American Resources Corporation

The management’s discussion, analysis of financial condition, and results of operations should be read in conjunction with our financial statements and notes thereto contained elsewhere in this annual report. Prior period amounts have been revised to reflect the correction of errors described in Note 13.

Overview.

Our primary source of revenue through 2025 has been the sale of metallurgical coal and coal used in pulverized coal injection (PCI), critical mineral process technology, purified elements and recycled metals; all of which are essential building blocks in the steel manufacturing process.

The overall outlook of critical minerals, recycled metals, metallurgical coal and rare earths is dependent on a variety of factors such as pricing, regulatory uncertainties and global economic conditions. Coal consumption and production in the U.S. have been driven in recent periods by several market dynamics and trends, such as the global economy, a strong U.S. dollar and accelerating production cuts.

Results of Operations.

Year Ended December 31, 2025 compared to Year Ended December 31, 2024.

Revenues

The following table summarizes the changes in revenue generating operations:

Revenues for 2025 and 2024 were $0 and $34,070, respectively. The Company did not generate revenues during 2025 as it did not conduct metal recovery or sales activities during the period. The timing and extent of future revenues, if any, will depend on strategic, operational, and market factors, and there can be no assurance that revenue‑generating activities will resume in the near term.

Operating expenses

The following table summarizes the changes in operating expenses:

Total operating expenses decreased by $2.9 million to $11.3 million for the year ended December 31, 2025, compared to $14.3 million in 2024. The decrease was primarily driven by lower general and administrative expenses, professional fees, coal production and holdings costs, and development costs as the Company reduced legacy coal‑related activities and continued to rationalize its cost structure following the strategic shift in operations. The $1.8 million reduction in general and administrative expenses was principally attributable to lower stock‑based compensation and reduced related‑party expenses. Professional fees declined primarily due to decreased transaction‑related and advisory costs compared to the prior year. Development costs decreased as a result of lower contract labor and research and development activity. These decreases were partially offset by litigation expense incurred during 2025 and modest increases in production taxes and royalties.

Other income (expense)

The following table summarizes the changes in other income (expense):

Total other expense increased to $6.5 million for the year ended December 31, 2025, compared to $1.7 million in 2024. The increase was primarily driven by a $5.1 million loss recognized on the extinguishment of debt during 2025. In addition, net equity method losses declined year over year as losses from equity‑method investees decreased compared to the prior year. Interest income increased due to higher average cash balances and investment yields during 2025, while interest expense increased primarily as a result of additional financing obligations entered into during the year. Other income and expense fluctuated modestly and was not a significant contributor to the overall change year over year.

The loss on debt extinguishment and litigation expense recorded during 2025 were non‑recurring in nature and are not expected to be indicative of future results.

Liquidity and Capital Resources.

Our primary sources of liquidity are derived from existing unrestricted cash, reimbursements from short-term investments and capital proceeds. We anticipate our Electrified Materials new business to achieve increasing revenues in 2026; however, we will continue to require cash flow from financing activities to support operations and the continued development of our new business models.

As of December 31, 2025, the Company had a cash balance of $31,701,916 unrestricted investments totaling $40,470,151 and a positive working capital balance of $73,054,345. The Company expects to fund its liquidity requirements over the next 12 months primarily through cash on hand and additional debt and equity financing transactions. Additionally, through short-term investments such as the fixed income fund. See further discussion around investments in Note 4. If future cash flows are insufficient to meet our liquidity needs or capital requirements, we may be required to rationalize our expenditures or slow down efforts to further develop our new business models.

Cash Flows

Year Ended December 31, 2025 compared to Year Ended December 31, 2024

Net cash used in operating activities was $10.4 million for the year ended December 31, 2025, compared to net cash provided of $2.0 million for the year ended December 31, 2024. The increase in cash used during 2025 was primarily attributable to the Company’s net loss, increased operating expenses associated with development and corporate activities following the spin‑off, and changes in working capital, including increased prepaid expenses and inventories, partially offset by non‑cash charges such as stock‑based compensation, depreciation, and amortization. Operating cash flows in 2024 benefited from favorable working capital movements and lower overall operating costs during the period.

Net cash used in investing activities was $39.4 million for the year ended December 31, 2025, compared to net cash provided of $0.9 million for the year ended December 31, 2024. Cash used in investing activities during 2025 was primarily related to capital expenditures for property and equipment and changes in restricted investments associated with the Company’s project development activities. In contrast, investing activities in 2024 primarily reflected net proceeds from investments and lower levels of capital expenditures.

Net cash provided by financing activities was $81.3 million for the year ended December 31, 2025, compared to net cash used of $4.4 million for the year ended December 31, 2024. Financing activities during 2025 were primarily driven by proceeds from equity issuances, warrant exercises, and other financing arrangements, partially offset by repayments of financing obligations. Financing activities in 2024 primarily reflected repayments of debt and other financing obligations, with no comparable equity financings during the period.

Capital Resources

We had no material commitments for capital expenditures as of December 31, 2025.

Off-Balance Sheet Arrangements

As of December 31, 2025, we had no off-balance sheet arrangements.

Critical Accounting Policies and Estimates

The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the amounts of revenues and expenses reported for the period then ended.

Impairment of Long-lived Assets. We review our long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. These events and circumstances include, but are not limited to, a current expectation that a long-lived asset will be disposed of significantly before the end of its previously estimated useful life, a significant adverse change in the extent or manner in which we use a long-lived asset or a change in its physical condition.

Consolidation/Deconsolidation of Variable Interest Entities and Controlled Companies. We review potential consolidation and deconsolidation of variable interest entities and controlled companies both on a qualitative and quantitative basis at the end of the reporting period.  If it is deemed that there are triggering events for a change in treatment the effects, including discontinued operations treatment, is assessed and recorded when the triggering event is deemed to have existed. 

Fair Value of Investments.  The Company reviews the stated value of its retained investments using the accepted applicable fair value framework.  If there are changes in inputs the adjustments are run through the period in which the change occurred. 

Stock Based Compensation. The Company records stock based compensation in accordance to the underlying documents to match the recognition of expense to the receipt of benefit. This includes an initial fair value assessment utilizing the Black Scholes Option Pricing Model and taking into account vesting schedules and any exercise or termination notices. 

Income Tax Loss Carryforward and Allowance. The Company assesses its income tax loss carryforward and the level of appropriate loss allowance every quarter or when events warrant a revision. 

Legal Contingencies and Accruals. The Company reviews its liabilities for potential losses associated with asserted or unasserted claims against the company. 

When such events or changes in circumstances occur, a recoverability test is performed comparing projected undiscounted cash flows from the use and eventual disposition of an asset or asset group to its carrying amount. If the projected undiscounted cash flows are less than the carrying amount, an impairment is recorded for the excess of the carrying amount over the estimated fair value.

We make various assumptions, including assumptions regarding future cash flows in our assessments of long-lived assets for impairment. The assumptions about future cash flows and growth rates are based on the current and long-term business plans related to the long-lived assets.