AREC Restates 2024, 2023 Financials Amidst Operational Shift

TL;DR

**AREC's restatement and complete coal operational halt signal a risky pivot, demanding investor caution on its unproven rare earth ventures.**

AI Summary

American Resources Corp (AREC) filed a 10-K/A on October 24, 2025, primarily to correct errors and restate certain items in its 2024 and 2023 consolidated financial statements, following an SEC comment letter dated August 12, 2025. The restatement corrected an overstatement of depreciation and amortization of mining rights expense for the quarter ended September 30, 2024, by $857,934, specifically $550,640 for depreciation and $307,294 for amortization for the year ended December 31, 2024. Additionally, the 2023 statement of operations omitted 'net revenue adjustments' of $1,412,500, which increased cost of coal sales and holding costs while decreasing coal sales, though without impacting 2023 consolidated net loss or net assets. Certain amounts previously classified as restricted cash were reclassified to restricted investments on the consolidated balance sheets for December 31, 2024, and 2023. The company's coal mining operations, including McCoy Elkhorn Coal LLC and Perry County Resources LLC, were entirely idled in 2024, producing zero tons compared to 75,353 tons in 2023, reflecting a strategic shift away from thermal coal since mid-2019. AREC is now in the exploration stage for mineral reserves and is diversifying into Electrified Materials Corporation (EMC) for metal recovery and ReElement Technologies LLC (ReElement) for critical and rare earth element purification.

Why It Matters

This restatement, prompted by an SEC comment letter, highlights potential weaknesses in American Resources Corp's internal financial reporting, which can erode investor confidence. The significant overstatement of depreciation by $857,934 and the omission of $1,412,500 in revenue adjustments for 2023, even if not impacting net loss, signal a need for improved accounting rigor. For investors, the complete idling of coal mining operations in 2024, with zero tons produced, underscores a critical business transformation towards rare earth elements and materials recovery, placing AREC in a highly competitive and capital-intensive new market. This shift could impact future revenue streams and competitive positioning against established players in the rare earth sector.

Risk Assessment

Risk Level: high — The risk level is high due to the restatement of financial statements for both 2024 and 2023, correcting an overstatement of depreciation by $857,934 and an omission of $1,412,500 in revenue adjustments. This indicates material accounting errors and potential internal control deficiencies. Furthermore, the company's core coal mining operations, which produced 75,353 tons in 2023, were completely idled in 2024, resulting in zero production, signifying a significant loss of traditional revenue streams and a high-risk pivot to unproven rare earth and materials recovery ventures.

Analyst Insight

Investors should exercise extreme caution and thoroughly scrutinize AREC's financial controls and the viability of its new ventures, Electrified Materials Corporation and ReElement Technologies LLC. Given the complete cessation of coal production and the financial restatements, a 'wait and see' approach is advisable until the company demonstrates consistent, profitable operations in its new strategic focus areas.

Key Numbers

• $857,934 — Overstatement of accumulated depreciation (As of December 31, 2024, corrected in 10-K/A)
• $550,640 — Overstatement of depreciation expense (For the year ended December 31, 2024, corrected in 10-K/A)
• $307,294 — Overstatement of amortization of mining rights expense (For the year ended December 31, 2024, corrected in 10-K/A)
• $1,412,500 — Omitted net revenue adjustments (For the 2023 statement of operations, increasing cost of coal sales and holding costs and decreasing coal sales)
• 0 tons — Total annual coal production (For 2024, down from 75,353 tons in 2023)
• 75,353 tons — Total annual coal production (For 2023, down from 171,769 tons in 2022)
• $131,330,970 — Aggregate market value of voting and non-voting common equity held by non-affiliates (As of the last business day of the most recently completed second fiscal quarter)
• 100,869,137 shares — Common Stock outstanding (As of October 17, 2025)

Key Players & Entities

• American Resources Corporation (company) — Registrant filing 10-K/A
• SEC (regulator) — Issued comment letter dated August 12, 2025
• Quest Energy Inc. (company) — Wholly-owned subsidiary of ARC since February 7, 2017
• American Carbon Corp. (company) — Former name of Quest Energy Inc. until December 27, 2024
• American Infrastructure Corporation (company) — Current name of American Carbon Corp. since December 27, 2024
• Electrified Materials Corporation (company) — Subsidiary focused on metal and steel recovery
• American Rare Earth LLC (company) — Former name of ReElement Technologies LLC
• ReElement Technologies LLC (company) — Subsidiary focused on critical and rare earth element purification
• McCoy Elkhorn Coal LLC (company) — Coal mining subsidiary with idled operations
• Perry County Resources (company) — Coal mining subsidiary with idled operations

FAQ

Risk Factors

• Cessation of Coal Mining Operations [high — operational]: The company's coal mining operations, including McCoy Elkhorn Coal LLC and Perry County Resources LLC, were entirely idled in 2024, producing zero tons compared to 75,353 tons in 2023. This reflects a strategic shift away from thermal coal, posing a significant operational risk as the company transitions to new business segments.
• Restatement of Financial Statements [medium — financial]: The 10-K/A filing on October 24, 2025, was primarily to correct errors, including an overstatement of depreciation and amortization of mining rights expense for Q3 2024 and omitted net revenue adjustments for 2023. These restatements indicate potential weaknesses in internal controls and financial reporting.
• Dependence on New Ventures [high — market]: AREC is diversifying into Electrified Materials Corporation (EMC) for metal recovery and ReElement Technologies LLC (ReElement) for critical and rare earth element purification. The success of these new ventures is crucial for future revenue, but they are in early stages and subject to significant market and execution risks.
• Environmental and Permitting Compliance [medium — regulatory]: While coal operations are idled, the company's historical and potential future involvement in mining and material processing necessitates ongoing compliance with stringent environmental regulations and permitting requirements, which can be costly and time-consuming.

Industry Context

The coal mining industry continues to face secular decline due to environmental concerns and the shift towards renewable energy sources. Companies are increasingly diversifying into higher-growth areas. The demand for critical and rare earth elements, however, is growing rapidly, driven by the electrification of transportation and advancements in technology, creating opportunities for specialized recovery and purification firms.

Regulatory Implications

The restatement of financial statements due to accounting errors suggests potential weaknesses in internal controls over financial reporting, which could attract further scrutiny from the SEC. The company's diversification into new materials also brings it under the purview of regulations related to environmental impact, resource extraction, and potentially international trade for critical minerals.

What Investors Should Do

1. Monitor the execution and financial performance of EMC and ReElement.
2. Evaluate the effectiveness of internal controls.
3. Assess the company's cash burn and funding needs.

Key Dates

• 2024-12-31: Coal mining operations idled — Marks a significant strategic shift away from traditional coal production, impacting historical revenue streams and requiring successful execution of new business initiatives.
• 2025-08-12: SEC comment letter issued — Triggered the need for financial statement restatements due to identified accounting errors, highlighting potential internal control deficiencies.
• 2025-10-24: 10-K/A filed — Corrected prior period financial statements, impacting reported depreciation, amortization, and revenue adjustments, and reclassified restricted cash to restricted investments.

Glossary

10-K/A

An amended annual report filed with the SEC to correct or supplement information previously filed in a Form 10-K. (This filing indicates that the company had to revise its previously submitted annual financial statements due to errors.)

Depreciation and Amortization of Mining Rights

The systematic allocation of the cost of tangible mining assets (depreciation) and intangible mining rights (amortization) over their useful lives. (An overstatement of this expense means the company previously reported lower net income than it should have for the periods affected.)

Net Revenue Adjustments

Corrections or modifications to reported revenue figures, which can include changes to gross sales, returns, allowances, or other factors impacting the net amount recognized. (Omission of these adjustments in the 2023 statement of operations affected the reported cost of coal sales and coal sales figures.)

Restricted Cash

Cash that is not available for general use by a company because it is pledged as collateral or restricted by contractual agreements. (Reclassification to restricted investments suggests a change in the nature or purpose of these held funds.)

Metallurgical Coal

A type of coal with specific properties required for use in the steelmaking process, often as a source of carbon or for pulverized coal injection (PCI). (This is one of the types of coal the company historically mined and processed.)

Critical and Rare Earth Elements

A group of 17 elements essential for many modern technologies, including electronics, electric vehicles, and defense systems. (AREC's diversification into ReElement Technologies LLC focuses on the purification and monetization of these valuable elements.)

Year-Over-Year Comparison

The 10-K/A filing corrects prior period financial statements, notably an overstatement of depreciation and amortization for 2024 and omitted revenue adjustments for 2023. The most significant operational change is the complete idling of coal mining operations in 2024, resulting in zero tons produced compared to 75,353 tons in 2023, reflecting a strategic pivot. Previously classified restricted cash has been reclassified to restricted investments, indicating a shift in asset management.

Key Financial Figures

• $0.0001 — e on which registered Class A Common, $0.0001 Par Value AREC NASDAQ Capital Marke
• $857,934 — depreciation as of December 31, 2024 by $857,934 and overstatement of depreciation and a
• $550,640 — mortization of mining rights expense by $550,640 and $307,294, respectively, for the yea
• $307,294 — f mining rights expense by $550,640 and $307,294, respectively, for the year ended Decem
• $1,412,500 — olding costs and decrease coal sales by $1,412,500. There was no change in the 2023 consol
• $20,000 — ases contain minimum annual payments of $20,000 and production royalty payments based o
• $2.50 — lease requires a payment of greater of $2.50 per ton or 5% of gross sales price. Wi
• $122 — y 41,400 tons and sold at an average of $122 per ton. The mineral mined is leased fr
• $1.75 — lease payments based on the greater of $1.75 per ton or 6% of gross sales price. Ca
• $159 — y 13,000 tons and sold at an average of $159 per ton. The mineral being mined is lea
• $95,000 — oy Elkhorn properties was approximately $95,000. Due to the processing storage capaci
• $1.50 — oyalty payments based on the greater of $1.50 per clean ton or 6% of gross sales pric
• $286,000 — County Coal property was approximately $286,000. Additional Permits: In addition to
• $1,569,641 — at Deane Mining paid by the Company is $1,569,641. Additional Permits: In addition to

Filing Documents

• arec_10ka.htm (10-K/A) — 2157KB
• arec_ex311.htm (EX-31.1) — 10KB
• arec_ex312.htm (EX-31.2) — 11KB
• arec_ex321.htm (EX-32.1) — 5KB
• arec_ex322.htm (EX-32.2) — 5KB
• arec_ex951.htm (EX-95.1) — 119KB
• arec_ex971.htm (EX-97.1) — 7KB
• arec_10kaimg6.jpg (GRAPHIC) — 72KB
• arec_10kaimg9.jpg (GRAPHIC) — 41KB
• arec_10kaimg8.jpg (GRAPHIC) — 75KB
• arec_10kaimg7.jpg (GRAPHIC) — 82KB
• arec_10kaimg11.jpg (GRAPHIC) — 38KB
• arec_10kaimg10.jpg (GRAPHIC) — 80KB
• 0001477932-25-007744.txt ( ) — 10678KB
• arec-20241231.xsd (EX-101.SCH) — 78KB
• arec-20241231_lab.xml (EX-101.LAB) — 435KB
• arec-20241231_cal.xml (EX-101.CAL) — 97KB
• arec-20241231_pre.xml (EX-101.PRE) — 402KB
• arec-20241231_def.xml (EX-101.DEF) — 252KB
• arec_10ka_htm.xml (XML) — 1737KB

Business

Business 4 Item 1A.

Risk Factors

Risk Factors 23 Item 1B. Unresolved Staff Comments 24 Item 2.

Properties

Properties 24 Item 3.

Legal Proceedings

Legal Proceedings 24 Item 4. Mine Safety Disclosures 24 PART II Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 25 Item 6.

Selected Financial Data

Selected Financial Data 29 Item 7.

Management's Discussion and Analysis of Financial Condition and Results of Operations

Management's Discussion and Analysis of Financial Condition and Results of Operations 29 Item 7A. Quantitative and Qualitative Disclosure About Market Risk 34 Item 8.

Financial Statements and Supplementary Data

Financial Statements and Supplementary Data 34 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure 34 Item 9A.

Controls and Procedures

Controls and Procedures 34 Item 9B. Other Information 35 PART III Item 10. Directors, Executive Officers and Corporate Governance 36 Item 11.

Executive Compensation

Executive Compensation 42 Item 12.

Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters 45 Item 13. Certain Relationships and Related Transactions, and Director Independence 47 Item 14. Principal Accounting Fees and Services 48 PART IV Item 15. Exhibits, Financial Statement Schedules 50

Signatures

Signatures 52 2 Table of Contents Special Note Regarding Forward Looking Statements. This annual report on Form 10-K of American Resources Corporation for the year ended December 31, 2024 contains certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, which are intended to be covered by the safe harbors created thereby. To the extent that such statements are not recitations of historical fact, such statements constitute forward looking statements which, by definition involve risks and uncertainties. In particular, statements under the Sections; Description of Business, Management's Discussion and Analysis of Financial Condition and Results of Operations contain forward looking statements. Where in any forward-looking statements, the Company expresses an expectation or belief as to future results or events, such expectation or belief is expressed in good faith and believed to have a reasonable basis, but there can be no assurance that the statement of expectation or belief will result or be achieved or accomplished. You should not rely on forward looking statements in this annual report. This annual report contains forward looking statements that involve risks and uncertainties. We use words such as "anticipates," "believes," "plans," "expects," "future," "intends," and similar expressions to identify these forward-looking statements. Prospective investors should not place undue reliance on these forward-looking statements, which apply only as of the date of this annual report. Our actual results could differ materially from those anticipated in these forward-looking statements. 3 Table of Contents PART I

Business

Item 1. Business. Overview When we formed our company, our focus was to (i) construct and/or purchase and manage a chain of combined gasoline, diesel and natural gas (NG) fueling and service stations (initially, in the Miami, FL area); (ii) construct conversion factories to convert NG to liquefied natural gas (LNG) and compressed natural gas (CNG); and (iii) construct conversion factories to retrofit vehicles currently using gasoline or diesel fuel to also run on NG in the United States and also to build a convenience store to serve our customers in each of our locations. On January 5, 2017, American Resources Corporation (ARC) executed a Share Exchange Agreement between the Company and Quest Energy Inc. ("Quest Energy"), a private company incorporated in the State of Indiana on May 2015 with offices at 12115 Visionary Way, Fishers, IN 46038, and due to the fulfillment of various conditions precedent to closing of the transaction, the control of the Company was transferred to the Quest Energy shareholders on February 7, 2017. This transaction resulted in Quest Energy becoming a wholly-owned subsidiary of ARC. Through Quest Energy, ARC was able to acquire coal mining and coal processing operations, substantially all located in eastern Kentucky and western West Virginia. On November 25, 2020, Quest Energy changed its name to American Carbon Corp. On December 27, 2024, American Carbon changed its name to American Infrastructure Corporation (American Infrastructure Corporation). American Infrastructure Corporation currently has six coal mining and processing operating subsidiaries: McCoy Elkhorn Coal LLC (doing business as McCoy Elkhorn Coal Company) (McCoy Elkhorn), Knott County Coal LLC (Knott County Coal), Deane Mining, LLC (Deane Mining), Wyoming County Coal LLC (Wyoming County), Perry County Resources (Perry County) located in eastern Kentucky and western West Virginia within the Central Appalachian coal basin, and ERC Mining Indiana Corporation (ERC) locate

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