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8-K - CURRENT REPORT - American Resources Corp | arec_8k.htm |
Exhibit 99.1
American Resources Corporation Reports First Quarter 2021 Financial
Results and Provides Business Outlook
Well-positioned to be a long-term supplier of raw material and
critical elements to the modern-day infrastructure
market
Near-term catalysts expected to drive significant growth and
value
Balance sheet improvements provides financial strength and
flexibility to execute on its innovation and growth
plans
Company to host update conference call
on Wednesday, May 12 at 4:30 PM
ET
May 12, 2021 | Source: American Resources
Corporation
FISHERS, INDIANA / ACCESSWIRE / May 12, 2021
/ American Resources
Corporation (NASDAQ:AREC)
(“American Resources” or the “Company”), a
next generation and socially responsible supplier of raw materials
to the new infrastructure and electrification marketplace, today
reported its first quarter of 2021 financial results and provided a
corporate update.
Mark Jensen, Chairman and CEO of American Resources Corporation
commented, “Over the course of the first quarter of 2021, we
had the opportunity to continue to position our dynamic platform to
provide the infrastructure and electrification marketplaces the
resources needed to advance to a greener economy. We’ve had
one of the most active three months to date in terms of
transforming our Company. We had the opportunity to further define
our suite of technology that has brought together some of the best
and most innovative universities and chemical engineers that have
developed technologies and processes that enable us to capture,
process and purify critical and rare earth elements, and do it in
the most environmentally safe, and in certain instances
environmentally positive, methods ever developed. We are confident
that our process chain is at the forefront of establishing a
sustainable and healthy supply chain of critical materials here in
the United States and redefine how these materials are sourced
across the globe. Our milestones and announcement over the first
quarter are groundbreaking and demonstrate our commitment to bring
these technologies to the market as expeditiously and efficiently
as possible.”
First Quarter 2021 Key Highlights
●
Secured
base load sales commitment for production of raw materials
servicing the infrastructure marketplace at its Perry County
Resources (“PCR”) mining complex.
●
Entered
into exclusive patent and technology licensing agreements and
sponsored research agreements with Penn State University and its
Department of Energy and Mineral Engineering to implement Penn
State’s intellectual property and technologies that separate
and extract pre-concentrate critical and rare earth minerals from
the Company’s carbon-based resources.
●
Acquired
exclusive rights for ligand assisted displacement
(“LAD”) chromatography patents and knowhow, developed
at Purdue University, to further expanded its capability in
environmentally friendly separation and purification of rare earth
elements. This technology is specific to the processing of
separated and pure rare earth metals and critical elements from
coal byproducts, recycled permanent magnets and lithium-ion
batteries.
●
Acquired
additional production equipment to expand its base of carbon
production and efficiencies at Perry County Resources as well as
prepare for the potential opportunity to bring other complexes
online in the future.
●
Engaged technology veteran William E. Smith III to
lead the design, build and operation phase of its rare earth and
critical mineral purification facilities utilizing ligand assisted
displacement (“LAD”) chromatography technology. Mr. Smith spent thirty-three years at
Eli Lilly and Co. (NYSE:LLY) overseeing technical support of their
worldwide manufacturing facilities and responsible for worldwide
planning, design, and construction of capital
projects.
●
Entered into exclusive license agreement with Ohio
University for a suite of technologies developed by Dr. Gerardine
Botte, the current Whitacre
Department Chair in Chemical Engineering at Texas Tech
University, to be used for rare
earth element (“REE”) and critical mineral separation
as well as the future production of graphene and advanced carbon
products.
●
Advanced
the commercialization process of its rare earth element technology
process chain with commencement of building a 2kW mobile rare earth
processing electrolysis facility in conjunction with the
Company’s sponsored research program with Dr. Gerardine Botte
and Texas Tech University. The facility represents a novel approach
for the revalorization of coal, coal waste, and coal byproducts
such as fly ash for the production of REE concentrate, carbon,
purified fly ash and hydrogen.
●
Priced the initial public offering of American
Acquisition Opportunity Inc. (NADSAQ: AMAOU), a blank check company
in which the Company has an indirect investment, consisting
of 10,000,000 units at $10.00 per unit. AMAOU is focusing
its search on land and resource holding companies, with the potential to create, support, and/or
innovate for the new economy.
●
Sub-licensed,
on a non-exclusive basis, two of its exclusive patents for the
production of graphene to Novusterra Inc. for a 50% equity stake in
the privately-held company and a portion of future cash flows from
the sale of graphene from that entity.
●
Further
improved the Company’s balance sheet and capital structure
through the payoff and / or conversion into equity of an additional
$10.3 million of outstanding debt throughout the first three months
of 2021.
“Looking
forward to the remainder of 2021 and beyond, we have never been
more excited about the opportunities that lie ahead of us
throughout all of our operating divisions. First and foremost,
American Carbon, with one of the largest metallurgical carbon
growth platforms in the industry, is back producing high quality
carbon to supply the steel and alloy metals industry with the
necessary resources to support worldwide infrastructure demand. We
are seeing that demand grow as economic activity continues to
materialize as the world emerges from the COVID-19 pandemic. We are
seeing numerous opportunities to expand our production base to
fulfill that demand and are confident in our position in being a
stable, long-term supplier of these essential resources. As such,
we remain comfortable with our previously stated guidance of $55
million to $75 million in revenues for 2021 as a whole,”
continued Mr. Jensen.
“As
previously stated, we’ve had the opportunity to further define our suite of technologies relevant
to rare earth and critical mineral production over the past few
months. We are aggressively advancing these initiatives,
specifically relating to our electrolysis processing and
chromatography purification technologies and are very excited for
what these technologies can accomplish for our shareholders and
stakeholders. Lastly, I think it’s important to mention the
additional valuation creation we’ve recently accomplished and
will continue to foster. First, the pricing of our
Company-sponsored SPAC, American Acquisition Opportunity Inc. has
the potential to drive meaningful value creation for our
shareholders. The quality of potential targets we are evaluating is
certainly impressive. Also, our sub-license agreement with
Novusterra Inc., for the development of graphene, demonstrates the
value of our acquired intellectual property and our commitment to
deliver that value to our shareholders.”
Conference Call Information
American Resources management will host a conference call for
investors, analysts and other interested parties on
Wednesday,
May 12, 2021 at 4:30 PM ET.
Interested participants and investors may access the conference
call by dialing (877) 407-4019 and referencing American Resources
Corporation’s First Quarter of 2021 Conference Call, or by
the webcast link: here.
Financial Results for First Quarter 2021
For the first quarter of 2021, American Resources reported a net
income loss of $6.4 million, or $0.14 per share for the three
months ended March 31, 2021, as compared with a net income loss of
$3.4 million, or a loss of $0.12 per share in the prior-year
period. The Company earned adjusted earnings before interest,
taxes, depreciation, amortization, equity-based compensation,
warrant expense and development and restructuring costs
(“Adjusted EBITDA”) of a $2.8 million loss in the first
quarter of 2021, as compared with an Adjusted EBITDA loss of
$847,187 for the first quarter of 2020.
First Quarter 2021 Summary
Total
revenues were $10,646 for the first quarter of 2021 compared to
revenues of $524,334 during the first quarter of 2020. General and
administrative expenses for the first quarter of 2021 were $1.1
million compared to $842,925 million in the prior year period.
American Resources incurred interest expense of $491,113 during the
first quarter of 2021 compared to $500,640 during the first quarter
of 2020. Development costs during the quarter were $1.8 million,
compared to $2.8 million in the fourth quarter of
2020.
The
Company did not incur any income tax expense in the first quarter
of 2021 as it was able to utilize its available net operating
losses (“NOL”) carried forward from prior periods of
approximately $17.8 million as of December 31, 2020.
AMERICAN RESOURCES CORPORATION
|
CONSOLIDATED STATEMENTS OF OPERATIONS
|
UNAUDITED
|
|
For the three
months ended
|
For the three
months ended
|
|
March
31,
2021
|
March
31,
2020
|
|
|
|
Coal
Sales
|
$3,274
|
$524,334
|
Royalty
Income
|
7,372
|
-
|
|
|
|
Total
Revenue
|
10,646
|
524,334
|
|
|
|
Cost of Coal Sales
and Processing
|
(800,515)
|
(1,855,187)
|
Accretion
Expense
|
(305,636)
|
(370,587)
|
Depreciation
|
(393,530)
|
(915,052)
|
Amortization of
Mining Rights
|
(311,685)
|
(313,224)
|
General and
Administrative
|
(1,081,447)
|
(842,925)
|
Professional
Fees
|
(710,032)
|
(194,046)
|
Production Taxes
and Royalties
|
(568,182)
|
(160,230)
|
Development
Costs
|
(1,811,951)
|
(128,159)
|
|
|
|
Total Operating
expenses
|
(5,982,978)
|
(4,779,410)
|
|
|
|
Net Loss from
Operations
|
(5,972,332)
|
(4,255,076)
|
|
|
|
Other Income and
(expense)
|
|
|
Other
Income
|
35,296
|
1,412,005
|
Amortization of
debt discount and debt issuance costs
|
(2,879)
|
-
|
Interest
Income
|
41,171
|
82,343
|
Interest
expense
|
(491,113)
|
(500,640)
|
Total Other income
(expense)
|
(417,525)
|
993,708)
|
|
|
|
Net loss
attributable to American Resources Corp. Shareholders
|
$(6,389,857)
|
$(3,261,368)
|
|
|
|
Net loss per common
share - basic and diluted
|
$(0.14)
|
$(0.12)
|
|
|
|
Weighted average
common shares outstanding- basic and diluted
|
46,917,910
|
27,267,197
|
|
March
31,
2021
|
December
31,
2020
|
|
|
|
ASSETS
|
||
|
|
|
CURRENT
ASSETS
|
|
|
Cash
|
$7,097,465
|
$10,617,495
|
Accounts
Receivable
|
3,274
|
38,650
|
Inventory
|
150,504
|
150,504
|
Prepaid
fees
|
241,668
|
175,000
|
Accounts Receivable
- Other
|
234,240
|
234,240
|
Total Current
Assets
|
7,727,149
|
11,215,889
|
|
|
|
OTHER
ASSETS
|
|
|
Cash -
restricted
|
1,233,708
|
583,708
|
Processing and rail
facility
|
11,591,273
|
11,591,273
|
Underground
equipment
|
7,403,417
|
6,838,417
|
Surface
equipment
|
2,527,576
|
2,527,576
|
Acquired mining
rights
|
561,575
|
561,575
|
Coal refuse
storage
|
12,134,192
|
12,134,192
|
Less Accumulated
Depreciation
|
(13,432,024)
|
(12,726,809)
|
Land
|
1,572,435
|
1,572,435
|
Investment in LLC
– Related Party
|
2,275,000
|
-
|
Note
Receivable
|
4,117,139
|
4,117,139
|
Total Other
Assets
|
29,984,291
|
27,199,506
|
|
|
|
TOTAL
ASSETS
|
$37,711,440
|
$38,415,395
|
|
|
|
LIABILITIES
AND STOCKHOLDERS’ EQUITY (DEFICIT)
|
||
|
|
|
CURRENT
LIABILITIES
|
|
|
Accounts
payable
|
$3,049,695
|
$4,288,794
|
Non-Trade
Payables
|
3,476,236
|
3,850,781
|
Accounts payable
– related party
|
712,872
|
679,146
|
Accrued
interest
|
247,271
|
1,043,519
|
Due to
affiliate
|
74,000
|
74,000
|
Current portion of
long term-debt (net of unamortized discount of $- and
$-)
|
5,805,453
|
10,997,692
|
Convertible note
payables – short term (net of unamortized discount of
$234,184 and $-)
|
10,906,144
|
-
|
Current portion of
reclamation liability
|
2,327,169
|
2,327,169
|
Total Current
Liabilities
|
26,598,840
|
23,261,101
|
|
|
|
OTHER
LIABILITIES
|
|
|
Long-term portion
of note payable (net of issuance costs of $402,788 and
$405,667)
|
5,033,631
|
5,330,752
|
Convertible note
payables – long term (net of unamortized discount of $829,650
and $1,854,421)
|
2,593,703
|
14,300,907
|
Reclamation
liability
|
15,833,772
|
15,528,135
|
Total Other
Liabilities
|
23,461,106
|
35,159,794
|
|
|
|
Total
Liabilities
|
50,059,946
|
58,420,895
|
|
|
|
STOCKHOLDERS’
EQUITY (DEFICIT)
|
|
|
AREC - Class A
Common stock: $.0001 par value; 230,000,000 shares authorized,
50,014,410 and 40,522,762 shares issued and
outstanding
|
4,984
|
4,256
|
AREC - Series A
Preferred stock: $.0001 par value; 100,000 shares authorized, nil
and nil shares issued and outstanding
|
-
|
-
|
AREC - Series B
Preferred stock: $.001 par value; 20,000,000 shares authorized, nil
and nil shares issued and outstanding, respectively
|
-
|
-
|
AREC - Series C
Preferred stock: $.001 par value; 20,000,000 shares authorized, nil
and nil shares issued and outstanding
|
-
|
-
|
Additional paid-in
capital
|
127,440,638
|
113,279,448
|
Accumulated
deficit
|
(139,794,126)
|
(133,289,247)
|
Total
Stockholders’ Equity (Deficit)
|
(12,348,504)
|
(20,005,500)
|
|
|
|
TOTAL
LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)
|
$37,711,442
|
$38,415,395
|
AMERICAN RESOURCES CORPORATION
|
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
UNAUDITED
|
|
For the three
months ended
|
For the three
months ended
|
|
March
31,
2021
|
March
31,
2020
|
|
|
|
Cash
Flows from Operating activities:
|
|
|
Net
loss
|
$(6,389,855)
|
$(3,261,368)
|
Adjustments
to reconcile net loss to net cash used in operating
activities:
|
|
|
Depreciation
|
393,530
|
915,052
|
Amortization of
mining rights
|
311,685
|
313,224
|
Accretion
expense
|
305,636
|
370,587
|
Reduction of ARO
liability due to sale of assets
|
-
|
(312,338)
|
Warrant
expense
|
115,025
|
115,025
|
Issuance of common
share options for compensation
|
147,000
|
-
|
Amortization of
beneficial conversion feature
|
590,464
|
-
|
Issuance of common
shares for services
|
188,000
|
-
|
Change
in current assets and liabilities:
|
|
|
|
|
|
Accounts
receivable
|
35,376
|
2,387,505
|
Prepaid expenses
and other assets
|
(66,668)
|
(175,000)
|
Inventory
|
-
|
365,126
|
Accounts
payable
|
(1,613,645
|
555,516
|
Accounts payable
– related party
|
33,726
|
85,446
|
Accrued
interest
|
(796,248)
|
(506,383)
|
Cash provided by
(used in) operating activities
|
(6,745,974)
|
852,392
|
|
|
|
Cash
Flows from Investing activities:
|
|
|
|
|
|
Cash paid for PPE,
net
|
(1,798,708)
|
(408,915)
|
Investment in
LLC
|
(2,275,000)
|
-
|
Cash provided by
(used in) investing activities
|
(4,073,708)
|
(408,915)
|
|
|
|
Cash
Flows from Financing activities:
|
|
|
|
|
|
Principal payments
on long term debt
|
(62,294)
|
(72,255)
|
Proceeds from long
term debt
|
-
|
28,000
|
Issuance of common
shares for debt and payable conversion
|
1,997,514
|
-
|
Payments on
factoring agreement, net
|
-
|
(1,807,443)
|
Proceeds from
convertible note
|
1,620,000
|
1,598,642
|
Proceeds from
warrant conversions
|
2,055,723
|
-
|
Proceeds from sale
of common stock, net
|
1,105,001
|
-
|
Cash provided by
financing activities
|
6,715,944
|
(253,056)
|
|
|
|
Increase (decrease)
in cash and restricted cash
|
(4,103,738)
|
190,421
|
|
|
|
Cash and restricted
cash, beginning of period
|
11,201,203
|
268,811
|
|
|
|
Cash
and restricted cash, end of period
|
$7,097,465
|
$459,232
|
|
|
|
Supplemental
Information
|
|
|
Non-cash investing
and financing activities
|
|
|
|
|
|
Conversion of debt
and trade payables to common shares
|
$1,997,514
|
$-
|
Discount on note
due to beneficial conversion feature
|
$715,740
|
$-
|
|
|
|
Cash paid for
interest
|
$42,426
|
$165,728
|
Cash paid for
income taxes
|
$-
|
$-
|
Reconciliation of Non-GAAP Measures
Reconciliation
of Adjusted EBITDA to Amounts Reported Under U.S. GAAP
|
For the three months ended March 31, 2021
|
For the three months ended March 31, 2020
|
Net
Income
|
(6,389,857)
|
(3,395,547)
|
|
|
|
Interest
& Other Expenses
|
491,113
|
500,640
|
Income
Tax Expense
|
-
|
-
|
Accretion
Expense
|
305,636
|
370,587
|
Depreciation
|
393,530
|
915,052
|
Amortization
of Mining Rights
|
311,685
|
313,224
|
Amortization
of Debt Discount & Issuance
|
2,879
|
-
|
Non-Cash
Stock & Option Comp. Expense
|
147,000
|
-
|
Non-Cash
Warrant Expense
|
115,025
|
115,025
|
Development
Costs
|
1,811,951
|
128,159
|
PCR
Restructuring Expenses
|
-
|
205,673
|
|
|
|
Total
Adjustments
|
3,578,819
|
2,548,360
|
|
|
|
Adjusted EBITDA(1)
|
(2,811,038)
|
(847,187)
|
(1)
Adjusted EBITDA is
defined as net income before net interest expense, income tax
expense, accretion expense, depreciation, non-cash stock
compensation expense, transaction and other professional fees, and
development costs. Adjusted EBITDA is not a measure of financial
performance in accordance with GAAP, and we believe items excluded
from Adjusted EBITDA are significant to a reader in understanding
and assessing our financial condition. Therefore, Adjusted EBITDA
should not be considered in isolation, nor as an alternative to net
income, income from operations, cash flow from operations or as a
measure of our profitability, liquidity, or performance under GAAP.
We believe that Adjusted EBITDA presents a useful measure of our
ability to incur and service debt based on ongoing operations.
Furthermore, similar measures are used by analysts to evaluate our
operating performance. Investors should be aware that our
presentation of Adjusted EBITDA may not be comparable to similarly
titled measures used by others.
About American Resources Corporation
American Resources Corporation is a next-generation,
environmentally and socially responsible supplier of high-quality
raw materials to the new infrastructure market. The Company is
focused on the extraction and processing of metallurgical carbon,
an essential ingredient used in steelmaking, critical and rare
earth minerals for the electrification market, and reprocessed
metal to be recycled. American Resources has a growing portfolio of
operations located in the Central Appalachian basin of eastern
Kentucky and southern West Virginia where premium quality
metallurgical carbon and rare earth mineral deposits are
concentrated.
American Resources has established a nimble, low-cost business
model centered on growth, which provides a significant opportunity
to scale its portfolio of assets to meet the growing global
infrastructure and electrification markets while also continuing to
acquire operations and significantly reduce their legacy industry
risks. Its streamlined and efficient operations are able to
maximize margins while reducing costs. For more information
visit
americanresourcescorp.com or connect with the Company on
Facebook,
Twitter, and
LinkedIn.
Special Note Regarding Forward-Looking Statements
This
press release contains “forward-looking statements”
within the meaning of the Private Securities Litigation Reform Act
of 1995. Forward-looking statements involve known and unknown
risks, uncertainties, and other important factors that could cause
the Company’s actual results, performance, or achievements or
industry results to differ materially from any future results,
performance, or achievements expressed or implied by these
forward-looking statements. These statements are subject to a
number of risks and uncertainties, many of which are beyond
American Resources Corporation’s control. The words
“believes”, “may”, “will”,
“should”, “would”, “could”,
“continue”, “seeks”,
“anticipates”, “plans”,
“expects”, “intends”,
“estimates”, or similar expressions are intended to
identify forward-looking statements, although not all
forward-looking statements contain such identifying words. Any
forward-looking statements included in this press release are made
only as of the date of this release. The Company does not undertake
any obligation to update or supplement any forward-looking
statements to reflect subsequent events or circumstances. The
Company cannot assure you that the projected results or events will
be achieved.
PR Contact
Precision
Public Relations
Matt
Sheldon
917-280-7329
matt@precisionpr.co
Investor Contact:
JTC
Team, LLC
Jenene
Thomas
833-475-8247
arec@jtcir.com
RedChip
Companies Inc.
Todd
McKnight
1-800-RED-CHIP
(733-2447)
Info@redchip.com
Company Contact:
Mark
LaVerghetta
Vice
President of Corporate Finance and Communications
317-855-9926
ext. 0
investor@americanresourcescorp.com