EX-99.1 2 arc_ex991.htm FINANCIAL STATEMENTS arc_ex991.htm

EXHIBIT 99.1

 

UNAUDITED PRO FORMA CONDENSED COMBINED CONSOLIDATED FINANCIAL STATEMENTS

 

American Resources Corporation, (the Company) acquired the majority of assets of Perry County Coal LLC (PCC) in a chapter 11 bankruptcy sale (Acquisition). The Company purchased the assets for consideration of $1 and assuming liabilities with a preliminary value of $4,987,748. Because the transaction closed near the end of the reporting quarter the values assigned are provisional as of September 30, 2019 while the company continues to gather information therefore the company’s conclusion is tentative while the transaction is being evaluated under ASC 805-10-20.

 

The Acquisition will be accounted for as an asset purchase. The assets acquired do not represent a business as defined in FASB AS 805-10-20 due to their classification as a single asset. The Company took full operational control of the assets on September 27, 2019. Because the transaction closed near the end of the reporting quarter the values assigned are provisional as of September 30, 2019 while the company continues to gather information therefore the company’s conclusion is tentative while the transaction is being evaluated under ASC 805-10-20.

 

The following unaudited pro forma condensed combined consolidated financial statements are based on our unaudited historical consolidated financial statements and PCC’s unaudited historical consolidated financial statements as adjusted to give effect to the Company’s acquisition of majority of assets of PCC. The unaudited pro forma condensed combined consolidated statements of operations for the three months ended June 30, 2019 and the six months ending June 30, 2019 give effect to the transaction as if they had occurred on January 1, 2019. The unaudited pro forma condensed combined balance sheet as of June 30, 2019 gives effect to the transaction as if it had occurred on January 1, 2019.

 

The assumptions and estimates underlying the unaudited adjustments to the pro forma condensed combined consolidated financial statements are described in the accompanying notes, which should be read together with the pro forma condensed combined consolidated financial statements.

 

The unaudited pro forma condensed combined consolidated financial statements should be read together with the Company’s historical consolidated financial statements, which are included in the Company’s Form 10K filed April 3, 2019 and PCC’s historical consolidated financial statements filed in Form 8K/A December 9, 2019.

 

 
1
 
 

 

AMERICAN RESOURCES CORP. AND SUBSIDIARIES

 

Unaudited Condensed Combined Pro Forma Consolidated Balance Sheets

 

June 30, 2019

 

 

 

 

American

 

 

Perry

 

 

 

 

 

 

 

 

 

Resources

 

 

 County

 

 

Proforma

 

 

 

 

Proforma

 

 

 

 Corp.

 

 

Coal, LLC

 

 

Adjustment

 

 

Notes

 

Combined

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

ASSETS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

CURRENT ASSETS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash

 

$1,129,790

 

 

$2,127,873

 

 

$(2,127,873)

 

( a )

 

$1,129,790

 

Accounts Receivable

 

 

1,945,330

 

 

 

556,353

 

 

 

(556,353)

 

( a )

 

 

1,945,330

 

Inventory - Coal

 

 

121,026

 

 

 

2,995,634

 

 

 

(2,343,936)

 

( a ) / ( b )

 

 

772,724

 

Inventory - Material

 

 

-

 

 

 

1,739,952

 

 

 

(1,739,952)

 

( a )

 

 

-

 

Prepaid Fees

 

 

483,000

 

 

 

2,717,088

 

 

 

(2,717,088)

 

( a )

 

 

483,000

 

Accounts Receivable - Other

 

 

360,718

 

 

 

-

 

 

 

-

 

 

 

360,718

 

Total Current Assets

 

 

4,039,864

 

 

 

10,136,900

 

 

 

(9,485,202)

 

 

 

 

4,691,562

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

OTHER ASSETS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash - restricted

 

 

364,985

 

 

 

-

 

 

 

-

 

 

 

 

 

364,985

 

Processing and rail facility

 

 

11,630,171

 

 

 

8,994,625

 

 

 

(7,062,934)

 

( a ) / ( b )

 

 

13,561,862

 

Underground equipment

 

 

9,452,724

 

 

 

-

 

 

 

863,053

 

 

( b )

 

 

10,315,777

 

Surface equipment

 

 

3,101,518

 

 

 

-

 

 

 

4,688

 

 

( b )

 

 

3,106,206

 

Acquired mining rights

 

 

28,313,241

 

 

 

-

 

 

 

518,199

 

 

( b )

 

 

28,831,440

 

Coal refuse storage

 

 

11,993,827

 

 

 

1,765,655

 

 

 

(1,588,211)

 

( a ) / ( b )

 

 

12,171,271

 

Less Accumulated Depreciation

 

 

(9,652,446)

 

 

(4,233,956)

 

 

4,233,956

 

 

( a )

 

 

(9,652,446)

Land

 

 

2,407,193

 

 

 

-

 

 

 

840,976

 

 

( b )

 

 

3,248,169

 

Note Receivable

 

 

4,117,139

 

 

 

444,576

 

 

 

(444,576)

 

( a )

 

 

4,117,139

 

Total Other Assets

 

 

61,728,352

 

 

 

6,970,900

 

 

 

(2,634,849)

 

 

 

 

66,064,403

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

TOTAL ASSETS

 

$65,768,216

 

 

$

17,107,800

 

 

$

(12,120,051

)

 

 

 

$70,755,965

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

CURRENT LIABILITIES

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accounts payable

 

$6,245,513

 

 

$11,411,612

 

 

$(11,411,611)

 

( a )

 

$6,245,514

 

Accounts payable - related party

 

 

597,656

 

 

 

-

 

 

 

-

 

 

597,656

 

Accrued expenses

 

 

1,698,222

 

 

 

4,186,198

 

 

 

(2,149,211)

 

( a ) / ( b )

 

 

3,735,209

 

Funds held for others

 

 

19,955

 

 

 

-

 

 

 

-

 

 

 

 

 

19,955

 

Due to affiliate

 

 

124,000

 

 

 

-

 

 

 

-

 

 

 

 

 

124,000

 

Current portion of long term-debt

 

 

15,528,199

 

 

 

-

 

 

 

-

 

 

 

 

 

15,528,199

 

Current portion of convertible debt

 

 

6,819,632

 

 

 

-

 

 

 

-

 

 

 

 

 

6,819,632

 

Black lung and workers compensation - current

 

 

-

 

 

 

2,307,564

 

 

 

(2,307,564

)

 

( a )

 

 

-

 

Current portion of reclamation liability

 

 

2,327,169

 

 

 

-

 

 

 

-

 

 

 

 

 

2,327,169

 

Total Current Liabilities

 

 

33,360,346

 

 

 

17,905,800

 

 

 

(15,868,386

)

 

 

 

 

35,397,334

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

OTHER LIABILITIES

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Long-term portion of note payable (net of issuance costs $422,921)

 

 

4,826,451

 

 

 

-

 

 

 

-

 

 

 

 

 

4,826,451

 

Black lung and workers compensation – long term

 

 

-

 

 

 

14,935,439

 

 

 

(14,935,439

)

 

( a )

 

 

-

 

Reclamation liability

 

 

16,853,436

 

 

 

2,315,121

 

 

 

635,640

 

 

( a ) / ( b )

 

 

19,804,197

 

Total Other Liabilities

 

 

21,679,887

 

 

 

17,750,560

 

 

 

(14,799,799

)

 

 

 

 

24,630,648

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Liabilities

 

 

55,040,233

 

 

 

35,655,934

 

 

 

(30,668,185

)

 

 

 

 

60,027,982

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

STOCKHOLDERS' EQUITY (DEFICIT)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

AREC - Class A Common stock: $.0001 par value; 230,000,000 shares authorized, 23,367,197 and 17,763,469 shares issued and outstanding

 

 

2,337

 

 

 

-

 

 

 

-

 

 

 

 

 

2,337

 

AREC Series A Preferred stock: $.0001 par value; 5,000,000 shares authorized, 0 issued and outstanding

 

 

-

 

 

 

-

 

 

 

-

 

 

 

 

 

-

 

AREC Series C Preferred stock: $.0001 par value; 20,000,000 shares authorized, 0 issued and outstanding

 

 

-

 

 

 

-

 

 

 

-

 

 

 

 

 

-

 

Additional paid-in capital

 

 

86,367,056

 

 

 

38,600,180

 

 

 

(38,600,180

)

 

( a )

 

 

86,367,056

 

Accumulated deficit

 

 

(75,641,410)

 

 

(57,148,314

)

 

 

57,148,314

 

 

( a )

 

 

(75,641,410)

Total Stockholders' Equity (Deficit)

 

 

10,727,983

 

 

 

(18,548,134

)

 

 

18,548,134

 

 

 

 

 

10,727,983

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

TOTAL LIABILITIES AND STOCKHOLDERS' EQUTY (DEFICIT)

 

$65,768,216

 

 

$

17,108,800

 

 

$

(12,120,051

)

 

 

 

$70,755,965

 

 

The accompanying notes are an integral part of the unaudited pro forma condensed combined consolidated financial statements.

 

 
2
 
 

 

AMERICAN RESOURCES CORP. AND SUBSIDIARIES

Unaudited Condensed Combined Pro Forma Consolidated Statements of Operations

For the Twelve Months Ended December 31, 2018

   

 

 

 

American

 

 

Perry

 

 

 

 

 

 

 

 

 

 

 

Resources

 

 

County

 

 

Proforma

 

 

 

 

 

 

 

 

 Corp.

 

 

Coal, LLC

 

 

Adjustment

 

 

Notes

 

Total

 

Total Revenue

 

$31,524,825

 

 

$51,740,331

 

 

$-

 

 

 

 

$83,265,156

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Expenses from Operations

 

 

(43,021,530)

 

 

(66,025,101)

 

 

-

 

 

 

 

 

(109,046,631

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Loss from Operations

 

 

(11,496,705)

 

 

(14,284,770)

 

 

-

 

 

 

 

 

(25,781,475

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other Income

 

 

466,808

 

 

 

-

 

 

 

-

 

 

 

 

 

466,808

 

Gain on cancelation of Debt

 

 

68,010

 

 

 

-

 

 

 

 

 

 

 

 

 

 

 

Amortization of debt discount and debt issuance costs

 

 

(670,601)

 

 

-

 

 

 

-

 

 

 

 

 

(670,601)

Interest income

 

 

164,166

 

 

 

-

 

 

 

-

 

 

 

 

 

164,166

 

Interest expense

 

 

(1,288,990)

 

 

(4,347,560)

 

 

-

 

 

 

 

 

(5,636,550

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss

 

 

(12,757,312)

 

 

(18,632,330)

 

 

-

 

 

 

 

 

(31,389,642)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Less: Preferred dividend requirement

 

 

(114,850)

 

 

-

 

 

 

-

 

 

 

 

 

(114,850)

Less: Net income attributable to Non Controlling Interest

 

 

(151,264)

 

 

-

 

 

 

-

 

 

 

 

 

(151,264)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss attributable to Controlling Shareholders

 

$(13,023,426)

 

$(18,632,330)

 

$-

 

 

 

 

$

(31,655,756

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss per share - basic and diluted

 

$(3.69)

 

 

-

 

 

 

-

 

 

 

 

$

(9.01

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average shares outstanding - basic and diluted

 

 

3,513,513

 

 

 

-

 

 

 

-

 

 

 

 

 

3,513,513

 

 

The accompanying notes are an integral part of the unaudited pro forma condensed combined consolidated financial statements.

 

 
3
 
 

 

AMERICAN RESOURCES CORP. AND SUBSIDIARIES

Unaudited Condensed Combined Pro Forma Consolidated Statements of Operations

For the Six Months Ended June, 2019

 

 

 

American

 

 

Perry

 

 

 

 

 

 

 

 

 

 

 

Resources

 

 

County

 

 

Proforma

 

 

 

 

 

 

 

 

 Corp.

 

 

Coal, LLC

 

 

Adjustment

 

 

Notes

 

Total

 

Total Revenue

 

$16,336,402

 

 

$24,640,031

 

 

$-

 

 

 

 

$40,976,433

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Expenses from Operations

 

 

(29,582,084)

 

 

(37,047,631)

 

 

-

 

 

 

 

 

(66,629,715

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Loss from Operations

 

 

(13,245,682)

 

 

(12,407,600)

 

 

-

 

 

 

 

 

(25,653,282

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other income (expense)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other Income

 

 

480,954

 

 

 

-

 

 

 

-

 

 

 

 

 

480,954

 

Loss on settlement of payable

 

 

(22,660)

 

 

-

 

 

 

-

 

 

 

 

 

(22,660)

Amortization of debt discount and issuance costs

 

 

(7,502,979)

 

 

-

 

 

 

-

 

 

 

 

 

(7,502,979)

Interest income

 

 

82,343

 

 

 

-

 

 

 

-

 

 

 

 

 

82,343

 

Warrant modification Expense

 

 

(2,545,360)

 

 

-

 

 

 

-

 

 

 

 

 

(2,545,360)

Interest expense

 

 

(772,843)

 

 

(2,574,942)

 

 

-

 

 

 

 

 

(3,347,785)

Total other income (expense)

 

 

(10,280,545)

 

 

(2,574,942)

 

 

-

 

 

 

 

 

(12,855,487)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Loss

 

 

(23,526,227)

 

 

(14,982,542)

 

 

-

 

 

 

 

 

(38,508,769

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss attributable to Controlling Shareholders

 

$(23,526,227)

 

$(14,682,542)

 

$-

 

 

 

 

$

(38,508,769

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss per share - basic and diluted

 

$(1.07)

 

 

-

 

 

 

-

 

 

 

 

$

(1.74

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average shares outstanding - basic and diluted

 

 

22,078,999

 

 

 

-

 

 

 

-

 

 

 

 

 

22,078,999

 

 

The accompanying notes are an integral part of the unaudited pro forma condensed combined consolidated financial statements.

 

 
4
 
 

 

AMERICAN RESOURCES CORPORATION

NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED

CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2019

 

NOTE 1 – Basis of Presentation

 

The historical consolidated financial statements have been adjusted in the pro forma condensed combined consolidated financial statements to give effect to pro forma events that are (1) directly attributable to the Acquisition (2) factually supportable and (3) with respect to the pro forma condensed combined statements of operations, expected to have a continuing impact on the combined results following the business combination.

 

The pro forma combined consolidated financial statements do not necessarily reflect what the combined company’s financial condition or results of operations would have been had the acquisition occurred on the dates indicated. They also may not be useful in predicting the future financial condition and results of operations of the combined company. the actual financial position and results of operations may differ significantly from the pro forma amounts reflected herein due to a variety of factors.

 

The assets acquired and liabilities assumed of Perry County Coal LLC were as follows at the purchase date on a provisional basis:

 

Assets

 

 

 

Coal Inventory

 

$651,698

 

Mine Development

 

 

518,199

 

Coal Refuse

 

 

177,444

 

Land

 

 

840,976

 

Underground Equipment

 

 

863,053

 

Surface Equipment

 

 

4,688

 

Processing and Loading Facility

 

 

1,444,596

 

Liabilities

 

 

 

 

Reclamation liability

 

$2,950,761

 

Accrued liabilities

 

 

2,036,987

 

 

The combined pro forma financial information does not reflect the realization of any expected cost savings or other synergies from the acquisition of the majority of assets of PCC as a result of restructuring activities and other planned cost savings initiatives following the completion of the business combination.

 

NOTE 2 – Pro forma Adjustments

 

The following adjustments have been reflected in the unaudited pro forma condensed combined consolidated financial information:

 

 

(a)elimination of Perry County Coal LLC assets and liabilities assumed to only include the assets and liabilities assumed.

 

 

 

 

(b)

recording of the provisional purchase price allocation of the relative fair value of the assets of Perry County Coal LLC included in the asset purchase. Because the transaction closed near the end of the reporting quarter the values assigned are provisional as of September 30, 2019 while the company continues to gather information therefore the company’s conclusion is tentative while the transaction is being evaluated under ASC 805-10-20.

 

 
5