|
|
|
|
|
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the Year Ended
Commission File Number:
(Exact Name of Small Business Issuer as Specified in its Charter)
|
|
|
|
|
(State or Other Jurisdiction of
Incorporation or Organization) |
(I.R.S. Employer
Identification Number) |
(Address of Principal Executive Offices)
Issuer’s telephone number including area
code:
Securities registered under Section 12(b) of the Exchange Act: None
Securities registered under Section 12(g) of the Exchange Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
|
|
|
N/A
(Former Name, Former Address and Former Fiscal Year,
if Changed Since Last Report)
Indicate by check mark if the Registrant is a
well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐
Indicate by check mark if the Registrant is not
required to file reports pursuant to Section 13 or 15(d) of the Exchange Act.
Indicate by check mark whether the issuer (1)
has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period
that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☐
Indicate by check mark whether the registrant
has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405
of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large, accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| Large accelerated filer | ☐ | Accelerated filer | ☐ |
|
|
☒ | Smaller reporting company |
|
| Emerging growth company |
|
||
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant
has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial
reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or
issued its audit report.
If securities are registered pursuant to Section
12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction
of an error to previously issued financial statements.
Indicate by check mark whether any of those error
corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant's executive
officers during the relevant recovery period pursuant to §240.10D-1(b).
Indicate by check mark whether the Registrant
is a shell company (as defined in Rule 12b-2 of the Exchange Act.) Yes ☐ No
On August 25, 2025, there were
Documents Incorporated by Reference:
AMERICAN CLEAN RESOURCES GROUP, INC.
Annual Report on Form 10-K
For the Year Ended December 31, 2024
Table of Contents
i
PART I
EXPLANATORY NOTE
This comprehensive annual report on Form 10-K (the “Super 10-K”) includes the Company’s financial statements for the fiscal year ending December 31, 2024 and 2023. The Company became delinquent in its filings primarily due to the unexpected retirement and subsequent medical disability of key personnel at its financial advisory firm. This significantly impacted the continuity and capacity of our financial oversight and reporting functions, resulting in delays in the preparation and filing of our financial reports for the fiscal year ended 2023. During the course of preparing our financial statements, we identified material weaknesses in our internal control over financial reporting. These deficiencies required us to undertake a comprehensive review and remediation process, which delayed the completion of our financial statements and related disclosures. Since the fiscal year ending December 31, 2023 until the date of this filing, the Company has not maintained financial reporting compliance. This Super 10-K contains all required information and disclosures to shareholders that each quarterly and annual report would normally have been provided had such quarterly and annual report had been filed timely. In the interest of complete disclosure, the Company has included current information in this annual report for all material events and developments that have taken place since December 31, 2023 through the filing date of this annual report.
We do not intend to file a separate amended Annual Report on Form 10-K/A for the fiscal year ended December 31, 2023, or Quarterly Reports on Form 10-Q for the quarterly periods ended March 31, 2024, June 30, 2024 and September 30, 2024 or Quarterly Reports on Form 10-Q/A for the quarterly periods ended March 31, 2023, June 30, 2023, or September 30, 2023. The financial statements presented for each quarter as included in Item 8. Financial Statements.
Investors should rely only on the financial information and other disclosures, including the adjusted or restated financial information, included in this Form 10-K, as applicable, and should not rely on any previously furnished or filed reports, earnings releases, investor presentations, or similar communications, regarding these periods.
FORWARD-LOOKING STATEMENTS
This Annual Report on Form 10-K contains both historical statements and statements that are forward-looking in nature. Historical statements are based on events that have already happened. Certain of these historical events provide some basis to our management, with which assumptions are made relating to events that are reasonably expected to happen in the future. Management also relies on information and assumptions provided by certain third- party operators of our projects as well as assumptions made with the information currently available to predict future events. These future event predictions, or forward-looking statements, include (but are not limited to) statements related to the uncertainty of the quantity or quality of ore or tailings grades, the fluctuations in the market price of such reserves, as well as gold, silver and other precious minerals, general trends in our operations or financial results, plans, expectations, estimates and beliefs. You can identify forward-looking statements by terminology such as “may,” “could,” “should,” “anticipate,” “believe,” “estimate,” “continue,” “expect,” “intend,” “plan,” “predict,” “potential” and similar expressions and their variants. These forward-looking statements reflect our judgment as of the date of this Annual Report with respect to future events, the outcome of which is subject to risks, which may have a significant impact on our business, operating results and/or financial condition. Readers are cautioned that these forward-looking statements are inherently uncertain. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results or outcomes may vary materially from those described herein. We undertake no obligation to update forward-looking statements. The risks identified in Item 1A, among others, may impact forward-looking statements contained in this Annual Report.
1
ITEM 1. BUSINESS
Business Overview
General
American Clean Resources Group, Inc. (“we,” “us,” “our,” “ACRG” or the “Company”) is an exploration stage company having offices in Lakewood, Colorado and, through its subsidiaries, a property in Tonopah, Nevada. Our business plan is to purchase equipment and build a facility on our Tonopah property to serve as a permitted custom processing toll milling facility (which includes an analytical lab, pyrometallurgical plant, and hydrometallurgical recovery plant).
The Company plans to perform permitted custom processing toll milling, which is a process whereby mined material is crushed and ground into fine particles to ease the extraction of any precious minerals contained therein, such as minerals in the gold, silver, and platinum metal groups. Custom milling and refining can include many different processes that are designed specifically for each ore load and to maximize the extraction of precious metals from carbon or concentrates. These toll-processing services also distill, dry, mix, or mill chemicals and bulk materials on a contractual basis and provide a chemical production outsourcing option for industrial companies, which lack the expertise, capacity, or regulatory permits for in-house production.
We are required to obtain several permits before we can begin construction of a small-scale mineral processing facility to conduct permitted processing toll milling activities and construction of the required additional buildings for us to commence operations.
Any reference herein to “ACRG” “the Company,” “we,” “our,” or “us” is intended to mean American Clean Resources Group, Inc., a Nevada corporation, and all of our subsidiaries unless otherwise indicated.
Corporate History
The Company was incorporated in the State of Colorado on July 10, 1985, as Princeton Acquisitions, Inc. On December 7, 2009, the Company changed its name to Standard Gold, Inc. Effective March 5, 2013, the Company moved its domicile from Colorado to Nevada and changed its name from Standard Gold, Inc. to Standard Gold Holdings, Inc. In 2013, the Company changed its name to Standard Metals Processing, Inc., and coincident with announcing its plans to acquire 80.1% of Sustainable Metals Solutions, LLC and its subsidiaries (the “SMS Group” or “SMS”) during 2022, changed its name to American Clean Resources Group, Inc. to more accurately reflect the business plans contemplated by the Company, and relocated its administrative offices into those adjacent to Granite Peak Resources, LLC (“GPR”), an ACRG affiliate. (see “ Recent Actions ” below for further information regarding the SMS Group).
On March 15, 2011, we closed a series of transactions, whereby we acquired certain assets of Shea Mining & Milling, LLC (“Shea Mining”), which assets include land, buildings, a dormant milling facility, abandoned milling equipment, water permits, mine tailings, mine dumps and the assignment of a note payable, a lease and a contract agreement with permits. We completed the Shea Exchange Agreement to acquire the Shea assets to develop a permitted custom processing toll milling of precious minerals business in Tonopah, Nevada. Toll milling is a process whereby mined material is crushed and ground into fine particles to ease the extraction of any precious minerals contained therein, such as gold, silver, and platinum group metals. Custom milling and refining can include many different processes to extract precious metals from carbon or concentrates. These toll-processing services also distil, dry, mix, or mill chemicals and bulk materials on a contractual basis and provide a chemical production outsourcing option for industrial companies which lack the expertise, capacity, or regulatory permits for in-house production. The land encompasses 1,186 deeded acres, one of the largest private land holdings in Esmeralda County, Nevada. Approximately 334 acres of this land has an estimated 2.2 million tons of tailings known as the Millers Tailings from the historic gold rush of Goldfield and Tonopah, Nevada sitting on it.
Subsidiaries
The Company has two wholly owned subsidiary, Aurielle Enterprises, Inc. (“AE”), a Nevada corporation and SWIS, LLC (“SWIS”), a Kentucky limited liability corporation.. AE has two wholly owned subsidiaries, Tonopah Resources, Inc., (“TR”) a Nevada corporation and Tonopah Custom Processing, Inc., (“TCP”) a Nevada corporation.
2
Products and Services
We seek to establish ourselves as a custom processing and permitted toll milling service provider. Our business plan is to build a facility on our Tonopah property, which includes an analytical lab, pyrometallurgical, and hydrometallurgical recovery plant.
We seek to establish ourselves as a custom processing and permitted toll milling service provider. Our business plan is to build a facility on our Tonopah property, which includes an analytical lab, pyrometallurgical, and hydrometallurgical recovery plant.
The Company’s intention is to become a full service permitted custom toll milling and processing company that facilitates the extraction of precious and strategic minerals from mined material. The Company will need to obtain permits for the planned construction and operation of our permitted custom processing toll milling facility with state-of-the-art equipment capable of processing gold, silver and platinum metal groups. Many junior miners do not have the capital or the ability to permit a processing facility, yet they have a large supply of mined material that requires milling to be performed. It is often cost prohibitive or impractical for these mine operators to send their materials to processing mills owned by the large mining companies, or to other customers badly needing milling and processing services.
While Nevada has a historic role as a mining center with good proximate geology and ample mined product, very little custom processing toll milling capacity remains in the state. During the last several decades, other processing facilities have been shuttered due to high costs of regulations and the vertical integration of milling within large mining companies leaving junior miners with few options for local milling services. As a result, we are in a unique position among processing facilities because we are capable of truly permitted custom processing. We have the only ball mill located within a custom toll milling facility within 300 miles allowing us to serve miners in the western United States, Canada, Mexico, and Central America.
Many junior miners are undercapitalized, have limited access to capital markets and have a large supply of mined material that requires milling to be performed. Many large mining companies reserve their milling capacity for their inventory, which does not make providing third party services worthwhile. This provides the Company with an opportunity to provide these potential customers with badly needed milling and processing services. Some of our mining customers will be able to take their tailings (the material left over after the desired minerals have been extracted) from the material they deposited with the Company and put it back in the exact same mines those particular tailings came from. This eliminates the need for the Company to dispose of those tailings.
In addition to the custom processing and permitted toll milling business, the Company is exploring the establishment of an industrial park on the Millers property in Esmeralda County, Nevada. The industrial park would serve as a central hub for renewable energy generation and storage, operating around the clock to attract and support tenants committed to producing NetZero goods and services, with a focus on data centers and AI farms. The industrial park will include a commercial solar farm, battery storage plus land dedicated to industrial storage, waste-to-energy generation and industrial manufacturing. The Company is actively exploring various funding sources to advance the establishment of the industrial park. Once operational the industrial park is envisioned to include a 2 GW solar farm, large battery storage centers, four 100,000 square foot data centers plus several industrial partners engaged in recycling industrial waste materials that include discarded windmill blades, corporate carpets, and other industrial manufacturing operations that rely on are large consumers of renewable energy.
ACRG is also exploring opportunities to advance the commercialization of the SWIS technology centered around the application of a warning and monitoring system related to Combined Sewer Overflow (“CSO”). This would include establishing and conducting small scale test runs with local municipalities to confirm the concept and performance of the technology before conducting a large scale rollout across the US to large utility companies and Municipal Sewer Districts.
3
Toll Milling Business
Given the probable significant gold and silver tailing resources located on the Millers property, the re-establishment of the currently dormant milling operation presents a unique for ACRG to establish a large US based milling operation. Once operational the milling operation will produce low carbon emission gold and silver that will be made available to US companies who rely on these metals in their manufacturing processes and who seek a NetZero production footprint, given that the tailings have already been mined and transported to the Millers location.
Process
Toll milling is a process whereby mined material is crushed and ground into fine particles to ease the extraction of any precious minerals contained therein, such as minerals in the gold, silver and platinum metal groups. Custom milling and refining that are designed specifically for each ore load can include many different processes to maximize the extraction of precious metals from ore, carbon, or concentrates.
Toll Milling – Procedure
Ore is sent to our facility at the responsibility and cost of the customer. The Company will take a sample of the ore through a specific ore sampling procedure. The Company’s metallurgist will test the sample on site. To obtain a quantitative determination of the amount of a given substance in a particular sample, the Company can perform wet methods and dry methods. In the wet method, the sample is dissolved in a reagent, like acid, until the purified metal is separated out. In the dry method, the sample is mixed with a flux (a substance such as borax or silica that helps lower the melting temperature) and then heated so that the impurities in the metal fuse with the flux, leaving the purified metal as residue.
If it is determined that the sample is approved for processing, the customer and the Company will then agree upon a value of the metal grade per ton. If there is any disagreement on the value, a third-party referee determines the value by testing the sample. The Company charges either a flat fee per ton of the ore processed or a percentage of the precious metals extracted during processing, or a combination of both based on the amount of work that is performed.
There are various methods of extraction. The Company determines which method to use based upon the sample sent to the Company. In most situations, a series of tests will be performed on a bulk sample ranging in size from 250 to 1,000 pounds. A metallurgist will determine the best process or processes to use for the extraction based on several factors. These include the composition of the host rock, mineralization of the host rock, whether or not it is an oxide or sulfide ore body, and the particle size of the precious metal. After the metallurgist reviews these characteristics, the Company will run ore on a gold table and assays the concentrates, middlings, and tails. An assay is an investigative procedure for qualitatively assessing or quantitatively measuring the presence, or amount of, precious metals in ore. If there is too much gold in the middling or tails, the size of the grind is adjusted to increase yield or if there is not enough gold in the middlings or tails the Company grinds the material to a finer mesh.
Some of our miner customers will be able to take their tailings (the material left over after the desired minerals have been extracted) from the material they deposited with the Company and put it back in the exact same mines those particular tailings came from. This eliminates the need for the Company to dispose of those tailings.
Toll Milling – Concentrate/Leach Circuit
Concentration is the separation of precious minerals from other materials by utilizing different properties of the minerals to be separated including density, magnetic or electric and physiochemical. The Company will attempt to create a “concentrate” of minerals to reduce the size of each ton processed. The Company may also receive concentrates from customers, especially those where transport of tons of raw ore is not feasible.
The leaching process uses chemicals to extract the metals from the solid materials (concentrates) and bring them into a solution. Once the metals are in the solution, it is passed through carbon or resin columns where the precious metals are deposited onto the carbon/resin.
4
The metals will then be stripped from the carbon back into a different solution where they are pumped through an electrowinning circuit in a process called carbon stripping. The metals are then deposited onto stainless steel in the electrowinning circuit. After this stage, the metals are either sold or further refined off-site. The solution is recycled and used again to process additional material.
Industrial Park Business
The planned industrial park will be called the ACRG Greenway to Power TM Renewable Energy Industry Park. It will be a transformative industrial project planned on the 1,183 acre Millers property. The state-of-the-art facility will serve as a central hub for renewable energy generation and storage, operating 24/7/365 to attract and support tenants committed to producing NetZero goods and services. The industrial park will be designed to attract high-tech data centers and other energy-intensive industries by leveraging its unique advantages. These unique advantages include:
| 1) | Direct proximity to the 16,787 acre Millers Solar Energy Zone (SEZ). |
| 2) | Planned Greenlink West grid access through NV Energy Esmeralda substation. |
| 3) | Located next to Highway 95 with access to the Hawthorne Railway. |
| 4) | 388 acre-feet of water rights (126 million gallons annually). |
| 5) | Strategic access to a major fiber optic junction. |
| 6) | 120-kV electrical power substation located on the Miller property. |
| 7) | Existing cell phone tower located on the Millers property. |
The above advantages are leveraged to establish a state-of-the-art industrial park centered around the ability to provide reliable power from an industrial scale solar farm supported by battery storage, the construction of four 100,000 square foot data centers, ownership of exclusive water rights, and a commitment to sustainability. ACRG is exploring opportunities in industrial storage whereby part of the 1,183 acre property will be allocated to be used for industrial storage by third-party companies. The industrial storage operations will transition over time into waste-to-energy and industrial manufacturing operations as the solar farm becomes operational, providing access to green electricity for NetZero manufacturing. We have identified the industrial storage of discarded commercial windmill blades as a potential business, where the windmill blades are initially stored and later recycled on site. The fiberglass and plastic are repurposed while the remaining residue is used for cement production and waste-to-energy processes, converting the remaining material into usable energy forms such as steam. Other waste-to-energy materials include industrial carpets and composite materials.
ACRG will seek to raise equity capital to fund the initial industrial park project development stages which include the creation of overall project plans, enhanced operational and financial analysis, screening and selection of potential partners and vendors, and securing city, state and federal support for the project. This includes, but is not limited to, laying the groundwork through infrastructure, regulatory, and labor partnerships. Parallel to the above activities ACRG will explore various grants (direct grants and matching grants) and low-cost debt funding sources to support the initial project development stages.
As the project becomes more defined, additional equity and debt will be secured to fund further project development, including the build-out of infrastructure, construction of four 100,000 square foot data farm structures, completion of the milling facility and four separate 0.5 GW solar farms in addition to attracting waste-to-energy and industrial storage operations to the location. The total scope of the ACRG Greenway to Power™ Renewable Energy Industrial Park is $3.0 billion not including investments from business partners located on the industrial park to establish their own waste-to-energy and manufacturing operations.
SWIS Smart Device Business
On September 13, 2023, the Company executed an agreement to acquire a 100% interest in SWIS, L.L.C. (“SWIS”). The Company issued 1,500,000 shares of restricted common stock to SWIS's former owner, Launch IT, LLC, and assumed certain liabilities in exchange for 100% interest in SWIS. Upon the executed agreement, Launch IT, LLC became a significant owner of the Company’s common stock and, as of December 31, 2024, owns 10% of the Company’s restricted common stock.
5
The Company determined the acquisition to be an asset acquisition under ASC 805, Business Combinations, as all of the fair value of the gross assets acquired was concentrated in a single identifiable asset, the developed technology and exclusive license. The developed technology and exclusive license is a definite-lived intangible asset and is being amortized over the life of the patent life.
The total purchase consideration for the acquisition of SWIS was $5,007,730, which includes the issuance of restricted common stock valued at $4,875,000 and assumed accounts payable balance of $132,730. The restricted common stock issued was fair valued reflecting a 35% liquidity discount from the $5.00 share price of the Company common stock on the date of the acquisition. The consideration paid is recorded on the Company’s books as Developed Technology and Patent Rights, with a useful life of 14 years (150 months from the acquisition date of September 13, 2023). The monthly amortization of the Developed Technology and Patent Rights is approximately $27,821.
The Company plans to develop a separate business around the exclusive patent and technology rights acquired by ACRG as part of the SWIS acquisition. SWIS has developed an algorithm and a “smart” device that provides essential information to improve water quality from Combined Sewer Overflow (“CSO”). SWIS, LLC assigned the patent to the University of Louisville (“U of L”) with the intent to commercialize the solution on behalf of the university, community, state and country. ACRG will, once adequate funding has been secured, roll out a pilot program to test its modernized approach to CSO Public Notification Programs with select utilities and Municipal Sewer Districts. Currently, the patented algorithm is on standby for integration into “smart” plugs that will be used for non-invasive in-home notification. An implementation playbook has been designed for municipal use. The pilot program will be followed by additional analysis and improvements to the overall SWIS technology that is centered around the application of a warning and monitoring system related to Combined Sewer Overflow (“CSO”). Once the SWIS concept has been fined tuned, ACRG envisions a large scale rollout across the US to large utility companies and Municipal Sewer Districts.
Combined Sewer Systems (“CSS”) were built over a century ago with the intention to divert wastewater away from households. CSS collects rainwater runoff, domestic sewage, and industrial wastewater into a single pipe system, which then transports the combined wastewater to a treatment plant. When the aged CSS is overwhelmed, the result is untreated wastewater being discharged directly into public waterways, such as creeks, streams, rivers, and other local bodies of water referred to as CSO. The resulting discharges of pollutants into public waterways increases the amount of suspended solids from point-source origins introduced to the ecosystem, creating a significant health hazard for wildlife and humans exposed to these waterways, historically tied to disease transmission. These violate the Clean Water Act and result in significant repercussions from the EPA. Currently, over forty million people in 700+ municipalities nationwide live in a municipality with a Combined Sewer System.
Current solutions rely predominantly on inadequate Public Notification Programs to prevent water use at the source, the household, during high-risk CSO times. The current Public Notification Programs utilized by all municipalities in a CSS entails email signups, website banners, pamphlets, signs, etc., which remain arduous and ineffective. This antiquated, ineffective approach creates the immediate need to develop a modern, real-time notification system that gives individual households and facilities the immediately ability to positively modify their water use behavior resulting in a decrease in harmful point source pollutants unknowingly and unnecessarily being introduced to public waterways.
The planned pilot program will be an opportunity for us to prove the SWIS solution and to expand the SWIS business going forward. As of the date of this filing the Company has not started the pilot program due to liquidity issues since acquiring SWIS. In December 2024, management determined that the asset’s book value of $4,574,871 was not recoverable and was subject to impairment. In accordance with the applicable guidance under ASC 360, “Impairment or Disposal of Long-Lived Assets,” the Company evaluated the recoverability of the developed technology based on estimated future undiscounted cash flows expected to result from the use and eventual disposition of the asset. As these cash flows were insufficient to recover the carrying amount, the Company measured and recognized an impairment loss equal to the difference between the asset’s carrying amount and its estimated fair value. As a result, the Company recorded a full impairment charge of $4,574,871 as of December 31, 2024.
Human Capital
As of December 31, 2024, we had 0 full-time employees and 0 consultants who devote substantial time to us.
Our Corporate Information
Our corporate headquarters are located at 12567 West Cedar Drive, Suite 203, Lakewood, Colorado 80228-2039. Our telephone number is (888) 960-7347. We maintain a website at https://acrgincorp.com to which we post copies of our press releases as well as additional information about us. Our filings with the Commission are available free of charge through our website as soon as reasonably practicable after being electronically filed with or furnished to the Commission. Information contained in our website is not a part of, nor incorporated by reference into, this Report or our other filings with the Commission, and should not be relied upon.
6
ITEM 1A. RISK FACTORS
An investment in our common stock is highly speculative and involves a high degree of risk. Before making an investment decision, you should carefully consider the risks described below together with all of the other information included in this prospectus. The statements contained in or incorporated into this prospectus that are not historic facts are forward-looking statements that are subject to risks and uncertainties that could cause actual results to differ materially from those set forth in or implied by forward-looking statements. If any of the following risks actually occur, our business, financial condition or results of operations could be harmed. In that case, the value of our common stock could decline, and an investor in our securities may lose all or part of their investment.
Risks Related to Our Capital Stock
INVESTORS MAY BE UNABLE TO ACCURATELY VALUE OUR COMMON STOCK.
Investors often value companies based on the stock prices and results of operations of other comparable companies. Currently, we do not believe another publicly traded permitted custom processing toll milling company exists that is directly comparable to our size and scale. Prospective investors, therefore, have limited historical information about our permitted custom processing toll milling capabilities on which to base an evaluation of our performance and prospects and an investment in our common stock. As such, investors may find it difficult to accurately value our common stock.
INVESTORS MAY FACE SIGNIFICANT RESTRICTIONS ON THE RESALE OF OUR COMMON STOCK DUE TO FEDERAL REGULATION OF PENNY STOCKS.
The SEC has defined any equity security with a market price of less than $5.00 per share as a “penny stock.” Penny stocks are subject to the requirements or Rule 15(g)-9 of the Securities Exchange Act of 1934. Our common stock is quoted on the Over the Counter (“OTC”) Markets under the symbol ACRG and despite recent trading prices above $5.00 per share, has historically been below $5.00 per share. Therefore, our common stock is deemed a “penny stock” and is subject to the requirements of Rule 15(g)-9. Under such rule, broker-dealers who recommend low-priced securities to persons other than established customers and accredited investors must satisfy special sales practice requirements, including a requirement that they make an individualized written suitability determination for the purchaser and receive the purchaser’s consent prior to the transaction. The required penny stock disclosures include the delivery, prior to any transaction, of a disclosure schedule explaining the penny stock market and the risks associated with it. Such requirements could severely limit the market liquidity of the securities and the ability of purchasers to sell their securities in the secondary market.
WE DO NOT INTEND TO PAY DIVIDENDS FOR THE FORESEEABLE FUTURE.
We have never declared or paid any dividends on our common stock. We intend to retain all of our earnings, if any, for the foreseeable future to finance the operation and expansion of our business, and we do not anticipate paying any cash dividends in the future. Our Board of Directors retains the discretion to change this policy.
THE MARKET FOR OUR COMMON STOCK IS LIMITED AND MAY BE VOLATILE.
Currently, our common stock is traded on the OTC Expert Market, and is not eligible for proprietary broker-dealer quotations. OTC Markets may designate securities for quoting on the Expert Market when it is not able to confirm that the company is making current information publicly available under SEC Rule 15c2-11, or when the security is otherwise restricted from public quoting. “Unsolicited-Only” stocks, such as ours, have a higher risk of wider spread, increased volatility, and price dislocations. Stock prices on the OTC Markets, especially “Unsolicited-Only” stocks listed on the Expert Market, can be more volatile than stocks trading on national market systems such as NSADAQ, NYSE or AMEX. Quotations in Expert Market securities are restricted from public viewing, and pricing is only available to broker-dealers and with investor best execution needs. Investors may have difficulty selling out stock. Additionally, our stock price may be affected by factors outside of our control and unrelated to our business operations.
7
OUR PRIOR FAILURE TO TIMELY FILE REPORTS REQUIRED BY THE SEC COULD AVERSELY AFFECT OUR BUSINESS, OUR REPUTATION, AND THE VALUE OF OUR STOCK.
We did not timely file our Annual Reports on Form 10-K for the years ended December 31, 2024 and December 31, 2023, its Quarterly Reports on Form 10-Q for the quarterly periods ended March 31, 2024, June 30, 2024 and September 30, 2024 or Quarterly Reports on Form 10-Q/A for the quarterly periods ended March 31, 2023, June 30, 2023, or September 30, 2023. As a result, we have been or could be subject to risks including potential notice of non-compliance from OTC Markets, limitations on our ability to use short-form registration statements, potential events of default under financing arrangements, increased audit and compliance costs, and reputational harm with investors, customers, and employees. Although this Super 10-K is intended to bring us current in our Exchange Act reporting, we could in the future experience delays in filings, and any such delays could have the effects described above and could negatively impact the market price of our securities.
Risks Related to Our Financial Condition
WE CURRENTLY DO NOT HAVE ENOUGH CASH TO FUND OPERATIONS AND/OR REDUCE OUR DEBT DURING 2025.
We have very limited funds, and such funds are not adequate to develop our current business plan, or even to satisfy our existing working capital requirements. We will be required to raise additional funds to effectuate our current business plan for permitted custom processing toll milling and to satisfy our working capital requirements. Without significant additional capital, we will be unable to start operations. With respect to our proposed permitted custom processing toll milling operations, the costs and ability to successfully operate have not been fully verified because none of our proposed tolling operations have begun and we may incur unexpected costs or delays in connection with starting operations. The cost of designing and building our operations and of finding customers and sources of ore for our toll milling sources can be extensive and will require us to obtain additional financing, and there is no assurance that we will have the resources necessary or the financing available to attain operations or to acquire customers and ore sources necessary for our long-term business. Our ultimate success will depend on our ability to raise additional capital. Additionally, such additional capital may not be available to us at acceptable terms or at all. Further, if we increase our capitalization and sell additional shares of our capital stock, a shareholder’s position in our Company will be subject to dilution. In the event we are unable to obtain additional capital, we may be forced to cease our search for additional business opportunities, reduce our operating expenditures or to cease operations altogether.
WE HAVE NOT YET BEGUN OPERATIONS AND WE EXPECT TO INCUR LOSSES FOR THE FORESEEABLE FUTURE.
We have yet to commence active operations. We have no prior operating history from which to evaluate our success, or our likelihood of success in operating our business, generating any revenues, or achieving profitability. This provides a limited basis for you to assess our ability to commercialize our services and the advisability of investing in our securities. We have not generated revenue from our toll milling services to date and there can be no assurance that our plans for permitted custom processing toll milling will be successful, or that we will ever attain significant revenue or profitability. Also, toll milling is a new area of business for us, and our management team has little experience in permitted custom processing toll milling operations. Although we intend to hire knowledgeable and experienced employees and/or consultants with significant experience in toll milling operations, there is no guarantee that we will reach profitability in the near future, if at all. As we develop our Tonopah property to prepare for operations, we are subject to unforeseen costs, expenses, problems and difficulties inherent in new business ventures.
OUR MANAGEMENT HAS SUBSTANTIAL DOUBT ABOUT OUR ABILITY TO CONTINUE AS A GOING CONCERN.
The consolidated financial statements for each of these periods were prepared assuming that we would continue as a going concern. We have had net losses for each of the years ended December 31, 2024 and 2023, and we have an accumulated a deficit as of December 31, 2024, of $113,553,937. Virtually all of the Company’s assets are encumbered or pledged under senior secured debt that is in default. These conditions raise substantial doubt about our ability to continue as a going concern. Furthermore, since we do not expect to generate any significant revenues from operations for the foreseeable future, our ability to continue as a going concern depends, in large part, on our ability to raise additional capital through equity or debt financing transactions. If we are unable to raise additional capital, we may be forced to discontinue our business.
8
Risks Related to the Company
WE HAVE LIMITED ASSETS.
Our assets to be used in the development of a toll milling service have not yet been utilized, we will need to acquire additional equipment and construct additional facilities and there can be no guarantee that we will be successful in utilizing our current assets or obtaining the additional equipment and facilities that we will need to operate going forward. We do not anticipate having any revenues from our permitted custom toll milling processing for the foreseeable future. Additionally, without adequate funding, we may never produce any significant revenues.
OUR MAJOR ASSETS ARE ENCUMBERED UNDER A DEED OF TRUST OR PLEDGED.
On March 16, 2020, the Company entered into a Line of Credit (“LOC”) agreement with Granite Peak Resources LLC (“GPR”), a related party and the majority shareholder of the Company. The initial LOC provided for borrowings up to $2.5 million, with a maturity date of March 16, 2023. At GPR’s sole discretion, the LOC could be increased by an additional $1.0 million and extended for two years. The LOC accrued interest at 10% per annum and was convertible into common stock at $2.00 per share, based on the closing price on the date of issuance. The LOC was secured by substantially all of the Company’s real and personal property.
On July 12, 2021, the LOC was amended (the “First Amendment”) to:
| ● | Increase the borrowing limit to $5.0 million, |
| ● | Extend the maturity date to March 16, 2025, and |
| ● | Reduce the conversion price to $1.65 per share. |
The First Amendment also granted GPR the option to further increase the LOC by $5.0 million and extend the maturity date by an additional five years.
On January 5, 2023, the Company entered into a Second Amendment to the LOC (the “Second Amendment”) with GPR. The amendment significantly restructured the existing LOC agreement. Key terms of the Second Amendment included:
| ● | Increase in Borrowing Capacity: From $5.0 million to $35.0 million. |
| ● | Extension of Maturity Date: To March 16, 2027. |
| ● | Reduction in Conversion Price: From $1.65 to $1.05 per share, based on the trailing three-day market price. |
| ● | Debt Consolidation: The following obligations, previously acquired by GPR, were formally consolidated into the LOC: |
| ● | Tina Gregerson Promissory Note: $477,500 principal and $293,963 accrued interest. |
| ● | Peter Krupp Promissory Note: $100,000 principal and $59,795 accrued interest. |
| ● | Forbearance: GPR agreed to forbear from exercising rights under the loan documents, including foreclosure rights related to the Stephen Flechner Judgment and the Pure Path Capital Senior Secured Convertible Promissory Note, both of which had been previously purchased by GPR. The forbearance period extends through January 12, 2024. |
The Company evaluated the amendment under ASC 470-50 and ASC 470-60 and concluded it constituted a debt extinguishment, as the present value of the revised cash flows exceeded the 10% threshold. No gain or loss was recognized, as the reacquisition price equaled the carrying amount of the extinguished debt.
9
On June 12, 2023, the Company entered into a Third Amendment to the LOC (the “Third Amendment”) with GPR. Key terms of the Third Amendment included:
| ● | Increase in Borrowing Capacity: From $35.0 million to $52.5 million. |
| ● | Expansion of Collateral: The Deed of Trust and Security Agreement was amended to increase the secured amount from $100 million to $250 million. |
| ● | Debt Consolidation: The following obligations, previously acquired by GPR, were formally consolidated into the LOC: |
| ● | The Pure Path Capital Senior Secured Convertible Promissory Note: $2,229,187 principal and $1,709,064 accrued interest. |
| ● | Stephen Flechner Judgment: $2,157,000 principal and $1,580,248 accrued interest. |
The Company determined the amendment met the criteria for a troubled debt restructuring (TDR) under ASC 470-60, as the Company was experiencing financial difficulty and GPR granted a concession. The amendment was accounted for as a debt extinguishment under ASC 470-50, with no gain or loss recognized.
On August 2, 2023, GPR converted $5,250,000 of LOC principal into 5,000,000 shares of restricted common stock. On August 15, 2023, GPR converted the remaining $4,969,551 (principal and accrued interest) into 4,732,906 shares of restricted common stock, at the conversion price of $1.05 per share, as provided in the Third Amendment.
As of December 31, 2024 the outstanding balance under the LOC consisted of $425,589 in principal and $28,857 in accrued interest. As of December 31, 2023, the outstanding balance was $156,303 in principal and $1,149 in accrued interest.
During the years ended December 31, 2024 and 2023, the Company recognized non-cash borrowings of $192,186 and $272,481, respectively, under the LOC. These amounts represent expenses paid directly by GPR on behalf of the Company and were recorded as increases to the LOC principal balance.
As of the date of this filing, GPR is the majority and controlling owner of the Company.
OUR MANAGEMENT TEAM MAY NOT BE ABLE TO SUCCESSFULLY IMPLEMENT OUR BUSINESS STRATEGIES.
If our management team is unable to execute our business strategies, then our development could be materially and adversely affected. In addition, we may encounter difficulties in effectively managing the budgeting, forecasting and other process control issues presented by any future growth. We may seek to augment or replace members of our management team or we may lose key members of our management team, and we may not be able to attract new management talent with sufficient skill and experience.
OUR SUCCESS IN THE FUTURE MAY DEPEND ON OUR ABILITY TO ESTABLISH AND MAINTAIN STRATEGIC ALLIANCES, AND ANY FAILURE ON OUR PART TO ESTABLISH AND MAINTAIN SUCH RELATIONSHIPS WOULD ADVERSELY AFFECT OUR MARKET PENETRATION AND REVENUE GROWTH.
We may be required to establish strategic relationships with third parties in the mining and toll milling industries. Our ability to establish strategic relationships will depend on a number of factors, many of which are outside our control, such as the suitability of our property, facilities and equipment relative to our competitors, or the quality grade of precious minerals we are able to extract from the ore we process. We can provide no assurance that we will be able to establish strategic relationships in the future.
10
In addition, any strategic alliances that we establish, will subject us to a number of risks, including risks associated with sharing proprietary information, loss of control of operations that are material to developed business and profit-sharing arrangements. Moreover, strategic alliances may be expensive to implement and subject us to the risk that the third party will not perform its obligations under the relationship, which may subject us to losses over which we have no control or expensive termination arrangements. As a result, even if our strategic alliances with third parties are successful, our business may be adversely affected by a number of factors that are outside of our control.
Risks Relating to Our Business
WE WILL REQUIRE ADDITIONAL FINANCING TO FUND OUR PERMITTED CUSTOM PROCESSING TOLL MILLING DEVELOPMENT AND OPERATIONS.
Substantial additional financing will be needed to fund the current plan to begin toll milling services and develop and maintain the Tonopah property. Our means of acquiring investment capital is limited to private equity and debt transactions. We have no significant sources of currently available funds to engage in additional development. Without significant additional capital, we will be unable to fund our current property interests or effectuate our current business plan for permitted custom processing toll milling and mining services. See “—Risks Relating to Our Financial Condition – We Currently Do Not Have Enough Cash to Fund Operations, and/or Reduce Debt During 2024”.
OUR PERFORMANCE MAY BE SUBJECT TO FLUCTUATIONS IN MINERAL PRICES.
The profitability of any permitted custom processing toll milling services could be significantly affected by changes in the market price of minerals. Demand for minerals can be influenced by economic conditions and attractiveness as an investment vehicle. Other factors include the level of interest rates, exchange rates and inflation. The aggregate effect of these factors is impossible to predict with accuracy.
In particular, mine production and the willingness of third parties such as central banks to sell or lease gold affects the supply of gold. Worldwide production levels also affect mineral prices. In addition, the price of gold, silver and other precious minerals have, on occasion, been subject to very rapid short-term changes due to speculative activities.
OUR PERMITTED CUSTOM PROCESSING TOLL MILLING OPERATIONS ARE SUBJECT TO ENVIRONMENTAL REGULATIONS AND PERMITTING, WHICH COULD RESULT IN THE INCURRENCE OF ADDITIONAL COSTS AND OPERATIONAL DELAYS.
All phases of our operations are subject to current environmental protection regulation. There is no assurance that future changes in environmental regulation, such as greenhouse gas emissions, carbon footprint and the like, will not adversely affect our operations. Some of our proposed operations will require additional permits, which could incur additional cost and may delay start up and cash flow. In addition, each toll milling mineral source must be fully permitted for its own operation, a process over which we have no control.
OUR PERMITTED CUSTOM PROCESSING TOLL MILLING OPERATIONS WILL REQUIRE US TO DEPEND ON THIRD PARTIES AND OTHER ELEMENTS BEYOND OUR CONTROL, WHICH COULD RESULT IN HARM TO OUR BUSINESS.
Our permitted custom processing toll milling operations will rely on mineral material produced by others, and we have no control over their operations. Delivery of ore to our processing facilities is also subject to the risks of transportation, including trucking and aviation operations run by others, regulations and permits, fuel cost, weather, and travel conditions. Toll milling requires that the mineral producer and the mineral processor agree on the grade of the incoming material, which can be a source of conflict between parties. Although a third party will be utilized for any such conflict, any disagreements with mineral producers, or problems with the delivery of ore, could result in additional costs, disruptions and other problems in the operation of our business.
11
U.S. FEDERAL LAWS
Under the U.S. Resource Conservation and Recovery Act, companies such as ours may incur costs for generating, transporting, treating, storing, or disposing of hazardous waste. Our permitted custom processing toll milling operations may produce air emissions, including fugitive dust and other air pollutants, from stationary equipment, storage facilities, and the use of mobile sources such as trucks and heavy construction equipment which are subject to review, monitoring and/or control requirements under the Federal Clean Air Act and state air quality laws. Permitting rules may impose limitations on our production levels or create additional capital expenditures in order to comply with the rules.
The U.S. Comprehensive Environmental Response Compensation and Liability Act of 1980, as amended (“CERCLA”) imposes strict joint and several liability on parties associated with releases or threats of releases of hazardous substances. The groups who could be found liable include, among others, the current owners and operators of facilities which release hazardous substances into the environment and past owners and operators of properties who owned such properties at the time the disposal of the hazardous substances occurred. This liability could include the cost of removal or remediation of the release and damages for injury to the surrounding property. We cannot predict the potential for future CERCLA liability with respect to our property.
THE GLOBAL FINANCIAL MARKET MAY HAVE IMPACTS ON OUR BUSINESS AND FINANCIAL CONDITION THAT WE CURRENTLY CANNOT PREDICT.
The global financial market, especially the precious metal market and its market price fluctuations have, and may continue to have, an impact on our business and our financial condition. We may face significant challenges if the price of the minerals we intend to process does not achieve or stay at adequate price levels. Our ability to access the capital markets may be severely restricted at a time when we would like, or need, to access such markets, which could have an impact on our flexibility to react to changing economic and business conditions. The market price of ores, metals and precious metals could have an impact on any potential lenders or investors or on our customers, causing them to fail to meet their obligations to us.
ITEM 1B. UNRESOLVED STAFF COMMENTS
None.
ITEM 1C. CYBERSECURITY
Our current cybersecurity risk assessment program
consists of an annual review of our risks and policies.
Our President, CFO and CEO are responsible for overseeing our business operations and are responsible for day-to-day assessment and management of risks from cybersecurity threats, including the prevention, mitigation, detection, and remediation of cybersecurity incidents.
12
We routinely undertake activities to prevent, detect, and minimize the effects of cybersecurity incidents, including an annual risk review, policy reviews and revisions. In addition, we maintain business continuity, contingency, and recovery plans for use in the event of a cybersecurity incident by the administering of local and cloud based back up of files and emails.
ITEM 2. PROPERTIES
On March 15, 2011, in an effort to enter the precious metal toll milling business, we completed the Shea Exchange Agreement, whereby we acquired the Tonopah property, consisting of land, buildings, mining tailings, a dormant milling facility, abandoned milling equipment and water permits.
Our Tonopah property consists of 1,186 acres of land, buildings, mining tailings, a dormant milling facility, abandoned milling equipment and water permits. The assets have been fully depreciated and have a $0 carry value as of December 31, 2024 and 2023. The Tonopah property was transferred to Aurielle Enterprises Inc (“AE”), the Company’s wholly owned subsidiary and then transferred to Tonopah Resources, Inc., (“TR”) a wholly owned subsidiary of AE.
During 2022, our corporate office was relocated to 10567 West Cedar Drive, Suite 203, Lakewood, Colorado 80228-2039, a commercial office building owned and operated by GPR’s affiliates. We believe that our facilities are adequate for our current needs and are in closer physical proximity to our property.
ITEM 3. LEGAL PROCEEDINGS
We are not aware of any pending legal proceedings to which we are a party, or to which any director, officer or affiliate of our Company, or any owner of record or beneficially of more than 5% of any class of our voting securities, is a party adverse to us or has a material interest adverse to us.
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.
13
PART II
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED SHAREHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
Market Information
Our common stock is quoted on the OTC Expert Market under the symbol “ACRG.” As of May 27, 2025, the last closing sale price of our common stock as reported by OTC was $2.00 per share. The following table sets forth for the periods indicating the range of high and low closing sale prices of our common stock:
| Period | High | Low | ||||||
| Quarter Ended March 31, 2023 | $ | 4.00 | $ | 1.00 | ||||
| Quarter Ended June 30, 2023 | $ | 3.10 | $ | 2.51 | ||||
| Quarter Ended September 30, 2023 | $ | 7.50 | $ | 2.51 | ||||
| Quarter Ended December 31, 2023 | $ | 12.03 | $ | 7.00 | ||||
| Quarter Ended March 31, 2024 | $ | 11.25 | $ | 7.00 | ||||
| Quarter Ended June 30, 2024 | $ | 11.00 | $ | 6.50 | ||||
| Quarter Ended September 30, 2024 | $ | 8.99 | $ | 6.41 | ||||
| Quarter Ended December 31, 2024 | $ | 5.05 | $ | 5.05 | ||||
The quotations from the OTC Market above reflect inter-dealer prices, without retail mark-up, mark-down or commission and may not reflect actual transactions.
Deficiency Notice Disclosure
The Company did not timely file its Annual Reports on Form 10-K for the years ended December 31, 2024 and December 31, 2023, or its Quarterly Reports on Form 10-Q for the quarterly periods ended March 31, 2024, June 30, 2024 and September 30, 2024 or Quarterly Reports on Form 10-Q/A for the quarterly periods ended March 31, 2023, June 30, 2023, or September 30, 2023. (collectively, the “Delayed Reports”), as required by Sections 13(a) and 15(d) of the Securities Exchange Act of 1934 and Rules 13a-1 and 13a-13 thereunder. This Super 10-K is intended to bring the Company current in its Exchange Act reporting obligations and includes updated disclosures for the periods covered, as required by Form 10-K.
Transfer Agent
Our transfer agent is Equiniti Trust Company, LLC (f/k/a American Stock Transfer & Trust Company, LLC), and is located at 48 Wall Street, 23rd Floor, New York, NY 10005. Their telephone number is (800) 401-1957 and website is www.equiniti.com.
Holders of Common Stock
As of July 10, 2025, there were approximately 156 shareholders of record of our common stock. As of such date, 13,912,236 shares were issued and outstanding.
Dividends
We have never paid cash dividends on our common stock and have no present intention of doing so in the foreseeable future. Rather, we intend to retain all future earnings to provide for the growth of our Company. Payment of cash dividends in the future, if any, will depend, among other things, upon our future earnings, requirements for capital improvements and financial condition.
Outstanding Equity Awards
No equity awards to our named executive officers were outstanding as of December 31, 2024 or as of the date of this Annual Report.
Recent Sales of Unregistered Securities
Except as set forth below, there were no sales of equity securities during the period covered by this Report that were not registered under the Securities Act and were not previously reported in a Quarterly Report on Form 10-Q or a Current Report on Form 8-K filed by the Company.
The issuances of the shares described above were exempt from registration under Section 4(a)(2) under the Securities Act, as transactions by an issuer not involving any public offering.
Issuer Purchases of Equity Securities
None.
ITEM 6. [RESERVED]
None.
14
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our financial statements and the related notes appearing elsewhere in this Annual Report. In addition to historical information, the following discussion contains forward-looking statements that involve risks, uncertainties and assumptions. See “Forward-looking Statements” for a discussion of the uncertainties and assumptions associated with these statements. Our actual results may differ materially from those discussed below.
Water Pollution Control Permit
Through the Company’s subsidiaries, a Water Pollution Control Permit (“WPCP”) Application will need to be filed with the Nevada Department of Environmental Protection (“NDEP”) Bureau of Mines and Mining Reclamation (“BMMR”) for the approval of the permits necessary for a small-scale mineral processing facility planned for the Tonopah Property. The plant will perform laboratory testing, pilot testing, and custom processing of precious metal ores and concentrates from mining industry clients. Processing of ore materials will employ standard mineral processing techniques including gravity concentration, froth flotation and chemical leaching and carbon stripping.
The WPCP must be approved prior to commencing the planned construction of our processing plant in Tonopah, Nevada.
In connection with the WPCP application, NDEP suggested that we take the following actions: (i) retain a Nevada Certified Environmental Manager (“CEM”), (ii) perform Meteoric Profile II water testing on ground water directly below the mill as well as surrounding wells located off site, and (iii) determine baseline values of water using the Meteoric Profile II results. NDEP regulations require that the Company delay any new construction planned for “metal extraction” until after the permits are in place.
Advanced Surveying & Professional Services, a Professional Land Surveyor (“PLS”), completed surveys and testing of the Tonopah property required for the application of our required permits. After completion of the survey, it was determined the property is 1,186 acres. The scope of work the PLS completed includes: (i) setting a total of 19 permanent monuments at angle points along lines, (ii) setting eight permanent monuments locating US Hwy 95, (iii) recording a professional map indicating longitude and latitude for all corners, and (iv) providing a digital map accessible in AutoCAD software.
Site Preparation
We have completed the initial grading of specific designated areas on the 40 undisturbed acres of land including clearing all vegetation, removing of all scrap metal, and the excavation of the building pad for the preparation of the new 21,875 square foot processing plant and have completed the removal of all the extra and unnecessary materials and old equipment that have accumulated on the land. We refurbished a trailer that will act as our construction office.
Business Plan
We seek to establish ourselves as a custom processing and permitted toll milling service provider. Our business plan is to build a facility on our Tonopah property, which includes an analytical lab, pyrometallurgical, and hydrometallurgical recovery plant.
The Company’s intention is to become a full service permitted custom toll milling and processing company that facilitates the extraction of precious and strategic minerals from mined material. The Company will need to obtain permits for the planned construction and operation of our permitted custom processing toll milling facility with state-of-the-art equipment capable of processing gold, silver and platinum metal groups. Many junior miners do not have the capital or the ability to permit a processing facility, yet they have a large supply of mined material that requires milling to be performed. It is often cost prohibitive or impractical for these mine operators to send their materials to processing mills owned by the large mining companies, or to other customers badly needing milling and processing services.
15
While Nevada has a historic role as a mining center with good proximate geology and ample mined product, very little custom processing toll milling capacity remains in the state. During the last several decades, other processing facilities have been shuttered due to high costs of regulations and the vertical integration of milling within large mining companies leaving junior miners with few options for local milling services. As a result, we are in a unique position among processing facilities because we are capable of truly permitted custom processing. We have the only ball mill located within a custom toll milling facility within 300 miles allowing us to serve miners in the western United States, Canada, Mexico, and Central America.
Many junior miners are undercapitalized, have limited access to capital markets and have a large supply of mined material that requires milling to be performed. Many large mining companies reserve their milling capacity for their inventory, which does not make providing third party services worthwhile. This provides the Company with an opportunity to provide these potential customers with badly needed milling and processing services. Some of our mining customers will be able to take their tailings (the material left over after the desired minerals have been extracted) from the material they deposited with the Company and put it back in the exact same mines those particular tailings came from. This eliminates the need for the Company to dispose of those tailings.
In addition to the custom processing and permitted toll milling business, the Company is exploring the establishment of an industrial park on the Millers property in Esmeralda County, Nevada. The industrial park would serve as a central hub for renewable energy generation and storage, operating around the clock to attract and support tenants committed to producing NetZero goods and services, with a focus on data centers and AI farms. The industrial park will include a commercial solar farm, battery storage plus land dedicated to industrial storage, waste-to-energy generation and industrial manufacturing. The Company is actively exploring various funding sources to advance the establishment of the industrial park. Once operational the industrial park is envisioned to include a 2 GW solar farm, large battery storage centers, four 100,000 square foot data centers plus several industrial partners engaged in recycling industrial waste materials that include discarded windmill blades, corporate carpets, and other industrial manufacturing operations that rely on are large consumers of renewable energy.
The Company is also exploring opportunities to advance the commercialization of the SWIS technology centered around the application of a warning and monitoring system related to Combined Sewer Overflow (“CSO”). This would include establishing and conducting small scale test runs with local municipalities to confirm the concept and performance of the technology before conducting a large scale rollout across the US to large utility companies and Municipal Sewer Districts.
The planned pilot program will be an opportunity for us to prove the SWIS solution and to expand the SWIS business going forward. As of the date of this filing the Company has not started the pilot program due to liquidity issues since acquiring SWIS. In December 2024, management determined that the asset’s book value of $4,574,871 was not recoverable and was subject to impairment. In accordance with the applicable guidance under ASC 360, “Impairment or Disposal of Long-Lived Assets,” the Company evaluated the recoverability of the developed technology based on estimated future undiscounted cash flows expected to result from the use and eventual disposition of the asset. As these cash flows were insufficient to recover the carrying amount, the Company measured and recognized an impairment loss equal to the difference between the asset’s carrying amount and its estimated fair value. As a result, the Company recorded a full impairment charge of $4,574,871 as of December 31, 2024.
In addition to the custom processing and permitted toll milling business, the Company is exploring the establishment of an industrial park on the Millers property in Esmeralda County, Nevada. The industrial park would serve as a central hub for renewable energy generation and storage, operating around the clock to attract and support tenants committed to producing NetZero goods and services, with a focus on data centers and AI farms. The industrial park will include a commercial solar farm, battery storage plus land dedicated to industrial storage, waste-to-energy generation and industrial manufacturing. The Company is actively exploring various funding sources to advance the establishment of the industrial park. Once operational the industrial park is envisioned to include a 2 GW solar farm, large battery storage centers, four 100,000 square foot data centers plus several industrial partners engaged in recycling industrial waste materials that include discarded windmill blades, corporate carpets, and other industrial manufacturing operations that rely on are large consumers of renewable energy.
16
The planned industrial park will be called the ACRG Greenway to Power TM Renewable Energy Industry Park. It will be a transformative industrial project planned on the 1,183 acre Millers property. The state-of-the-art facility will serve as a central hub for renewable energy generation and storage, operating 24/7/365 to attract and support tenants committed to producing NetZero goods and services. The industrial park will be designed to attract high-tech data centers and other energy-intensive industries by leveraging its unique advantages. These unique advantages include:
| 1) | Direct proximity to the 16,787 acre Millers Solar Energy Zone (SEZ). |
| 2) | Planned Greenlink West grid access through NV Energy Esmeralda substation. |
| 3) | Located next to Highway 95 with access to the Hawthorne Railway. |
| 4) | 388 acre-feet of water rights (126 million gallons annually). |
| 5) | Strategic access to a major fiber optic junction. |
| 6) | 120-kV electrical power substation located on the Miller property. |
| 7) | Existing cell phone tower located on the Millers property. |
The above advantages are leveraged to establish a state-of-the-art industrial park centered around the ability to provide reliable power from an industrial scale solar farm supported by battery storage, the construction of four 100,000 square foot data centers, ownership of exclusive water rights, and a commitment to sustainability. The Company is exploring opportunities in industrial storage whereby part of the 1,183 acre property will be allocated to be used for industrial storage by third-party companies. The industrial storage operations will transition over time into waste-to-energy and industrial manufacturing operations as the solar farm becomes operational, providing access to green electricity for NetZero manufacturing. We have identified the industrial storage of discarded commercial windmill blades as a potential business, where the windmill blades are initially stored and later recycled on site. The fiberglass and plastic are repurposed while the remaining residue is used for cement production and waste-to-energy processes, converting the remaining material into usable energy forms such as steam. Other waste-to-energy materials include industrial carpets and composite materials.
The Company will seek to raise equity capital to fund the initial industrial park project development stages which include the creation of overall project plans, enhanced operational and financial analysis, screening and selection of potential partners and vendors, and securing city, state and federal support for the project. This includes, but is not limited to, laying the groundwork through infrastructure, regulatory, and labor partnerships. Parallel to the above activities the Company will explore various grants (direct grants and matching grants) and low-cost debt funding sources to support the initial project development stages.
As the project becomes more defined, additional equity and debt will be secured to fund further project development, including the build-out of infrastructure, construction of four 100,000 square foot data farm structures, completion of the milling facility and four separate 0.5 GW solar farms in addition to attracting waste-to-energy and industrial storage operations to the location. The total scope of the ACRG Greenway to Power™ Renewable Energy Industrial Park is $3.0 billion not including investments from business partners located on the industrial park to establish their own waste-to-energy and manufacturing operations.
17
Results of Operations
Comparison of the Years Ended December 31, 2024 and 2023.
The following table summarized our results of operations for the periods presented:
| For Year Ended December 31, | ||||||||
| 2024 | 2023 | |||||||
| Operating expenses: | ||||||||
| General and administrative expenses | 992,142 | 487,357 | ||||||
| Impairment Expense | 4,574,871 | - | ||||||
| Total operating expenses | 5,567,013 | 487,357 | ||||||
| Loss from operations | (5,567,013 | ) | (487,357 | ) | ||||
| Other income (expense): | ||||||||
| Other income | 13,661 | 8,395 | ||||||
| Interest expense | (379,198 | ) | (692,204 | ) | ||||
| Total other expense, net | (365,537 | ) | (683,809 | ) | ||||
| Loss before income tax provision | (5,932,550 | ) | (1,171,166 | ) | ||||
| Income tax provision | - | - | ||||||
| Net loss | $ | (5,932,550 | ) | $ | (1,171,166 | ) | ||
| Net loss per common shares: | ||||||||
| Basic net loss per common share | $ | (0.43 | ) | $ | (0.17 | ) | ||
| Weighted average shares outstanding per common shares: | ||||||||
| Basic weighted average common shares outstanding | 13,908,725 | 6,978,201 | ||||||
Revenues
We had no revenues from any operations for the years ended December 31, 2024 and 2023. Furthermore, we do not anticipate any significant future revenue until we have sufficiently funded construction and begin operations.
General and Administrative Expenses
General and administrative expenses were $992,142 and $487,357 for the year ended December 31, 2024 and 2023, respectively. The increase was primarily due to increases in expenses related to accounting, legal, consulting fees, amortization expense, and board compensation. We anticipate that future administration and operating expenses will increase for fiscal 2025 as we work toward completion of the planned merger.
Impairment Expenses
Impairment expenses were $4,574,871 and $0 for the year ended December 31, 2024 and 2023, respectively. During the Company’s ongoing assessment of the carrying value of its developed technology in 2024, management determined that the asset’s book value of $4,574,871 was not recoverable and was subject to impairment. In accordance with the applicable guidance under ASC 360, “Impairment or Disposal of Long-Lived Assets,” the Company evaluated the recoverability of the developed technology based on estimated future undiscounted cash flows expected to result from the use and eventual disposition of the asset. As these cash flows were insufficient to recover the carrying amount, the Company measured and recognized an impairment loss equal to the difference between the asset’s carrying amount and its estimated fair value. As a result, the Company recorded a full impairment charge of $4,574,871 as of December 31, 2024, which is included in the consolidated statements of operations as impairment expense.
Other Income and Expenses
During the years ended December 31, 2024 and 2023, other expenses decreased by $318,272. The decrease is primarily due to a decrease in interest expense of $313,006 and an increase in other income of $5,266. The activity was offset by a decrease in gain on the settlement of accounts payable of $57,571. The $352,634 decrease in interest expense relates to the GPR LOC conversion to restricted common shares during September 2023 and a lower average debt balance during the year ended December 31, 2024 compared to 2023.
18
Results of Operations
Comparison of the Three Months Ended September 30, 2024 and 2023.
The following table summarized our results of operations for the periods presented:
|
For Three Months Ended
September 30, |
||||||||
| 2024 | 2023 | |||||||
| Operating expenses: | ||||||||
| General and administrative expenses | $ | 241,920 | $ | 115,351 | ||||
| Total operating expenses | 241,920 | 115,351 | ||||||
| Loss from operations | (241,920 | ) | (115,351 | ) | ||||
| Other income (expense): | ||||||||
| Other income | 2,098 | 2,098 | ||||||
| Interest expense | (98,251 | ) | (184,073 | ) | ||||
| Total other expense, net | (96,153 | ) | (181,975 | ) | ||||
| Loss before income tax provision | (338,073 | ) | (297,326 | ) | ||||
| Income tax provision | - | - | ||||||
| Net loss | $ | (338,073 | ) | $ | (297,326 | ) | ||
| Net loss per common shares: | ||||||||
| Basic net loss per common share | $ | (0.03 | ) | $ | (0.03 | ) | ||
| Weighted average shares outstanding per common shares: | ||||||||
| Basic weighted average common shares outstanding | 13,908,059 | 10,827,118 | ||||||
Revenues
We had no revenues from any operations for the three months ended September 30, 2024 and 2023. Furthermore, we do not anticipate any significant future revenue until we have sufficiently funded construction and begin operations.
General and Administrative Expenses
General and administrative expenses were $241,920 and $115,351 for the three months ended September 30, 2024 and 2023, respectively. The increase was primarily due to increases in expenses related to consulting fees, amortization expense, and board compensation.
Other Income and Expenses
During the three months ended September 30, 2024 and 2023, other expenses decreased by $85,822. The decrease is primarily due to a decrease in interest expense of $85,822. The $85,822 decrease in interest expense relates to the GPR LOC conversion to restricted common shares during September 2023 and a lower debt balance during the three months ended September 30, 2024 compared to 2023.
19
Results of Operations
Comparison of the Nine Months Ended September 30, 2024 and 2023.
The following table summarized our results of operations for the periods presented:
|
For Nine Months Ended
September 30, |
||||||||
| 2024 | 2023 | |||||||
| Operating expenses: | ||||||||
| General and administrative expenses | $ | 768,547 | $ | 222,066 | ||||
| Total operating expenses | 768,547 | 222,066 | ||||||
| Loss from operations | (768,547 | ) | (222,066 | ) | ||||
| Other income (expense): | ||||||||
| Other income | 11,296 | 6,296 | ||||||
| Interest expense | (278,072 | ) | (609,547 | ) | ||||
| Total other expense, net | (266,776 | ) | (603,251 | ) | ||||
| Loss before income tax provision | (1,035,323 | ) | (825,317 | ) | ||||
| Income tax provision | - | - | ||||||
| Net loss | $ | (1,035,323 | ) | $ | (825,317 | ) | ||
| Net loss per common shares: | ||||||||
| Basic net loss per common share | $ | (0.07 | ) | $ | (0.09 | ) | ||
| Weighted average shares outstanding per common shares: | ||||||||
| Basic weighted average common shares outstanding | 13,907,704 | 8,809,280 | ||||||
Revenues
We had no revenues from any operations for the nine months ended September 30, 2024 and 2023. Furthermore, we do not anticipate any significant future revenue until we have sufficiently funded construction and begin operations.
General and Administrative Expenses
General and administrative expenses were $768,547 and $222,066 for the nine months ended September 30, 2024 and 2023, respectively. The increase was primarily due to increases in expenses related to accounting, legal, professional fees, consulting fees, amortization expense, and board compensation expense.
Other Income and Expenses
During the nine months ended September 30, 2024 and 2023, other expenses decreased by $336,475. The decrease is primarily due to a decrease in interest expense of $331,475 and an increase in other income of $5,000. The $331,475 decrease in interest expense relates to the GPR LOC conversion to restricted common shares during September 2023 and a lower average debt balance during the nine months ended September 30, 2024 compared to 2023.
20
Results of Operations
Comparison of the Three Months Ended June 30, 2024 and 2023.
The following table summarized our results of operations for the periods presented:
|
For Three Months Ended
June 30, |
||||||||
| 2024 | 2023 | |||||||
| Operating expenses: | ||||||||
| General and administrative expenses | $ | 315,129 | $ | 64,405 | ||||
| Total operating expenses | 315,129 | 64,405 | ||||||
| Loss from operations | (315,129 | ) | (64,405 | ) | ||||
| Other income (expense): | ||||||||
| Other income | 2,099 | 2,099 | ||||||
| Interest expense | (91,946 | ) | (236,614 | ) | ||||
| Total other expense, net | (89,847 | ) | (234,515 | ) | ||||
| Loss before income tax provision | (404,976 | ) | (298,920 | ) | ||||
| Income tax provision | - | - | ||||||
| Net loss | $ | (404,976 | ) | $ | (298,920 | ) | ||
| Net loss per common shares: | ||||||||
| Basic net loss per common share | $ | (0.03 | ) | $ | (0.11 | ) | ||
| Weighted average shares outstanding per common shares: | ||||||||
| Basic weighted average common shares outstanding | 13,907,452 | 2,674,530 | ||||||
Revenues
We had no revenues from any operations for the three months ended June 30, 2024 and 2023. Furthermore, we do not anticipate any significant future revenue until we have sufficiently funded construction and begin operations.
General and Administrative Expenses
General and administrative expenses were $315,129 and $64,405 for the three months ended June 30, 2024 and 2023, respectively. The increase was primarily due to increases in expenses related to accounting, legal, professional fees, consulting fees, amortization expense, and board compensation. We anticipate that future administration and operating expenses will increase for fiscal 2025 as we work toward completion of the planned merger.
Other Income and Expenses
During the three months ended June 30, 2024 and 2023, other expenses decreased by $144,668. The decrease is primarily due to a decrease in interest expense of $144,668. The $144,668 decrease in interest expense relates to the GPR LOC conversion to restricted common shares during September 2023 and a lower average debt balance during the three months ended June 30, 2024 compared to 2023.
21
Results of Operations
Comparison of the Six Months Ended June 30, 2024 and 2023.
The following table summarized our results of operations for the periods presented:
|
For Six Months Ended
June 30, |
||||||||
| 2024 | 2023 | |||||||
| Operating expenses: | ||||||||
| General and administrative expenses | $ | 526,627 | $ | 106,715 | ||||
| Total operating expenses | 526,627 | 106,715 | ||||||
| Loss from operations | (526,627 | ) | (106,715 | ) | ||||
| Other income (expense): | ||||||||
| Other income | 9,198 | 4,198 | ||||||
| Interest expense | (179,821 | ) | (425,474 | ) | ||||
| Total other expense, net | (170,623 | ) | (421,276 | ) | ||||
| Loss before income tax provision | (697,250 | ) | (527,991 | ) | ||||
| Income tax provision | - | - | ||||||
| Net loss | $ | (697,250 | ) | $ | (527,991 | ) | ||
| Net loss per common shares: | ||||||||
| Basic net loss per common share | $ | (0.05 | ) | $ | (0.20 | ) | ||
| Weighted average shares outstanding per common shares: | ||||||||
| Basic weighted average common shares outstanding | 13,907,444 | 2,674,530 | ||||||
Revenues
We had no revenues from any operations for the six months ended June 30, 2024 and 2023. Furthermore, we do not anticipate any significant future revenue until we have sufficiently funded construction and begin operations.
General and Administrative Expenses
General and administrative expenses were $526,627 and $106,715 for the six months ended June 30, 2024 and 2023, respectively. The increase was primarily due to increases in expenses related to accounting, legal, consulting fees, amortization expense, and board compensation.
Other Income and Expenses
During the six months ended June 30, 2024 and 2023, other expenses decreased by $250,653. The decrease is primarily due to a decrease in interest expense of $245,653 and an increase in other income of $5,000. The $245,653 decrease in interest expense relates to the GPR LOC conversion to restricted common shares during September 2023 and a lower average debt balance during the six months ended June 30, 2024 compared to 2023.
22
Results of Operations
Comparison of the Three Months Ended March 31, 2024 and 2023.
The following table summarized our results of operations for the periods presented:
|
For Three Months Ended
March 31, |
||||||||
| 2024 | 2023 | |||||||
| RESTATED | RESTATED | |||||||
| Operating expenses: | ||||||||
| General and administrative expenses | $ | 211,498 | $ | 42,310 | ||||
| Total operating expenses | 211,498 | 42,310 | ||||||
| Loss from operations | (211,498 | ) | (42,310 | ) | ||||
| Other income (expense): | ||||||||
| Other income | 7,099 | 2,099 | ||||||
| Interest expense | (87,875 | ) | (188,860 | ) | ||||
| Total other expense, net | (80,776 | ) | (186,761 | ) | ||||
| Loss before income tax provision | (292,274 | ) | (229,071 | ) | ||||
| Income tax provision | - | - | ||||||
| Net loss | $ | (292,274 | ) | $ | (229,071 | ) | ||
| Net loss per common shares: | ||||||||
| Basic net loss per common share | $ | (0.02 | ) | $ | (0.09 | ) | ||
| Weighted average shares outstanding per common shares: | ||||||||
| Basic weighted average common shares outstanding | 13,907,436 | 2,674,530 | ||||||
Revenues
We had no revenues from any operations for the three months ended March 31, 2024 and 2023. Furthermore, we do not anticipate any significant future revenue until we have sufficiently funded construction and begin operations.
General and Administrative Expenses
General and administrative expenses were $211,498 and $42,310 for the three months ended March 31, 2024 and 2023, respectively. The increase was primarily due to increases in expenses related to legal, consulting fees, and amortization expense. We anticipate that future administration and operating expenses will increase for fiscal 2025 as we work toward completion of the planned merger.
Other Income and Expenses
During the three months ended March 31, 2024 and 2023, other expenses decreased by $105,985. The decrease is primarily due to a decrease in interest expense of $100,985 and an increase in other income of $5,00. The $100,985 decrease in interest expense relates to the GPR LOC conversion to restricted common shares during September 2023 and a lower average debt balance during the three months ended March 31, 2024 compared to 2023.
23
Results of Operations
Comparison of the Years Ended December 31, 2023 and 2022
The following table summarized our results of operations for the periods presented:
|
For Year Ended
December 31, |
||||||||
| 2023 | 2022 | |||||||
| RESTATED | RESTATED | |||||||
| Operating expenses: | ||||||||
| General and administrative expenses | 487,357 | 157,441 | ||||||
| Total operating expenses | 487,357 | 157,441 | ||||||
| Loss from operations | (487,357 | ) | (157,441 | ) | ||||
| Other income (expense): | ||||||||
| Other income | 8,395 | 8,395 | ||||||
| Derecognition of debt | - | 15,138 | ||||||
| Interest expense | (692,204 | ) | (771,248 | ) | ||||
| Total other expense | (683,809 | ) | (747,715 | ) | ||||
| Loss before income tax provision | (1,171,166 | ) | (905,156 | ) | ||||
| Income tax provision | - | - | ||||||
| Net loss | $ | (1,171,166 | ) | $ | (905,156 | ) | ||
| Net loss per common shares: | ||||||||
| Basic net loss per common share | $ | (0.17 | ) | $ | (0.34 | ) | ||
| Basic weighted average common shares outstanding | 6,978,201 | 2,674,530 | ||||||
Revenues
We had no revenues from any operations for the years ended December 31, 2023 and 2022. Furthermore, we do not anticipate any significant future revenue until we have sufficiently funded construction and begin operations.
General and Administrative Expenses
General and administrative expenses were $487,357 and $157,441 for the year ended December 31, 2023 and 2022, respectively. The increase was primarily due to increases in expenses related to accounting, legal, professional fees, consulting fees, and amortization expense. We anticipate that future administration and operating expenses will increase for fiscal 2024 as we work toward completion of the planned merger.
Other Income and Expenses
During the years ended December 31, 2023 and 2022, other expenses decreased by $63,906. The decrease is primarily due to a decrease in interest expense of $79,044 offset by the decrease in gain on settlement of accounts payable of $15,138. The $79,044 decrease in interest expense relates to the GPR LOC conversion to restricted common shares during September 2023 and a lower average debt balance during the year ended December 31, 2023 compared to 2022.
24
Liquidity and Capital Resources
Since inception, we have financed our operations from a combination of:
| ● | issuance and sales of our Class A common stock; |
| ● | issuance of promissory notes payable with related and non-related parties; |
| ● | issuance of convertible promissory notes payable with related and non-related parties; and |
| ● | cash advances from related parties |
We have experienced operating losses since our inception and had a total accumulated deficit of $113,553,937 as of December 31, 2024. We expect to incur additional cost and require additional capital as we continue to implement our expansion plan. During the year ended December 31, 2024, our cash used in operating activities was $112,786. During the year ended December 31, 2023, our cash provided by operating activities was $35,037.
Known Trends and Uncertainties
As of December 31, 2024, our current assets were significantly less than our current liabilities, resulting in a working capital deficit. This deficit, along with recurring operating losses and negative cash flows from operations, raises substantial doubt about our ability to continue as a going concern for the next twelve months from the date these financial statements were issued. Our ability to continue as a going concern is dependent on our ability to obtain additional financing and to generate revenue and cash flow to meet our obligations on a timely basis. Management is actively seeking additional sources of capital, including debt and equity financing, and is evaluating cost containment measures to preserve liquidity. There is no assurance that such funding will be available on acceptable terms, or at all.
Internal and External Sources of Liquidity
Our primary internal source of liquidity is cash on hand, which was $719 as of December 31, 2024. We do not currently generate positive operating cash flows. Our external sources of liquidity include related party financing (notably from GPR), potential equity issuances, and possible third-party debt arrangements. The Company does not have any off-balance sheet financing arrangements.
Material Cash Requirements and Commitments
Our primary short-term cash requirements are to fund working capital and service short-term debt. Working capital requirements can vary significantly from period to period, particularly as a result of additional development expenses. As of December 31, 2024, the Company had no material commitments for capital expenditures. However, significant capital will be required to fund the construction of the Tonopah processing facility and the planned industrial park. The Company anticipates that these requirements will be met through a combination of equity and debt financing, as well as potential government grants and strategic partnerships. The general purpose of these expenditures is to advance the Company’s business plan, including the development of permitted custom processing toll milling operations and the ACRG Greenway to Power™ Renewable Energy Industrial Park.
Trends in Capital Resources and Changes in Mix/Cost
During the period, the Company’s capital structure shifted from debt to equity as a result of the conversion of the GPR line of credit into common stock. This reduced interest expense but increased shareholder dilution. The cost of capital remains high due to the Company’s financial condition and market volatility. Future financing may be more expensive or dilutive, and there is no assurance that such financing will be available on acceptable terms.
25
Risks and Uncertainties
The Company is subject to risks from inflation, rising interest rates, and volatility in capital markets, which may adversely affect its ability to raise capital. Additionally, the mining and renewable energy sectors are experiencing increased regulatory scrutiny and competition for funding, which could impact the Company’s liquidity and capital resources.
Convertible Promissory Notes Payable
On March 16, 2020, the Company executed a Line of Credit (“LOC”) with GPR, related party. The LOC is for up to $2,500,000, matures over three years and may be increased by up to another $1,000,000 and extended an additional two years, respectively, at GPR’s sole option. The LOC bears interest at 10% per annum, is convertible into shares of the Company’s common stock at a per share price of $2.00 based on the last closing sale price on the date of execution and will be secured by the real and personal property GPR already has under lien.
The Company entered into a Second Amendment and Forbearance Agreement with GPR on January 5, 2023 wherein GPR agreed to: (a) increase the existing LOC from $5,000,000 due March 16, 2025 to $35,000,000 due March 16, 2027, (b) roll two existing promissory notes (Tina Gregerson and Krupp notes) purchased by GPR into the LOC resulting in the extinguishment of such notes as separate instruments, and (c) to forebear until January 12, 2024, on exercising its foreclosure rights under its defaulted Senior Secured Note. The Company’s Board of Directors approved a revision in the conversion price at which the LOC may convert into the Company’s common stock from $1.65 per share to $1.05 per share, based upon the market price of the Company’s common stock over the 3 days preceding the agreement. GPR is the Company’s majority shareholder and largest debtholder. GPR holds a senior secured interest in all of the assets of the Company, including the stock of its subsidiary entities.
On June 12, 2023, the Company entered into a Third Amendment Agreement with GPR, wherein the LOC was increased to $52,500,000 and both the Senior Secured Promissory Note (previously held by PPMC and acquired in 2019) and the Flechner Judgment were rolled into the balance of the LOC and the Deed of Trust was increased to $250,000,000. The LOC bears interest at 10% per annum and is convertible into shares of the Company’s common stock at $2.00 per share and is secured by the Company’s real and personal property and its subsidiaries stock.
In furtherance of the preparation for the planned merger with the SMS Group, GPR converted a $5,250,000 portion of the LOC into 5 million shares of restricted common stock effective August 2, 2023. The remaining $4,969,551 balance of the LOC was converted into 4,732,906 shares of restricted common stock effective August 15, 2023. GPR now owns 10,542,989 shares of common stock, which is 73% of the Company’s outstanding shares of common stock, 511,324 of those shares are classified on the statements of stockholders’ deficit as shares issued in excess.
As of December 31, 2024 the outstanding principal and accrued interest balance was $425,589 and $28,857, respectively. During the year ended December 31, 2024, the Company had $192,186 and $77,100 expenses that were paid directly by GPR - related party and proceeds from convertible notes - related party, respectively. The Company’s convertible note line of credit with GPR was increased by this same amount.
Going Concern
The accompanying consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The Company has incurred recurring losses and as of December 31, 2024, had an accumulated deficit of $113,533,937. For the year ended December 31, 2024, the Company sustained a net loss of $5,697,543. These factors, among others, raise substantial doubt about the Company’s ability to continue as a going concern for the next twelve months from the date these financial statements were issued. These financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that may be necessary should the Company be unable to continue as a going concern. The Company’s continuation as a going concern is contingent upon its ability to obtain additional financing and to generate revenue and cash flow to meet its obligations on a timely basis. The Company will continue to seek to raise additional funding through debt or equity financing during the next twelve months from the date of issuance of these financial statements. There is no guarantee the Company will be successful in achieving obtaining additional funding and may have to cease operations.
26
Cash Flows
|
Years Ended
December 31, |
||||||||
| 2024 | 2023 | |||||||
| Net cash (used in) provided by operating activities | $ | (112,786 | ) | $ | 35,037 | |||
| Net cash provided by investing activities | - | - | ||||||
| Net cash provided by financing activities | 77,100 | - | ||||||
| Increase (decrease) in cash | $ | (35,686 | ) | $ | 35,037 | |||
Operating Activities
Net cash used in operating activities was $112,786 for the year ended December 31, 2024, primarily due to the net loss for the year, amortization expense, net of expenses paid directly by related party and increases in accruals for settlement of lawsuit, accrued interest, and accounts payable, related party.
Net cash provided by operating activities was $35,037 for the year ended December 31, 2023, primarily due to the net loss for the year, amortization expense, common stock issued for services, impairment expense, and increases in accrued interest, and accounts payable, related party.
Investing Activities
For the years ended December 31, 2024, and 2023 the Company conducted no investing activities.
Financing Activities
Net cash provided by financing activities was $77,100 for the year ended December 31, 2024, primarily due to proceeds from convertible promissory notes, related party.
For the years ended December 31, 2023, the Company conducted no financing activities.
|
Nine Months Ended
September 30, |
||||||||
| 2024 | 2023 | |||||||
| Net cash used in operating activities | $ | (111,906 | ) | $ | (198 | ) | ||
| Net cash provided by investing activities | - | - | ||||||
| Net cash provided by financing activities | 77,100 | - | ||||||
| Decrease in cash | $ | (34,806 | ) | $ | (198 | ) | ||
Operating Activities
Net cash used in operating activities was $111,906 for the nine months ended September 30, 2024, primarily attributable to the net loss for the year, increase in prepaid expenses, and decrease in accounts payable-related parties. This activity is offset by amortization expense, common stock issued for services, increases in accounts payable, accrued interest, and accrued interest-related parties.
Net cash used in operating activities amounted to $198 for the nine months ended September 30, 2023, primarily attributable to the net loss for the year, offset by amortization expense, increases in accrued interest, accrued interest-related parties, accounts payable, accounts payable-related parties, and accruals for the settlement of lawsuits.
Investing Activities
For the nine months ended September 30, 2024, and 2023 the Company conducted no investing activities.
27
Financing Activities
Net cash provided by financing activities was $77,100 for the nine months ended September 30, 2024, primarily due to proceeds from convertible promissory notes, related party.
For the nine months ended September 30, 2023, the Company conducted no financing activities.
|
Six Months Ended
June 30, |
||||||||
| 2024 | 2023 | |||||||
| Net cash used in operating activities | $ | (99,870 | ) | $ | (652 | ) | ||
| Net cash provided by investing activities | - | - | ||||||
| Net cash provided by financing activities | 77,100 | - | ||||||
| Decrease in cash | $ | (22,770 | ) | $ | (652 | ) | ||
Operating Activities
Net cash used in operating activities was $99,870 for the six months ended June 30, 2024, primarily due to the net loss for the year, increase in prepaid expenses, decrease in accounts payable-related parties. These activities were offset by amortization expense, common stock issued for services, increases in accounts payable, accrued interest, and accrued interest-related parties.
Net cash used in operating activities was $652 for the six months ended June 30, 2023, primarily due to the net loss for the year offset by increases in accounts payable, accrual settlement of lawsuits, accrued interest, and accrued interest-related parties.
Investing Activities
For the six months ended June 30, 2024, and 2023 the Company conducted no investing activities.
Financing Activities
Net cash provided by financing activities was $77,100 for the six months ended June 30, 2024, primarily due to proceeds from convertible promissory notes, related party.
For the six months ended June 30, 2023, the Company conducted no financing activities.
|
Three Months Ended
March 31, |
||||||||
| 2024 | 2023 | |||||||
| Net cash used in operating activities | $ | (75,494 | ) | $ | (710 | ) | ||
| Net cash provided by investing activities | - | - | ||||||
| Net cash provided by financing activities | 40,000 | - | ||||||
| Decrease in cash | $ | (35,494 | ) | $ | (710 | ) | ||
Operating Activities
Net cash used in operating activities was $75,494 for the three months ended March 31, 2024, primarily due to the net loss for the year and decrease in accounts payable-related parties. These activities were offset by decreases in prepaid expenses, increases in accounts payable, accrued interest, and accrued interest-related parties.
Net cash used in operating activities was $710 for the three months ended March 31, 2023. This was primarily attributable to the net loss for the year offset by increases in accounts payable, accrual for settlement lawsuits, accrued interest, and accrued interest-related parties.
28
Investing Activities
For the three months ended March 31, 2024, and 2023 the Company conducted no investing activities.
Financing Activities
Net cash provided by financing activities was $40,000 for the three months ended March 31, 2024, primarily due to proceeds from convertible promissory notes, related party.
For the three months ended March 31, 2023, the Company conducted no financing activities.
|
Years Ended
December 31, |
||||||||
| 2023 | 2022 | |||||||
| Net cash provided by (used in) operating activities | $ | 35,037 | $ | (995 | ) | |||
| Net cash provided by investing activities | — | — | ||||||
| Net cash provided by financing activities | — | — | ||||||
| Increase (decrease) in cash | $ | 35,037 | $ | (995 | ) | |||
Operating Activities
Net cash provided by operating activities was $35,037 for the year ended December 31, 2023, primarily due to the net loss for the year, amortization expense, net of expenses paid directly by related party and increases in accruals for settlement of lawsuit, accrued interest, and accounts payable, related party.
Net cash used in operating activities was $995 for the year ended December 31, 2022.
Investing Activities
For the years ended December 31, 2023, and 2022 the Company conducted no investing activities.
Financing Activities
For the years ended December 31, 2023, and 2022 the Company conducted no financing activities.
Off-Balance Sheet Arrangements
During the year ended December 31, 2023, we did not engage in any off-balance sheet arrangements as defined in item 303(a)(4) of the SEC’s Regulation S-K.
Effects of Inflation
We do not believe that inflation has had a material impact on our business, revenues or operating results during the periods presented.
Critical Accounting Policies and Estimates
Our significant accounting policies are more fully described in the notes to our unaudited consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2023. We believe that the accounting policies below are critical for one to fully understand and evaluate our consolidated financial condition and results of operations.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
We are a smaller reporting company and are not required to include information called for by this Item 7A.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The information called for by Item 8 is included following the “Index to Financial Statements” on page F-1 contained in this annual report on Form 10-K.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
None.
29
ITEM 9A. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
We maintain disclosure controls and procedures designed to provide reasonable assurance that information required to be disclosed in our reports filed pursuant to the Securities Exchange Act of 1934, as amended (the “Exchange Act”), is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer as appropriate, to allow timely decisions regarding required disclosures. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance the objectives of the control system are met.
Under the supervision of, and the participation of, our management, including our Chief Executive Officer and Chief Financial Officer, we have conducted an evaluation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, as amended) as of the end of the period covered by this Annual Report on Form 10-K to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in Securities and Exchange Commission rules and forms, and is accumulated and communicated to our management as appropriate to allow timely decisions regarding required disclosure. Based on this evaluation, our Chief Executive Officer and Chief Financial Officer concluded that the design and operation of our disclosure controls and procedures were not effective as of December 31, 2023, because of the identification of the material weaknesses in internal control over financial reporting described below. Notwithstanding the material weaknesses that existed as of December 31, 2023, our Chief Executive Officer and Chief Financial Officer have each concluded that the consolidated financial statements included in this Annual Report on Form 10-K present fairly, in all material respects, the financial position, results of operations and cash flows of the Company and its subsidiaries in conformity with accounting principles generally accepted in the United States of America (“GAAP”). We are currently taking steps to remediate such material weaknesses as described below.
Management’s Report on Internal Control over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting. Internal control over financial reporting is a set of processes designed by, or under the supervision of, a company’s principal executive and principal financial officers, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with GAAP and includes those policies and procedures that:
| ● | Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect our transactions and dispositions of our assets; |
| ● | Provide reasonable assurance our transactions are recorded as necessary to permit preparation of our financial statements in accordance with GAAP, and that receipts and expenditures are being made only in accordance with authorizations of our management and directors; and |
| ● | Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on the financial statements. |
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. It should be noted that any system of internal control, however well designed and operated, can provide only reasonable, and not absolute, assurance that the objectives of the system will be met. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, we conducted an assessment of the effectiveness of our internal control over financial reporting based on criteria established in “Internal Control-Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”), as of December 31, 2009.
30
As a result of our continued material weaknesses described below, management has concluded that, as of December 31, 2024 and 2023, our internal control over financial reporting was not effective based on the criteria in “Internal Control-Integrated Framework” issued by COSO.
Material Weaknesses in Internal Control over Financial Reporting
A material weakness is a control deficiency, or combination of control deficiencies, that results in more than a remote likelihood that a material misstatement of annual or interim financial statements will not be prevented or detected. In connection with the assessment, management identified the following control deficiencies, which were previously identified, that still represent material weaknesses as of December 31, 2024:
| ● | The Company, at times in the past prior to the period covered by this annual statement, entered into material transactions without timely obtaining the appropriate signed agreements, stock certificates and board approval prior to releasing cash funds called for by the transaction. Management believes the approval process currently in place is sufficient to alleviate any misappropriation of funds and will change procedures if and when circumstances indicate they are needed. Although the Company has taken steps to prevent this from happening by utilizing an escrow agent, agreements entered into by prior management will continue to cause an issue until such prior agreements terminate or expire. |
| ● | Management did not design and maintain effective control relating to the quarter end closing and financial reporting process due to lack of evidence of review surrounding various account reconciliations and properly evidenced journal entries. Due to the Company’s limited resources, the Company has insufficient personnel resources and technical accounting and reporting expertise to properly address all of the accounting matters inherent in the Company’s financial transactions. Additionally, though the Company has recently formed a formal audit committee, the Company has not yet formalized processes and controls that would provide proper board oversight role within the financial reporting process. Management continues to search for additional board members that are independent and can add financial expertise and intends to formalize oversight processes in this area in an effort to remediate part of this material weakness. |
| ● | The Company’s change in management, board members and officer positions resulting in changes of the responsible person for certain duties has caused delays in the timely review of financial data and banking information. The Company has very limited review procedures in place. This material weakness, previously identified, continued in 2024 as a result of additional management changes. Management plans to establish a more formal review process by the board members in an effort to reduce the risk of fraud and financial misstatements. |
We are in the process of establishing certain steps in response to the identification of these material weaknesses that should result in certain changes in our internal control over financial reporting, but due to the Company’s limited funds and inability to add certain staff personnel, the changes may be limited and may also not be completely effective. There were no additional material weaknesses noted during the year ended December 31, 2024.
ITEM 9B. OTHER INFORMATION
ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS
None.
31
PART III
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
Set forth below are the names of all directors and executive officers of the Company, their respective ages and all positions and offices with the Company held by each person as of December 31, 2024:
| Name | Age | Positions with the Company | ||
| Tawana Bain | 46 | Chief Executive Officer, Director, and Chairwoman | ||
| Sharon L. Ullman | 79 | Chief Financial Officer, Chief Administrative Officer and Director | ||
| J. Bryan Read | 63 | President, Director and Secretary |
Biographies
Tawana Bain – Chief Executive Officer, Director and Chairwoman
Ms. Bain is Founder and CEO of TBAIN & Co, LLC (“TBAIN”), a social impact enterprise that houses organizations committed to renewable energy and Diversity, Equity and Inclusion (“DEI”) efforts. TBAIN is the manager of Granite Peak Resources, LLC, the Company’s largest shareholder.
She is also Owner and Publisher of Todays Woman, a 30+ year regional publication designed to uplift and empower the everyday woman.
Ms. Bain is active in philanthropic and government relations through her work as Founder of Derby Diversity Week and has been nationally recognized for building equity initiatives for black entrepreneurs and other marginalized groups. Ms. Bain has an extensive history in environmental programs that require community buy-in and marketing strategy of environmental restoration efforts, Diversity Equity and Inclusion around tourism for horse racing and technical support of consent decrees for the monitoring and documentation in the water and land space. Bain has been ranked as one of the top 50 most powerful people among her business peers in Louisville, Kentucky in 2022 and 2023.
Sharon L. Ullman – Chief Financial Officer, Director and Chief Administrative Officer
Sharon L. Ullman was appointed to our board of directors on March 18, 2011, in connection with the Shea Exchange Agreement. Effective December 16, 2011, Ms. Ullman was appointed to serve as the Company’s interim Chief Executive Officer and Executive Chairperson of the Board. On October 9, 2012, the Board of Directors voted to remove “interim” from her title and approve her position as Chief Executive Officer and Chairman of the Board. On February 6, 2014, the Board of Directors voted to appoint Ms. Ullman the Company’s President and Executive Chairwoman of the Board of Directors. On August 20, 2015 Ms. Ullman stepped down as CEO and President and took on the role of Chief Administrative Officer, she was appointed as the Interim Chief Financial Officer on October 26, 2015. Her appointment as CFO and Chief Administrative Officer was confirmed by the Board of Directors on April 4, 2016 and she was also appointed as the Treasurer.
Since June 2010, Ms. Ullman has served as the Manager of Afignis, LLC (“Afignis”), a New York limited liability company, which was established to identify and develop mining, natural resource and agricultural opportunities on a global basis, with a focus on emerging markets. Afignis has made several investments, including currently holding approximately 12% of our outstanding common stock and the acquisition of mining and agricultural interests in Sierra Leone, Africa. The Sierra Leone investment is managed by Afignis Sierra Leone Limited, a Sierra Leone company, which is a strategic partnership between the Mende tribe and Afignis. Ms. Ullman has been the President of Afignis Sierra Leone Limited since 2010. Afignis Sierra Leone Limited is involved in gold and diamond mining operations and had interests in large parcels of arable land for agriculture including acres of cacao and coffee plantations.
Ms. Ullman is active in philanthropic and government relations through her work as the Founder, President and Chief Executive Officer of S. L. Ullman & Associates, Inc., formed in 2007 as a private consulting firm, and has been recognized for her achievements in these areas.
32
Ms. Ullman served as the Executive Director and President of the 23rd Street Association (the “Association”). Through her efforts, the Association was involved in the development of Project 9A, the Hudson River Waterfront and the High Line. She was a prominent leader in the revitalization of historic Madison Square Park, helping to raise millions for its restoration and maintenance. She successfully led the effort to establish the Flatiron/23rd Street Partnership, a Business Improvement District in the Flatiron/23rd Street area. Her efforts as the founding member and member of the Board, helped reinforce the Flatiron/23rd Street area’s growing stature as one of the city’s premier destination spots.
Ms. Ullman has worked with all levels of government and government agencies and has been widely acknowledged for her contributions. Her numerous awards include being voted a top 100 New Yorker. She was written into the congressional record with remarks in recognition of her outstanding leadership by congresswoman Carolyn Maloney in 2004 and 2007, she received letters of recognition and outstanding citizen citations from President Bill Clinton, Governor George Pataki, Mayors Michael Bloomberg and Rudolf Giuliani, and she received letters of recognition from then senator Hillary Rodham Clinton and Charles E. Schumer.
Ms. Ullman has been awarded the Outstanding Citizen Award from Speaker Christine Quinn, Council of the City of New York, and letters of recognition from State Senators, State Assembly Members, City Council Members and Police Commissioners. She received the Tilden Humanitarian Award and the Humanitarian of the Year Award from Concerned Citizen’s Speak. She has participated in Mayor Bloomberg’s “Friday Morning Breakfasts” for outstanding community leaders to discuss important issues affecting the city.
J. Bryan Read, Lt. Col, US Army (R) – President, Director and Secretary
Mr. Read, appointed Chief Executive Officer on December 13, 2016, honorably served as an officer and a commander in the United States Army. He has over twenty years professional military experience in leadership management, military logistics, training operations, missile defense, property management, diplomacy, and supply systems. He has commanded military organizations from platoon up through battalion level. As a military attaché assigned to the State Department and an overseas United States Embassy in the Former Soviet Union, he regularly planned and conducted meetings with high level foreign government officials and ministries on behalf of the United States involving important defense and commerce related matters. He has served as the Russian language Interpreter and team leader for the U.S. Humanitarian Special Operations Mission to Semipalatinsk, Kazakhstan. Additionally, he was a professor at the United States Military Academy at West Point.
Bryan has served as a business development executive officer and independent business development consultant for variety of companies and industries. He has introduced businesses to private and government sector opportunities by utilizing operations research, analytics, and networking. The goal was to present revenue generating opportunities as well as merger and acquisition opportunities. His duties included negotiating terms of agreement for client projects, analyzing business models, developing marketing strategies, and reviewing P&L. His clients’ products and services have included the following industries: renewable energy, mining, precious metals processing, B2B connectivity/management services, e-mail encryption technology software, EVM software, steel manufacturing technology, construction, antennas, smart grid technologies, computer simulations, and sports recovery nutritional products. He has also served as a business development liaison between Bio-Pharmaceutical companies in order to coordinate clinical research for FDA approval. He has regularly organized and facilitated meetings for clients with fortune 500 senior management, government agencies, and congressional staffs. His efforts have a proven track record of producing contracts, teaming arrangements, alliances, and reseller agreements.
As a member of the American Council of Renewable Energy (“ACORE”), Mr. Read has served on the Power and Infrastructure Committee and the Defense Initiatives Energy Committee. These committee positions allowed him to regularly provide input to elected officials on future energy policy. He regularly attends national energy conferences to connect and share ideas with public and private leaders in the energy community. Bryan is also the President and Founder of Keystone General Contracting and Technologies LLC., a Veteran Owned Small Business.
Mr. Read has a master’s degree from Cornell University and is a graduate of the United States Army Command and General Staff College. He was a Senior Fellow at the George C. Marshall European Center for Security Studies in Garmisch, Germany. He earned his bachelor’s degree from the University of Alabama.
33
Family Relationships
There are no other family relationships between or among any of our directors and executive officers and any incoming directors or executive officers.
Code of Ethics
We adopted a Code of Ethics that applies to our principal executive officer, principal financial officer and persons performing similar functions on October 5, 2012.
Compliance with Section 16(a) of the Securities Exchange Act of 1934
Section 16(a) of the Exchange Act requires our directors, officers and holders of more than 10% of our common stock to file with the SEC initial reports of ownership and reports of changes in ownership of our common stock and other equity securities. Based solely upon our review of such filings, we are not aware of any failures by such persons to make any such filings on a timely basis.
Audit Committee, Compensation Committee and Financial Expert
The Company does not currently utilize a formal audit committee. There were no audit committee meetings held during 2023. Financial information relating to quarterly reports was disseminated to all board members for review. The consolidated unaudited financial statements for the year ended December 31, 2023 and audited financial statements for the year ended December 31, 2022 were provided to each member of the board in which any concerns by the members were directed to management and the auditors. The Company does not currently utilize a compensation committee. There were no compensation committee meetings during 2023 and no actions taken by written consent.
ITEM 11. EXECUTIVE COMPENSATION
General Philosophy
Our Board of Directors is responsible for establishing and administering the Company’s executive and director compensation.
Executive Compensation
The following table summarizes the compensation of each named executive officer for the fiscal years ended December 31, 2024, and 2023 awarded to or earned by (i) each individual serving as our principal executive officer and principal financial officer of the Company and (ii) each individual that served as an executive officer of the Company at the end of such fiscal years who received compensation in excess of $100,000.
| Annual Compensation | Option | All Other | Total | |||||||||||||||||||||
| Name and Principal Position | Year | Salary | Bonus | Awards | Compensation | ($) | ||||||||||||||||||
| Tawana Bain | 2024 | $ | — | $ | — | $ | — | $ | — | $ | — | |||||||||||||
| Chief Executive Officer | 2023 | $ | — | $ | — | $ | — | $ | — | $ | — | |||||||||||||
| J. Bryan Read, | 2024 | $ | — | $ | — | $ | — | $ | — | $ | — | |||||||||||||
| President and Secretary | 2023 | $ | — | $ | — | $ | — | $ | — | $ | — | |||||||||||||
| Sharon L. Ullman | 2024 | $ | — | $ | — | $ | — | $ | — | $ | — | |||||||||||||
| Chief Financial Officer | 2023 | $ | — | $ | — | $ | — | $ | — | $ | — | |||||||||||||
34
Employment Agreements
We have not entered into any severance or change of control provisions with any of our other executive officers.
Equity Compensation Plans
No options were exercised by our named executive officers during the years ended December 31, 2024 and 2023. As of December 31, 2024 and 2023 the executive officers held no options or warrants.
Director Compensation
Members of our board who are also employees of ours receive no compensation for their services as directors. Non-employee directors are reimbursed for all reasonable and necessary costs and expenses incurred in connection with their duties as directors. In addition, we issue options to our directors as determined from time to time by the Board.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED SHAREHOLDER MATTERS
The following information sets forth the number and percentage of shares of the Company’s common stock owned beneficially, as of August 25, 2025, based on 13,912,236 shares of common stock outstanding as of that date, by any person, who is known to the Company to be the beneficial owner of five percent or more of the Company’s common stock, and, in addition, by each director and each executive officer of the Company, and by all directors and executive officers as a group.
Information as to beneficial ownership is based upon statements furnished to the Company by such persons and the shareholder list provided by the Company’s transfer agent, Equiniti Trust Company, LLC, as of August 25, 2025.
| Name and Address |
Amount of
Beneficial Ownership (1) |
Percentage of
Class % |
||||||
| Sharon Ullman | 507,200 | 3.65 | % | |||||
| 12567 West Cedar Drive, Suite 104 | ||||||||
| Lakewood, Colorado 80228-2039 | ||||||||
| J. Bryan Read | 3,000 | * | ||||||
| 12567 West Cedar Drive, Suite 104 | ||||||||
| Lakewood, Colorado 80228-2039 | ||||||||
| All directors and officers as a group | 510,200 | 3.67 | % | |||||
| Granite Peak Resources, LLC# | 10,542,989 | 75.78 | % | |||||
| 30 N Gould Street, Suite R | ||||||||
| Sheridan, WY 82081 | ||||||||
| (1) | Except as otherwise indicated, each person possesses sole voting and investment power with respect to the shares shown as beneficially owned. Shares are deemed owned in the same percentage as the individual’s ownership in the entity owning such shares. |
| (*) | Less than 1% |
| (#) | Tawana Bain, the CEO of the Company is the Manager of GPR but is not deemed to own any of GPR’s shares |
35
Equity Compensation Plans
The following table sets forth certain information regarding equity compensation plan information as of December 31, 2024:
| Plan category |
Number of
securities to be issued upon exercise of outstanding options (a) |
Weighted-
average exercise price of outstanding options |
Number of
securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a) (b) |
|||||||||
| Equity compensation plans approved by security holders | 65,000 | (1) | $ | 62.50 | 1,460,000 | |||||||
| Equity compensation plans not approved by security holders | — | $ | — | — | ||||||||
| Total | 65,000 | $ | 62.50 | 1,460,000 | ||||||||
| (1) | granted pursuant to the 2014 Option Plan, for individual grants. See the notes to the financial statements. |
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
The following describes certain relationships and related transactions that we have with persons deemed to be affiliates of ours. We believe that each of the transactions described below were on terms at least as favorable to our Company as we would have expected to negotiate with unaffiliated third parties.
Granite Peak Resources, LLC
On March 16, 2020, the Company entered into a LOC agreement with GPR. GPR is a related party by virtue of its majority ownership of the Company’s common stock. Under the LOC, GPR has also paid expenses directly on behalf of the Company to support its operations.
On March 16, 2020, the Company entered into a Line of Credit (“LOC”) agreement with Granite Peak Resources LLC (“GPR”), a related party and the majority shareholder of the Company. The initial LOC provided for borrowings up to $2.5 million, with a maturity date of March 16, 2023. At GPR’s sole discretion, the LOC could be increased by an additional $1.0 million and extended for two years. The LOC accrued interest at 10% per annum and was convertible into common stock at $2.00 per share, based on the closing price on the date of issuance. The LOC was secured by substantially all of the Company’s real and personal property.
On July 12, 2021, the LOC was amended (the “First Amendment”) to:
| ● | Increase the borrowing limit to $5.0 million, | |
| ● | Extend the maturity date to March 16, 2025, and | |
| ● | Reduce the conversion price to $1.65 per share. |
The First Amendment also granted GPR the option to further increase the LOC by $5.0 million and extend the maturity date by an additional five years.
36
On January 5, 2023, the Company entered into a Second Amendment to the LOC (the “Second Amendment”) with GPR. The amendment significantly restructured the existing LOC agreement. Key terms of the Second Amendment included:
| ● | Increase in Borrowing Capacity: From $5.0 million to $35.0 million. | |
| ● | Extension of Maturity Date: To March 16, 2027. | |
| ● | Reduction in Conversion Price: From $1.65 to $1.05 per share, based on the trailing three-day market price. | |
| ● | Debt Consolidation: The following obligations, previously acquired by GPR, were formally consolidated into the LOC: | |
| ● | Tina Gregerson Promissory Note: $477,500 principal and $293,963 accrued interest. |
| ● | Krupp Note: $100,000 principal and $59,795 accrued interest. |
| ● | Forbearance: GPR agreed to forbear from exercising rights under the loan documents, including foreclosure rights related to the Stephen Flechner Judgment and the Pure Path Capital Senior Secured Convertible Promissory Note, both of which had been previously purchased by GPR. The forbearance period extends through January 12, 2024. |
The Company evaluated the amendment under ASC 470-50 and ASC 470-60 and concluded it constituted a debt extinguishment, as the present value of the revised cash flows exceeded the 10% threshold. No gain or loss was recognized, as the reacquisition price equaled the carrying amount of the extinguished debt.
On June 12, 2023, the Company entered into a Third Amendment to the LOC (the “Third Amendment”) with GPR. Key terms of the Third Amendment included:
| ● | Increase in Borrowing Capacity: From $35.0 million to $52.5 million. | |
| ● | Expansion of Collateral: The Deed of Trust and Security Agreement was amended to increase the secured amount from $100 million to $250 million. | |
| ● | Debt Consolidation: The following obligations, previously acquired by GPR, were formally consolidated into the LOC: | |
| ● | The Pure Path Capital Senior Secured Convertible Promissory Note: $2,229,187 principal and $1,709,064 accrued interest. | |
| ● | Stephen Flechner Judgment: $2,157,000 principal and $1,580,248 accrued interest. |
The Company determined the amendment met the criteria for a troubled debt restructuring (TDR) under ASC 470-60, as the Company was experiencing financial difficulty and GPR granted a concession. The amendment was accounted for as a debt extinguishment under ASC 470-50, with no gain or loss recognized.
On August 2, 2023, GPR converted $5,250,000 of LOC principal into 5,000,000 shares of restricted common stock. On August 15, 2023, GPR converted the remaining $4,969,551 (principal and accrued interest) into 4,732,906 shares of restricted common stock, at the conversion price of $1.05 per share, as provided in the Third Amendment.
As of December 31, 2024 the outstanding balance under the LOC consisted of $425,589 in principal and $28,857 in accrued interest. As of December 31, 2023, the outstanding balance was $156,303 in principal and $1,149 in accrued interest.
During the years ended December 31, 2024 and 2023, the Company recognized non-cash borrowings of $192,186 and $272,481, respectively, under the LOC. These amounts represent expenses paid directly by GPR on behalf of the Company and were recorded as increases to the LOC principal balance.
During 2019 and 2021, GPR acquired several outstanding debt instruments and judgments originally held by third parties, including:
| ● | The Tina Gregerson Promissory Note, | |
| ● | The Peter Krupp Promissory Note, | |
| ● | The Pure Path Capital Senior Secured Convertible Promissory Note, and | |
| ● | The Stephen E. Flechner Judgment. |
37
Director Independence
Our securities are quoted on the OTC Market, which does not have any director independence requirements. We evaluate independence by the standards for director independence established by applicable laws, rules, and listing standards including, without limitation, the standards for independent directors established by The New York Stock Exchange, Inc., the NASDAQ National Market, and the Securities and Exchange Commission. Subject to some exceptions, these standards generally provide that a director will not be independent if (a) the director is, or in the past three years has been, an employee of ours; (b) a member of the director’s immediate family is, or in the past three years has been, an executive officer of ours; (c) the director or a member of the director’s immediate family has received more than $120,000 per year in direct compensation from us other than for service as a director (or for a family member, as a non-executive employee); (d) the director or a member of the director’s immediate family is, or in the past three years has been, employed in a professional capacity by our independent public accountants, or has worked for such firm in any capacity on our audit; (e) the director or a member of the director’s immediate family is, or in the past three years has been, employed as an executive officer of a company where one of our executive officers serves on the compensation committee; or (f) the director or a member of the director’s immediate family is an executive officer of a company that makes payments to, or receives payments from, us in an amount which, in any twelve-month period during the past three years, exceeds the greater of $1,000,000 or two percent of that other company’s consolidated gross revenues. Based on these standards, we have determined that our directors are not independent directors.
ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
On February 12, 2025, the Audit Committee approved the appointment of M&K CPAS, PLLC (“M&K”) as the Company’s new independent public accounting firm, effective immediately. During the Company’s two most recent fiscal years, and any subsequent interim period prior to engaging M&K, neither the Company, nor anyone on its behalf, consulted M&K regarding either (i) the application of accounting principles to a specified transaction, either completed or proposed, or the type of audit opinion that might be rendered with respect to the consolidated financial statements of the Company, and no written report or oral advice was provided to the Company by M&K that was an important factor considered by the Company in reaching a decision as to any accounting, auditing or financial reporting issue; or (ii) any matter that was the subject of a “disagreement” (as defined in Item 304(a)(1)(iv) of Regulation S-K and the related instructions) or a “reportable event” (as that term is defined in Item 304(a)(1)(v) of Regulation S-K).
Our Board of Directors appointed Turner, Stone & Company, L.L.P. (“Turner”) PCAOB Auditor ID76 to audit our consolidated financial statements for the years ended December 31, 2023, and 2022. The following tables set forth the fees billed to the Company for professional services rendered by Turner for the years ended December 31, 2023, and 2022.
The following is a summary of fees paid or to be paid to M&K and Turner, Stone & Company, L.L.P. (“Turner”) for services rendered for the years ended December 31, 2024 and 2023:
| Services | 2024 | 2023 | ||||||
| Audit fees – M&K | $ | 25,250 | $ | 25,250 | ||||
| Audit related fees – M&K | — | — | ||||||
| All other fees – M&K | — | — | ||||||
| Audit fees – Turner | — | 51,250 | ||||||
| Audit related fees – Turner | — | — | ||||||
| All other fees – Turner | — | — | ||||||
| Total fees | $ | 25,250 | $ | 76,500 | ||||
Audit Fees — This category includes the audit of our annual financial statements, review of financial statements included in our quarterly reports on Form 10-Q and services that are normally provided by the independent registered public accounting firm in connection with engagements for those fiscal years. This category also includes advice on audit and accounting matters that arose during, or as a result of, the audit or the review of interim financial statements.
Audit Related Fees — This category consists of assurance and related services by the independent registered public accounting firm that are reasonably related to the performance of the audit or review of our financial statements and are not reported above under “Audit Fees.” The services for the fees disclosed under this category include consultation regarding our correspondence with the Securities and Exchange Commission and other accounting consulting.
All Other Fees — This category consists of fees for other miscellaneous items.
Pre-Approval Policies and Procedures
The Company does not currently utilize a formal audit committee as it has yet to formalize processes and controls that would provide proper Board oversight. Our Board approves each engagement for audit or non-audit services before we engage our independent auditor to provide those services. The Board has not established any pre-approval policies or procedures that would allow our management to engage our independent auditor to provide any specified services with only an obligation to notify the audit committee of the engagement for those services. None of the services provided by our independent auditors for fiscal year 2023 were obtained in reliance on the waiver of the pre-approval requirement afforded in SEC regulations.
38
PART IV
ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
The following exhibits are filed as part of this Annual Report on Form 10-K or are incorporated herein by reference.
| ** | Filed herewith electronically |
39
SIGNATURES
In accordance with Section 13 or 15(d) of the Securities Exchange Act of 1934, the Company caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| AMERICAN CLEAN RESOURCES GROUP, INC. | ||
| Dated: August 26, 2025 | By: | /s/ Tawana Bain |
| Tawana Bain | ||
| Chief Executive Officer | ||
Each person whose signature to this Annual Report appears below hereby constitutes and appoints Tawana Bain and Sharon L. Ullman as their true and lawful attorney-in-fact and agent, with full power of substitution, to sign on their behalf individually and in the capacity stated below and to perform any acts necessary to be done in order to file all amendments to this Annual Report and any and all instruments or documents filed as part of or in connection with this Annual Report or the amendments thereto and each of the undersigned does hereby ratify and confirm all that said attorney-in-fact and agent, or their substitutes, shall do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed by the following persons on behalf of the Company, in the capacities and dates indicated.
| Name | Title | Date | ||
| /s/ Tawana Bain | Chief Executive Officer, Director and Chairwoman | August 26, 2025 | ||
| Tawana Bain | ||||
| /s/ Sharon Ullman | Chief Financial Officer and Director | August 26, 2025 | ||
| Sharon Ullman |
40
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
AMERICAN CLEAN RESOURCES GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED FINANCIAL STATEMENTS AS OF DECEMBER 31, 2024 AND 2023
TABLE OF CONTENTS
F- 1
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Stockholders of American Clean Resources Group, Inc.,
Opinion on the Consolidated Financial Statements
We have audited the accompanying consolidated balance sheets of American Clean Resources Group, Inc. (the Company) as of December 31, 2024 and 2023 and the related consolidated statements of operations, changes in stockholders’ deficit, and cash flows for the two years-ended December 31, 2024 and 2023 and the related notes (collectively referred to as the “financial statements”). In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2024 and 2023, and the results of its operations and its cash flows for the two-years ended December 31, 2024 and 2023, in conformity with accounting principles generally accepted in the United States of America.
Going Concern
The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 2 to the consolidated financial statements, the Company suffered recurring losses, a large accumulated deficit as of December 31, 2024 and has no revenues to fully fund the operations, which raises substantial doubt about its ability to continue as a going concern. Management’s plans regarding those matters are also described in Note 2. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Basis for Opinion
These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and the significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe our audits provide a reasonable basis for our opinion.
F- 2
Restatement of the 2024 Consolidated financial Statements
As discussed in Note 2 and Note 11 to the consolidated financial statements, the accompanying 2023 consolidated financial statements have been restated to correct for errors.
Critical Audit Matter
The critical audit matter communicated below is a matter arising from the current period audits of the consolidated financial statements that were communicated, or required to be communicated, to the audit committee and that: (1) relate to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing separate opinion on the critical audit matter or on the accounts or disclosures to which they relate.
Going Concern
Due to the net loss for the year, the Company evaluated the need for a going concern.
Auditing management’s evaluation of a going concern can be a significant judgement given the fact that the Company uses management estimates on future revenues and expenses which are not able to be substantiated.
As discussed in Note 2, the Company has incurred recurring losses and as of December 31, 2024, had an accumulated deficit of $113,553,937 and no revenues for either audited year.
To evaluate the appropriateness of the going concern, we examined and evaluated the financial information along with management’s plans to mitigate the going concern and management’s disclosure on going concern.
/s/
We have served as the Company’s auditor since 2025
August 26, 2025
PCAOB ID #
F- 3
American Clean Resources Group, Inc.
Consolidated Balance Sheets
| December 31, |
December 31,
2023 |
|||||||
| 2024 | RESTATED | |||||||
| Assets | ||||||||
| Current assets: | ||||||||
| Cash | $ |
|
$ |
|
||||
| Prepaid expenses |
|
|
||||||
| Total current assets |
|
|
||||||
| Mineral rights |
|
|
||||||
| Intangible asset, net |
|
|||||||
| Total assets | $ |
|
$ |
|
||||
| Liabilities and stockholders’ deficit | ||||||||
| Convertible promissory notes, related party |
|
|
||||||
| Accounts payable |
|
|
||||||
| Accounts payable – related party |
|
|
||||||
| Accrued interest |
|
|
||||||
| Accrued interest - related party |
|
|
||||||
| Total current liabilities |
|
|
||||||
| Commitments and contingencies (Note 8) | ||||||||
|
Preferred stock,
|
|
|
||||||
| Stockholders’ deficit: | ||||||||
|
Common stock, $
|
|
|
||||||
| Additional paid-in capital |
|
|
||||||
| Accumulated deficit |
(
|
) |
(
|
) | ||||
| Total stockholders’ deficit | $ |
(
|
) | $ |
(
|
) | ||
| Total liabilities and stockholders’ deficit | $ |
|
$ |
|
||||
The accompanying footnotes are an integral part of these consolidated financial statements.
F- 4
American Clean Resources Group, Inc.
Consolidated Statements of Operations
| For Year Ended December 31, | ||||||||
| 2024 | 2023 | |||||||
| Operating expenses: | ||||||||
| General and administrative expenses | $ |
|
$ |
|
||||
| Impairment Expense |
|
|||||||
| Total operating expenses |
|
|
||||||
| Loss from operations |
(
|
) |
(
|
) | ||||
| Other income (expense): | ||||||||
| Other income |
|
|
||||||
| Interest expense |
(
|
) |
(
|
) | ||||
| Total other expenses, net |
(
|
) |
(
|
) | ||||
| Loss before income tax provision |
(
|
) |
(
|
) | ||||
| Income tax provision | ||||||||
| Net loss | $ |
(
|
) | $ |
(
|
) | ||
| Net loss per common shares: | ||||||||
| Basic net loss per common share | $ |
(
|
) | $ |
(
|
) | ||
| Weighted average shares outstanding per common shares: | ||||||||
| Basic weighted average common shares outstanding |
|
|
||||||
The accompanying footnotes are an integral part of these consolidated financial statements.
F- 5
American Clean Resources Group, Inc.
Consolidated Statements of Change in Stockholders’ Deficit
| Common Stock |
Additional
Paid-in |
Accumulated | ||||||||||||||||||
| Shares | Amount | Capital | Deficit | Total | ||||||||||||||||
| RESTATED | RESTATED | RESTATED | RESTATED | RESTATED | ||||||||||||||||
| Balance, December 31, 2022 |
|
$ |
|
$ |
|
$ |
(
|
) | $ |
(
|
) | |||||||||
| Issuance of stock for acquisition |
|
|
|
|
||||||||||||||||
| Issuance of common stock for conversion of debt and interest |
|
|
|
|
||||||||||||||||
| Net loss | - |
(
|
) |
(
|
) | |||||||||||||||
| Balance, December 31, 2023 |
|
|
|
(
|
) |
(
|
) | |||||||||||||
| Common Stock Issued for Services |
|
|
|
|
||||||||||||||||
| Net Loss | - |
(
|
) |
(
|
) | |||||||||||||||
| Balance, December 31, 2024 |
|
$ |
|
$ |
|
$ |
(
|
) | $ |
(
|
) | |||||||||
The accompanying footnotes are an integral part of these consolidated financial statements.
F- 6
American Clean Resources Group, Inc.
Consolidated Statements of Cash Flows
| For the Year Ended December 31, | ||||||||
| 2024 |
2023
RESTATED |
|||||||
| Cash flows from operating activities: | ||||||||
| Net loss | $ |
(
|
) | $ |
(
|
) | ||
| Adjustments to reconcile net loss to cash flows (used in) provided by operating activities: | ||||||||
| Amortization Expense |
|
|
||||||
| Common Stock Issued for Services |
|
|||||||
| Impairment Expense |
|
|||||||
| Changes in operating assets and liabilities: | ||||||||
| Prepaid expenses |
(
|
) |
(
|
) | ||||
| Accounts payable |
|
|
||||||
| Accounts payable – related party |
(
|
) |
|
|||||
| Accrual for settlement of lawsuits |
|
|||||||
| Accrued interest |
|
|
||||||
| Accrued interest – related parties |
|
|
||||||
| Net cash (used in) provided by operating activities |
(
|
) |
|
|||||
| Cash flows from financing activities: | ||||||||
| Proceeds from convertible notes - related party |
|
|||||||
| Net cash provided by financing activities |
|
|||||||
| Net (decrease) increase in Cash |
(
|
) |
|
|||||
| Cash, beginning of year |
|
|
||||||
| Cash, end of year | $ |
|
$ |
|
||||
| Noncash investing and financing activity: | ||||||||
| Payments made by related party on behalf of the Company | $ |
|
$ |
|
||||
| Issuance of common stock for conversion of convertible promissory note payable - related party | $ | $ |
|
|||||
| Issuance of common stock for purchase of intangible asset | $ | $ |
|
|||||
The accompanying footnotes are an integral part of these consolidated financial statements.
F- 7
AMERICAN CLEAN RESOURCES GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2024 AND 2023
1. Nature of Business
American Clean Resources Group, Inc. f/k/a Standard Metals Processing, Inc. (“we,” “us,” “our,” “ACRG” or the “Company”) is an exploration stage company, incorporated in Nevada. The Company’s primary business plan is to purchase equipment and build a facility on the Tonopah property to serve as a permitted custom processing toll milling facility while it explores new technologies that allow greater effectiveness in achieving industry sustainability goals (which includes an analytical lab, pyrometallurgical plant, and hydrometallurgical recovery plant).
The Company plans to perform permitted custom processing toll milling which is a process whereby mined material is crushed and ground into fine particles to ease the extraction of any precious minerals contained therein, such as minerals in the gold, silver, and platinum metal groups. Custom milling and refining can include many different processes that are designed specifically for each ore load and to maximize the extraction of precious metals from carbon or concentrates. These toll-processing services also distil, dry, mix, or mill chemicals and bulk materials on a contractual basis and provide a chemical production outsourcing option for industrial companies, which lack the expertise, capacity, or regulatory permits for in-house production.
We are required to obtain several permits before we can begin construction of a small-scale mineral processing facility to conduct permitted processing toll milling activities and construction of the required additional buildings and well relocation necessary for us to commence operations.
2. Summary of Significant Accounting Policies
Basis of Presentation
The accompanying consolidated financial statements of the Company have been prepared using the accrual method of accounting in accordance with U.S. GAAP and considering the requirements of the United States Securities and Exchange Commission.
Going Concern
The accompanying consolidated financial statements
have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal
course of business. The Company has incurred recurring losses and as of December 31, 2024, had an accumulated deficit of $
Principles of Consolidation
The consolidated financial statements include the accounts of the Company, and its wholly owned subsidiary Aurielle Enterprises, Inc., (f/k/a Tonopah Milling and Metals Group, Inc.) and its wholly owned subsidiaries Tonopah Custom Processing, Inc., and Tonopah Resources, Inc., and since being acquired in September 2023, SWIS LLC. All significant intercompany transactions, accounts and balances have been eliminated in consolidation.
F- 8
Use of Estimates
Preparing 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 financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Estimates may pertain to impairment of intangible assets and mining rights, useful lives of intangible assets and contingent liabilities.
Segment Information
Operating segments are identified as components
of an enterprise about which separate discrete financial information is available for evaluation by the chief operating decision maker,
or decision-making group, in making decisions regarding resource allocation and assessing performance. To date, the Company has viewed
its operations and manages its business as principally
Related Party Transaction
A related party is generally defined as (i) any person that holds 10% or more of the Company’s securities and their immediate families, (ii) the Company’s management, (iii) someone that directly or indirectly controls, is controlled by or is under common control with the Company, or (iv) anyone who can significantly influence the financial and operating decisions of the Company. A transaction is considered to be a related party transaction when there is a transfer of resources or obligations between related parties. The Company conducts business with its related parties in the ordinary course of business.
Transactions involving related parties cannot be presumed to be carried out on an arm’s-length basis, as the requisite conditions of competitive, free market dealings may not exist. Representations about transactions with related parties, if made, shall not imply that the related party transactions were consummated on terms equivalent to those that prevail in arm’s-length transactions unless such representations can be substantiated.
Cash
The Company considers all highly liquid investments with original maturities at the date of purchase of three months or less to be cash equivalents. Cash and cash equivalents include bank demand deposits, marketable securities with maturities of three months or less at purchase, and money market funds that invest primarily in certificates of deposits, commercial paper and U.S. government and U.S. government agency obligations. Cash equivalents are reported at fair value. The Company had cash equivalents as of December 31, 2024 and 2023.
Mineral Rights
The Company capitalizes acquisition costs until the Company determines the economic viability of the property. The Company has not established proven or probable reserves for any of its projects. The Company reviews the carrying value of our mineral rights and properties for impairment, including mineral rights upon the occurrence of events or changes in circumstances that indicate the related carrying amounts may not be recoverable. Our estimate of precious metal prices, mineralized materials, operating capital, and reclamation costs are subject to risks and uncertainties affecting the recoverability of our investment in all of our properties. Although the Company has made our best, most current estimate of these factors, it is possible that near term changes could adversely affect estimated net cash flows from our properties and mineral claims, and possibly require future asset impairment write-downs. Where estimates of future net operating cash flows are not available and where other conditions suggest impairment, the Company assesses recoverability of carrying value from other means, including net cash flows generated by the sale of the asset.
F- 9
Intangible Assets
Intangible assets consist of developed technology
acquired in the SWIS acquisition. The Company amortizes its developed technology over its useful life under the straight-line method.
The useful life of the developed technology is calculated based on the number of years remaining on the patent. The SWIS developed technology
has a remaining useful life of
Redeemable Series A Preferred Stock
The Company applies the guidance in ASC 480 to determine the classification and measurement of preferred stock. Preferred stock that is mandatorily redeemable is classified as a liability and measured in accordance with ASC 480. Preferred stock that is conditionally redeemable, including instruments with redemption features that are either at the option of the holder or contingent upon events outside the Company’s control, is classified as mezzanine equity in accordance with ASC 480-10-S99. All other preferred stock is classified in stockholders’ equity. Mezzanine equity is initially recorded at its original issuance price. It is subsequently measured at its redemption value when the instrument becomes currently redeemable or when it becomes probable that it will be redeemed. As the Series A Preferred Stock includes redemption features that are outside the Company’s control, it is classified as mezzanine equity and is currently recorded at its original issuance price, as the instrument is not currently redeemable and redemption is not considered probable.
Revenue Recognition
As of December 31, 2024, we have recorded no revenues from custom permitted processing toll milling. If we achieve revenue generation, the Company plans to report such revenues consistent with ASC Topic 606 Revenues from Contracts with Customers. The Company recognizes revenue when control of the promised goods or services is transferred to customers, in an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods or services. Significant judgments are required in determining the transaction price and the timing of revenue recognition.
Stock-Based Compensation
The stock-based payments are accounted for in accordance with the provisions of ASC 718, Compensation — Stock Compensation. The Company measures the estimated fair value of the stock-based award on the date of grant using the Black-Scholes-Merton option pricing model (“Black-Scholes Model”) and recognizes compensation expense for those awards over the requisite service period, which is generally the vesting period of the respective award. The Black-Scholes Model requires the use of a number of assumptions including volatility of the stock price, the weighted average risk-free interest rate, and the vesting period in determining the fair value of stock-based awards. The expected term is based on the “simplified method”, due to the Company’s limited stock award history. Under this method, the term is estimated using the weighted average of the service vesting period and contractual term of the option award. As the Company Class A common stock has a limited history in the public markets, the Company has identified several public entities of similar size, complexities and industry and calculates historical volatility based on the volatilities of these companies. Although the Company believes its assumptions used to calculate stock-based compensation expenses are reasonable, these assumptions can involve complex judgments about future events, which are open to interpretation and inherent uncertainty. In addition, significant changes to our assumptions could significantly impact the amount of expense recorded in a given period. The Company accounts for forfeitures in the period in which they occur, rather than estimate expected forfeitures.
F- 10
Concentration of Credit Risk
Financial instruments that potentially subject
the Company to concentrations of credit risk consist principally of cash and cash equivalents and trade accounts receivable. Cash and
cash equivalents of the Company are exposed to credit risk, subject to federal deposit insurance, in the event of default by the financial
institutions holding its cash and cash equivalents to the extent of amounts recorded on the balance sheet. The cash accounts are insured
by the Federal Deposit Insurance Corporation (“FDIC”) up to $
Fair Value of Financial Instruments
The Company accounts for financial instruments under Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 820, Fair Value Measurements. This statement defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles, and expands disclosures about fair value measurements. To increase consistency and comparability in fair value measurements, ASC 820 establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three levels as follows:
| Level 1 — | quoted prices (unadjusted) in active markets for identical assets or liabilities; |
| Level 2 — | observable inputs other than Level 1, quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets and liabilities in markets that are not active, and model-derived prices whose inputs are observable or whose significant value drivers are observable; and |
| Level 3 — | assets and liabilities whose significant value drivers are unobservable. |
The Company applies fair value accounting for all assets and liabilities that are recognized or disclosed at fair value in the financial statements. The carrying amounts reported in the financial statements for cash, accounts payables and accrued liabilities approximate their fair value due to their short-term nature.
Loss Contingencies
Certain conditions may exist as of the date the financial statements are issued, which may result in a loss to the Company, but which will only be resolved when one or more future events occur or fail to occur. The Company’s management and its legal counsel assess such contingent liabilities, and such assessment inherently involves an exercise of judgment. In assessing loss contingencies related to legal proceedings that are pended against the Company or unasserted claims that may result in such proceedings, the Company’s legal counsel evaluates the perceived merits of any legal proceedings or unasserted claims as well as the perceived merits of the amount of relief sought or expected to be sought therein.
If the assessment of a contingency indicates that it is probable that a material loss has been incurred and the amount of the liability can be estimated, then the estimated liability would be accrued in the Company’s financial statements. If the assessment indicates that a potentially material loss contingency is not probable, but is reasonably possible, or is probable but cannot be estimated, then the nature of the contingent liability, together with an estimate of the range of possible loss if determinable and material, would be disclosed.
Loss contingencies considered remote are generally not disclosed unless they involve guarantees, in which case the nature of the guarantee would be disclosed.
F- 11
Income Taxes
The Company and its U.S. subsidiaries file a consolidated federal income tax return and is taxed as a C-Corporation, whereby it is subject to federal and state income taxes. The Company accounts for income taxes in accordance with ASC 740, “Income Taxes”. ASC 740 requires an asset and liability approach for financial accounting and reporting for income taxes and established for all the entities a minimum threshold for financial statement recognition of the benefit of tax positions and requires certain expanded disclosures. The provision for income taxes is based upon income or loss after adjustment for those permanent items that are not considered in the determination of taxable income. Deferred income taxes represent the tax effects of differences between the financial reporting and tax basis of the Company’s assets and liabilities at the enacted tax rates in effect for the years in which the differences are expected to reverse. The Company evaluates the recoverability of deferred tax assets and establishes a valuation allowance when it is more likely than not that some portion or all the deferred tax assets will not be realized. Management makes judgments as to the interpretation of the tax laws that might be challenged upon an audit and cause changes to previous estimates of tax liability. In management’s opinion, adequate provisions for income taxes have been made. If actual taxable income by tax jurisdiction varies from estimates, additional allowances or reversals of reserves may be necessary.
Basic and Diluted Net Loss Per Share
Basic net loss per common share is computed by dividing net loss by the weighted-average number of common shares outstanding during each period. Diluted net loss per share of common shares includes the effect, if any, from the potential exercise or conversion of securities, such as convertible debt, share options and warrants, which would result in the issuance of incremental shares of common shares. For diluted net loss per share, the weighted-average number of common shares is the same for basic net loss per share due to the fact that when a net loss exists, dilutive securities are not included in the calculation as the impact is anti-dilutive. For all periods presented, basic and diluted net loss per share are the same, as any additional share equivalents would be anti-dilutive.
As of December 31, 2024 and 2023, the Company
convertible promissory note – related party was convertible into
Recent Accounting Standards
On November 27, 2023, the FASB issued ASU 2023-07, “Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures,” which requires incremental disclosures related to an entity’s reportable segments, effective for annual periods beginning after December 15, 2023. The Company adopted ASU 2023-07 on December 31, 2024, which resulted in additional disclosures in the notes to our consolidated financial statements that we applied retrospectively to all prior periods presented. See Note 10. Segment Information.
The FASB and other entities issued new or modifications to, or interpretations of, existing accounting guidance during 2024. Management has carefully considered the new pronouncements that altered generally accepted accounting principles and does not believe that any other new or modified principles will have a material impact on the Company’s reported financial position or operations in the near term.
F- 12
Restatement of Previously Issued Consolidated Financial Statements
During the third quarter of 2024, and prior to the filing of the Company’s Form 10-K/A for the year ended December 31, 2023, the Company determined that it was necessary to re-evaluate the Company’s accounting treatment for certain debt obligations. In accordance with Staff Accounting Bulletins No. 99 (SAB No. 99) Topic 1.M, “Materiality” and SAB No. 99 Topic 1.N “Considering the Effects of Misstatements when Quantifying Misstatements in the Current Year Financial Statements,” the Company assessed the materiality of these errors to its previously issued consolidated financial statements. Based upon the Company’s evaluation of both quantitative and qualitative factors, the Company concluded the errors were material to the Company’s previously issued consolidated financial statements for the fiscal years ended December 31, 2023 and 2022. Accordingly, this Form 10-K presents the Company’s Restated Consolidated Financial Statements for the fiscal years ended December 31, 2023 and 2022. Additionally, the Company has restated its previously filed unaudited interim condensed consolidated financial statements for the periods ended March 31, 2023, June 30, 2023 and September 30, 2023 contained within this Form 10-K. See Note 11 for further information and the unaudited interim condensed consolidated financial statements contained within this Form 10-K.
3. Mineral rights
The Company is preparing the Tonopah property
site for the construction of a permitted custom processing toll milling facility including grading the land, installing fencing, and working
with contractors for our planned
The Company has continued to assess the realizability
of its Mineral rights. Based on an assessment the Company conducted during 2024, the Company decided the combined carrying value of its
land, mineral rights, and water rights of $
4. Developed Technology
On September 13, 2023, the Company executed an
agreement to acquire a
The Company determined the acquisition to be an asset acquisition under ASC 805, Business Combinations, as all of the fair value of the gross assets acquired was concentrated in a single identifiable asset, the developed technology and exclusive license. The developed technology and exclusive license is a definite-lived intangible asset and is being amortized over the life of the patent life.
The total purchase consideration for the acquisition
of SWIS was $
During the years ended December 31, 2024 and 2023,
the Company recorded total amortization expense of $
During the Company’s ongoing assessment
of the carrying value of its developed technology in 2024, management determined that the asset’s book value of $
F- 13
5. Debt
Convertible Promissory Notes Payable – Related Party
On March 16, 2020, the Company entered into
a Line of Credit (“LOC”) agreement with Granite Peak Resources LLC (“GPR”), a related party and
the majority shareholder of the Company. The initial LOC provided for borrowings up to $
On July 12, 2021, the LOC was amended (the “First Amendment”) to:
| ● |
Increase the borrowing limit to $
|
| ● |
Extend the maturity date to
|
| ● |
Reduce the conversion price to $
|
The First Amendment also granted GPR the option
to further increase the LOC by $
On January 5, 2023, the Company entered into a Second Amendment to the LOC (the “Second Amendment”) with GPR. The amendment significantly restructured the existing LOC agreement. Key terms of the Second Amendment included:
| ● |
Increase in Borrowing Capacity: From $
|
| ● |
Extension of Maturity Date: To
|
| ● |
Reduction in Conversion Price: From $
|
| ● | Debt Consolidation: The following obligations, previously acquired by GPR, were formally consolidated into the LOC: |
| ● |
Tina Gregerson Promissory Note: $
|
| ● |
Krupp Note: $
|
| ● | Forbearance: GPR agreed to forbear from exercising rights under the loan documents, including foreclosure rights related to the Stephen Flechner Judgment and the Pure Path Capital Senior Secured Convertible Promissory Note, both of which had been previously purchased by GPR. The forbearance period extends through January 12, 2024. |
The Company evaluated the amendment under ASC
470-50 and ASC 470-60 and concluded it constituted a debt extinguishment, as the present value of the revised cash
flows exceeded the
On June 12, 2023, the Company entered into a Third Amendment to the LOC (the “Third Amendment”) with GPR. Key terms of the Third Amendment included:
| ● |
Increase in Borrowing Capacity: From $
|
| ● |
Expansion of Collateral: The Deed of Trust
and Security Agreement was amended to increase the secured amount from $
|
| ● | Debt Consolidation: The following obligations, previously acquired by GPR, were formally consolidated into the LOC: |
| ● |
The Pure Path Capital Senior Secured Convertible
Promissory Note: $
|
| ● |
Stephen Flechner Judgment: $
|
F- 14
The Company determined the amendment met the criteria for a troubled debt restructuring (TDR) under ASC 470-60, as the Company was experiencing financial difficulty and GPR granted a concession. The amendment was accounted for as a debt extinguishment under ASC 470-50, with no gain or loss recognized.
On August 2, 2023, GPR converted $
As of December 31, 2024 the outstanding balance
under the LOC consisted of $
During the years ended December 31, 2024 and 2023,
the Company recognized non-cash borrowings of $
Acquisition of Outstanding Defaulted Debt and Material Judgement
Tina Gregerson Promissory Note
On February 11, 2015, the Company issued
an unsecured promissory note (the “TG Note”) to Tina Gregerson Family Properties, LLC, an entity controlled by a former
director of the Company. The TG Note provided for borrowings of up to $
Each tranche under the TG Note matured one year
from the date of funding and accrued interest at a rate of
| ● |
$
|
| ● |
$
|
| ● |
$
|
| ● |
$
|
| ● |
$
|
| ● |
$
|
| ● |
$
|
On August 12, 2021, GPR and Tina Gregerson entered into an Exchange Agreement, under which GPR acquired the TG Note. Subsequently, on January 5, 2023, the outstanding balance of the TG Note was consolidated into the Company’s LOC with GPR as part of the Second Amendment to the LOC.
As of the date of consolidation, the total balance
of the TG Note was $
Peter Krupp Promissory Note
On August 4, 2011, the Company issued an
unsecured promissory note (the “Krupp Note”) to Peter Krupp in the principal amount of $
On August 12, 2021, GPR and Peter Krupp entered into an Exchange Agreement, under which GPR acquired the Krupp Note. Subsequently, on January 5, 2023, the outstanding balance of the Krupp Note was consolidated into the Company’s LOC with GPR as part of the Second Amendment to the LOC.
As of the date of consolidation, the total balance
of the Krupp Note was $
F- 15
Stephen Flechner Judgement
On August 12, 2015, the court entered an Amended
Final Judgment in favor of Stephen E. Flechner and against the Company in connection with breach of contract claims. The
judgment awarded $
On November 29, 2021, GPR, a related party and majority shareholder, entered into a Purchase and Sale Agreement with Mr. Flechner, under which GPR acquired all rights, title, and interest in the judgment.
On January 5, 2023, in connection with the Second Amendment to the Company’s LOC with GPR, GPR agreed to forbear from exercising its rights and remedies under the loan documents, including foreclosure rights related to the Flechner Judgment, through January 12, 2024.
On June 12, 2023, pursuant to the Third
Amendment to the LOC, the Flechner Judgment was formally consolidated into the LOC. As of the date of consolidation, the total
balance of the judgment was $
Pure Path Capital Senior Secured Convertible Promissory Note
On October 10, 2013, the Company issued a Senior
Secured Convertible Promissory Note (the “Senior Secured Note”) to Pure Path Capital Management Company, LLC (“PPMC”) in
the principal amount of up to $
The Senior Secured Note was secured by a blanket lien on all of the Company’s tangible and intangible assets, whether currently owned or subsequently acquired. This included, but was not limited to, machinery, inventory, accounts receivable, cash, computer equipment, hardware, land, and mineral rights.
On March 29, 2019, GPR, a related party and majority shareholder, acquired the Senior Secured Note from PPMC pursuant to an Exchange and Assignment Agreement.
On June 12, 2023, in connection with
the Third Amendment to the Company’s LOC with GPR, the Senior Secured Note was formally consolidated into the
LOC. As of the date of consolidation, the total balance of the note was $
6. Related Parties
As part of its normal operations, the Company conducts financing through its largest shareholder, GPR. The details of the related party balances are disclosed as part of Note 5.
F- 16
Granite Peak Resources, LLC
On March 16, 2020, the Company entered into a LOC agreement with GPR. GPR is a related party by virtue of its majority ownership of the Company’s common stock. Under the LOC, GPR has also paid expenses directly on behalf of the Company to support its operations.
During 2019 and 2021, GPR acquired several outstanding debt instruments and judgments originally held by third parties, including:
| ● | The Tina Gregerson Promissory Note, |
| ● | The Peter Krupp Promissory Note, |
| ● | The Pure Path Capital Senior Secured Convertible Promissory Note, and |
| ● | The Stephen E. Flechner Judgment. |
On January 5, 2023, and June 12, 2023, the Company entered into the Second and Third Amendments, respectively, to the LOC with GPR. These amendments formally consolidated the above obligations into the LOC, which was subsequently converted into equity.
On August 2, 2023, and August 15, 2023,
GPR converted a total of $
During the year ended December 31, 2024, the Company recorded:
| ● |
$
|
| ● |
$
|
These amounts were added to the LOC principal balance.
Sustainable Metals Solutions, LLC
On January 10, 2022, the Company entered into a definitive agreement to acquire a controlling interest in Sustainable Metals Solutions, LLC (“SMS”), a company majority-owned by GPR. SMS is an environmental development platform focused on producing carbon-neutral precious metals and minerals. The purchase price for the controlling interest will be determined based on the Company’s common stock price on the closing date, which will be mutually agreed upon once all closing conditions are satisfied. Additional details are provided in Note 8 – Commitments and Contingencies.
Launch IT, LLC
On September 13, 2023, the Company acquired
a
In connection with the acquisition, the Company
retained AJ Miller and Chris Laveson, both former owners of Launch IT, LLC, to continue supporting the SWIS business. AJ
Miller is an officer and Chris Laveson is a manager of SWIS subsidiary following the acquisition and both hold
F- 17
The following table summarizes the amounts related to these parties that were included in accounts payable – related party, expenses incurred, and cash paid during the year ended December 31, 2024 and 2023:
| As of and for the Year Ending December 31, 2024 | ||||||||||||
| Related Party | Included in Accounts Payable - Related Party |
Expenses
incurred |
Amount
paid |
|||||||||
| Launch IT, LLC | $ |
|
$ | $ |
|
|||||||
| Gazellig LLC - AJ Miller |
|
|
|
|||||||||
| Chris Lavenson |
|
|
|
|||||||||
| $ |
|
$ |
|
$ |
|
|||||||
| As of and for the Year Ending December 31, 2023 | ||||||||||||
| Related Party | Included in Accounts Payable - Related Party |
Expense
incurred |
Amount
paid |
|||||||||
| Launch IT, LLC | $ |
|
$ |
|
$ | |||||||
| Gazellig LLC - AJ Miller |
|
|
||||||||||
| Chris Lavenson |
|
|
||||||||||
| $ |
|
$ |
|
$ | ||||||||
7. Stockholders’ Deficit and Mezzanine Equity
Preferred Stock
The Series A Preferred Stock is presented as mezzanine equity due to its rights and preferences.
Attributes of Series A Preferred Stock include but are not limited to the following:
Distribution in Liquidation
The Series A Preferred Stock has a liquidation
preference of $
| ● |
The Company has an average market capitalization (calculated by adding the value of all outstanding shares of Common Stock valued at the Company’s closing sale price on the OTC Market or other applicable bulletin board or exchange, plus the value of the outstanding Series A Preferred Stock at the Original Issue Price per share) of $
|
| ● |
Any Liquidity Event in which the Company receives proceeds of $
|
F- 18
Redemption
The Series A Preferred Stock may be redeemed in whole or in part as determined by a resolution of the Board of Directors at any time, at a price equal to the Liquidation Value.
Voting Rights
Shares of Series A Preferred Stock shall have
no rights to vote on any matter submitted to a vote of shareholders, except as required by law, in which case each share of Series A Preferred
Stock shall be entitled to
Conversion Rights
Holders of Series A Preferred Stock will have no right to convert such shares into any other equity securities of the Company.
Common Stock
As of December 31, 2024 and 2023, the Company
is authorized to issue
Voting Rights
Holders of our common stock are entitled to
Dividend Rights
Holders of our common stock are entitled to receive dividends when, as and if declared by our board of directors out of funds legally available for this purpose.
Liquidation Preference
In the event of our liquidation, dissolution or winding up, holders of our common stock are entitled to receive on a proportional basis any assets remaining available for distribution after payment of our liabilities and Series A Preferred Stock.
Other Terms
Holders of common stock have no conversion, preemptive or other subscription rights and there are no sinking fund or redemption provisions applicable to the common stock. All outstanding shares of the common stock are fully paid and non-assessable.
F- 19
Common Stock Issuances
The following table summarizes the Company’s issuances of common stock during the year ended December 31, 2024:
| Date | Shares Issued | Purpose |
Fair Value
per Share |
Total
Value |
||||||||||
| 6/25/2024 |
|
|
$ |
|
(1)(3) | $ |
|
|||||||
| 9/19/2024 & 9/25/2024 |
|
|
$ |
|
(1)(3) | $ |
|
|||||||
| 8/2/2023 |
|
|
$ |
|
(1) | $ |
|
|||||||
| 8/15/2023 |
|
|
$ |
|
(1) | $ |
|
|||||||
| 9/13/2023 |
|
|
$ |
|
(2) | $ |
|
|||||||
| 1) |
|
| 2) |
|
| 3) |
|
All issuances were accounted for in accordance with ASC 505-10 (Equity) and ASC 718 (Compensation—Stock Compensation), as applicable. o gain or loss was recognized on the debt conversions, as the carrying amount of the debt equaled the fair value of the equity issued. Advisory Board compensation was recorded as general and administrative expense, with a corresponding credit to additional paid-in capital.
8. Commitments and Contingencies
Merger with the SMS Group
On January 10, 2022 the Company executed a definitive agreement to acquire a controlling interest in Sustainable Metal Solutions LLC and its subsidiaries (“SMS” or the “SMS Group”). The purchase price for the controlling interest in SMS will be determined based upon the price of the Company’s common stock on the date of closing, such date to be decided by the Parties in good faith after all conditions precedent are met. These conditions precedent include, but are not limited to:
| ● | Completion of SMS’s audited financial statements by an independent PCAOB-registered accounting firm; |
| ● | Delivery of a completed and SEC-compliant SK-1300 technical report summary on SMS’s mineral reserves as of December 31, 2021 and 2022; |
| ● | Uplisting of ACRG’s common stock to the Nasdaq Capital Market; |
| ● | SEC clearance of the Form S-4 registration statement and proxy materials; |
| ● | Approval of the merger by ACRG’s shareholders; |
| ● | Satisfaction of customary closing conditions, including representations and warranties, covenants, and absence of material adverse changes. |
SMS is an American multi-company environmental development platform focused on producing carbon neutral precious metals and minerals thereby driving American mineral independence while revitalizing the environment and minimizing the impacts of climate change. The business of SMS is consistent with the Company’s posture to acquire, license or joint venture with other parties involved in toll milling, processing, or mining related activities, which may include GPR and its affiliated entities, including, but not limited to, NovaMetallix. Inc., and BlackBear Natural Resources, LTD.
SMS is a group of companies that has developed a significant primary source of metals for conventional mining and secondary sources of metals from previously discarded mining tailings for re-reprocessing and recovery. Access to the large amount of mine tailings on the Company’s Nevada property adds favorably to SMS’s plans. Its goal is to enhance the US’s supply chain of various metals produced locally using environmentally friendly methods. In addition, SMS’s sustainable resource program has developing interests in alternative sources of energy, including the Company’s Nevada property which is zoned for solar development, and the conservation of our water resources.
F- 20
Joint Venture with AMI
Effective June 3, 2024, the Company executed a Memorandum of Understanding for a Joint Venture with AMI Strategies, (“AMI”). The Parties intend to form a joint operation and utilize the technology and talent of both organizations for their mutual benefit which includes the Company’s planned renewable energy generation, specifically solar power through the operation, engineering, infrastructure, and construction of controlled solar power and AMI’s management of utility costs through a proprietary software platform that can bill, audit, invoice and manage the daily operations of suppliers and clients.
About AMI:
AMI Strategies serves clients on every continent, offering a global suite of solutions for Telecom, Mobility, Cloud, Utility, ServiceNow, and Managed Automation deployments – all powered by cutting-edge technology and automation.
AMI’s platform is designed to manage any vendor that’s important to its customers – no matter what category it’s in. By establishing inventory that includes integrated data from vendors and enterprise systems, auditing charges against correlating contracts, automating allocations and payments, and centralizing how services are purchased, changed or decommissioned, AMI ensures its clients never waste time on vendor-related busywork, and never pay more than they’re supposed to.
Definitive Documents:
The Parties will work together to draft definitive documents including the formation of the joint venture and its governing documents.
9. Income Taxes
The components of income tax expense for the years ended December 31, 2024, and 2023 consist of the following:
| 2024 | 2023 | |||||||
| Current tax provision | $ | $ | ||||||
| Deferred tax benefit |
(
|
) |
(
|
) | ||||
| Valuation allowance |
|
|
||||||
| Total income tax provision | $ | $ | ||||||
Reconciliations between the statutory rate and the effective tax rate for the years ended December 31, 2024, and 2023 consist as follows:
| 2024 | 2023 | |||||||
| Federal statutory tax rate |
(
|
)% |
(
|
)% | ||||
| Prior period adjustment |
|
% | ||||||
| Valuation allowance |
|
% |
|
% | ||||
| Effective tax rate | ||||||||
F- 21
Significant components of the Company’s
deferred tax assets as of December 31, 2024 and 2023 are summarized below. The calculations presented below reflect the new U.S. federal
statutory corporate tax rate of
| 2024 | 2023 | |||||||
| Deferred tax assets: | ||||||||
| Net operating loss carry forwards | $ |
|
$ |
|
||||
| Impairment of assets |
|
|
||||||
| Stock based compensation |
|
|
||||||
| Loss on settlement of debt |
(
|
) |
(
|
) | ||||
| Total deferred tax asset |
|
|
||||||
| Valuation allowance |
(
|
) |
(
|
) | ||||
| $ | $ | |||||||
As of December 31, 2024, the Company had approximately
$
As of December 31, 2024, we do not believe any of our net operating loss carry forward consists of deductions generated by the exercise of warrants or options to purchase our stock. In the future, the stock options referenced in the above table of deferred tax items may be exercised and we may receive a tax deduction. To the extent that the tax deduction is included in a net operating loss carry forward and is in excess of amounts recognized for book purposes, no benefit will be recognized until the loss carry forward is recognized. Upon utilization and realization of the carry forward, the corresponding change in the deferred asset and valuation allowance will be recorded as additional paid-in capital.
We provide for a valuation allowance when it is more likely than not that we will not realize a portion of the deferred tax assets. We have established a valuation allowance against our net deferred tax asset due to the uncertainty that enough taxable income will be generated in those taxing jurisdictions to utilize the assets. Therefore, we have not reflected any benefit of such deferred tax assets in the accompanying financial statements.
.
We reviewed all income tax positions taken or that we expect to be taken for all open years and determined that our income tax positions are appropriately stated and supported for all open years. The Company is subject to U.S. federal income tax examinations by tax authorities for years after 2021 due to unexpired net operating loss carryforwards originating in and subsequent to that year. The Company may be subject to income tax examinations for the various taxing authorities which vary by jurisdiction.
10. Segment Information
The Company views its operations and manages its
business in
The measure of segment assets is reported on the balance sheets and income statements such as cash and net loss or income, respectively. All material long-lived assets are in the United States.
F- 22
11. Restatement of Previously Issued Financial Statements
As described in Note 2 the Company determined that it was necessary to re-evaluate its accounting treatment for its debt obligations. The Company identified accrued interest calculations were performed incorrectly and borrowing on its related party promissory note with GPR included borrowings that weren’t related to the Company operations and should have not been included in the principal balance. Certain previously reported amounts within the financial statements did not mathematically reconcile (i.e., did not foot). These amounts are presented herein as originally reported in the previously issued financial statements for transparency and consistency. The restatement corrects these errors and reflects the appropriate adjustments. Below are the Company’s restated consolidated balance sheets, statement of operations, statement of stockholders’ deficit and statement of cash flows with the adjustments for the periods stated in the tables below.
AMERICAN RESOURCES CORPORATION
RESTATED BALANCE SHEETS
| Balance Sheet as of December 31, 2023 | As Reported | Adjustment | As Restated | |||||||||
| Assets | ||||||||||||
| Current assets: | ||||||||||||
| Cash | $ |
|
$ |
|
$ |
|
||||||
| Prepaid expenses |
|
|
|
|||||||||
| Total current assets |
|
|
|
|||||||||
| Mineral rights |
|
|
||||||||||
| Intangible asset, net |
|
|
|
|||||||||
| Total assets | $ |
|
$ |
|
$ |
|
||||||
| Liabilities, mezzanine, and stockholders’ deficit | ||||||||||||
| Current liabilities: | ||||||||||||
| Convertible promissory notes, related party | $ |
|
$ |
(
|
) | $ |
|
|||||
| Accrual for settlement of lawsuits | ||||||||||||
| Accounts payable |
|
(
|
) |
|
||||||||
| Accounts payable – related party |
|
|
|
|||||||||
| Accrued interest |
|
|
|
|||||||||
| Accrued interest - related party |
|
(
|
) |
|
||||||||
| Total current liabilities |
|
|
|
|||||||||
| Commitments and contingencies | ||||||||||||
| Preferred stock, 50,000,000 shares authorized: | ||||||||||||
|
Preferred stock,
|
|
|
||||||||||
| Stockholders’ deficit: | ||||||||||||
|
Common stock, $
|
|
(
|
) |
|
||||||||
| Additional paid-in capital |
|
(
|
) |
|
||||||||
| Accumulated deficit |
(
|
) |
|
(
|
) | |||||||
| Total stockholders’ deficit |
(
|
) |
(
|
) |
(
|
) | ||||||
| Total Liabilities, mezzanine and stockholders’ deficit | $ |
|
$ |
(
|
) | $ |
|
|||||
F- 23
AMERICAN RESOURCES CORPORATION
RESTATED INCOME STATEMENT
| Statement of operations for the year ended December 31, 2023 | As Reported | Adjustment | As Restated | |||||||||
| Operating expenses: | ||||||||||||
| General and administrative expenses | $ |
|
$ |
(
|
) | $ |
|
|||||
| Amortization expense |
|
(
|
) | |||||||||
| Total operating expenses |
|
(
|
) |
|
||||||||
| Loss from operations |
(
|
) |
|
(
|
) | |||||||
| Other income (expense): | ||||||||||||
| Other income |
|
|
||||||||||
| Gain on the settlement of accounts payable |
|
(
|
) | |||||||||
| Interest expense |
(
|
) |
|
(
|
) | |||||||
| Total other expense, net |
(
|
) |
|
(
|
) | |||||||
| Loss before income tax provision |
(
|
) |
|
(
|
) | |||||||
| Income tax provision | ||||||||||||
| Net loss | $ |
(
|
) | $ |
|
$ |
(
|
) | ||||
| Basic net loss per common share | $ |
(
|
) | $ |
|
$ |
(
|
) | ||||
| Basic weighted average common shares outstanding |
|
|
|
|||||||||
F- 24
|
As Reported
Common Stock Shares |
Adjustments |
As Restated
Common Stock Shares |
As Reported
Common Stock Amount |
Adjustments |
As Restated
Common Stock Amount |
As Reported
Additional Paid-in Capital |
Adjustments |
As Restated
Additional Paid-in Capital |
As Reported
Accumulated Deficit |
Adjustments |
As Restated
Accumulated Deficit |
As Reported
Total |
Adjustments |
As Restated
Total |
||||||||||||||||||||||||||||||||||||||||||||||
| Balance, December 31, 2022 |
|
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
(
|
) | $ |
|
$ |
(
|
) | $ |
|
$ |
(
|
) | $ |
(
|
) | $ |
|
$ |
(
|
) | |||||||||||||||||||||||||||||
| Issuance of stock for acquisition |
|
|
|
|
|
|
|
|
||||||||||||||||||||||||||||||||||||||||||||||||||||
| Issuance of common stock for conversion of debt and interest |
|
(
|
) |
|
|
(
|
) |
|
|
(
|
) |
|
|
(
|
) |
|
||||||||||||||||||||||||||||||||||||||||||||
| Net loss | - | - | - |
(
|
) |
|
(
|
) |
(
|
) |
|
(
|
) | |||||||||||||||||||||||||||||||||||||||||||||||
| Balance, December 31, 2023 |
|
(
|
) |
|
$ |
|
$ |
(
|
) | $ |
|
$ |
|
$ |
(
|
) | $ |
|
$ |
(
|
) | $ |
|
$ |
(
|
) | $ |
(
|
) | $ |
(
|
) | $ |
(
|
) | |||||||||||||||||||||||||
F- 25
AMERICAN RESOURCES CORPORATION
RESTATED CASH FLOW STATEMENT
| Statement of Cash flows for the year ended December 31, 2023 | As Reported | Adjustment | As Restated | |||||||||
| Cash flows used in operating activities: | ||||||||||||
| Net loss | $ |
(
|
) | $ |
|
$ |
(
|
) | ||||
| Adjustments to reconcile net loss to cash flows used in operating activities: | ||||||||||||
| Amortization expense |
|
(
|
) |
|
||||||||
| Gain on derecognition of certain accounts payable |
(
|
) |
|
|||||||||
| Expenses paid directly by related party |
|
(
|
) | |||||||||
| Changes in operating assets and liabilities: | ||||||||||||
| Prepaid expenses |
(
|
) |
(
|
) |
(
|
) | ||||||
| Accounts payable |
(
|
) |
|
|
||||||||
| Accounts payable – related party |
|
(
|
) |
|
||||||||
| Accrual for settlement of lawsuits |
|
|
|
|||||||||
| Accrued interest |
|
|
||||||||||
| Accrued interest – related parties |
|
(
|
) |
|
||||||||
| Net cash used in operating activities |
|
|
|
|||||||||
| Net (decrease in cash |
|
|
|
|||||||||
| Cash, beginning of year |
|
|
|
|||||||||
| Cash, end of year | $ |
|
$ |
|
$ |
|
||||||
| Noncash investing and financing activity: | ||||||||||||
| Payments made by related party on behalf of the Company | $ |
|
$ |
(
|
) | $ |
|
|||||
| Consolidation of debt and accrued interest due to parent | $ |
|
(
|
) | ||||||||
| Issuance of common stock for conversion of convertible promissory note payable - related party | $ |
|
$ |
(
|
) | $ |
|
|||||
| Issuance of common stock for purchase of intangible asset | $ |
|
$ |
|
$ |
|
||||||
12. Subsequent Events
The Company follows the guidance in FASB ASC 855-10 for the disclosure of subsequent events. The Company evaluated subsequent events through the date the financial statements were issued and determined the Company had no subsequent events.
F- 26
American Clean Resources Group, Inc.
Unaudited Condensed Consolidated Balance Sheets
| September 30, | December 31, | |||||||
| 2024 | 2023 | |||||||
| (Unaudited) | RESTATED | |||||||
| Assets | ||||||||
| Current assets: | ||||||||
| Cash | $ | 1,599 | $ | 36,405 | ||||
| Prepaid expenses | 22,015 | 6,774 | ||||||
| Total current assets | 23,614 | 43,179 | ||||||
| Mineral rights | 3,883,524 | 3,883,524 | ||||||
| Intangible asset, net | 4,658,333 | 4,908,719 | ||||||
| Total assets | $ | 8,565,471 | $ | 8,835,422 | ||||
| Liabilities, mezzanine, and stockholders’ deficit | ||||||||
| Convertible promissory notes, related party | $ | 368,264 | $ | 156,302 | ||||
| Accounts payable | 1,468,618 | 1,194,663 | ||||||
| Accounts payable – related party | 190,858 | 219,962 | ||||||
| Accrued interest | 1,985,855 | 1,726,210 | ||||||
| Accrued interest - related party | 19,575 | 1,149 | ||||||
| Total current liabilities | 4,033,170 | 3,298,286 | ||||||
| Commitments and contingencies (Note 8) | ||||||||
| Preferred stock, 50,000,000 shares authorized Series A, $.001 par value, 10,000,000 shares issued and outstanding as of September 30, 2024 and December 31, 2024 | 10,000,000 | 10,000,000 | ||||||
| Stockholders’ deficit: | ||||||||
| Common stock, $0.001 par value, 500,000,000 shares authorized: 14,422,360 and 14,418,760 issued and outstanding as of September 30, 2024 and December 31, 2023, respectively | 13,911 | 13,908 | ||||||
| Additional paid-in capital | 103,175,100 | 103,144,615 | ||||||
| Accumulated deficit | (108,656,710 | ) | (107,621,387 | ) | ||||
| Total stockholders’ deficit | $ | (5,467,699 | ) | $ | (4,462,864 | ) | ||
| Total liabilities and stockholders’ deficit | $ | 8,565,471 | $ | 8,835,422 | ||||
The accompanying footnotes are an integral part of these condensed consolidated financial statements.
F- 27
American Clean Resources Group, Inc.
Unaudited Condensed Consolidated Statements of Operations
|
For Three Months Ended
September 30, |
For Nine Months Ended
September 30, |
|||||||||||||||
| 2024 | 2023 | 2024 | 2023 | |||||||||||||
| Operating expenses: | ||||||||||||||||
| General and administrative expenses | $ | 241,920 | $ | 115,351 | $ | 768,547 | $ | 222,066 | ||||||||
| Total operating expenses | 241,920 | 115,351 | 768,547 | 222,066 | ||||||||||||
| Loss from operations | (241,920 | ) | (115,351 | ) | (768,547 | ) | (222,066 | ) | ||||||||
| Other income (expense): | ||||||||||||||||
| Other income | 2,098 | 2,098 | 11,296 | 6,296 | ||||||||||||
| Interest expense | (98,251 | ) | (184,073 | ) | (278,072 | ) | (609,547 | ) | ||||||||
| Total other expense, net | (96,153 | ) | (181,975 | ) | (266,776 | ) | (603,251 | ) | ||||||||
| Loss before income tax provision | (338,073 | ) | (297,326 | ) | (1,035,323 | ) | (825,317 | ) | ||||||||
| Income tax provision | - | - | - | - | ||||||||||||
| Net loss | $ | (338,073 | ) | $ | (297,326 | ) | $ | (1,035,323 | ) | $ | (825,317 | ) | ||||
| Net loss per common shares: | ||||||||||||||||
| Basic net loss per common share | $ | (0.03 | ) | $ | (0.03 | ) | $ | (0.07 | ) | $ | (0.09 | ) | ||||
| Weighted average shares outstanding per common shares: | ||||||||||||||||
| Basic weighted average common shares outstanding | 13,908,059 | 10,827,118 | 13,907,704 | 8,809,280 | ||||||||||||
The accompanying footnotes are an integral part of these condensed consolidated financial statements.
F- 28
American Clean Resources Group, Inc.
Unaudited Condensed Consolidated Statements of Changes in Stockholders’ Deficit
| Common Stock |
Additional
Paid-in |
Accumulated | ||||||||||||||||||
| Shares | Amount | Capital | Deficit | Total | ||||||||||||||||
| RESTATED | RESTATED | RESTATED | RESTATED | RESTATED | ||||||||||||||||
| Balance, December 31, 2022 | 2,674,530 | $ | 2,675 | $ | 88,061,297 | $ | (106,450,221 | ) | $ | (18,386,249 | ) | |||||||||
| Net loss | - | - | - | (229,071 | ) | (229,071 | ) | |||||||||||||
| Balance, March 31, 2023 | 2,674,530 | 2,675 | 88,061,297 | (106,679,292 | ) | (18,615,320 | ) | |||||||||||||
| Net loss | - | - | - | (298,920 | ) | (298,920 | ) | |||||||||||||
| Balance, June 30, 2023 | 2,674,530 | 2,675 | 88,061,297 | (106,978,212 | ) | (18,914,240 | ) | |||||||||||||
| Issuance of stock for acquisition | 1,500,000 | 1,500 | 4,873,500 | - | 4,875,000 | |||||||||||||||
| Issuance of common stock for conversion of debt and interest | 9,732,906 | 9,733 | 10,209,818 | - | 10,219,551 | |||||||||||||||
| Net loss | - | - | - | (297,326 | ) | (297,326 | ) | |||||||||||||
| Balance, September 30, 2023 | 13,907,436 | $ | 13,908 | $ | 103,144,615 | $ | (107,275,538 | ) | $ | (4,117,015 | ) | |||||||||
| Common Stock |
Additional
Paid-in |
Accumulated | ||||||||||||||||||
| Shares | Amount | Capital | Deficit | Total | ||||||||||||||||
| Balance, December 31, 2023 | 13,907,436 | $ | 13,908 | $ | 103,144,615 | $ | (107,621,387 | ) | $ | (4,462,864 | ) | |||||||||
| Net loss | - | - | - | (292,274 | ) | (292,274 | ) | |||||||||||||
| Balance, March 31, 2024 | 13,907,436 | 13,908 | 103,144,615 | (107,913,661 | ) | (4,755,138 | ) | |||||||||||||
| Common Stock Issued for Services | 300 | - | 1,950 | - | 1,950 | |||||||||||||||
| Net Loss | - | - | - | (404,976 | ) | (404,976 | ) | |||||||||||||
| Balance, June 30, 2024 | 13,907,736 | 13,908 | 103,146,565 | (108,318,637 | ) | (5,158,164 | ) | |||||||||||||
| Common Stock Issued for Services | 3,300 | 3 | 28,535 | - | 28,538 | |||||||||||||||
| Net Loss | - | - | - | (338,073 | ) | (338,073 | ) | |||||||||||||
| Balance, September 30, 2024 | 13,911,036 | $ | 13,911 | $ | 103,175,100 | $ | (108,656,710 | ) | $ | (5,467,699 | ) | |||||||||
The accompanying footnotes are an integral part of these condensed consolidated financial statements.
F- 29
American Clean Resources Group, Inc.
Unaudited Condensed Consolidated Statements of Cash Flows
|
For the Nine Months Ended
September 30, |
||||||||
| 2024 |
2023
RESTATED |
|||||||
| Cash flows from operating activities: | ||||||||
| Net loss | $ | (1,035,323 | ) | $ | (825,317 | ) | ||
| Adjustments to reconcile net loss to cash flows used in operating activities: | ||||||||
| Amortization Expense | 250,386 | 15,549 | ||||||
| Common Stock Issued for Services | 30,488 | - | ||||||
| Changes in operating assets and liabilities: | ||||||||
| Prepaid expenses | (15,241 | ) | - | |||||
| Accounts payable | 408,817 | 177,733 | ||||||
| Accounts payable – related party | (29,104 | ) | 22,290 | |||||
| Accrual for settlement of lawsuits | - | 77,060 | ||||||
| Accrued interest | 259,645 | 230,422 | ||||||
| Accrued interest – related parties | 18,426 | 302,065 | ||||||
| Net cash used in operating activities | (111,906 | ) | (198 | ) | ||||
| Cash flows from financing activities: | ||||||||
| Proceeds from convertible notes - related party | 77,100 | - | ||||||
| Net cash provided by financing activities | 77,100 | - | ||||||
| Net decrease in Cash | (34,806 | ) | (198 | ) | ||||
| Cash, beginning of year | 36,405 | 1,368 | ||||||
| Cash, end of year | $ | 1,599 | $ | 1,170 | ||||
| Noncash investing and financing activity: | ||||||||
| Payments made by related party on behalf of the Company | $ | 134,862 | $ | 161,758 | ||||
| Issuance of common stock for conversion of convertible promissory note payable - related party | $ | - | $ | 10,219,551 | ||||
| Issuance of common stock for purchase of intangible asset | $ | - | $ | 5,007,730 | ||||
The accompanying footnotes are an integral part of these condensed consolidated financial statements.
F- 30
AMERICAN CLEAN RESOURCES GROUP, INC.
NOTES TO UNADUITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2024
1. Nature of Business
American Clean Resources Group, Inc. f/k/a Standard Metals Processing, Inc. (“we,” “us,” “our,” “ACRG” or the “Company”) is an exploration stage company, incorporated in Nevada. The Company’s primary business plan is to purchase equipment and build a facility on the Tonopah property to serve as a permitted custom processing toll milling facility while it explores new technologies that allow greater effectiveness in achieving industry sustainability goals (which includes an analytical lab, pyrometallurgical plant, and hydrometallurgical recovery plant).
The Company plans to perform permitted custom processing toll milling which is a process whereby mined material is crushed and ground into fine particles to ease the extraction of any precious minerals contained therein, such as minerals in the gold, silver, and platinum metal groups. Custom milling and refining can include many different processes that are designed specifically for each ore load and to maximize the extraction of precious metals from carbon or concentrates. These toll-processing services also distil, dry, mix, or mill chemicals and bulk materials on a contractual basis and provide a chemical production outsourcing option for industrial companies, which lack the expertise, capacity, or regulatory permits for in-house production.
We are required to obtain several permits before we can begin construction of a small-scale mineral processing facility to conduct permitted processing toll milling activities and construction of the required additional buildings and well relocation necessary for us to commence operations.
2. Summary of Significant Accounting Policies
Basis of Presentation
The accompanying consolidated financial statements of the Company have been prepared using the accrual method of accounting in accordance with U.S. GAAP and considering the requirements of the United States Securities and Exchange Commission.
Going Concern
The accompanying consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The Company has incurred recurring losses and as of September 30, 2024, had an accumulated deficit of $108,656,710. For the nine months ended September 30, 2024, the Company sustained a net loss of $1,035,323. These factors, among others, raise substantial doubt about the Company’s ability to continue as a going concern for the next twelve months from the date these financial statements were issued. These financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that may be necessary should the Company be unable to continue as a going concern. The Company’s continuation as a going concern is contingent upon its ability to obtain additional financing and to generate revenue and cash flow to meet its obligations on a timely basis. The Company will continue to seek to raise additional funding through debt or equity financing during the next twelve months from the date of issuance of these financial statements. There is no guarantee the Company will be successful in achieving obtaining additional funding and may have to cease operations.
F- 31
Principles of Consolidation
The consolidated financial statements include the accounts of the Company, and its wholly owned subsidiary Aurielle Enterprises, Inc., (f/k/a Tonopah Milling and Metals Group, Inc.) and its wholly owned subsidiaries Tonopah Custom Processing, Inc., and Tonopah Resources, Inc., and since being acquired in September 2023, SWIS LLC. All significant intercompany transactions, accounts and balances have been eliminated in consolidation.
Use of Estimates
Preparing 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 financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Estimates may pertain to impairment of intangible assets and mining rights, useful lives of intangible assets and contingent liabilities.
Revenue Recognition
As of September 30, 2024, we have recorded no revenues from custom permitted processing toll milling. If we achieve revenue generation, the Company plans to report such revenues consistent with ASC Topic 606 Revenues from Contracts with Customers. The Company recognizes revenue when control of the promised goods or services is transferred to customers, in an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods or services. Significant judgments are required in determining the transaction price and the timing of revenue recognition.
Fair Value of Financial Instruments
The Company accounts for financial instruments under Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 820, Fair Value Measurements. This statement defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles, and expands disclosures about fair value measurements. To increase consistency and comparability in fair value measurements, ASC 820 establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three levels as follows:
| Level 1 — | quoted prices (unadjusted) in active markets for identical assets or liabilities; |
| Level 2 — | observable inputs other than Level 1, quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets and liabilities in markets that are not active, and model-derived prices whose inputs are observable or whose significant value drivers are observable; and |
| Level 3 — | assets and liabilities whose significant value drivers are unobservable. |
The Company applies fair value accounting for all assets and liabilities that are recognized or disclosed at fair value in the financial statements. The carrying amounts reported in the financial statements for cash, accounts payables and accrued liabilities approximate their fair value due to their short-term nature.
F- 32
Basic and Diluted Net Loss Per Share
Basic net loss per common share is computed by dividing net loss by the weighted-average number of common shares outstanding during each period. Diluted net loss per share of common shares includes the effect, if any, from the potential exercise or conversion of securities, such as convertible debt, share options and warrants, which would result in the issuance of incremental shares of common shares. For diluted net loss per share, the weighted-average number of common shares is the same for basic net loss per share due to the fact that when a net loss exists, dilutive securities are not included in the calculation as the impact is anti-dilutive. For all periods presented, basic and diluted net loss per share are the same, as any additional share equivalents would be anti-dilutive.
As of September 30, 2024 and December 31, 2023, the Company convertible promissory note – related party was convertible into 369,370 and 149,954 shares of common stock respectively.
Recent Accounting Standards
On November 27, 2023, the FASB issued ASU 2023-07, “Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures,” which requires incremental disclosures related to an entity’s reportable segments, effective for annual periods beginning after December 15, 2023. The Company plans to adopt ASU 2023-07 on December 31, 2024.
The FASB and other entities issued new or modifications to, or interpretations of, existing accounting guidance during 2024. Management has carefully considered the new pronouncements that altered generally accepted accounting principles and does not believe that any other new or modified principles will have a material impact on the Company’s reported financial position or operations in the near term.
Restatement of Previously Issued Consolidated Financial Statements
During the third quarter of 2024, and prior to the filing of the Company’s Form 10-K/A for the year ended December 31, 2023, the Company determined that it was necessary to re-evaluate the Company’s accounting treatment for certain debt obligations. In accordance with Staff Accounting Bulletins No. 99 (SAB No. 99) Topic 1.M, “Materiality” and SAB No. 99 Topic 1.N “Considering the Effects of Misstatements when Quantifying Misstatements in the Current Year Financial Statements,” the Company assessed the materiality of these errors to its previously issued consolidated financial statements. Based upon the Company’s evaluation of both quantitative and qualitative factors, the Company concluded the errors were material to the Company’s previously issued consolidated financial statements for the fiscal years ended December 31, 2023 and 2022. Accordingly, the Company intends to file its Restated Consolidated Financial Statements for the fiscal years ended December 31, 2023 and 2022. Additionally, the Company has restated its previously filed unaudited interim condensed consolidated financial statements for the periods ended March 31, 2023, June 30, 2023, and September 30, 2023. These restated interim financial statements are included within this Form 10-K. See Note 9 for further information regarding the nature of the errors and the impact of the restatements.
F- 33
3. Mineral rights
The Company is preparing the Tonopah property site for the construction of a permitted custom processing toll milling facility including grading the land, installing fencing, and working with contractors for our planned 21,875 square foot building and servicing and drilling various wells for our future operations.
The Company has continued to assess the realizability of its Mineral rights. Based on an assessment the Company conducted during 2024, the Company decided the combined carrying value of its land, mineral rights, and water rights of $3,883,524 was fairly stated and not exposed to impairment.
4. Developed Technology
On September 13, 2023, the Company executed an agreement to acquire a 100% interest in SWIS, L.L.C. (“SWIS”). The Company issued 1,500,000 shares of restricted common stock to SWIS’s former owner, Launch IT, LLC, and assumed certain liabilities in exchange for 100% interest in SWIS. Upon the executed agreement, Launch IT, LLC became a significant owner of the Company’s common stock and, as of September 30, 2024, owns 10% of the Company’s restricted common stock.
The Company determined the acquisition to be an asset acquisition under ASC 805, Business Combinations, as all of the fair value of the gross assets acquired was concentrated in a single identifiable asset, the developed technology and exclusive license. The developed technology and exclusive license is a definite-lived intangible asset and is being amortized over the life of the patent life.
The total purchase consideration for the acquisition of SWIS was $5,007,730, which includes the issuance of restricted common stock valued at $4,875,000 and assumed accounts payable balance of $132,730. The restricted common stock issued was fair valued reflecting a 35% liquidity discount from the $5.00 share price of the Company common stock on the date of the acquisition. The consideration paid is recorded on the Company’s books as Developed Technology and Patent Rights, with a useful life of 14 years (150 months from the acquisition date of September 13, 2023). The monthly amortization of the Developed Technology and Patent Rights is approximately $27,821.
During the nine months ended September 30, 2024 and 2023, the Company recorded total amortization expense of $250,386 and $15,549, respectively. Amortization expense is included in general and administrative expenses in the consolidated statements of operations.
F- 34
5. Debt
Convertible Promissory Notes Payable – Related Party
On March 16, 2020, the Company entered into a Line of Credit (“LOC”) agreement with Granite Peak Resources LLC (“GPR”), a related party and the majority shareholder of the Company. The initial LOC provided for borrowings up to $2.5 million, with a maturity date of March 16, 2023. At GPR’s sole discretion, the LOC could be increased by an additional $1.0 million and extended for two years. The LOC accrued interest at 10% per annum and was convertible into common stock at $2.00 per share, based on the closing price on the date of issuance. The LOC was secured by substantially all of the Company’s real and personal property.
On July 12, 2021, the LOC was amended (the “First Amendment”) to:
| ● | Increase the borrowing limit to $5.0 million, |
| ● | Extend the maturity date to March 16, 2025, and |
| ● | Reduce the conversion price to $1.65 per share. |
The First Amendment also granted GPR the option to further increase the LOC by $5.0 million and extend the maturity date by an additional five years.
On January 5, 2023, the Company entered into a Second Amendment to the LOC (the “Second Amendment”) with GPR. The amendment significantly restructured the existing LOC agreement. Key terms of the Second Amendment included:
| ● | Increase in Borrowing Capacity: From $5.0 million to $35.0 million. |
| ● | Extension of Maturity Date: To March 16, 2027. |
| ● | Reduction in Conversion Price: From $1.65 to $1.05 per share, based on the trailing three-day market price. |
| ● | Debt Consolidation: The following obligations, previously acquired by GPR, were formally consolidated into the LOC: |
| ● | Tina Gregerson Promissory Note: $477,500 principal and $293,963 accrued interest. |
| ● | Krupp Note: $100,000 principal and $59,795 accrued interest. |
| ● | Forbearance: GPR agreed to forbear from exercising rights under the loan documents, including foreclosure rights related to the Stephen Flechner Judgment and the Pure Path Capital Senior Secured Convertible Promissory Note, both of which had been previously purchased by GPR. The forbearance period extends through January 12, 2024. |
F- 35
The Company evaluated the amendment under ASC 470-50 and ASC 470-60 and concluded it constituted a debt extinguishment, as the present value of the revised cash flows exceeded the 10% threshold. No gain or loss was recognized, as the reacquisition price equaled the carrying amount of the extinguished debt.
On June 12, 2023, the Company entered into a Third Amendment to the LOC (the “Third Amendment”) with GPR. Key terms of the Third Amendment included:
| ● | Increase in Borrowing Capacity: From $35.0 million to $52.5 million. |
| ● | Expansion of Collateral: The Deed of Trust and Security Agreement was amended to increase the secured amount from $100 million to $250 million. |
| ● | Debt Consolidation: The following obligations, previously acquired by GPR, were formally consolidated into the LOC: |
| ● | The Pure Path Capital Senior Secured Convertible Promissory Note: $2,229,187 principal and $1,709,064 accrued interest. |
| ● | Stephen Flechner Judgment: $2,157,000 principal and $1,580,248 accrued interest. |
The Company determined the amendment met the criteria for a troubled debt restructuring (TDR) under ASC 470-60, as the Company was experiencing financial difficulty and GPR granted a concession. The amendment was accounted for as a debt extinguishment under ASC 470-50, with no gain or loss recognized.
On August 2, 2023, GPR converted $5,250,000 of LOC principal into 5,000,000 shares of restricted common stock. On August 15, 2023, GPR converted the remaining $4,969,551 (principal and accrued interest) into 4,732,906 shares of restricted common stock, at the conversion price of $1.05 per share, as provided in the Third Amendment.
As of September 30, 2024 the outstanding balance under the LOC consisted of $368,264 in principal and $19,574 in accrued interest. As of December 31, 2023, the outstanding balance was $156,303 in principal and $1,149 in accrued interest.
During the nine months ended September 30, 2024 and 2023, the Company recognized non-cash borrowings of $134,862 and $161,758, respectively, under the LOC. These amounts represent expenses paid directly by GPR on behalf of the Company and were recorded as increases to the LOC principal balance.
During the nine months ended September 30, 2024, the Company had $77,100 proceeds from convertible notes - related party. The Company’s convertible note line of credit with GPR was increased by this same amount.
Acquisition of Outstanding Defaulted Debt and Material Judgement
Tina Gregerson Promissory Note
On February 11, 2015, the Company issued an unsecured promissory note (the “TG Note”) to Tina Gregerson Family Properties, LLC, an entity controlled by a former director of the Company. The TG Note provided for borrowings of up to $750,000, to be funded in multiple tranches. In connection with the issuance, the Company also granted 250,000 common stock warrants with an exercise price of $1.23 per share and an expiration date of February 11, 2022.
F- 36
Each tranche under the TG Note matured one year from the date of funding and accrued interest at a rate of 8% per annum. The Company received the following advances under the TG Note:
| ● | $200,000 on February 11, 2015 |
| ● | $48,000 on February 13, 2015 |
| ● | $50,000 on April 13, 2015 |
| ● | $150,000 on July 31, 2015 |
| ● | $2,500 on October 20, 2015 |
| ● | $12,000 on October 29, 2015 |
| ● | $15,000 on November 4, 2015 |
On August 12, 2021, GPR and Tina Gregerson entered into an Exchange Agreement, under which GPR acquired the TG Note. Subsequently, on January 5, 2023, the outstanding balance of the TG Note was consolidated into the Company’s LOC with GPR as part of the Second Amendment to the LOC.
As of the date of consolidation, the total balance of the TG Note was $771,463, consisting of $477,500 in principal and $293,963 in accrued interest. Following the consolidation, the TG Note ceased to exist as a separate obligation and became part of the LOC principal balance.
Peter Krupp Promissory Note
On August 4, 2011, the Company issued an unsecured promissory note (the “Krupp Note”) to Peter Krupp in the principal amount of $100,000, bearing interest at a rate of 5% per annum.
On August 12, 2021, GPR and Peter Krupp entered into an Exchange Agreement, under which GPR acquired the Krupp Note. Subsequently, on January 5, 2023, the outstanding balance of the Krupp Note was consolidated into the Company’s LOC with GPR as part of the Second Amendment to the LOC.
As of the date of consolidation, the total balance of the Krupp Note was $159,795, consisting of $100,000 in principal and $59,795 in accrued interest. Following the consolidation, the Krupp Note ceased to exist as a separate obligation and was included in the principal balance of the amended LOC.
Stephen Flechner Judgement
On August 12, 2015, the court entered an Amended Final Judgment in favor of Stephen E. Flechner and against the Company in connection with breach of contract claims. The judgment awarded $2,157,000, with interest accruing at 8% per annum from the date of judgment until paid in full.
On November 29, 2021, GPR, a related party and majority shareholder, entered into a Purchase and Sale Agreement with Mr. Flechner, under which GPR acquired all rights, title, and interest in the judgment.
On January 5, 2023, in connection with the Second Amendment to the Company’s LOC with GPR, GPR agreed to forbear from exercising its rights and remedies under the loan documents, including foreclosure rights related to the Flechner Judgment, through January 12, 2024.
On June 12, 2023, pursuant to the Third Amendment to the LOC, the Flechner Judgment was formally consolidated into the LOC. As of the date of consolidation, the total balance of the judgment was $3,737,248, consisting of the original $2,157,000 judgment amount and $1,580,248 in accrued interest. Following the consolidation, the judgment ceased to exist as a separate obligation and was included in the principal balance of the amended LOC.
F- 37
Pure Path Capital Senior Secured Convertible Promissory Note
On October 10, 2013, the Company issued a Senior Secured Convertible Promissory Note (the “Senior Secured Note”) to Pure Path Capital Management Company, LLC (“PPMC”) in the principal amount of up to $2.5 million, pursuant to a Settlement and Release Agreement. As part of the settlement, the Company also issued 27 million shares of common stock to PPMC, resulting in PPMC becoming a related party.
The Senior Secured Note was secured by a blanket lien on all of the Company’s tangible and intangible assets, whether currently owned or subsequently acquired. This included, but was not limited to, machinery, inventory, accounts receivable, cash, computer equipment, hardware, land, and mineral rights.
On March 29, 2019, GPR, a related party and majority shareholder, acquired the Senior Secured Note from PPMC pursuant to an Exchange and Assignment Agreement.
On June 12, 2023, in connection with the Third Amendment to the Company’s LOC with GPR, the Senior Secured Note was formally consolidated into the LOC. As of the date of consolidation, the total balance of the note was $3,938,251, consisting of $2,229,187 in principal and $1,709,064 in accrued interest. Following the consolidation,
the Senior Secured Note ceased to exist as a separate obligation and was included in the principal balance of the amended LOC.
6. Related Parties
As part of its normal operations, the Company conducts financing through its largest shareholder, GPR. The details of the related party balances are disclosed as part of Note 5.
Granite Peak Resources, LLC
On March 16, 2020, the Company entered into a LOC agreement with GPR. GPR is a related party by virtue of its majority ownership of the Company’s common stock. Under the LOC, GPR has also paid expenses directly on behalf of the Company to support its operations.
During 2019 and 2021, GPR acquired several outstanding debt instruments and judgments originally held by third parties, including:
| ● | The Tina Gregerson Promissory Note, |
| ● | The Peter Krupp Promissory Note, |
| ● | The Pure Path Capital Senior Secured Convertible Promissory Note, and |
| ● | The Stephen E. Flechner Judgment. |
On January 5, 2023, and June 12, 2023, the Company entered into the Second and Third Amendments, respectively, to the LOC with GPR. These amendments formally consolidated the above obligations into the LOC, which was subsequently converted into equity.
On August 2, 2023, and August 15, 2023, GPR converted a total of $10,219,551 of principal and accrued interest under the LOC into 10,244,230 shares of restricted common stock at a conversion price of $1.05 per share, pursuant to the terms of the Third Amendment. As a result of these conversions, GPR became the majority owner, holding approximately 73% of the Company’s outstanding common stock as of September 30, 2024.
During the year ended September 30, 2024, the Company recorded:
| ● | $134,862 in non-cash borrowings for expenses paid directly by GPR, and |
| ● | $77,100 in proceeds from convertible notes – related party. |
These amounts were added to the LOC principal balance.
F- 38
Sustainable Metals Solutions, LLC
On January 10, 2022, the Company entered into a definitive agreement to acquire a controlling interest in Sustainable Metals Solutions, LLC (“SMS”), a company majority-owned by GPR. SMS is an environmental development platform focused on producing carbon-neutral precious metals and minerals. The purchase price for the controlling interest will be determined based on the Company’s common stock price on the closing date, which will be mutually agreed upon once all closing conditions are satisfied. Additional details are provided in Note 8 – Commitments and Contingencies.
Launch IT, LLC
On September 13, 2023, the Company acquired a 100% interest in SWIS, L.L.C. (“SWIS”) by assuming certain liabilities and issuing 1,500,000 shares of restricted common stock to its former owner, Launch IT, LLC. As a result of the transaction, Launch IT, LLC became a significant shareholder, holding over 10% of the Company’s outstanding common stock as of September 30, 2024.
In connection with the acquisition, the Company retained AJ Miller and Chris Laveson, both former owners of Launch IT, LLC, to continue supporting the SWIS business. AJ Miller is an officer and Chris Laveson is a manager of SWIS subsidiary following the acquisition and both hold 500,000 shares each of restricted common stock of the Company.
The following table summarizes the amounts related to these parties that were included in accounts payable – related party, expenses incurred, and cash paid during the periods ended September 30, 2024 and December 31, 2023:
| As of and for the period ending September 30, 2024 | ||||||||||||
| Related Party |
Included in
Accounts Payable - Related Party |
Expense
incurred |
Amount
paid |
|||||||||
| Launch IT, LLC | $ | 116,458 | $ | - | $ | 23,504 | ||||||
| Gazellig LLC - AJ Miller | 34,400 | 15,000 | 20,600 | |||||||||
| Chris Lavenson | 40,000 | 15,000 | 15,000 | |||||||||
| $ | 190,858 | $ | 30,000 | $ | 59,104 | |||||||
| As of and for the Year Ending December 31, 2023 | ||||||||||||
| Related Party |
Included in
Accounts Payable - Related Party |
Expense
incurred |
Amount
paid |
|||||||||
| Launch IT, LLC | $ | 139,962 | $ | 7,232 | $ | - | ||||||
| Gazellig LLC - AJ Miller | 40,000 | 40,000 | - | |||||||||
| Chris Lavenson | 40,000 | 40,000 | - | |||||||||
| $ | 219,962 | $ | 87,232 | $ | - | |||||||
7. Stockholders’ Deficit and Mezzanine Equity
Preferred Stock
The Series A Preferred Stock is presented as mezzanine equity due to its rights and preferences.
F- 39
Attributes of Series A Preferred Stock include but are not limited to the following:
Distribution in Liquidation
The Series A Preferred Stock has a liquidation preference of $10,000,000, payable only upon certain liquidity events or upon the achievement of a market value of our equity equaling $200,000,000 or more. Upon any liquidation, dissolution or winding up of the Company, and after paying or adequately providing for the payment of all its obligations, the remainder of the assets of the Company shall be distributed, either in cash or in kind, first pro rata to the holders of the Series A Preferred Stock in an amount equal to the Liquidation Value (as described below); then, to any other series of Preferred Stock, until an amount to be determined by a resolution of the Board of Directors prior to issuances of such Preferred Stock, has been distributed per share, and, then, the remainder pro rata to the holders of the Common Stock. Upon the occurrence of any Liquidation Event (as defined below), each holder of Series A Preferred Stock will receive a payment equal to the Original Issue Price for each share of Series A Preferred Stock held by such holder (the “Liquidation Value”). A “Liquidation Event” will have occurred when:
| ● | The Company has an average market capitalization (calculated by adding the value of all outstanding shares of Common Stock valued at the Company’s closing sale price on the OTC Market or other applicable bulletin board or exchange, plus the value of the outstanding Series A Preferred Stock at the Original Issue Price per share) of $200,000,000 or more over any 90 day period. The holders of the Series A Preferred Stock would have the right, for 30 days after the end of such qualifying 90 day measurement period, to require the Company to purchase the Series A Preferred Stock for an amount equal to the Liquidation Value. |
| ● | Any Liquidity Event in which the Company receives proceeds of $50,000,000 or more. For purposes hereof, a “Liquidity Event” means any (a) liquidation, dissolution or winding up of the Company; (b) acquisition of the Company by means of any transaction or series of related transactions (including, without limitation, any reorganization, merger, share exchange, share purchase or consolidation) provided that the applicable transaction shall not be deemed a liquidation unless the Company’s stockholders constituted immediately prior to such transaction hold less than 50% of the voting power of the surviving or acquiring entity; or (c) the sale, lease, transfer or other disposition, in a single transaction or series of related transactions, by the Company or any subsidiary of the Company of all or substantially all the assets of the Company and its subsidiaries taken as a whole, or the sale or disposition (whether by merger or otherwise) of one or more subsidiaries of the Company if substantially all of the assets of the Company and its subsidiaries taken as a whole are held by such subsidiary or subsidiaries. |
Redemption
The Series A Preferred Stock may be redeemed in whole or in part as determined by a resolution of the Board of Directors at any time, at a price equal to the Liquidation Value.
Voting Rights
Shares of Series A Preferred Stock shall have no rights to vote on any matter submitted to a vote of shareholders, except as required by law, in which case each share of Series A Preferred Stock shall be entitled to one vote.
Conversion Rights
Holders of Series A Preferred Stock will have no right to convert such shares into any other equity securities of the Company.
Common Stock
As of September 30, 2024 and December 31, 2023, the Company is authorized to issue 500,000,000 shares of common stock at a par value of $0.001 per share.
Voting Rights
Holders of our common stock are entitled to one vote for each share held of record on all matters to be voted on by stockholders. There is no cumulative voting with respect to the election of directors.
F- 40
Dividend Rights
Holders of our common stock are entitled to receive dividends when, as and if declared by our board of directors out of funds legally available for this purpose.
Liquidation Preference
In the event of our liquidation, dissolution or winding up, holders of our common stock are entitled to receive on a proportional basis any assets remaining available for distribution after payment of our liabilities and Series A Preferred Stock.
Other Terms
Holders of common stock have no conversion, preemptive or other subscription rights and there are no sinking fund or redemption provisions applicable to the common stock. All outstanding shares of the common stock are fully paid and non-assessable.
Common Stock Issuances
The following table summarizes the Company’s issuances of common stock during the nine months ended September 30, 2024:
| Date | Shares Issued | Purpose |
Fair Value
per Share |
Total
Value |
||||||||||
| 6/25/2024 | 300 | Advisory Board compensation | $ | 6.50 | (1)(3) | $ | 1,950 | |||||||
| 9/19/2024 & 9/25/2024 | 3,300 | Advisory Board compensation | $ | 8.65 | (1)(3) | $ | 28,538 | |||||||
| 8/2/2023 | 5,000,000 | Debt conversion (LOC) | $ | 1.05 | (1) | $ | 5,250,000 | |||||||
| 8/15/2023 | 4,732,906 | Debt conversion (LOC) | $ | 1.05 | (1) | $ | 4,969,551 | |||||||
| 9/13/2023 | 1,500,000 | Acquisition of SWIS, LLC | $ | 3.25 | (2) | $ | 4,875,000 | |||||||
| 4) | Fair Value Basis: The fair value per share was determined based on the closing market price on the date of issuance or the agreed-upon conversion price under the applicable agreement. |
| 5) | Discounted Valuation: The fair value per share for the SWIS acquisition was determined using a 35% liquidity discount from the $5.00 market price as of the acquisition date. |
| 6) | Advisory Board Compensation: In March 2024, the Company appointed twelve members to its Advisory Board. Each member is entitled to receive 150 shares of restricted common stock per quarter, contingent upon compliance with their advisory agreement. |
All issuances were accounted for in accordance with ASC 505-10 (Equity) and ASC 718 (Compensation—Stock Compensation), as applicable. o gain or loss was recognized on the debt conversions, as the carrying amount of the debt equaled the fair value of the equity issued. Advisory Board compensation was recorded as general and administrative expense, with a corresponding credit to additional paid-in capital.
F- 41
8. Commitments and Contingencies
Merger with the SMS Group
On January 10, 2022 the Company executed a definitive agreement to acquire a controlling interest in Sustainable Metal Solutions LLC and its subsidiaries (“SMS” or the “SMS Group”). The purchase price for the controlling interest in SMS will be determined based upon the price of the Company’s common stock on the date of closing, such date to be decided by the Parties in good faith after all conditions precedent are met. These conditions precedent include, but are not limited to:
| ● | Completion of SMS’s audited financial statements by an independent PCAOB-registered accounting firm; |
| ● | Delivery of a completed and SEC-compliant SK-1300 technical report summary on SMS’s mineral reserves as of December 31, 2021 and 2022; |
| ● | Uplisting of ACRG’s common stock to the Nasdaq Capital Market; |
| ● | SEC clearance of the Form S-4 registration statement and proxy materials; |
| ● | Approval of the merger by ACRG’s shareholders; |
| ● | Satisfaction of customary closing conditions, including representations and warranties, covenants, and absence of material adverse changes. |
SMS is an American multi-company environmental development platform focused on producing carbon neutral precious metals and minerals thereby driving American mineral independence while revitalizing the environment and minimizing the impacts of climate change. The business of SMS is consistent with the Company’s posture to acquire, license or joint venture with other parties involved in toll milling, processing, or mining related activities, which may include GPR and its affiliated entities, including, but not limited to, NovaMetallix. Inc., and BlackBear Natural Resources, LTD.
SMS is a group of companies that has developed a significant primary source of metals for conventional mining and secondary sources of metals from previously discarded mining tailings for re-reprocessing and recovery. Access to the large amount of mine tailings on the Company’s Nevada property adds favorably to SMS’s plans. Its goal is to enhance the US’s supply chain of various metals produced locally using environmentally friendly methods. In addition, SMS’s sustainable resource program has developing interests in alternative sources of energy, including the Company’s Nevada property which is zoned for solar development, and the conservation of our water resources.
Joint Venture with AMI
Effective June 3, 2024, the Company executed a Memorandum of Understanding for a Joint Venture with AMI Strategies, (“AMI”). The Parties intend to form a joint operation and utilize the technology and talent of both organizations for their mutual benefit which includes the Company’s planned renewable energy generation, specifically solar power through the operation, engineering, infrastructure, and construction of controlled solar power and AMI’s management of utility costs through a proprietary software platform that can bill, audit, invoice and manage the daily operations of suppliers and clients.
About AMI:
AMI Strategies serves clients on every continent, offering a global suite of solutions for Telecom, Mobility, Cloud, Utility, ServiceNow, and Managed Automation deployments – all powered by cutting-edge technology and automation.
AMI’s platform is designed to manage any vendor that’s important to its customers – no matter what category it’s in. By establishing inventory that includes integrated data from vendors and enterprise systems, auditing charges against correlating contracts, automating allocations and payments, and centralizing how services are purchased, changed or decommissioned, AMI ensures its clients never waste time on vendor-related busywork, and never pay more than they’re supposed to.
Definitive Documents:
The Parties will work together to draft definitive documents including the formation of the joint venture and its governing documents.
9. Restatement of Previously Issued Financial Statements
As described in Note 2 the Company determined that it was necessary to re-evaluate its accounting treatment for its debt obligations. The Company identified accrued interest calculations were performed incorrectly and borrowing on its related party promissory note with GPR included borrowings that weren’t related to the Company operations and should have not been included in the principal balance. Certain previously reported amounts within the financial statements did not mathematically reconcile (i.e., did not foot). These amounts are presented herein as originally reported in the previously issued financial statements for transparency and consistency. The restatement corrects these errors and reflects the appropriate adjustments. Below are the Company’s restated consolidated balance sheets, statement of operations, statement of stockholders’ deficit and statement of cash flows with the adjustments for the periods stated in the tables below.
F- 42
AMERICAN RESOURCES CORPORATION
RESTATED BALANCE SHEETS
| Balance Sheet as of December 31, 2023 | As Reported | Adjustment | As Restated | |||||||||
| Assets | ||||||||||||
| Current assets: | ||||||||||||
| Cash | $ | 36,254 | $ | 151 | $ | 36,405 | ||||||
| Prepaid expenses | 140 | 6,634 | 6,774 | |||||||||
| Total current assets | 36,394 | 6,785 | 43,179 | |||||||||
| Mineral rights | 3,883,524 | - | 3,883,524 | |||||||||
| Intangible asset, net | 4,888,762 | 19,957 | 4,908,719 | |||||||||
| Total assets | $ | 8,808,680 | $ | 26,742 | $ | 8,835,422 | ||||||
| Liabilities, mezzanine, and stockholders’ deficit | ||||||||||||
| Current liabilities: | ||||||||||||
| Convertible promissory notes, related party | $ | 191,231 | $ | (34,929 | ) | $ | 156,302 | |||||
| Accrual for settlement of lawsuits | - | - | - | |||||||||
| Accounts payable | 1,332,612 | (137,949 | ) | 1,194,663 | ||||||||
| Accounts payable – related party | 80,000 | 139,962 | 219,962 | |||||||||
| Accrued interest | 1,511,434 | 214,776 | 1,726,210 | |||||||||
| Accrued interest - related party | 17,384 | (16,235 | ) | 1,149 | ||||||||
| Total current liabilities | 3,132,661 | 165,625 | 3,298,286 | |||||||||
| Commitments and contingencies (Note 9) | ||||||||||||
| Preferred stock, 50,000,000 shares authorized: | ||||||||||||
| Preferred stock, 50,000,000 shares authorized Series A, $.001 par value, 10,000,000 shares issued and outstanding as of December 31, 2023 | 10,000,000 | - | 10,000,000 | |||||||||
| Stockholders’ deficit: | ||||||||||||
| Common stock, $0.001 par value, 500,000,000 shares authorized: 14,418,760 issued and outstanding as of December 31, 2023 | 14,419 | (511 | ) | 13,908 | ||||||||
| Additional paid-in capital | 103,680,994 | (536,379 | ) | 103,144,615 | ||||||||
| Accumulated deficit | (107,939,395 | ) | 318,008 | (107,621,387 | ) | |||||||
| Total stockholders’ deficit | (4,243,982 | ) | (218,882 | ) | (4,462,864 | ) | ||||||
| Total Liabilities, mezzanine and stockholders’ deficit | $ | 8,808,680 | $ | 26,742 | $ | 8,835,422 | ||||||
F- 43
AMERICAN RESOURCES CORPORATION
RESTATED INCOME STATEMENT
| Statement of operations for the nine months ended September 30, 2023 | As Reported | Adjustment | As Restated | |||||||||
| Operating expenses: | ||||||||||||
| General and administrative expenses | $ | 311,319 | $ | (89,253 | ) | $ | 222,066 | |||||
| Total operating expenses | 311,319 | (89,253 | ) | 222,066 | ||||||||
| Loss from operations | (311,319 | ) | 89,253 | (222,066 | ) | |||||||
| Other income (expense): | ||||||||||||
| Other income | 6,296 | - | 6,296 | |||||||||
| Gain on the settlement of accounts payable | 57,572 | (57,572 | ) | - | ||||||||
| Interest expense | (669,166 | ) | 59,619 | (609,547 | ) | |||||||
| Total othe expense, net | (605,298 | ) | 2,047 | (603,251 | ) | |||||||
| Loss before income tax provision | (916,617 | ) | 91,300 | (825,317 | ) | |||||||
| Income tax provision | - | - | - | |||||||||
| Net loss | $ | (916,617 | ) | $ | 91,300 | $ | (825,317 | ) | ||||
| Basic net loss per common share | $ | (0.20 | ) | $ | 0.05 | $ | (0.15 | ) | ||||
| Basic weighted average common shares outstanding | 4,640,633 | 1,003,026 | 5,643,659 | |||||||||
F- 44
|
As Reported
Common Stock |
As Restated
Common Stock |
As Reported
Common Stock |
As Restated
Common Stock |
As Reported
Additional Paid-in |
As Restated
Additional Paid-in |
As Reported
Accumulated |
As Restated
Accumulated |
As Reported | As Restated | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Shares | Adjustments | Shares | Amount | Adjustments | Amount | Capital | Adjustments | Capital | Deficit | Adjustments | Deficit | Total | Adjustments | Total | ||||||||||||||||||||||||||||||||||||||||||||||
| Balance, December 31, 2022 | 2,674,530 | - | 2,674,530 | $ | 2,674 | $ | 1 | $ | 2,675 | $ | 88,061,298 | $ | (1 | ) | $ | 88,061,297 | $ | (106,530,496 | ) | $ | 80,275 | $ | (106,450,221 | ) | $ | (18,466,524 | ) | $ | 80,275 | $ | (18,386,249 | ) | ||||||||||||||||||||||||||||
| Net Loss | - | - | - | - | - | - | - | - | - | (195,357 | ) | (33,714 | ) | (229,071 | ) | (195,357 | ) | (33,714 | ) | (229,071 | ) | |||||||||||||||||||||||||||||||||||||||
| Balance, March 31, 2023 | 2,674,530 | - | 2,674,530 | 2,674 | 1 | 2,675 | 88,061,298 | (1 | ) | 88,061,297 | (106,725,853 | ) | 46,561 | (106,679,292 | ) | (18,661,881 | ) | 46,561 | (18,615,320 | ) | ||||||||||||||||||||||||||||||||||||||||
| Net Loss | - | - | - | - | - | - | - | - | - | (421,936 | ) | 123,016 | (298,920 | ) | (421,936 | ) | 123,016 | (298,920 | ) | |||||||||||||||||||||||||||||||||||||||||
| Balance, June 30, 2023 | 2,674,530 | - | 2,674,530 | 2,674 | 1 | 2,675 | 88,061,298 | (1 | ) | 88,061,297 | (107,147,789 | ) | 169,577 | (106,978,212 | ) | (19,083,817 | ) | 169,577 | (18,914,240 | ) | ||||||||||||||||||||||||||||||||||||||||
| Issuance of stock for acquisition | 1,500,000 | - | 1,500,000 | 1,500 | - | 1,500 | 4,873,500 | - | 4,873,500 | - | - | - | 4,875,000 | - | 4,875,000 | |||||||||||||||||||||||||||||||||||||||||||||
| Issuance of common stock for conversion of debt and interest | 10,244,230 | (511,324 | ) | 9,732,906 | 10,245 | (512 | ) | 9,733 | 10,746,196 | (536,378 | ) | 10,209,818 | - | - | - | 10,756,441 | (536,890 | ) | 10,219,551 | |||||||||||||||||||||||||||||||||||||||||
| Net loss | - | - | - | - | - | - | - | - | - | (299,324 | ) | 1,998 | (297,326 | ) | (299,324 | ) | 1,998 | (297,326 | ) | |||||||||||||||||||||||||||||||||||||||||
| Balance, September 30, 2023 | 14,418,760 | (511,324 | ) | 13,907,436 | $ | 14,419 | $ | (511 | ) | $ | 13,908 | $ | 103,680,994 | $ | (536,379 | ) | $ | 103,144,615 | $ | (107,447,113 | ) | $ | 171,575 | $ | (107,275,538 | ) | $ | (3,751,700 | ) | $ | (365,315 | ) | $ | (4,117,015 | ) | |||||||||||||||||||||||||
F- 45
AMERICAN RESOURCES CORPORATION
RESTATED CASH FLOW STATEMENT
| Statement of Cash flows for the nine months ended September 30, 2023 | As Reported | Adjustment | As Restated | |||||||||
| Cash flows used in operating activities: | ||||||||||||
| Net loss | $ | (916,617 | ) | $ | 91,300 | $ | (825,317 | ) | ||||
| Adjustments to reconcile net loss to cash flows used in operating activities: | ||||||||||||
| Amortization expense | - | 15,549 | 15,549 | |||||||||
| Gain on derecognition of certain accounts payable | (57,572 | ) | 57,572 | - | ||||||||
| Expenses paid directly by related party | 262,393 | (262,393 | ) | - | ||||||||
| Changes in operating assets and liabilities: | ||||||||||||
| Accounts payable | - | 177,733 | 177,733 | |||||||||
| Accounts payable – related party | - | 22,290 | 22,290 | |||||||||
| Accrual for settlement of lawsuits | - | 77,060 | 77,060 | |||||||||
| Accrued interest | 669,166 | (438,744 | ) | 230,422 | ||||||||
| Accrued interest – related parties | 42,549 | 259,516 | 302,065 | |||||||||
| Net cash used in operating activities | (81 | ) | (117 | ) | (198 | ) | ||||||
| Net (decrease in cash) | (81 | ) | (117 | ) | (198 | ) | ||||||
| Cash, beginning of year | 1,251 | 117 | 1,368 | |||||||||
| Cash, end of year | $ | 1,170 | $ | - | $ | 1,170 | ||||||
| Non-Cash Investing and Financing: | ||||||||||||
| Payments made by related party on behalf of the Company | $ | 262,393 | $ | (100,635 | ) | $ | 161,758 | |||||
| Consolidation of debt and accrued interest due to parent | $ | 8,779,594 | $ | (8,779,594 | ) | $ | - | |||||
| Issuance of common stock for conversion of convertible promissory note payable - related party | $ | 10,756,441 | $ | (536,890 | ) | $ | 10,219,551 | |||||
| Issuance of common stock for purchase of intangible asset | $ | 7,500,000 | $ | (2,492,270 | ) | $ | 5,007,730 | |||||
| Liabilities assumed due to purchase of SWIS | $ | 212,731 | $ | (212,731 | ) | $ | - | |||||
| 10. | Subsequent Events |
The Company follows the guidance in FASB ASC 855-10 for the disclosure of subsequent events. The Company evaluated subsequent events through the date the financial statements were issued and determined the Company had no subsequent events.
F- 46
American Clean Resources Group, Inc.
Unaudited Condensed Consolidated Balance Sheets
| June 30, | December 31, | |||||||
| 2024 | 2023 | |||||||
| (Unaudited) | RESTATED | |||||||
| Assets | ||||||||
| Current assets: | ||||||||
| Cash | $ | 13,635 | $ | 36,405 | ||||
| Prepaid expenses | 33,052 | 6,774 | ||||||
| Total current assets | 46,687 | 43,179 | ||||||
| Mineral rights | 3,883,524 | 3,883,524 | ||||||
| Intangible asset, net | 4,741,795 | 4,908,719 | ||||||
| Total assets | $ | 8,672,006 | $ | 8,835,422 | ||||
| Liabilities, mezzanine, and stockholders’ deficit | ||||||||
| Convertible promissory notes, related party | 361,264 | 156,302 | ||||||
| Accounts payable | 1,370,868 | 1,194,663 | ||||||
| Accounts payable – related party | 190,858 | 219,962 | ||||||
| Accrued interest | 1,896,711 | 1,726,210 | ||||||
| Accrued interest - related party | 10,469 | 1,149 | ||||||
| Total current liabilities | 3,830,170 | 3,298,286 | ||||||
| Commitments and contingencies (Note 8) | ||||||||
| Preferred stock, 50,000,000 shares authorized Series A, $.001 par value, 10,000,000 shares issued and outstanding as of June 30, 2024 and December 31, 2023 | 10,000,000 | 10,000,000 | ||||||
| Stockholders’ deficit: | ||||||||
| Common stock, $0.001 par value, 500,000,000 shares authorized: 13,907,736 and 13,907,436 issued and outstanding at June 30, 2024 and December 31, 2023, respectively | 13,908 | 13,908 | ||||||
| Additional paid-in capital | 103,146,565 | 103,144,615 | ||||||
| Accumulated deficit | (108,318,637 | ) | (107,621,387 | ) | ||||
| Total stockholders’ deficit | $ | (5,158,164 | ) | $ | (4,462,864 | ) | ||
| Total liabilities and stockholders’ deficit | $ | 8,672,006 | $ | 8,835,422 | ||||
The accompanying footnotes are an integral part of these condensed consolidated financial statements.
F- 47
American Clean Resources Group, Inc.
Unaudited Condensed Consolidated Statements of Operations
|
For Three Months Ended
June 30, |
For Six Months Ended
June 30, |
|||||||||||||||
| 2024 | 2023 | 2024 | 2023 | |||||||||||||
| Operating expenses: | ||||||||||||||||
| General and administrative expenses | $ | 315,129 | $ | 64,405 | $ | 526,627 | $ | 106,715 | ||||||||
| Total operating expenses | 315,129 | 64,405 | 526,627 | 106,715 | ||||||||||||
| Loss from operations | (315,129 | ) | (64,405 | ) | (526,627 | ) | (106,715 | ) | ||||||||
| Other income (expense): | ||||||||||||||||
| Other income | 2,099 | 2,099 | 9,198 | 4,198 | ||||||||||||
| Interest expense | (91,946 | ) | (236,614 | ) | (179,821 | ) | (425,474 | ) | ||||||||
| Total other expense, net | (89,847 | ) | (234,515 | ) | (170,623 | ) | (421,276 | ) | ||||||||
| Loss before income tax provision | (404,976 | ) | (298,920 | ) | (697,250 | ) | (527,991 | ) | ||||||||
| Income tax provision | - | - | - | - | ||||||||||||
| Net loss | $ | (404,976 | ) | $ | (298,920 | ) | $ | (697,250 | ) | $ | (527,991 | ) | ||||
| Net loss per common shares: | ||||||||||||||||
| Basic net loss per common share | $ | (0.03 | ) | $ | (0.11 | ) | $ | (0.05 | ) | $ | (0.20 | ) | ||||
| Weighted average shares outstanding per common shares: | ||||||||||||||||
| Basic weighted average common shares outstanding | 13,907,452 | 2,674,530 | 13,907,444 | 2,674,530 | ||||||||||||
The accompanying footnotes are an integral part of these condensed consolidated financial statements.
F- 48
American Clean Resources Group, Inc.
Unaudited Condensed Consolidated Statements of Changes in Stockholders’ Deficit
| Common Stock | Additional | Accumulated | ||||||||||||||||||
| Shares | Amount | Paid-in Capital | Deficit | Total | ||||||||||||||||
| RESTATED | RESTATED | RESTATED | RESTATED | RESTATED | ||||||||||||||||
| Balance, December 31, 2022 | 2,674,530 | $ | 2,675 | $ | 88,061,297 | $ | (106,450,221 | ) | $ | (18,386,249 | ) | |||||||||
| Net loss | - | - | - | (229,071 | ) | (229,071 | ) | |||||||||||||
| Balance, March 31, 2023 | 2,674,530 | 2,675 | 88,061,297 | (106,679,292 | ) | (18,615,320 | ) | |||||||||||||
| Net loss | - | - | - | (298,920 | ) | (298,920 | ) | |||||||||||||
| Balance, June 30, 2023 | 2,674,530 | $ | 2,675 | $ | 88,061,297 | $ | (106,978,212 | ) | $ | (18,914,240 | ) | |||||||||
| Common Stock | Additional | Accumulated | ||||||||||||||||||
| Shares | Amount | Paid-in Capital | Deficit | Total | ||||||||||||||||
| Balance, December 31, 2023 | 13,907,436 | $ | 13,908 | $ | 103,144,615 | $ | (107,621,387 | ) | $ | (4,462,864 | ) | |||||||||
| Net loss | - | - | - | (292,274 | ) | (292,274 | ) | |||||||||||||
| Balance, March 31, 2024 | 13,907,436 | 13,908 | 103,144,615 | (107,913,661 | ) | (4,755,138 | ) | |||||||||||||
| Common Stock Issued for Services | 300 | - | 1,950 | - | 1,950 | |||||||||||||||
| Net Loss | - | - | - | (404,976 | ) | (404,976 | ) | |||||||||||||
| Balance, June 30, 2024 | 13,907,736 | $ | 13,908 | $ | 103,146,565 | $ | (108,318,637 | ) | $ | (5,158,164 | ) | |||||||||
The accompanying footnotes are an integral part of these condensed consolidated financial statements.
F- 49
American Clean Resources Group, Inc.
Unaudited Condensed Consolidated Statements of Cash Flows
|
For the Six Months Ended
June 30, |
||||||||
| 2023 | ||||||||
| 2024 | RESTATED | |||||||
| Cash flows from operating activities: | ||||||||
| Net loss | $ | (697,250 | ) | $ | (527,991 | ) | ||
| Adjustments to reconcile net loss to cash flows used in operating activities: | ||||||||
| Amortization Expense | 166,924 | - | ||||||
| Common Stock Issued for Services | 1,950 | - | ||||||
| Changes in operating assets and liabilities: | ||||||||
| Prepaid expenses | (26,278 | ) | - | |||||
| Accounts payable | 304,067 | 101,865 | ||||||
| Accounts payable – related party | (29,104 | ) | - | |||||
| Accrual for settlement of lawsuits | - | 77,060 | ||||||
| Accrued interest | 170,501 | 151,312 | ||||||
| Accrued interest – related parties | 9,320 | 197,102 | ||||||
| Net cash used in operating activities | (99,870 | ) | (652 | ) | ||||
| Cash flows from financing activities: | ||||||||
| Proceeds from convertible notes - related party | 77,100 | - | ||||||
| Net cash provided by financing activities | 77,100 | - | ||||||
| Net decrease in Cash | (22,770 | ) | (652 | ) | ||||
| Cash, beginning of year | 36,405 | 1,368 | ||||||
| Cash, end of year | $ | 13,635 | $ | 716 | ||||
| Noncash investing and financing activity: | ||||||||
| Payments made by related party on behalf of the Company | $ | 127,862 | $ | 95,888 | ||||
The accompanying footnotes are an integral part of these condensed consolidated financial statements.
F- 50
AMERICAN CLEAN RESOURCES GROUP, INC.
NOTES TO UNADUITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2024 AND 2023
| 1. | Nature of Business |
American Clean Resources Group, Inc. f/k/a Standard Metals Processing, Inc. (“we,” “us,” “our,” “ACRG” or the “Company”) is an exploration stage company, incorporated in Nevada. The Company’s primary business plan is to purchase equipment and build a facility on the Tonopah property to serve as a permitted custom processing toll milling facility while it explores new technologies that allow greater effectiveness in achieving industry sustainability goals (which includes an analytical lab, pyrometallurgical plant, and hydrometallurgical recovery plant).
The Company plans to perform permitted custom processing toll milling which is a process whereby mined material is crushed and ground into fine particles to ease the extraction of any precious minerals contained therein, such as minerals in the gold, silver, and platinum metal groups. Custom milling and refining can include many different processes that are designed specifically for each ore load and to maximize the extraction of precious metals from carbon or concentrates. These toll-processing services also distil, dry, mix, or mill chemicals and bulk materials on a contractual basis and provide a chemical production outsourcing option for industrial companies, which lack the expertise, capacity, or regulatory permits for in-house production.
We are required to obtain several permits before we can begin construction of a small-scale mineral processing facility to conduct permitted processing toll milling activities and construction of the required additional buildings and well relocation necessary for us to commence operations.
| 2. | Summary of Significant Accounting Policies |
Basis of Presentation
The accompanying consolidated financial statements of the Company have been prepared using the accrual method of accounting in accordance with U.S. GAAP and considering the requirements of the United States Securities and Exchange Commission.
Going Concern
The accompanying consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The Company has incurred recurring losses and as of June 30, 2024, had an accumulated deficit of $108,318,637. For the six months ended June 30, 2024, the Company sustained a net loss of $697,250. These factors, among others, raise substantial doubt about the Company’s ability to continue as a going concern for the next twelve months from the date these financial statements were issued. These financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that may be necessary should the Company be unable to continue as a going concern. The Company’s continuation as a going concern is contingent upon its ability to obtain additional financing and to generate revenue and cash flow to meet its obligations on a timely basis. The Company will continue to seek to raise additional funding through debt or equity financing during the next twelve months from the date of issuance of these financial statements. There is no guarantee the Company will be successful in achieving obtaining additional funding and may have to cease operations.
Principles of Consolidation
The consolidated financial statements include the accounts of the Company, and its wholly owned subsidiary Aurielle Enterprises, Inc., (f/k/a Tonopah Milling and Metals Group, Inc.) and its wholly owned subsidiaries Tonopah Custom Processing, Inc., and Tonopah Resources, Inc., and since being acquired in September 2023, SWIS LLC. All significant intercompany transactions, accounts and balances have been eliminated in consolidation.
F- 51
Use of Estimates
Preparing 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 financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Estimates may pertain to impairment of intangible assets and mining rights, useful lives of intangible assets and contingent liabilities.
Revenue Recognition
As of June 30, 2024, we have recorded no revenues from custom permitted processing toll milling. If we achieve revenue generation, the Company plans to report such revenues consistent with ASC Topic 606 Revenues from Contracts with Customers. The Company recognizes revenue when control of the promised goods or services is transferred to customers, in an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods or services. Significant judgments are required in determining the transaction price and the timing of revenue recognition.
Fair Value of Financial Instruments
The Company accounts for financial instruments under Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 820, Fair Value Measurements. This statement defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles, and expands disclosures about fair value measurements. To increase consistency and comparability in fair value measurements, ASC 820 establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three levels as follows:
| Level 1 — | quoted prices (unadjusted) in active markets for identical assets or liabilities; |
| Level 2 — | observable inputs other than Level 1, quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets and liabilities in markets that are not active, and model-derived prices whose inputs are observable or whose significant value drivers are observable; and |
| Level 3 — | assets and liabilities whose significant value drivers are unobservable. |
The Company applies fair value accounting for all assets and liabilities that are recognized or disclosed at fair value in the financial statements. The carrying amounts reported in the financial statements for cash, accounts payables and accrued liabilities approximate their fair value due to their short-term nature.
Basic and Diluted Net Loss Per Share
Basic net loss per common share is computed by dividing net loss by the weighted-average number of common shares outstanding during each period. Diluted net loss per share of common shares includes the effect, if any, from the potential exercise or conversion of securities, such as convertible debt, share options and warrants, which would result in the issuance of incremental shares of common shares. For diluted net loss per share, the weighted-average number of common shares is the same for basic net loss per share due to the fact that when a net loss exists, dilutive securities are not included in the calculation as the impact is anti-dilutive. For all periods presented, basic and diluted net loss per share are the same, as any additional share equivalents would be anti-dilutive.
As of June 30, 2024 and December 31, 2023, the Company convertible promissory note – related party was convertible into 354,031 and 149,954 shares of common stock respectively.
F- 52
Recent Accounting Standards
On November 27, 2023, the FASB issued ASU 2023-07, “Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures,” which requires incremental disclosures related to an entity’s reportable segments, effective for annual periods beginning after December 15, 2023. The Company plans to adopt ASU 2023-07 on December 31, 2024.
The FASB and other entities issued new or modifications to, or interpretations of, existing accounting guidance during 2024. Management has carefully considered the new pronouncements that altered generally accepted accounting principles and does not believe that any other new or modified principles will have a material impact on the Company’s reported financial position or operations in the near term.
Restatement of Previously Issued Consolidated Financial Statements
During the third quarter of 2024, and prior to the filing of the Company’s Form 10-K/A for the year ended December 31, 2023, the Company determined that it was necessary to re-evaluate the Company’s accounting treatment for certain debt obligations. In accordance with Staff Accounting Bulletins No. 99 (SAB No. 99) Topic 1.M, “Materiality” and SAB No. 99 Topic 1.N “Considering the Effects of Misstatements when Quantifying Misstatements in the Current Year Financial Statements,” the Company assessed the materiality of these errors to its previously issued consolidated financial statements. Based upon the Company’s evaluation of both quantitative and qualitative factors, the Company concluded the errors were material to the Company’s previously issued consolidated financial statements for the fiscal years ended December 31, 2023 and 2022. Accordingly, the Company intends to file its Restated Consolidated Financial Statements for the fiscal years ended December 31, 2023 and 2022. Additionally, the Company has restated its previously filed unaudited interim condensed consolidated financial statements for the periods ended March 31, 2023, June 30, 2023, and September 30, 2023. These restated interim financial statements are included within this Form 10-K. See Note 9 for further information regarding the nature of the errors. and the impact of the restatements.
| 3. | Mineral rights |
The Company is preparing the Tonopah property site for the construction of a permitted custom processing toll milling facility including grading the land, installing fencing, and working with contractors for our planned 21,875 square foot building and servicing and drilling various wells for our future operations.
The Company has continued to assess the realizability of its Mineral rights. Based on an assessment the Company conducted during 2024, the Company decided the combined carrying value of its land, mineral rights, and water rights of $3,883,524 was fairly stated and not exposed to impairment.
| 4. | Developed Technology |
On September 13, 2023, the Company executed an agreement to acquire a 100% interest in SWIS, L.L.C. (“SWIS”). The Company issued 1,500,000 shares of restricted common stock to SWIS's former owner, Launch IT, LLC, and assumed certain liabilities in exchange for 100% interest in SWIS. Upon the executed agreement, Launch IT, LLC became a significant owner of the Company’s common stock and, as of June 30, 2024, owns 10% of the Company’s restricted common stock.
The Company determined the acquisition to be an asset acquisition under ASC 805, Business Combinations, as all of the fair value of the gross assets acquired was concentrated in a single identifiable asset, the developed technology and exclusive license. The developed technology and exclusive license is a definite-lived intangible asset and is being amortized over the life of the patent life.
F- 53
The total purchase consideration for the acquisition of SWIS was $5,007,730, which includes the issuance of restricted common stock valued at $4,875,000 and assumed accounts payable balance of $132,730. The restricted common stock issued was fair valued reflecting a 35% liquidity discount from the $5.00 share price of the Company common stock on the date of the acquisition. The consideration paid is recorded on the Company’s books as Developed Technology and Patent Rights, with a useful life of 14 years (150 months from the acquisition date of September 13, 2023). The monthly amortization of the Developed Technology and Patent Rights is approximately $27,821.
During the three and six months ended June 30, 2024, the Company recorded total amortization expense of $83,462 and $166,924, respectively. During the three and six months ended June 30, 2023, the Company recorded total amortization expense of $0 and $0, respectively. Amortization expense is included in general and administrative expenses in the consolidated statements of operations.
| 5. | Debt |
Convertible Promissory Notes Payable – Related Party
On March 16, 2020, the Company entered into a Line of Credit (“LOC”) agreement with Granite Peak Resources LLC (“GPR”), a related party and the majority shareholder of the Company. The initial LOC provided for borrowings up to $2.5 million, with a maturity date of March 16, 2023. At GPR’s sole discretion, the LOC could be increased by an additional $1.0 million and extended for two ye ars. The LOC accrued interest at 10% per annum and was convertible into common stock at $2.00 per share, based on the closing price on the date of issuance. The LOC was secured by substantially all of the Company’s real and personal property.
On July 12, 2021, the LOC was amended (the “First Amendment”) to:
| ● | Increase the borrowing limit to $5.0 million, |
| ● | Extend the maturity date to March 16, 2025, and |
| ● | Reduce the conversion price to $1.65 per share. |
The First Amendment also granted GPR the option to further increase the LOC by $5.0 million and extend the maturity date by an additional five years.
On January 5, 2023, the Company entered into a Second Amendment to the LOC (the “Second Amendment”) with GPR. The amendment significantly restructured the existing LOC agreement. Key terms of the Second Amendment included:
| ● | Increase in Borrowing Capacity: From $5.0 million to $35.0 million. |
| ● | Extension of Maturity Date: To March 16, 2027. |
| ● | Reduction in Conversion Price: From $1.65 to $1.05 per share, based on the trailing three-day market price. |
| ● | Debt Consolidation: The following obligations, previously acquired by GPR, were formally consolidated into the LOC: |
| ● | Tina Gregerson Promissory Note: $477,500 principal and $293,963 accrued interest. |
| ● | Krupp Note: $100,000 principal and $59,795 accrued interest. |
| ● | Forbearance: GPR agreed to forbear from exercising rights under the loan documents, including foreclosure rights related to the Stephen Flechner Judgment and the Pure Path Capital Senior Secured Convertible Promissory Note, both of which had been previously purchased by GPR. The forbearance period extends through January 12, 2024. |
F- 54
The Company evaluated the amendment under ASC 470-50 and ASC 470-60 and concluded it constituted a debt extinguishment, as the present value of the revised cash flows exceeded the 10% threshold. No gain or loss was recognized, as the reacquisition price equaled the carrying amount of the extinguished debt.
On June 12, 2023, the Company entered into a Third Amendment to the LOC (the “Third Amendment”) with GPR. Key terms of the Third Amendment included:
| ● | Increase in Borrowing Capacity: From $35.0 million to $52.5 million. |
| ● | Expansion of Collateral: The Deed of Trust and Security Agreement was amended to increase the secured amount from $100 million to $250 million. |
| ● | Debt Consolidation: The following obligations, previously acquired by GPR, were formally consolidated into the LOC: |
| ● | The Pure Path Capital Senior Secured Convertible Promissory Note: $2,229,187 principal and $1,709,064 accrued interest. |
| ● | Stephen Flechner Judgment: $2,157,000 principal and $1,580,248 accrued interest. |
The Company determined the amendment met the criteria for a troubled debt restructuring (TDR) under ASC 470-60, as the Company was experiencing financial difficulty and GPR granted a concession. The amendment was accounted for as a debt extinguishment under ASC 470-50, with no gain or loss recognized.
On August 2, 2023, GPR converted $5,250,000 of LOC principal into 5,000,000 shares of restricted common stock. On August 15, 2023, GPR converted the remaining $4,969,551 (principal and accrued interest) into 4,732,906 shares of restricted common stock, at the conversion price of $1.05 per share, as provided in the Third Amendment.
As of June 30, 2024 the outstanding balance under the LOC consisted of $361,264 in principal and $10,469 in accrued interest. As of December 31, 2023, the outstanding balance was $156,303 in principal and $1,149 in accrued interest.
During the six months ended June 30, 2024 and 2023, the Company recognized non-cash borrowings of $127,862 and $95,888, respectively, under the LOC. These amounts represent expenses paid directly by GPR on behalf of the Company and were recorded as increases to the LOC principal balance.
During the six months ended June 30, 2025, the Company had $77,100 proceeds from convertible notes - related party. The Company’s convertible note line of credit with GPR was increased by this same amount.
Acquisition of Outstanding Defaulted Debt and Material Judgement
Tina Gregerson Promissory Note
On February 11, 2015, the Company issued an unsecured promissory note (the “TG Note”) to Tina Gregerson Family Properties, LLC, an entity controlled by a former director of the Company. The TG Note provided for borrowings of up to $750,000, to be funded in multiple tranches. In connection with the issuance, the Company also granted 250,000 common stock warrants with an exercise price of $1.23 per share and an expiration date of February 11, 2022.
Each tranche under the TG Note matured one year from the date of funding and accrued interest at a rate of 8% per annum. The Company received the following advances under the TG Note:
| ● | $200,000 on February 11, 2015 |
| ● | $48,000 on February 13, 2015 |
F- 55
| ● | $50,000 on April 13, 2015 |
| ● | $150,000 on July 31, 2015 |
| ● | $2,500 on October 20, 2015 |
| ● | $12,000 on October 29, 2015 |
| ● | $15,000 on November 4, 2015 |
On August 12, 2021 , GPR and Tina Gregerson entered into an Exchange Agreement, under which GPR acquired the TG Note. Subsequently, on January 5, 2023, the outstanding balance of the TG Note was consolidated into the Company’s LOC with GPR as part of the Second Amendment to the LOC.
As of the date of consolidation, the total balance of the TG Note was $771,463, consisting of $477,500 in principal and $293,963 in accrued interest. Following the consolidation, the TG Note ceased to exist as a separate obligation and became part of the LOC principal balance.
Peter Krupp Promissory Note
On August 4, 2011, the Company issued an unsecured promissory note (the “Krupp Note”) to Peter Krupp in the principal amount of $100,000, bearing interest at a rate of 5% per annum.
On August 12, 2021, GPR and Peter Krupp entered into an Exchange Agreement, under which GPR acquired the Krupp Note. Subsequently, on January 5, 2023, the outstanding balance of the Krupp Note was consolidated into the Company’s LOC with GPR as part of the Second Amendment to the LOC.
As of the date of consolidation, the total balance of the Krupp Note was $159,795, consisting of $100,000 in principal and $59,795 in accrued interest. Following the consolidation, the Krupp Note ceased to exist as a separate obligation and was included in the principal balance of the amended LOC.
Stephen Flechner Judgement
On August 12, 2015, the court entered an Amended Final Judgment in favor of Stephen E. Flechner and against the Company in connection with breach of contract claims. The judgment awarded $2,157,000, with interest accruing at 8% per annum from the date of judgment until paid in full.
On November 29, 2021, GPR, a related party and majority shareholder, entered into a Purchase and Sale Agreement with Mr. Flechner, under which GPR acquired all rights, title, and interest in the judgment.
On January 5, 2023, in connection with the Second Amendment to the Company’s LOC with GPR, GPR agreed to forbear from exercising its rights and remedies under the loan documents, including foreclosure rights related to the Flechner Judgment, through January 12, 2024.
On June 12, 2023, pursuant to the Third Amendment to the LOC, the Flechner Judgment was formally consolidated into the LOC. As of the date of consolidation, the total balance of the judgment was $3,737,248, consisting of the original $2,157,000 judgment amount and $1,580,248 in accrued interest. Following the consolidation, the judgment ceased to exist as a separate obligation and was included in the principal balance of the amended LOC.
F- 56
Pure Path Capital Senior Secured Convertible Promissory Note
On October 10, 2013, the Company issued a Senior Secured Convertible Promissory Note (the “Senior Secured Note”) to Pure Path Capital Management Company, LLC (“PPMC”) in the principal amount of up to $2.5 million, pursuant to a Settlement and Release Agreement. As part of the settlement, the Company also issued 27 million shares of common stock to PPMC, resulting in PPMC becoming a related party.
The Senior Secured Note was secured by a blanket lien on all of the Company’s tangible and intangible assets, whether currently owned or subsequently acquired. This included, but was not limited to, machinery, inventory, accounts receivable, cash, computer equipment, hardware, land, and mineral rights.
On March 29, 2019, GPR, a related party and majority shareholder, acquired the Senior Secured Note from PPMC pursuant to an Exchange and Assignment Agreement.
On June 12, 2023, in connection with the Third Amendment to the Company’s LOC with GPR, the Senior Secured Note was formally consolidated into the LOC. As of the date of consolidation, the total balance of the note was $3,938,251, consisting of $2,229,187 in principal and $1,709,064 in accrued interest. Following the consolidation, the Senior Secured Note ceased to exist as a separate obligation and was included in the principal balance of the amended LOC.
| 6. | Related Parties |
As part of its normal operations, the Company conducts financing through its largest shareholder, GPR. The details of the related party balances are disclosed as part of Note 5.
Granite Peak Resources, LLC
On March 16, 2020, the Company entered into a LOC agreement with GPR. GPR is a related party by virtue of its majority ownership of the Company’s common stock. Under the LOC, GPR has also paid expenses directly on behalf of the Company to support its operations.
During 2019 and 2021, GPR acquired several outstanding debt instruments and judgments originally held by third parties, including:
| ● | The Tina Gregerson Promissory Note, |
| ● | The Peter Krupp Promissory Note, |
| ● | The Pure Path Capital Senior Secured Convertible Promissory Note, and |
| ● | The Stephen E. Flechner Judgment. |
On January 5, 2023, and June 12, 2023, the Company entered into the Second and Third Amendments, respectively, to the LOC with GPR. These amendments formally consolidated the above obligations into the LOC, which was subsequently converted into equity.
On August 2, 2023, and August 15, 2023, GPR converted a total of $10,219,551 of principal and accrued interest under the LOC into 10,244,230 shares of restricted common stock at a conversion price of $1.05 per share, pursuant to the terms of the Third Amendment. As a result of these conversions, GPR became the majority owner, holding approximately 73% of the Company’s outstanding common stock as of June 30, 2024.
F- 57
During the six m onths ended June 30, 2024, the Company recorded:
| ● | $127,862 in non-cash borrowings for expenses paid directly by GPR, and |
| ● | $77,100 in proceeds from convertible notes – related party. |
These amounts were added to the LOC principal balance.
Sustainable Metals Solutions, LLC
On January 10, 2022, the Company entered into a definitive agreement to acquire a controlling interest in Sustainable Metals Solutions, LLC (“SMS”), a company majority-owned by GPR. SMS is an environmental development platform focused on producing carbon-neutral precious metals and minerals. The purchase price for the controlling interest will be determined based on the Company’s common stock price on the closing date, which will be mutually agreed upon once all closing conditions are satisfied. Additional details are provided in Note 8 – Commitments and Contingencies.
Launch IT, LLC
On September 13, 2023, the Company acquired a 100% interest in SWIS, L.L.C. (“SWIS”) by assuming certain liabilities and issuing 1,500,000 shares of restricted common stock to its former owner, Launch IT, LLC. As a result of the transaction, Launch IT, LLC became a significant shareholder, holding over 10% of the Company’s outstanding common stock as of June 30, 2024.
In connection with the acquisition, the Company retained AJ Miller and Chris Laveson, both former owners of Launch IT, LLC, to continue supporting the SWIS business. AJ Miller is an officer and Chris Laveson is a manager of SWIS subsidiary following the acquisition and both hold 500,000 shares each of restricted common stock of the Company.
The following table summarizes the amounts related to these parties that were included in accounts payable – related party, expenses incurred, and cash paid during the periods ended June 30, 2024 and December 31, 2023:
| As of and for the period ending June 30, 2024 | ||||||||||||
| Related Party | Included in Accounts Payable - Related Party |
Expense
incurred |
Amount
paid |
|||||||||
| Launch IT, LLC | $ | 116,458 | $ | - | $ | 23,504 | ||||||
| Gazellig LLC - AJ Miller | 34,400 | 15,000 | 20,600 | |||||||||
| Chris Lavenson | 40,000 | 15,000 | 15,000 | |||||||||
| $ | 190,858 | $ | 30,000 | $ | 59,104 | |||||||
| As of and for the Year Ending December 31, 2023 | ||||||||||||
| Related Party | Included in Accounts Payable - Related Party |
Expense
incurred |
Amount
paid |
|||||||||
| Launch IT, LLC | $ | 139,962 | $ | 7,232 | $ | - | ||||||
| Gazellig LLC - AJ Miller | 40,000 | 40,000 | - | |||||||||
| Chris Lavenson | 40,000 | 40,000 | - | |||||||||
| $ | 219,962 | $ | 87,232 | $ | - | |||||||
F- 58
| 7. | Stockholders’ Deficit and Mezzanine Equity |
Preferred Stock
The Series A Preferred Stock is presented as mezzanine equity due to its rights and preferences. Attributes of Series A Preferred Stock include but are not limited to the following:
Distribution in Liquidation
The Series A Preferred Stock has a liquidation preference of $10,000,000, payable only upon certain liquidity events or upon the achievement of a market value of our equity equaling $200,000,000 or more. Upon any liquidation, dissolution or winding up of the Company, and after paying or adequately providing for the payment of all its obligations, the remainder of the assets of the Company shall be distributed, either in cash or in kind, first pro rata to the holders of the Series A Preferred Stock in an amount equal to the Liquidation Value (as described below); then, to any other series of Preferred Stock, until an amount to be determined by a resolution of the Board of Directors prior to issuances of such Preferred Stock, has been distributed per share, and, then, the remainder pro rata to the holders of the Common Stock. Upon the occurrence of any Liquidation Event (as defined below), each holder of Series A Preferred Stock will receive a payment equal to the Original Issue Price for each share of Series A Preferred Stock held by such holder (the “Liquidation Value”). A “Liquidation Event” will have occurred when:
| ● | The Company has an average market capitalization (calculated by adding the value of all outstanding shares of Common Stock valued at the Company’s closing sale price on the OTC Market or other applicable bulletin board or exchange, plus the value of the outstanding Series A Preferred Stock at the Original Issue Price per share) of $200,000,000 or more over any 90 day period. The holders of the Series A Preferred Stock would have the right, for 30 days after the end of such qualifying 90 day measurement period, to require the Company to purchase the Series A Preferred Stock for an amount equal to the Liquidation Value. |
| ● | Any Liquidity Event in which the Company receives proceeds of $50,000,000 or more. For purposes hereof, a “Liquidity Event” means any (a) liquidation, dissolution or winding up of the Company; (b) acquisition of the Company by means of any transaction or series of related transactions (including, without limitation, any reorganization, merger, share exchange, share purchase or consolidation) provided that the applicable transaction shall not be deemed a liquidation unless the Company’s stockholders constituted immediately prior to such transaction hold less than 50% of the voting power of the surviving or acquiring entity; or (c) the sale, lease, transfer or other disposition, in a single transaction or series of related transactions, by the Company or any subsidiary of the Company of all or substantially all the assets of the Company and its subsidiaries taken as a whole, or the sale or disposition (whether by merger or otherwise) of one or more subsidiaries of the Company if substantially all of the assets of the Company and its subsidiaries taken as a whole are held by such subsidiary or subsidiaries. |
Redemption
The Series A Preferred Stock may be redeemed in whole or in part as determined by a resolution of the Board of Directors at any time, at a price equal to the Liquidation Value.
Voting Rights
Shares of Series A Preferred Stock shall have no rights to vote on any matter submitted to a vote of shareholders, except as required by law, in which case each share of Series A Preferred Stock shall be entitled to one vote.
Conversion Rights
Holders of Series A Preferred Stock will have no right to convert such shares into any other equity securities of the Company.
Common Stock
As of June 30, 2024 and December 31, 2023, the Company is authorized to issue 500,000,000 shares of common stock at a par value of $0.001 per share.
Voting Rights
Holders of our common stock are entitled to one vote for each share held of record on all matters to be voted on by stockholders. There is no cumulative voting with respect to the election of directors.
Dividend Rights
Holders of our common stock are entitled to receive dividends when, as and if declared by our board of directors out of funds legally available for this purpose.
F- 59
Liquidation Preference
In the event of our liquidation, dissolution or winding up, holders of our common stock are entitled to receive on a proportional basis any assets remaining available for distribution after payment of our liabilities and Series A Preferred Stock.
Other Terms
Holders of common stock have no conversion, preemptive or other subscription rights and there are no sinking fund or redemption provisions applicable to the common stock. All outstanding shares of the common stock are fully paid and non-assessable.
Common Stock Issuances
The following table summarizes the Company’s issuances of common stock during the three months ended June 30, 2024:
| Date | Shares Issued | Purpose |
Fair Value
per Share |
Total Value | ||||||||||
| 6/25/2024 | 300 | Advisory Board compensation | $ | 6.50 | (1) (2) | $ | 1,950 | |||||||
| 7) | Fair Value Basis: The fair value per share was determined based on the closing market price on the date of issuance or the agreed-upon conversion price under the applicable agreement. |
| 8) | Advisory Board Compensation: In March 2024, the Company appointed twelve members to its Advisory Board. Each member is entitled to receive 150 shares of restricted common stock per quarter, contingent upon compliance with their advisory agreement. |
All issuances were accounted for in accordance with ASC 505-10 (Equity) and ASC 718 (Compensation—Stock Compensation), as applicable. o gain or loss was recognized on the debt conversions, as the carrying amount of the debt equaled the fair value of the equity issued. Advisory Board compensation was recorded as general and administrative expense, with a corresponding credit to additional paid-in capital.
8. Commitments and Contingencies
Merger with the SMS Group
On January 10, 2022 the Company executed a definitive agreement to acquire a controlling interest in Sustainable Metal Solutions LLC and its subsidiaries (“SMS” or the “SMS Group”). The purchase price for the controlling interest in SMS will be determined based upon the price of the Company’s common stock on the date of closing, such date to be decided by the Parties in good faith after all conditions precedent are met. These conditions precedent include, but are not limited to:
| ● | Completion of SMS’s audited financial statements by an independent PCAOB-registered accounting firm; | |
| ● | Delivery of a completed and SEC-compliant SK-1300 technical report summary on SMS’s mineral reserves as of December 31, 2021 and 2022; | |
| ● | Uplisting of ACRG’s common stock to the Nasdaq Capital Market; | |
| ● | SEC clearance of the Form S-4 registration statement and proxy materials; | |
| ● | Approval of the merger by ACRG’s shareholders; | |
| ● | Satisfaction of customary closing conditions, including representations and warranties, covenants, and absence of material adverse changes. |
F- 60
SMS is an American multi-company environmental development platform focused on producing carbon neutral precious metals and minerals thereby driving American mineral independence while revitalizing the environment and minimizing the impacts of climate change. The business of SMS is consistent with the Company’s posture to acquire, license or joint venture with other parties involved in toll milling, processing, or mining related activities, which may include GPR and its affiliated entities, including, but not limited to, NovaMetallix. Inc., and BlackBear Natural Resources, LTD.
SMS is a group of companies that has developed a significant primary source of metals for conventional mining and secondary sources of metals from previously discarded mining tailings for re-reprocessing and recovery. Access to the large amount of mine tailings on the Company’s Nevada property adds favorably to SMS’s plans. Its goal is to enhance the US’s supply chain of various metals produced locally using environmentally friendly methods. In addition, SMS’s sustainable resource program has developing interests in alternative sources of energy, including the Company’s Nevada property which is zoned for solar development, and the conservation of our water resources.
Joint Venture with AMI
Effective June 3, 2024, the Company executed a Memorandum of Understanding for a Joint Venture with AMI Strategies, (“AMI”). The Parties intend to form a joint operation and utilize the technology and talent of both organizations for their mutual benefit which includes the Company’s planned renewable energy generation, specifically solar power through the operation, engineering, infrastructure, and construction of controlled solar power and AMI’s management of utility costs through a proprietary software platform that can bill, audit, invoice and manage the daily operations of suppliers and clients.
About AMI:
AMI Strategies serves clients on every continent, offering a global suite of solutions for Telecom, Mobility, Cloud, Utility, ServiceNow, and Managed Automation deployments – all powered by cutting-edge technology and automation.
AMI’s platform is designed to manage any vendor that’s important to its customers – no matter what category it’s in. By establishing inventory that includes integrated data from vendors and enterprise systems, auditing charges against correlating contracts, automating allocations and payments, and centralizing how services are purchased, changed or decommissioned, AMI ensures its clients never waste time on vendor-related busywork, and never pay more than they’re supposed to.
Definitive Documents:
The Parties will work together to draft definitive documents including the formation of the joint venture and its governing documents.
9. Restatement of Previously Issued Financial Statements
As described in Note 2 the Company determined that it was necessary to re-evaluate its accounting treatment for its debt obligations. The Company identified accrued interest calculations were performed incorrectly and borrowing on its related party promissory note with GPR included borrowings that weren’t related to the Company operations and should have not been included in the principal balance. Certain previously reported amounts within the financial statements did not mathematically reconcile (i.e., did not foot). These amounts are presented herein as originally reported in the previously issued financial statements for transparency and consistency. The restatement corrects these errors and reflects the appropriate adjustments. Below are the Company’s restated consolidated balance sheets, statement of operations, statement of stockholders’ deficit and statement of cash flows with the adjustments for the periods stated in the tables below.
F- 61
AMERICAN RESOURCES CORPORATION
RESTATED BALANCE SHEETS
| Balance Sheet as of December 31, 2023 | As Reported | Adjustment | As Restated | |||||||||
| Assets | ||||||||||||
| Current assets: | ||||||||||||
| Cash | $ | 36,254 | $ | 151 | $ | 36,405 | ||||||
| Prepaid expenses | 140 | 6,634 | 6,774 | |||||||||
| Total current assets | 36,394 | 6,785 | 43,179 | |||||||||
| Mineral rights | 3,883,524 | - | 3,883,524 | |||||||||
| Intangible asset, net | 4,888,762 | 19,957 | 4,908,719 | |||||||||
| Total assets | $ | 8,808,680 | $ | 26,742 | $ | 8,835,422 | ||||||
| Liabilities, mezzanine, and stockholders’ deficit | ||||||||||||
| Current liabilities: | ||||||||||||
| Convertible promissory notes, related party | $ | 191,231 | $ | (34,929 | ) | $ | 156,302 | |||||
| Accrual for settlement of lawsuits | - | - | - | |||||||||
| Accounts payable | 1,332,612 | (137,949 | ) | 1,194,663 | ||||||||
| Accounts payable – related party | 80,000 | 139,962 | 219,962 | |||||||||
| Accrued interest | 1,511,434 | 214,776 | 1,726,210 | |||||||||
| Accrued interest - related party | 17,384 | (16,235 | ) | 1,149 | ||||||||
| Total current liabilities | 3,132,661 | 165,625 | 3,298,286 | |||||||||
| Commitments and contingencies (Note 9) | ||||||||||||
| Preferred stock, 50,000,000 shares authorized: | ||||||||||||
| Preferred stock, 50,000,000 shares authorized Series A, $.001 par value, 10,000,000 shares issued and outstanding as of December 31, 2023 | 10,000,000 | - | 10,000,000 | |||||||||
| Stockholders’ deficit: | ||||||||||||
| Common stock, $0.001 par value, 500,000,000 shares authorized: 14,418,760 issued and outstanding as of December 31, 2023 | 14,419 | (511 | ) | 13,908 | ||||||||
| Additional paid-in capital | 103,680,994 | (536,379 | ) | 103,144,615 | ||||||||
| Accumulated deficit | (107,939,395 | ) | 318,008 | (107,621,387 | ) | |||||||
| Total stockholders’ deficit | (4,243,982 | ) | (218,882 | ) | (4,462,864 | ) | ||||||
| Total Liabilities, mezzanine and stockholders’ deficit | $ | 8,808,680 | $ | 26,742 | $ | 8,835,422 | ||||||
F- 62
AMERICAN RESOURCES CORPORATION
RESTATED INCOME STATEMENT
| Statement of operations for the six months ended June 30, 2023 | As Reported | Adjustment | As Restated | |||||||||
| Operating expenses: | ||||||||||||
| General and administrative expenses | $ | 206,565 | $ | (99,850 | ) | $ | 106,715 | |||||
| Total operating expenses | 206,565 | (99,850 | ) | 106,715 | ||||||||
| Loss from operations | (206,565 | ) | 99,850 | (106,715 | ) | |||||||
| Other income (expense): | ||||||||||||
| Other income | 4,198 | - | 4,198 | |||||||||
| Gain on the settlement of accounts payable | 57,572 | (57,572 | ) | - | ||||||||
| Interest expense | (472,499 | ) | 47,025 | (425,474 | ) | |||||||
| Total other expense, net | (410,729 | ) | (10,547 | ) | (421,276 | ) | ||||||
| Loss before income tax provision | (617,294 | ) | 89,303 | (527,991 | ) | |||||||
| Income tax provision | - | - | - | |||||||||
| Net loss | $ | (617,294 | ) | $ | 89,303 | $ | (527,991 | ) | ||||
| Basic net loss per common share | $ | (0.23 | ) | $ | 0.03 | $ | (0.20 | ) | ||||
| Basic weighted average common shares outstanding | 2,674,530 | - | 2,674,530 | |||||||||
F- 63
|
As
Reported
Common Stock Shares |
Adjustments |
As
Restated
Common Stock Shares |
As
Reported
Common Stock Amount |
Adjustments |
As
Restated
Common Stock Amount |
As
Reported
Additional Paid-in Capital |
Adjustments |
As
Restated
Additional Paid-in Capital |
As
Reported
Accumulated Deficit |
Adjustments |
As
Restated
Accumulated Deficit |
As
Reported
Total |
Adjustments |
As
Restated
Total |
||||||||||||||||||||||||||||||||||||||||||||||
| Balance, December 31, 2022 | 2,674,530 | - | 2,674,530 | $ | 2,674 | $ | 1 | $ | 2,675 | $ | 88,061,298 | $ | (1 | ) | $ | 88,061,297 | $ | (106,530,496 | ) | $ | 80,275 | $ | (106,450,221 | ) | $ | (18,466,524 | ) | $ | 80,275 | $ | (18,386,249 | ) | ||||||||||||||||||||||||||||
| Net Loss | - | - | - | - | - | - | - | - | - | (195,357 | ) | (33,714 | ) | (229,071 | ) | (195,357 | ) | (33,714 | ) | (229,071 | ) | |||||||||||||||||||||||||||||||||||||||
| Balance, March 31, 2023 | 2,674,530 | - | 2,674,530 | 2,674 | 1 | 2,675 | 88,061,298 | (1 | ) | 88,061,297 | (106,725,853 | ) | 46,561 | (106,679,292 | ) | (18,661,881 | ) | 46,561 | (18,615,320 | ) | ||||||||||||||||||||||||||||||||||||||||
| Net Loss | - | - | - | - | - | - | - | - | - | (421,936 | ) | 123,016 | (298,920 | ) | (421,936 | ) | 123,016 | (298,920 | ) | |||||||||||||||||||||||||||||||||||||||||
| Balance, June 30, 2023 | 2,674,530 | - | 2,674,530 | $ | 2,674 | $ | 1 | $ | 2,675 | $ | 88,061,298 | $ | (1 | ) | $ | 88,061,297 | $ | (107,147,789 | ) | $ | 169,577 | $ | (106,978,212 | ) | $ | (19,083,817 | ) | $ | 169,577 | $ | (18,914,240 | ) | ||||||||||||||||||||||||||||
F- 64
AMERICAN RESOURCES CORPORATION
RESTATED CASH FLOW STATEMENT
| Statement of Cash flows for the six months ended June 30, 2023 | As Reported | Adjustment | As Restated | |||||||||
| Cash flows used in operating activities: | ||||||||||||
| Net loss | $ | (617,294 | ) | $ | 89,303 | $ | (527,991 | ) | ||||
| Adjustments to reconcile net loss to cash flows used in operating activities: | ||||||||||||
| Gain on derecognition of certain accounts payable | (57,572 | ) | 57,572 | - | ||||||||
| Expenses paid directly by related party | 159,283 | (159,283 | ) | - | ||||||||
| Changes in operating assets and liabilities: | ||||||||||||
| Accounts payable | - | 101,865 | 101,865 | |||||||||
| Accrual for settlement of lawsuits | - | 77,060 | 77,060 | |||||||||
| Accrued interest | 472,499 | (321,187 | ) | 151,312 | ||||||||
| Accrued interest – related parties | 42,549 | 154,553 | 197,102 | |||||||||
| Net cash used in operating activities | (535 | ) | (117 | ) | (652 | ) | ||||||
| Net (decrease in cash | (535 | ) | (117 | ) | (652 | ) | ||||||
| Cash, beginning of year | 1,251 | 117 | 1,368 | |||||||||
| Cash, end of year | $ | 716 | $ | - | $ | 716 | ||||||
| Non-Cash Investing and Financing: | ||||||||||||
| Payments made by related party on behalf of the Company | $ | 162,404 | $ | (66,516 | ) | $ | 95,888 | |||||
| Consolidation of debt and accrued interest due to parent | $ | 8,779,594 | $ | (8,779,594 | ) | $ | - | |||||
10. Subsequent Events
The Company follows the guidance in FASB ASC 855-10 for the disclosure of subsequent events. The Company evaluated subsequent events through the date the financial statements were issued and determined the Company had no subsequent events.
F- 65
American Clean Resources Group, Inc.
Unaudited Condensed Consolidated Balance Sheets
| March 31, | December 31, | |||||||
| 2024 | 2023 | |||||||
| RESTATED | RESTATED | |||||||
| (Unaudited) | ||||||||
| Assets | ||||||||
| Current assets: | ||||||||
| Cash | $ | 911 | $ | 36,405 | ||||
| Prepaid expenses | 2,749 | 6,774 | ||||||
| Total current assets | 3,660 | 43,179 | ||||||
| Mineral rights | 3,883,524 | 3,883,524 | ||||||
| Intangible asset, net | 4,825,257 | 4,908,719 | ||||||
| Total assets | $ | 8,712,441 | $ | 8,835,422 | ||||
| Liabilities, mezzanine, and stockholders’ deficit | ||||||||
| Convertible promissory notes, related party | 217,513 | 156,302 | ||||||
| Accounts payable | 1,243,974 | 1,194,663 | ||||||
| Accounts payable – related party | 190,858 | 219,962 | ||||||
| Accrued interest | 1,810,188 | 1,726,210 | ||||||
| Accrued interest - related party | 5,046 | 1,149 | ||||||
| Total current liabilities | 3,467,579 | 3,298,286 | ||||||
| Commitments and contingencies (Note 8) | ||||||||
| Preferred stock, 50,000,000 shares authorized Series A, $.001 par value, 10,000,000 shares issued and outstanding as of March 31, 2024 and 2023 | 10,000,000 | 10,000,000 | ||||||
| Stockholders’ deficit: | ||||||||
| Common stock, $0.001 par value, 500,000,000 shares authorized: 13,907,436 issued and outstanding at March 31, 2024 and December 31, 2023 | 13,908 | 13,908 | ||||||
| Additional paid-in capital | 103,144,615 | 103,144,615 | ||||||
| Accumulated deficit | (107,913,661 | ) | (107,621,387 | ) | ||||
| Total stockholders’ deficit | $ | (4,755,138 | ) | $ | (4,462,864 | ) | ||
| Total liabilities and stockholders’ deficit | $ | 8,712,441 | $ | 8,835,422 | ||||
The accompanying footnotes are an integral part of these condensed consolidated financial statements.
F- 66
American Clean Resources Group, Inc.
Unaudited Condensed Consolidated Statements of Operations
| For Three Months Ended March 31, | ||||||||
| 2024 | 2023 | |||||||
| RESTATED | RESTATED | |||||||
| Operating expenses: | ||||||||
| General and administrative expenses | $ | 211,498 | $ | 42,310 | ||||
| Total operating expenses | 211,498 | 42,310 | ||||||
| Loss from operations | (211,498 | ) | (42,310 | ) | ||||
| Other income (expense): | ||||||||
| Other income | 7,099 | 2,099 | ||||||
| Interest expense | (87,875 | ) | (188,860 | ) | ||||
| Total other expense, net | (80,776 | ) | (186,761 | ) | ||||
| Loss before income tax provision | (292,274 | ) | (229,071 | ) | ||||
| Income tax provision | - | - | ||||||
| Net loss | $ | (292,274 | ) | $ | (229,071 | ) | ||
| Net loss per common shares: | ||||||||
| Basic net loss per common share | $ | (0.02 | ) | $ | (0.09 | ) | ||
| Weighted average shares outstanding per common shares: | ||||||||
| Basic weighted average common shares outstanding | 13,907,436 | 2,674,530 | ||||||
The accompanying footnotes are an integral part of these condensed consolidated financial statements.
F- 67
American Clean Resources Group, Inc.
Unaudited Condensed Consolidated Statements of Changes in Stockholders’ Deficit
| Common Stock |
Additional
Paid-in |
Accumulated | ||||||||||||||||||
| Shares | Amount | Capital | Deficit | Total | ||||||||||||||||
| RESTATED | RESTATED | RESTATED | RESTATED | RESTATED | ||||||||||||||||
| Balance, December 31, 2022 | 2,674,530 | $ | 2,675 | $ | 88,061,297 | $ | (106,450,221 | ) | $ | (18,386,249 | ) | |||||||||
| Net loss | - | - | - | (229,071 | ) | (229,071 | ) | |||||||||||||
| Balance, March 31, 2023 | 2,674,530 | $ | 2,675 | $ | 88,061,297 | $ | (106,679,292 | ) | $ | (18,615,320 | ) | |||||||||
| Common Stock |
Additional
Paid-in |
Accumulated | ||||||||||||||||||
| Shares | Amount | Capital | Deficit | Total | ||||||||||||||||
| RESTATED | RESTATED | RESTATED | RESTATED | RESTATED | ||||||||||||||||
| Balance, December 31, 2023 | 13,907,436 | $ | 13,908 | $ | 103,144,615 | $ | (107,621,387 | ) | $ | (4,462,864 | ) | |||||||||
| Net loss | - | - | - | (292,274 | ) | (292,274 | ) | |||||||||||||
| Balance, March 31, 2024 | 13,907,436 | $ | 13,908 | $ | 103,144,615 | $ | (107,913,661 | ) | $ | (4,755,138 | ) | |||||||||
The accompanying footnotes are an integral part of these condensed consolidated financial statements.
F- 68
American Clean Resources Group, Inc.
Unaudited Condensed Consolidated Statements of Cash Flows
|
For the Three Months Ended
March 31, |
||||||||
| 2024 | 2023 | |||||||
| RESTATED | RESTATED | |||||||
| Cash flows from operating activities: | ||||||||
| Net loss | $ | (292,274 | ) | $ | (229,071 | ) | ||
| Adjustments to reconcile net loss to cash flows used in operating activities: | ||||||||
| Amortization Expense | 83,462 | - | ||||||
| Changes in operating assets and liabilities: | ||||||||
| Prepaid expenses | 4,025 | - | ||||||
| Accounts payable | 70,522 | 39,501 | ||||||
| Accounts payable – related party | (29,104 | ) | - | |||||
| Accrual for settlement of lawsuits | - | 42,548 | ||||||
| Accrued interest | 83,978 | 74,527 | ||||||
| Accrued interest – related parties | 3,897 | 71,785 | ||||||
| Net cash used in operating activities | (75,494 | ) | (710 | ) | ||||
| Cash flows from financing activities: | ||||||||
| Proceeds from convertible notes - related party | 40,000 | - | ||||||
| Net cash provided by financing activities | 40,000 | - | ||||||
| Net decrease in Cash | (35,494 | ) | (710 | ) | ||||
| Cash, beginning of year | 36,405 | 1,368 | ||||||
| Cash, end of year | $ | 911 | $ | 658 | ||||
| Noncash investing and financing activity: | ||||||||
| Payments made by related party on behalf of the Company | 21,211 | 34,549 | ||||||
The accompanying footnotes are an integral part of these condensed consolidated financial statements.
F- 69
AMERICAN CLEAN RESOURCES GROUP, INC.
NOTES TO UNADUITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED MARCH 31, 2024
1. Nature of Business
American Clean Resources Group, Inc. f/k/a Standard Metals Processing, Inc. (“we,” “us,” “our,” “ACRG” or the “Company”) is an exploration stage company, incorporated in Nevada. The Company’s primary business plan is to purchase equipment and build a facility on the Tonopah property to serve as a permitted custom processing toll milling facility while it explores new technologies that allow greater effectiveness in achieving industry sustainability goals (which includes an analytical lab, pyrometallurgical plant, and hydrometallurgical recovery plant).
The Company plans to perform permitted custom processing toll milling which is a process whereby mined material is crushed and ground into fine particles to ease the extraction of any precious minerals contained therein, such as minerals in the gold, silver, and platinum metal groups. Custom milling and refining can include many different processes that are designed specifically for each ore load and to maximize the extraction of precious metals from carbon or concentrates. These toll-processing services also distil, dry, mix, or mill chemicals and bulk materials on a contractual basis and provide a chemical production outsourcing option for industrial companies, which lack the expertise, capacity, or regulatory permits for in-house production.
We are required to obtain several permits before we can begin construction of a small-scale mineral processing facility to conduct permitted processing toll milling activities and construction of the required additional buildings and well relocation necessary for us to commence operations.
2. Summary of Significant Accounting Policies
Basis of Presentation
The accompanying consolidated financial statements of the Company have been prepared using the accrual method of accounting in accordance with U.S. GAAP and considering the requirements of the United States Securities and Exchange Commission.
Going Concern
The accompanying consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The Company has incurred recurring losses and as of March 31, 2024, had an accumulated deficit of $107,913,661. For the three months ended March 31, 2024, the Company sustained a net loss of $292,274. These factors, among others, raise substantial doubt about the Company’s ability to continue as a going concern for the next twelve months from the date these financial statements were issued. These financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that may be necessary should the Company be unable to continue as a going concern. The Company’s continuation as a going concern is contingent upon its ability to obtain additional financing and to generate revenue and cash flow to meet its obligations on a timely basis. The Company will continue to seek to raise additional funding through debt or equity financing during the next twelve months from the date of issuance of these financial statements. There is no guarantee the Company will be successful in achieving obtaining additional funding and may have to cease operations.
F- 70
Principles of Consolidation
The consolidated financial statements include the accounts of the Company, and its wholly owned subsidiary Aurielle Enterprises, Inc., (f/k/a Tonopah Milling and Metals Group, Inc.) and its wholly owned subsidiaries Tonopah Custom Processing, Inc., and Tonopah Resources, Inc., and since being acquired in September 2023, SWIS LLC. All significant intercompany transactions, accounts and balances have been eliminated in consolidation.
Use of Estimates
Preparing 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 financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Estimates may pertain to impairment of intangible assets and mining rights, useful lives of intangible assets and contingent liabilities.
Revenue Recognition
As of March 31, 2024, we have recorded no revenues from custom permitted processing toll milling. If we achieve revenue generation, the Company plans to report such revenues consistent with ASC Topic 606 Revenues from Contracts with Customers. The Company recognizes revenue when control of the promised goods or services is transferred to customers, in an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods or services. Significant judgments are required in determining the transaction price and the timing of revenue recognition.
Fair Value of Financial Instruments
The Company accounts for financial instruments under Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 820, Fair Value Measurements. This statement defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles, and expands disclosures about fair value measurements. To increase consistency and comparability in fair value measurements, ASC 820 establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three levels as follows:
| Level 1 — | quoted prices (unadjusted) in active markets for identical assets or liabilities; |
| Level 2 — | observable inputs other than Level 1, quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets and liabilities in markets that are not active, and model-derived prices whose inputs are observable or whose significant value drivers are observable; and |
| Level 3 — | assets and liabilities whose significant value drivers are unobservable. |
The Company applies fair value accounting for all assets and liabilities that are recognized or disclosed at fair value in the financial statements. The carrying amounts reported in the financial statements for cash, accounts payables and accrued liabilities approximate their fair value due to their short-term nature.
Basic and Diluted Net Loss Per Share
Basic net loss per common share is computed by dividing net loss by the weighted-average number of common shares outstanding during each period. Diluted net loss per share of common shares includes the effect, if any, from the potential exercise or conversion of securities, such as convertible debt, share options and warrants, which would result in the issuance of incremental shares of common shares. For diluted net loss per share, the weighted-average number of common shares is the same for basic net loss per share due to the fact that when a net loss exists, dilutive securities are not included in the calculation as the impact is anti-dilutive. For all periods presented, basic and diluted net loss per share are the same, as any additional share equivalents would be anti-dilutive.
F- 71
As of March 31, 2024 and December 31 2023, the Company convertible promissory note – related party was convertible into 211,961 and 149,954 shares of common stock respectively.
Recent Accounting Standards
On November 27, 2023, the FASB issued ASU 2023-07, “Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures,” which requires incremental disclosures related to an entity’s reportable segments, effective for annual periods beginning after December 15, 2023. The Company plans to adopt ASU 2023-07 on December 31, 2024.
The FASB and other entities issued new or modifications to, or interpretations of, existing accounting guidance during 2024. Management has carefully considered the new pronouncements that altered generally accepted accounting principles and does not believe that any other new or modified principles will have a material impact on the Company’s reported financial position or operations in the near term.
Restatement of Previously Issued Consolidated Financial Statements
During the third quarter of 2024, and prior to the filing of the Company’s Form 10-K/A for the year ended December 31, 2023, the Company determined that it was necessary to re-evaluate the Company’s accounting treatment for certain debt obligations. In accordance with Staff Accounting Bulletins No. 99 (SAB No. 99) Topic 1.M, “Materiality” and SAB No. 99 Topic 1.N “Considering the Effects of Misstatements when Quantifying Misstatements in the Current Year Financial Statements,” the Company assessed the materiality of these errors to its previously issued consolidated financial statements. Based upon the Company’s evaluation of both quantitative and qualitative factors, the Company concluded the errors were material to the Company’s previously issued consolidated financial statements for the fiscal years ended December 31, 2023 and 2022. Accordingly, the Company intends to file its Restated Consolidated Financial Statements for the fiscal years ended December 31, 2023 and 2022. Additionally, the Company has restated its previously filed unaudited interim condensed consolidated financial statements for the periods ended March 31, 2023, June 30, 2023, and September 30, 2023. These restated interim financial statements are included within this Form 10-K. See Note 9 for further information regarding the nature of the errors. and the impact of the restatements
3. Mineral rights
The Company is preparing the Tonopah property site for the construction of a permitted custom processing toll milling facility including grading the land, installing fencing, and working with contractors for our planned 21,875 square foot building and servicing and drilling various wells for our future operations.
The Company has continued to assess the realizability of its Mineral rights. Based on an assessment the Company conducted during 2023, the Company decided the combined carrying value of its land, mineral rights, and water rights of $3,883,524 was fairly stated and not exposed to impairment.
4. Developed Technology
On September 13, 2023, the Company executed an agreement to acquire a 100% interest in SWIS, L.L.C. (“SWIS”). The Company issued 1,500,000 shares of restricted common stock to SWIS's former owner, Launch IT, LLC, and assumed certain liabilities in exchange for 100% interest in SWIS. Upon the executed agreement, Launch IT, LLC became a significant owner of the Company’s common stock and, as of March 31, 2024, owns 10% of the Company’s restricted common stock.
F- 72
The Company determined the acquisition to be an asset acquisition under ASC 805, Business Combinations, as all of the fair value of the gross assets acquired was concentrated in a single identifiable asset, the developed technology and exclusive license. The developed technology and exclusive license is a definite-lived intangible asset and is being amortized over the life of the patent life.
The total purchase consideration for the acquisition of SWIS was $5,007,730, which includes the issuance of restricted common stock valued at $4,875,000 and assumed accounts payable balance of $132,730. The restricted common stock issued was fair valued reflecting a 35% liquidity discount from the $5.00 share price of the Company common stock on the date of the acquisition. The consideration paid is recorded on the Company’s books as Developed Technology and Patent Rights, with a useful life of 14 years (150 months from the acquisition date of September 13, 2023). The monthly amortization of the Developed Technology and Patent Rights is approximately $27,821.
During the three months ended March 31, 2024 and 2023, the Company recorded total amortization expense of $83,462 and $0, respectively. Amortization expense is included in general and administrative expenses in the consolidated statements of operations.
5. Debt
Convertible Promissory Notes Payable – Related Party
On March 16, 2020, the Company entered into a Line of Credit (“LOC”) agreement with Granite Peak Resources LLC (“GPR”), a related party and the majority shareholder of the Company. The initial LOC provided for borrowings up to $2.5 million, with a maturity date of March 16, 2023. At GPR’s sole discretion, the LOC could be increased by an additional $1.0 million and extended for two years. The LOC accrued interest at 10% per annum and was convertible into common stock at $2.00 per share, based on the closing price on the date of issuance. The LOC was secured by substantially all of the Company’s real and personal property.
On July 12, 2021, the LOC was amended (the “First Amendment”) to:
| ● | Increase the borrowing limit to $5.0 million, |
| ● | Extend the maturity date to March 16, 2025, and |
| ● | Reduce the conversion price to $1.65 per share. |
The First Amendment also granted GPR the option to further increase the LOC by $5.0 million and extend the maturity date by an additional five years.
On January 5, 2023, the Company entered into a Second Amendment to the LOC (the “Second Amendment”) with GPR. The amendment significantly restructured the existing LOC agreement. Key terms of the Second Amendment included:
| ● | Increase in Borrowing Capacity: From $5.0 million to $35.0 million. |
| ● | Extension of Maturity Date: To March 16, 2027. |
| ● | Reduction in Conversion Price: From $1.65 to $1.05 per share, based on the trailing three-day market price. |
| ● | Debt Consolidation: The following obligations, previously acquired by GPR, were formally consolidated into the LOC: |
| ● | Tina Gregerson Promissory Note: $477,500 principal and $293,963 accrued interest. |
| ● | Krupp Note: $100,000 principal and $59,795 accrued interest. |
| ● | Forbearance: GPR agreed to forbear from exercising rights under the loan documents, including foreclosure rights related to the Stephen Flechner Judgment and the Pure Path Capital Senior Secured Convertible Promissory Note, both of which had been previously purchased by GPR. The forbearance period extends through January 12, 2024. |
F- 73
The Company evaluated the amendment under ASC 470-50 and ASC 470-60 and concluded it constituted a debt extinguishment, as the present value of the revised cash flows exceeded the 10% threshold. No gain or loss was recognized, as the reacquisition price equaled the carrying amount of the extinguished debt.
On June 12, 2023, the Company entered into a Third Amendment to the LOC (the “Third Amendment”) with GPR. Key terms of the Third Amendment included:
| ● | Increase in Borrowing Capacity: From $35.0 million to $52.5 million. |
| ● | Expansion of Collateral: The Deed of Trust and Security Agreement was amended to increase the secured amount from $100 million to $250 million. |
| ● | Debt Consolidation: The following obligations, previously acquired by GPR, were formally consolidated into the LOC: |
| ● | The Pure Path Capital Senior Secured Convertible Promissory Note: $2,229,187 principal and $1,709,064 accrued interest. |
| ● | Stephen Flechner Judgment: $2,157,000 principal and $1,580,248 accrued interest. |
The Company determined the amendment met the criteria for a troubled debt restructuring (TDR) under ASC 470-60, as the Company was experiencing financial difficulty and GPR granted a concession. The amendment was accounted for as a debt extinguishment under ASC 470-50, with no gain or loss recognized.
On August 2, 2023, GPR converted $5,250,000 of LOC principal into 5,000,000 shares of restricted common stock. On August 15, 2023, GPR converted the remaining $4,969,551 (principal and accrued interest) into 4,732,906 shares of restricted common stock, at the conversion price of $1.05 per share, as provided in the Third Amendment.
As of March 31, 2024 the outstanding balance under the LOC consisted of $217,513 in principal and $5,046 in accrued interest. As of December 31, 2023, the outstanding balance was $156,303 in principal and $1,149 in accrued interest.
During the three months ended March 31, 2024 and 2023, the Company recognized non-cash borrowings of $21,211 and $34,549, respectively, under the LOC. These amounts represent expenses paid directly by GPR on behalf of the Company and were recorded as increases to the LOC principal balance.
During the three months ended March 31, 2024, the Company had $40,000 proceeds from convertible notes - related party. The Company’s convertible note line of credit with GPR was increased by this same amount.
Acquisition of Outstanding Defaulted Debt and Material Judgement
Tina Gregerson Promissory Note
On February 11, 2015, the Company issued an unsecured promissory note (the “TG Note”) to Tina Gregerson Family Properties, LLC, an entity controlled by a former director of the Company. The TG Note provided for borrowings of up to $750,000, to be funded in multiple tranches. In connection with the issuance, the Company also granted 250,000 common stock warrants with an exercise price of $1.23 per share and an expiration date of February 11, 2022.
Each tranche under the TG Note matured one year from the date of funding and accrued interest at a rate of 8% per annum. The Company received the following advances under the TG Note:
| ● | $200,000 on February 11, 2015 |
| ● | $48,000 on February 13, 2015 |
| ● | $50,000 on April 13, 2015 |
| ● | $150,000 on July 31, 2015 |
F- 74
| ● | $2,500 on October 20, 2015 |
| ● | $12,000 on October 29, 2015 |
| ● | $15,000 on November 4, 2015 |
On August 12, 2021, GPR and Tina Gregerson entered into an Exchange Agreement, under which GPR acquired the TG Note. Subsequently, on January 5, 2023, the outstanding balance of the TG Note was consolidated into the Company’s LOC with GPR as part of the Second Amendment to the LOC.
As of the date of consolidation, the total balance of the TG Note was $771,463, consisting of $477,500 in principal and $293,963 in accrued interest. Following the consolidation, the TG Note ceased to exist as a separate obligation and became part of the LOC principal balance.
Peter Krupp Promissory Note
On August 4, 2011, the Company issued an unsecured promissory note (the “Krupp Note”) to Peter Krupp in the principal amount of $100,000, bearing interest at a rate of 5% per annum.
On August 12, 2021, GPR and Peter Krupp entered into an Exchange Agreement, under which GPR acquired the Krupp Note. Subsequently, on January 5, 2023, the outstanding balance of the Krupp Note was consolidated into the Company’s LOC with GPR as part of the Second Amendment to the LOC.
As of the date of consolidation, the total balance of the Krupp Note was $159,795, consisting of $100,000 in principal and $59,795 in accrued interest. Following the consolidation, the Krupp Note ceased to exist as a separate obligation and was included in the principal balance of the amended LOC.
Stephen Flechner Judgement
On August 12, 2015, the court entered an Amended Final Judgment in favor of Stephen E. Flechner and against the Company in connection with breach of contract claims. The judgment awarded $2,157,000, with interest accruing at 8% per annum from the date of judgment until paid in full.
On November 29, 2021, GPR, a related party and majority shareholder, entered into a Purchase and Sale Agreement with Mr. Flechner, under which GPR acquired all rights, title, and interest in the judgment.
On January 5, 2023, in connection with the Second Amendment to the Company’s LOC with GPR, GPR agreed to forbear from exercising its rights and remedies under the loan documents, including foreclosure rights related to the Flechner Judgment, through January 12, 2024.
On June 12, 2023, pursuant to the Third Amendment to the LOC, the Flechner Judgment was formally consolidated into the LOC. As of the date of consolidation, the total balance of the judgment was $3,737,248, consisting of the original $2,157,000 judgment amount and $1,580,248 in accrued interest. Following the consolidation, the judgment ceased to exist as a separate obligation and was included in the principal balance of the amended LOC.
Pure Path Capital Senior Secured Convertible Promissory Note
On October 10, 2013, the Company issued a Senior Secured Convertible Promissory Note (the “Senior Secured Note”) to Pure Path Capital Management Company, LLC (“PPMC”) in the principal amount of up to $2.5 million, pursuant to a Settlement and Release Agreement. As part of the settlement, the Company also issued 27 million shares of common stock to PPMC, resulting in PPMC becoming a related party.
F- 75
The Senior Secured Note was secured by a blanket lien on all of the Company’s tangible and intangible assets, whether currently owned or subsequently acquired. This included, but was not limited to, machinery, inventory, accounts receivable, cash, computer equipment, hardware, land, and mineral rights.
On March 29, 2019, GPR, a related party and majority shareholder, acquired the Senior Secured Note from PPMC pursuant to an Exchange and Assignment Agreement.
On June 12, 2023, in connection with the Third Amendment to the Company’s LOC with GPR, the Senior Secured Note was formally consolidated into the LOC. As of the date of consolidation, the total balance of the note was $3,938,251, consisting of $2,229,187 in principal and $1,709,064 in accrued interest. Following the consolidation,
the Senior Secured Note ceased to exist as a separate obligation and was included in the principal balance of the amended LOC.
6. Related Parties
As part of its normal operations, the Company conducts financing through its largest shareholder, GPR. The details of the related party balances are disclosed as part of Note 5.
Granite Peak Resources, LLC
On March 16, 2020, the Company entered into a LOC agreement with GPR. GPR is a related party by virtue of its majority ownership of the Company’s common stock. Under the LOC, GPR has also paid expenses directly on behalf of the Company to support its operations.
During 2019 and 2021, GPR acquired several outstanding debt instruments and judgments originally held by third parties, including:
| ● | The Tina Gregerson Promissory Note, |
| ● | The Peter Krupp Promissory Note, |
| ● | The Pure Path Capital Senior Secured Convertible Promissory Note, and |
| ● | The Stephen E. Flechner Judgment. |
On January 5, 2023, and June 12, 2023, the Company entered into the Second and Third Amendments, respectively, to the LOC with GPR. These amendments formally consolidated the above obligations into the LOC, which was subsequently converted into equity.
On August 2, 2023, and August 15, 2023, GPR converted a total of $10,219,551 of principal and accrued interest under the LOC into 10,244,230 shares of restricted common stock at a conversion price of $1.05 per share, pursuant to the terms of the Third Amendment. As a result of these conversions, GPR became the majority owner, holding approximately 73% of the Company’s outstanding common stock as of March 31, 2024.
During the three months ended March 31, 2024, the Company recorded:
| ● | $21,211 in non-cash borrowings for expenses paid directly by GPR, and |
| ● | $40,000 in proceeds from convertible notes – related party. |
These amounts were added to the LOC principal balance.
Sustainable Metals Solutions, LLC
On January 10, 2022, the Company entered into a definitive agreement to acquire a controlling interest in Sustainable Metals Solutions, LLC (“SMS”), a company majority-owned by GPR. SMS is an environmental development platform focused on producing carbon-neutral precious metals and minerals. The purchase price for the controlling interest will be determined based on the Company’s common stock price on the closing date, which will be mutually agreed upon once all closing conditions are satisfied. Additional details are provided in Note 8 – Commitments and Contingencies.
F- 76
Launch IT, LLC
On September 13, 2023, the Company acquired a 100% interest in SWIS, L.L.C. (“SWIS”) by assuming certain liabilities and issuing 1,500,000 shares of restricted common stock to its former owner, Launch IT, LLC. As a result of the transaction, Launch IT, LLC became a significant shareholder, holding over 10% of the Company’s outstanding common stock as of March 31, 2024.
In connection with the acquisition, the Company retained AJ Miller and Chris Laveson, both former owners of Launch IT, LLC, to continue supporting the SWIS business. AJ Miller is an officer and Chris Laveson is a manager of SWIS subsidiary following the acquisition and both hold 500,000 shares each of restricted common stock of the Company.
The following table summarizes the amounts related to these parties that were included in accounts payable – related party, expenses incurred, and cash paid during the periods ended March 31, 2024 and December 31, 2023:
| As of and for the period ending March 31, 2024 | ||||||||||||
| Related Party |
Included in
Accounts Payable - Related Party |
Expense
incurred |
Amount
paid |
|||||||||
| Launch IT, LLC | $ | 116,458 | $ | - | $ | 23,504 | ||||||
| Gazellig LLC - AJ Miller | 34,400 | 5,000 | 10,600 | |||||||||
| Chris Lavenson | 40,000 | 5,000 | 5,000 | |||||||||
| $ | 190,858 | $ | 10,000 | $ | 39,104 | |||||||
| As of and for the Year Ending December 31, 2023 | ||||||||||||
| Related Party |
Included in
Accounts Payable - Related Party |
Expense
incurred |
Amount
paid |
|||||||||
| Launch IT, LLC | $ | 139,962 | $ | 7,232 | $ | - | ||||||
| Gazellig LLC - AJ Miller | 40,000 | 40,000 | - | |||||||||
| Chris Lavenson | 40,000 | 40,000 | - | |||||||||
| $ | 219,962 | $ | 87,232 | $ | - | |||||||
7. Stockholders’ Deficit and Mezzanine Equity
Preferred Stock
The Series A Preferred Stock is presented as mezzanine equity due to its rights and preferences.
F- 77
Attributes of Series A Preferred Stock include but are not limited to the following:
Distribution in Liquidation
The Series A Preferred Stock has a liquidation preference of $10,000,000, payable only upon certain liquidity events or upon the achievement of a market value of our equity equaling $200,000,000 or more. Upon any liquidation, dissolution or winding up of the Company, and after paying or adequately providing for the payment of all its obligations, the remainder of the assets of the Company shall be distributed, either in cash or in kind, first pro rata to the holders of the Series A Preferred Stock in an amount equal to the Liquidation Value (as described below); then, to any other series of Preferred Stock, until an amount to be determined by a resolution of the Board of Directors prior to issuances of such Preferred Stock, has been distributed per share, and, then, the remainder pro rata to the holders of the Common Stock. Upon the occurrence of any Liquidation Event (as defined below), each holder of Series A Preferred Stock will receive a payment equal to the Original Issue Price for each share of Series A Preferred Stock held by such holder (the “Liquidation Value”). A “Liquidation Event” will have occurred when:
| ● | The Company has an average market capitalization (calculated by adding the value of all outstanding shares of Common Stock valued at the Company’s closing sale price on the OTC Market or other applicable bulletin board or exchange, plus the value of the outstanding Series A Preferred Stock at the Original Issue Price per share) of $200,000,000 or more over any 90 day period. The holders of the Series A Preferred Stock would have the right, for 30 days after the end of such qualifying 90 day measurement period, to require the Company to purchase the Series A Preferred Stock for an amount equal to the Liquidation Value. |
| ● | Any Liquidity Event in which the Company receives proceeds of $50,000,000 or more. For purposes hereof, a “Liquidity Event” means any (a) liquidation, dissolution or winding up of the Company; (b) acquisition of the Company by means of any transaction or series of related transactions (including, without limitation, any reorganization, merger, share exchange, share purchase or consolidation) provided that the applicable transaction shall not be deemed a liquidation unless the Company’s stockholders constituted immediately prior to such transaction hold less than 50% of the voting power of the surviving or acquiring entity; or (c) the sale, lease, transfer or other disposition, in a single transaction or series of related transactions, by the Company or any subsidiary of the Company of all or substantially all the assets of the Company and its subsidiaries taken as a whole, or the sale or disposition (whether by merger or otherwise) of one or more subsidiaries of the Company if substantially all of the assets of the Company and its subsidiaries taken as a whole are held by such subsidiary or subsidiaries. |
Redemption
The Series A Preferred Stock may be redeemed in whole or in part as determined by a resolution of the Board of Directors at any time, at a price equal to the Liquidation Value.
Voting Rights
Shares of Series A Preferred Stock shall have no rights to vote on any matter submitted to a vote of shareholders, except as required by law, in which case each share of Series A Preferred Stock shall be entitled to one vote.
Conversion Rights
Holders of Series A Preferred Stock will have no right to convert such shares into any other equity securities of the Company.
F- 78
Common Stock
As of March 31, 2024 and December 31, 2023, the Company is authorized to issue 500,000,000 shares of common stock at a par value of $0.001 per share.
Voting Rights
Holders of our common stock are entitled to one vote for each share held of record on all matters to be voted on by stockholders. There is no cumulative voting with respect to the election of directors.
Dividend Rights
Holders of our common stock are entitled to receive dividends when, as and if declared by our board of directors out of funds legally available for this purpose.
Liquidation Preference
In the event of our liquidation, dissolution or winding up, holders of our common stock are entitled to receive on a proportional basis any assets remaining available for distribution after payment of our liabilities and Series A Preferred Stock.
Other Terms
Holders of common stock have no conversion, preemptive or other subscription rights and there are no sinking fund or redemption provisions applicable to the common stock. All outstanding shares of the common stock are fully paid and non-assessable.
Common Stock Issuances
The following table summarizes the Company’s issuances of common stock during the three months ended March 31, 2024:
| Date |
Shares
Issued |
Purpose |
Fair Value
per Share |
Total
Value |
||||||||||
| 8/2/2023 | 5,000,000 | Debt conversion (LOC) | $ | 1.05 | (1) | $ | 5,250,000 | |||||||
| 8/15/2023 | 4,732,906 | Debt conversion (LOC) | $ | 1.05 | (1) | $ | 4,969,551 | |||||||
| 9/13/2023 | 1,500,000 | Acquisition of SWIS, LLC | $ | 3.25 | (2) | $ | 4,875,000 | |||||||
| 9) | Fair Value Basis: The fair value per share was determined based on the closing market price on the date of issuance or the agreed-upon conversion price under the applicable agreement. |
| 10) | Discounted Valuation: The fair value per share for the SWIS acquisition was determined using a 35% liquidity discount from the $5.00 market price as of the acquisition date. |
All issuances were accounted for in accordance with ASC 505-10 (Equity) and ASC 718 (Compensation—Stock Compensation), as applicable. o gain or loss was recognized on the debt conversions, as the carrying amount of the debt equaled the fair value of the equity issued. Advisory Board compensation was recorded as general and administrative expense, with a corresponding credit to additional paid-in capital.
F- 79
8. Commitments and Contingencies
Merger with the SMS Group
On January 10, 2022 the Company executed a definitive agreement to acquire a controlling interest in Sustainable Metal Solutions LLC and its subsidiaries (“SMS” or the “SMS Group”). The purchase price for the controlling interest in SMS will be determined based upon the price of the Company’s common stock on the date of closing, such date to be decided by the Parties in good faith after all conditions precedent are met. These conditions precedent include, but are not limited to:
| ● | Completion of SMS’s audited financial statements by an independent PCAOB-registered accounting firm; |
| ● | Delivery of a completed and SEC-compliant SK-1300 technical report summary on SMS’s mineral reserves as of December 31, 2021 and 2022; |
| ● | Uplisting of ACRG’s common stock to the Nasdaq Capital Market; |
| ● | SEC clearance of the Form S-4 registration statement and proxy materials; |
| ● | Approval of the merger by ACRG’s shareholders; |
| ● | Satisfaction of customary closing conditions, including representations and warranties, covenants, and absence of material adverse changes. |
SMS is an American multi-company environmental development platform focused on producing carbon neutral precious metals and minerals thereby driving American mineral independence while revitalizing the environment and minimizing the impacts of climate change. The business of SMS is consistent with the Company’s posture to acquire, license or joint venture with other parties involved in toll milling, processing, or mining related activities, which may include GPR and its affiliated entities, including, but not limited to, NovaMetallix. Inc., and BlackBear Natural Resources, LTD.
SMS is a group of companies that has developed a significant primary source of metals for conventional mining and secondary sources of metals from previously discarded mining tailings for re-reprocessing and recovery. Access to the large amount of mine tailings on the Company’s Nevada property adds favorably to SMS’s plans. Its goal is to enhance the US’s supply chain of various metals produced locally using environmentally friendly methods. In addition, SMS’s sustainable resource program has developing interests in alternative sources of energy, including the Company’s Nevada property which is zoned for solar development, and the conservation of our water resources.
9. Restatement of Previously Issued Financial Statements
As described in Note 2 the Company determined that it was necessary to re-evaluate its accounting treatment for its debt obligations. The Company identified accrued interest calculations were performed incorrectly and borrowing on its related party promissory note with GPR included borrowings that weren’t related to the Company operations and should have not been included in the principal balance. Certain previously reported amounts within the financial statements did not mathematically reconcile (i.e., did not foot). These amounts are presented herein as originally reported in the previously issued financial statements for transparency and consistency. The restatement corrects these errors and reflects the appropriate adjustments. Below are the Company’s restated consolidated balance sheets, statement of operations, statement of stockholders’ deficit and statement of cash flows with the adjustments for the periods stated in the tables below.
F- 80
AMERICAN RESOURCES CORPORATION
RESTATED BALANCE SHEET
| Balance Sheet as of March 31, 2024 | As Reported | Adjustment | As Restated | |||||||||
| Assets | ||||||||||||
| Current assets: | ||||||||||||
| Cash | $ | 9,311 | $ | (8,400 | ) | $ | 911 | |||||
| Accounts receivable | 5,000 | (5,000 | ) | - | ||||||||
| Prepaid expenses | 3,260 | (511 | ) | 2,749 | ||||||||
| Total current assets | 17,571 | (13,911 | ) | 3,660 | ||||||||
| Mineral rights | 3,883,524 | - | 3,883,524 | |||||||||
| Intangible asset, net | 4,799,333 | 25,924 | 4,825,257 | |||||||||
| Total assets | $ | 8,700,428 | $ | 12,013 | $ | 8,712,441 | ||||||
| Liabilities, mezzanine, and stockholders’ deficit | ||||||||||||
| Current liabilities: | ||||||||||||
| Accrued liabilities | $ | 3,925 | $ | (3,925 | ) | $ | - | |||||
| Convertible promissory notes, related party | 329,661 | (112,148 | ) | 217,513 | ||||||||
| Accounts payable | 1,294,442 | (50,468 | ) | 1,243,974 | ||||||||
| Accounts payable – related party | 80,000 | 110,858 | 190,858 | |||||||||
| Accrued interest | - | 1,810,188 | 1,810,188 | |||||||||
| Accrued interest - related party | 1,606,714 | (1,601,668 | ) | 5,046 | ||||||||
| Total current liabilities | 3,314,742 | 152,837 | 3,467,579 | |||||||||
| Commitments and contingencies (Note 9) | ||||||||||||
| Preferred stock, 50,000,000 shares authorized: | ||||||||||||
| Preferred stock, 50,000,000 shares authorized Series A, $.001 par value, 10,000,000 shares issued and outstanding at March 31,2024. | 10,000,000 | - | 10,000,000 | |||||||||
| Stockholders’ deficit: | ||||||||||||
| Common stock, $0.001 par value, 500,000,000 shares authorized: 13,907,436 at March 31,2024. | 14,419 | (511 | ) | 13,908 | ||||||||
| Additional paid-in capital | 103,680,994 | (536,379 | ) | 103,144,615 | ||||||||
| Accumulated deficit | (108,110,489 | ) | 196,828 | (107,913,661 | ) | |||||||
| Total stockholders’ deficit | (4,415,076 | ) | (340,062 | ) | (4,755,138 | ) | ||||||
| Total Liabilities, mezzanine and stockholders’ deficit | $ | 8,899,666 | $ | (187,225 | ) | $ | 8,712,441 | |||||
F- 81
AMERICAN RESOURCES CORPORATION
RESTATED STATEMENT OF OPERATIONS
| Statement of operations for the three months ended March 31, 2024 | As Reported | Adjustment | As Restated | |||||||||
| Operating expenses: | ||||||||||||
| General and administrative expenses | $ | 128,608 | $ | 82,890 | $ | 211,498 | ||||||
| Amortization expense | 89,429 | (89,429 | ) | - | ||||||||
| Total operating expenses | 218,037 | (6,539 | ) | 211,498 | ||||||||
| Loss from operations | (218,037 | ) | 6,539 | (211,498 | ) | |||||||
| Other income (expense): | ||||||||||||
| Other income | 5,601 | 1,498 | 7,099 | |||||||||
| Interest expense | (77,896 | ) | (9,979 | ) | (87,875 | ) | ||||||
| Total other expense, net | (71,694 | ) | (9,082 | ) | (80,776 | ) | ||||||
| Loss before income tax provision | (289,731 | ) | (2,543 | ) | (292,274 | ) | ||||||
| Income tax provision | - | - | - | |||||||||
| Net loss | $ | (289,731 | ) | $ | (2,543 | ) | $ | (292,274 | ) | |||
| Basic net loss per common share | $ | (0.02 | ) | $ | 0.00 | $ | (0.02 | ) | ||||
| Basic weighted average common shares outstanding | 14,418,760 | (511,324 | ) | 13,907,436 | ||||||||
F- 82
|
As
Reported
Common Stock |
As
Restated
Common Stock |
As
Reported
Common Stock |
As
Restated
Common Stock |
As
Reported
Additional Paid-in |
As
Restated
Additional Paid-in |
As
Reported
Accumulated |
As
Restated
Accumulated |
As Reported | As Restated | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Shares | Adjustments | Shares | Amount | Adjustments | Amount | Capital | Adjustments | Capital | Deficit | Adjustments | Deficit | Total | Adjustments | Total | ||||||||||||||||||||||||||||||||||||||||||||||
| Balance, December 31, 2023 | 14,418,760 | (511,324 | ) | 13,907,436 | $ | 14,419 | $ | (511 | ) | $ | 13,908 | $ | 103,680,994 | $ | (536,379 | ) | $ | 103,144,615 | $ | (107,939,395 | ) | $ | 318,008 | $ | (107,621,387 | ) | $ | (4,243,982 | ) | $ | (218,882 | ) | $ | (4,462,864 | ) | |||||||||||||||||||||||||
| Net Loss | - | - | - | - | - | - | - | - | - | (289,731 | ) | (2,543 | ) | (292,274 | ) | (289,731 | ) | (2,543 | ) | (292,274 | ) | |||||||||||||||||||||||||||||||||||||||
| Balance, March 31, 2024 | 14,418,760 | (511,324 | ) | 13,907,436 | $ | 14,419 | $ | (511 | ) | $ | 13,908 | $ | 103,680,994 | $ | (536,379 | ) | $ | 103,144,615 | $ | (108,229,126 | ) | $ | 315,465 | $ | (107,913,661 | ) | $ | (4,533,713 | ) | $ | (221,425 | ) | $ | (4,755,138 | ) | |||||||||||||||||||||||||
F- 83
AMERICAN RESOURCES CORPORATION
RESTATED CASH FLOW STATEMENT
| Statement of Cash flows for the three months ended March 31, 2024 | As Reported | Adjustment | As Restated | |||||||||
| Cash flows used in operating activities: | ||||||||||||
| Net loss | $ | (289,731 | ) | $ | (2,543 | ) | $ | (292,274 | ) | |||
| Adjustments to reconcile net loss to cash flows used in operating activities: | ||||||||||||
| Amortization expense | 89,429 | (5,967 | ) | 83,462 | ||||||||
| Expenses paid directly by related party | 138,430 | (138,430 | ) | - | ||||||||
| Changes in operating assets and liabilities: | ||||||||||||
| Prepaid expenses | (5,000 | ) | 9,025 | 4,025 | ||||||||
| Accounts payable | (3,120 | ) | 73,642 | 70,522 | ||||||||
| Accounts payable – related party | (38,171 | ) | 9,067 | (29,104 | ) | |||||||
| Accrual for settlement of lawsuits | 77,896 | (77,896 | ) | - | ||||||||
| Accrued interest | - | 83,978 | 83,978 | |||||||||
| Accrued interest – related parties | 3,925 | (28 | ) | 3,897 | ||||||||
| Net cash used in operating activities | (26,943 | ) | (48,551 | ) | (75,494 | ) | ||||||
| Cash flows provided by financing activities: | ||||||||||||
| Proceeds from convertible notes - related party | - | 40,000 | 40,000 | |||||||||
| Net cash provided by financing activities | - | 40,000 | 40,000 | |||||||||
| Net (decrease in cash | ||||||||||||
| Cash, beginning of year | (26,943 | ) | (8,551 | ) | (35,494 | ) | ||||||
| Cash, end of year | 36,254 | 151 | 36,405 | |||||||||
| $ | 9,912 | $ | (8,400 | ) | $ | 911 | ||||||
| Noncash investing and financing activity: | ||||||||||||
| Payments made by related party on behalf of the Company | $ | - | $ | 21,211 | $ | 21,211 | ||||||
F- 84
AMERICAN RESOURCES CORPORATION
RESTATED BALANCE SHEETS
| Balance Sheet as of December 31, 2023 | As Reported | Adjustment | As Restated | |||||||||
| Assets | ||||||||||||
| Current assets: | ||||||||||||
| Cash | $ | 36,254 | $ | 151 | $ | 36,405 | ||||||
| Prepaid expenses | 140 | 6,634 | 6,774 | |||||||||
| Total current assets | 36,394 | 6,785 | 43,179 | |||||||||
| Mineral rights | 3,883,524 | - | 3,883,524 | |||||||||
| Intangible asset, net | 4,888,762 | 19,957 | 4,908,719 | |||||||||
| Total assets | $ | 8,808,680 | $ | 26,742 | $ | 8,835,422 | ||||||
| Liabilities, mezzanine, and stockholders’ deficit | ||||||||||||
| Current liabilities: | ||||||||||||
| Convertible promissory notes, related party | $ | 191,231 | $ | (34,929 | ) | $ | 156,302 | |||||
| Accrual for settlement of lawsuits | - | - | - | |||||||||
| Accounts payable | 1,332,612 | (137,949 | ) | 1,194,663 | ||||||||
| Accounts payable – related party | 80,000 | 139,962 | 219,962 | |||||||||
| Accrued interest | 1,511,434 | 214,776 | 1,726,210 | |||||||||
| Accrued interest - related party | 17,384 | (16,235 | ) | 1,149 | ||||||||
| Total current liabilities | 3,132,661 | 165,625 | 3,298,286 | |||||||||
| Commitments and contingencies (Note 9) | ||||||||||||
| Preferred stock, 50,000,000 shares authorized: | ||||||||||||
| Preferred stock, 50,000,000 shares authorized Series A, $.001 par value, 10,000,000 shares issued and outstanding as of December 31, 2023 | 10,000,000 | - | 10,000,000 | |||||||||
| Stockholders’ deficit: | ||||||||||||
| Common stock, $0.001 par value, 500,000,000 shares authorized: 14,418,760 issued and outstanding as of December 31, 2023 | 14,419 | (511 | ) | 13,908 | ||||||||
| Additional paid-in capital | 103,680,994 | (536,379 | ) | 103,144,615 | ||||||||
| Accumulated deficit | (107,939,395 | ) | 318,008 | (107,621,387 | ) | |||||||
| Total stockholders’ deficit | (4,243,982 | ) | (218,882 | ) | (4,462,864 | ) | ||||||
| Total Liabilities, mezzanine and stockholders’ deficit | $ | 8,888,679 | $ | (53,257 | ) | $ | 8,835,422 | |||||
F- 85
AMERICAN RESOURCES CORPORATION
RESTATED STATEMENT OF OPERATIONS
| Statement of operations for the three months ended March 31, 2023 | As Reported | Adjustment | As Restated | |||||||||
| Operating expenses: | ||||||||||||
| General and administrative expenses | $ | 42,119 | $ | 191 | $ | 42,310 | ||||||
| Total operating expenses | 42,119 | 191 | 42,310 | |||||||||
| Loss from operations | (42,119 | ) | (191 | ) | (42,310 | ) | ||||||
| Other income (expense): | ||||||||||||
| Other income | 2,099 | - | 2,099 | |||||||||
| Gain on the settlement of accounts payable | 57,572 | (57,572 | ) | - | ||||||||
| Interest expense | (212,909 | ) | 24,049 | (188,860 | ) | |||||||
| Total other expense, net | (153,238 | ) | (33,523 | ) | (186,761 | ) | ||||||
| Loss before income tax provision | (195,357 | ) | (33,714 | ) | (229,071 | ) | ||||||
| Income tax provision | - | - | - | |||||||||
| Net loss | $ | (195,357 | ) | $ | (33,714 | ) | $ | (229,071 | ) | |||
| Basic net loss per common share | $ | (0.07 | ) | $ | (0.01 | ) | $ | (0.09 | ) | |||
| Basic weighted average common shares outstanding | 2,674,530 | - | 2,674,530 | |||||||||
F- 86
|
As
Reported
Common Stock |
As
Restated
Common Stock |
As
Reported
Common Stock |
As
Restated
Common Stock |
As
Reported Additional
Paid-in |
As
Restated Additional
Paid-in |
As Reported Accumulated | As Restated Accumulated | As Reported | As Restated | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Shares | Adjustments | Shares | Amount | Adjustments | Amount | Capital | Adjustments | Capital | Deficit | Adjustments | Deficit | Total | Adjustments | Total | ||||||||||||||||||||||||||||||||||||||||||||||
| Balance, December 31, 2022 | 2,674,530 | - | 2,674,530 | $ | 2,674 | $ | 1 | $ | 2,675 | $ | 88,061,298 | $ | (1 | ) | $ | 88,061,297 | $ | (106,530,496 | ) | $ | 80,275 | $ | (106,450,221 | ) | $ | (18,466,524 | ) | $ | 80,275 | $ | (18,386,249 | ) | ||||||||||||||||||||||||||||
| Net Loss | - | - | - | - | - | - | - | - | - | (195,357 | ) | (33,714 | ) | (229,071 | ) | (195,357 | ) | (33,714 | ) | (229,071 | ) | |||||||||||||||||||||||||||||||||||||||
| Balance, March 31, 2023 | 2,674,530 | - | 2,674,530 | $ | 2,674 | $ | 1 | $ | 2,675 | $ | 88,061,298 | $ | (1 | ) | $ | 88,061,297 | $ | (106,725,853 | ) | $ | 46,561 | $ | (106,679,292 | ) | $ | (18,661,881 | ) | $ | 46,561 | $ | (18,615,320 | ) | ||||||||||||||||||||||||||||
F- 87
AMERICAN RESOURCES CORPORATION
RESTATED CASH FLOW STATEMENT
| Statement of Cash flows for the three months ended March 31, 2023 | As Reported | Adjustment | As Restated | |||||||||
| Cash flows used in operating activities: | ||||||||||||
| Net loss | $ | (195,357 | ) | $ | (33,714 | ) | $ | (229,071 | ) | |||
| Adjustments to reconcile net loss to cash flows used in operating activities: | ||||||||||||
| Gain on derecognition of certain accounts payable | (57,572 | ) | 57,572 | - | ||||||||
| Expenses paid directly by related party | 39,426 | (39,426 | ) | - | ||||||||
| Changes in operating assets and liabilities: | ||||||||||||
| Accounts payable | 39,501 | 39,501 | ||||||||||
| Accrual for settlement of lawsuits | - | 42,548 | 42,548 | |||||||||
| Accrued interest | 170,361 | (95,834 | ) | 74,527 | ||||||||
| Accrued interest – related parties | 42,549 | 29,236 | 71,785 | |||||||||
| Net cash used in operating activities | (593 | ) | (117 | ) | (710 | ) | ||||||
| Net (decrease in cash | (593 | ) | (117 | ) | (710 | ) | ||||||
| Cash, beginning of year | 1,251 | 117 | 1,368 | |||||||||
| Cash, end of year | $ | 658 | $ | - | $ | 658 | ||||||
| Non-Cash Investing and Financing: | ||||||||||||
| Payments made by related party on behalf of the Company | $ | - | $ | 34,549 | $ | 34,549 | ||||||
F- 88
10. Subsequent Events
The Company follows the guidance in FASB ASC 855-10 for the disclosure of subsequent events. The Company evaluated subsequent events through the date the financial statements were issued and determined the Company had the following subsequent events:
Effective June 3, 2024, the Company executed a Memorandum of Understanding for a Joint Venture with AMI Strategies, (“AMI”). The Parties intend to form a joint operation and utilize the technology and talent of both organizations for their mutual benefit which includes the Company’s planned renewable energy generation, specifically solar power through the operation, engineering, infrastructure, and construction of controlled solar power and AMI’s management of utility costs through a proprietary software platform that can bill, audit, invoice and manage the daily operations of suppliers and clients.
Joint Venture with AMI
Effective June 3, 2024, the Company executed a Memorandum of Understanding for a Joint Venture with AMI Strategies, (“AMI”). The Parties intend to form a joint operation and utilize the technology and talent of both organizations for their mutual benefit which includes the Company’s planned renewable energy generation, specifically solar power through the operation, engineering, infrastructure, and construction of controlled solar power and AMI’s management of utility costs through a proprietary software platform that can bill, audit, invoice and manage the daily operations of suppliers and clients.
About AMI:
AMI Strategies serves clients on every continent, offering a global suite of solutions for Telecom, Mobility, Cloud, Utility, ServiceNow, and Managed Automation deployments – all powered by cutting-edge technology and automation.
AMI’s platform is designed to manage any vendor that’s important to its customers – no matter what category it’s in. By establishing inventory that includes integrated data from vendors and enterprise systems, auditing charges against correlating contracts, automating allocations and payments, and centralizing how services are purchased, changed or decommissioned, AMI ensures its clients never waste time on vendor-related busywork, and never pay more than they’re supposed to.
Definitive Documents:
The Parties will work together to draft definitive documents including the formation of the joint venture and its governing documents.
F- 89
American Clean Resources Group, Inc.
Restated Consolidated Balance Sheets
|
For Year Ended
December 31, |
||||||||
| 2023 | 2022 | |||||||
| RESTATED | RESTATED | |||||||
| Assets | ||||||||
| Current assets: | ||||||||
| Cash | $ | 36,405 | $ | 1,368 | ||||
| Prepaid expenses | 6,774 | - | ||||||
| Total current assets | 43,179 | 1,368 | ||||||
| Mineral rights | 3,883,524 | 3,883,524 | ||||||
| Intangible asset, net | 4,908,719 | - | ||||||
| Total assets | $ | 8,835,422 | $ | 3,884,892 | ||||
| Liabilities and stockholders' deficit | ||||||||
| Current liabilities: | ||||||||
| Senior secured convertible promissory note payable, related party | - | 2,229,187 | ||||||
| Promissory notes payable - related party | - | 577,500 | ||||||
| Convertible promissory notes, related party | 156,302 | 1,103,961 | ||||||
| Accrual for settlement of lawsuits | - | 3,660,188 | ||||||
| Accounts payable | 1,194,663 | 1,132,614 | ||||||
| Accounts payable – related party | 219,962 | - | ||||||
| Accrued interest | 1,726,210 | 1,414,280 | ||||||
| Accrued interest - related party | 1,149 | 2,153,411 | ||||||
| Total current liabilities | 3,298,286 | 12,271,141 | ||||||
| Commitments and contingencies (Note 8) | ||||||||
| Preferred stock, 50,000,000 shares authorized Series A, $.001 par value, 10,000,000 shares issued and outstanding as of December 31, 2023 and 2022, respectively. | 10,000,000 | 10,000,000 | ||||||
| Stockholders’ deficit: | ||||||||
| Common stock, $0.001 par value, 500,000,000 shares authorized: 13,907,436 and 2,674,530 issued and outstanding as of December 31, 2023 and 2022, respectively | 13,908 | 2,675 | ||||||
| Additional paid-in capital | 103,144,615 | 88,061,297 | ||||||
| Accumulated deficit | (107,621,387 | ) | (106,450,221 | ) | ||||
| Total stockholders’ deficit | $ | (4,462,864 | ) | $ | (18,386,249 | ) | ||
| Total liabilities and stockholders’ deficit | $ | 8,835,422 | $ | 3,884,892 | ||||
The accompanying footnotes are an integral part of these consolidated financial statements.
F- 90
American Clean Resources Group, Inc.
Restated Consolidated Statements of Operations
|
For Year Ended
December 31, |
||||||||
| 2023 | 2022 | |||||||
| RESTATED | RESTATED | |||||||
| Operating expenses: | ||||||||
| General and administrative expenses | $ | 487,357 | $ | 157,441 | ||||
| Total operating expenses | 487,357 | 157,441 | ||||||
| Loss from operations | (487,357 | ) | (157,441 | ) | ||||
| Other income (expense): | ||||||||
| Other income | 8,395 | 8,395 | ||||||
| Gain on the settlement of accounts payable | - | 15,138 | ||||||
| Interest expense | (692,204 | ) | (771,248 | ) | ||||
| Total other expense, net | (683,809 | ) | (747,715 | ) | ||||
| Loss before income tax provision | (1,171,166 | ) | (905,156 | ) | ||||
| Income tax provision | - | - | ||||||
| Net loss | $ | (1,171,166 | ) | $ | (905,156 | ) | ||
| Net loss per common shares: | ||||||||
| Basic net loss per common share | $ | (0.17 | ) | $ | (0.34 | ) | ||
| Weighted average shares outstanding per common shares: | ||||||||
| Basic weighted average common shares outstanding | 6,978,201 | 2,674,530 | ||||||
The accompanying footnotes are an integral part of these consolidated financial statements.
F- 91
American Clean Resources Group, Inc.
Restated Consolidated Statements of Change in Stockholders’ Equity (Deficit)
| Common Stock |
Additional
Paid-in |
Accumulated | ||||||||||||||||||
| Shares | Amount | Capital | Deficit | Total | ||||||||||||||||
| RESTATED | RESTATED | RESTATED | RESTATED | RESTATED | ||||||||||||||||
| Balance, December 31, 2021 | 2,674,530 | $ | 2,675 | $ | 88,061,297 | $ | (105,545,065 | ) | $ | (17,481,093 | ) | |||||||||
| Net loss | - | - | - | (905,156 | ) | (905,156 | ) | |||||||||||||
| Balance, December 31, 2022 | 2,674,530 | 2,675 | 88,061,297 | (106,450,221 | ) | (18,386,249 | ) | |||||||||||||
| Issuance of stock for acquisition | 1,500,000 | 1,500 | 4,873,500 | - | 4,875,000 | |||||||||||||||
| Issuance of common stock for conversion of debt and interest | 9,732,906 | 9,733 | 10,209,818 | - | 10,219,551 | |||||||||||||||
| Net loss | - | - | - | (1,171,166 | ) | (1,171,166 | ) | |||||||||||||
| Balance, December 31, 2023 | 13,907,436 | $ | 13,908 | $ | 103,144,615 | $ | (107,621,387 | ) | $ | (4,462,864 | ) | |||||||||
The accompanying footnotes are an integral part of these consolidated financial statements.
F- 92
American Clean Resources Group, Inc.
Restated Consolidated Statements of Cash Flows
|
For the Year Ended
December 31, |
||||||||
| 2023 | 2022 | |||||||
| RESTATED | RESTATED | |||||||
| Cash flows from operating activities: | ||||||||
| Net loss | $ | (1,171,166 | ) | $ | (905,156 | ) | ||
| Adjustments to reconcile net loss to cash flows provided by (used in) operating activities: | ||||||||
| Gain on derecognition of certain accounts payable | - | (15,137 | ) | |||||
| Amortization Expense | 99,011 | - | ||||||
| Changes in operating assets and liabilities: | ||||||||
| Prepaid expenses | (6,774 | ) | - | |||||
| Accounts payable | 334,530 | 148,051 | ||||||
| Accounts payable – related party | 87,232 | - | ||||||
| Accrual for settlement of lawsuits | 77,060 | 172,557 | ||||||
| Accrued interest | 311,930 | 276,822 | ||||||
| Accrued interest – related parties | 303,214 | 321,868 | ||||||
| Net cash provided by (used in) operating activities | 35,037 | (995 | ) | |||||
| Net increase (decrease) in Cash | 35,037 | (995 | ) | |||||
| Cash, beginning of year | 1,368 | 2,363 | ||||||
| Cash, end of year | $ | 36,405 | $ | 1,368 | ||||
| Noncash investing and financing activity: | ||||||||
| Payments made by related party on behalf of the Company | $ | 272,481 | $ | 148,051 | ||||
| Issuance of common stock for conversion of convertible promissory note payable - related party | $ | 10,219,551 | $ | - | ||||
| Issuance of common stock for purchase of intangible asset | $ | 5,007,730 | $ | - | ||||
The accompanying footnotes are an integral part of these consolidated financial statements.
F- 93
AMERICAN CLEAN RESOURCES GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2023 AND 2022
1. Nature of Business
American Clean Resources Group, Inc. f/k/a Standard Metals Processing, Inc. (“we,” “us,” “our,” “ACRG” or the “Company”) is an exploration stage company, incorporated in Nevada. The Company’s primary business plan is to purchase equipment and build a facility on the Tonopah property to serve as a permitted custom processing toll milling facility while it explores new technologies that allow greater effectiveness in achieving industry sustainability goals (which includes an analytical lab, pyrometallurgical plant, and hydrometallurgical recovery plant).
The Company plans to perform permitted custom processing toll milling which is a process whereby mined material is crushed and ground into fine particles to ease the extraction of any precious minerals contained therein, such as minerals in the gold, silver, and platinum metal groups. Custom milling and refining can include many different processes that are designed specifically for each ore load and to maximize the extraction of precious metals from carbon or concentrates. These toll-processing services also distil, dry, mix, or mill chemicals and bulk materials on a contractual basis and provide a chemical production outsourcing option for industrial companies, which lack the expertise, capacity, or regulatory permits for in-house production.
We are required to obtain several permits before we can begin construction of a small-scale mineral processing facility to conduct permitted processing toll milling activities and construction of the required additional buildings and well relocation necessary for us to commence operations.
2. Summary of Significant Accounting Policies
Basis of Presentation
The accompanying consolidated financial statements of the Company have been prepared using the accrual method of accounting in accordance with U.S. GAAP and considering the requirements of the United States Securities and Exchange Commission.
Going Concern
The accompanying consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The Company has incurred recurring losses and as of December 31, 2023, had an accumulated deficit of $107,621,387. For the year ended December 31, 2023, the Company sustained a net loss of $1,171,166. These factors, among others, raise substantial doubt about the Company’s ability to continue as a going concern for the next twelve months from the date these financial statements were issued. These financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that may be necessary should the Company be unable to continue as a going concern. The Company’s continuation as a going concern is contingent upon its ability to obtain additional financing and to generate revenue and cash flow to meet its obligations on a timely basis. The Company will continue to seek to raise additional funding through debt or equity financing during the next twelve months from the date of issuance of these financial statements. There is no guarantee the Company will be successful in achieving obtaining additional funding and may have to cease operations.
Principles of Consolidation
The consolidated financial statements include the accounts of ACRG, and its wholly owned subsidiary Aurielle Enterprises, Inc., (f/k/a Tonopah Milling and Metals Group, Inc.) and its wholly owned subsidiaries Tonopah Custom Processing, Inc., and Tonopah Resources, Inc., and since being acquired in September 2023, SWIS LLC. All significant intercompany transactions, accounts and balances have been eliminated in consolidation.
F- 94
Use of Estimates
Preparing 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 financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Estimates may pertain to impairment of intangible assets and mining rights, useful lives of intangible assets and contingent liabilities.
Segment Information
Operating segments are identified as components of an enterprise about which separate discrete financial information is available for evaluation by the chief operating decision maker, or decision-making group, in making decisions regarding resource allocation and assessing performance. To date, the Company has viewed its operations and manages its business as principally one operating segment, which is mining gold and silver from their Tonopah property. The Company’s Chief Executive Officer and Chairwoman of the Board of Directors, Tawana Bain, serves as the Chief Operating Decision Maker (CODM). The CODM evaluates performance and makes operating decisions about allocating resources based on net loss or income and cash balances presented in the accompanying statement of operations and balance sheet, respectively. The measure of segment assets is reported on the balance sheets and income statements such as cash and net loss or income, respectively. All material long-lived assets are in the United States.
Related Party Transaction
A related party is generally defined as (i) any person that holds 10% or more of the Company’s securities and their immediate families, (ii) the Company’s management, (iii) someone that directly or indirectly controls, is controlled by or is under common control with the Company, or (iv) anyone who can significantly influence the financial and operating decisions of the Company. A transaction is considered to be a related party transaction when there is a transfer of resources or obligations between related parties. The Company conducts business with its related parties in the ordinary course of business.
Transactions involving related parties cannot be presumed to be carried out on an arm’s-length basis, as the requisite conditions of competitive, free market dealings may not exist. Representations about transactions with related parties, if made, shall not imply that the related party transactions were consummated on terms equivalent to those that prevail in arm’s-length transactions unless such representations can be substantiated.
Cash
The Company considers all highly liquid investments with original maturities at the date of purchase of three months or less to be cash equivalents. Cash and cash equivalents include bank demand deposits, marketable securities with maturities of three months or less at purchase, and money market funds that invest primarily in certificates of deposits, commercial paper and U.S. government and U.S. government agency obligations. Cash equivalents are reported at fair value. The Company had no cash equivalents as of December 31, 2023 and 2022.
Mineral Rights
The Company capitalizes acquisition costs until the Company determines the economic viability of the property. The Company has not established proven or probable reserves for any of its projects. The Company reviews the carrying value of our mineral rights and properties for impairment, including mineral rights upon the occurrence of events or changes in circumstances that indicate the related carrying amounts may not be recoverable. Our estimate of precious metal prices, mineralized materials, operating capital, and reclamation costs are subject to risks and uncertainties affecting the recoverability of our investment in all of our properties. Although the Company has made our best, most current estimate of these factors, it is possible that near term changes could adversely affect estimated net cash flows from our properties and mineral claims, and possibly require future asset impairment write-downs. Where estimates of future net operating cash flows are not available and where other conditions suggest impairment, the Company assesses recoverability of carrying value from other means, including net cash flows generated by the sale of the asset.
F- 95
Intangible Assets
Intangible assets consist of developed technology acquired in the SWIS acquisition. The Company amortizes its developed technology over its useful life under the straight-line method. The useful life of the developed technology is calculated based on the number of years remaining on the patent. The SWIS developed technology has a remaining useful life of 14 years. The intangible asset is evaluated for impairment on an annual basis or more frequently whenever events or circumstances occur indicating that the carrying amount may not be recoverable.
Redeemable Series A Preferred Stock
The Company applies the guidance in ASC 480 to determine the classification and measurement of preferred stock. Preferred stock that is mandatorily redeemable is classified as a liability and measured in accordance with ASC 480. Preferred stock that is conditionally redeemable, including instruments with redemption features that are either at the option of the holder or contingent upon events outside the Company’s control, is classified as mezzanine equity in accordance with ASC 480-10-S99. All other preferred stock is classified in stockholders’ equity. Mezzanine equity is initially recorded at its original issuance price. It is subsequently measured at its redemption value when the instrument becomes currently redeemable or when it becomes probable that it will be redeemed. As the Series A Preferred Stock includes redemption features that are outside the Company’s control, it is classified as mezzanine equity and is currently recorded at its original issuance price, as the instrument is not currently redeemable and redemption is not considered probable.
Revenue Recognition
As of December 31, 2023, we have recorded no revenues from custom permitted processing toll milling. If we achieve revenue generation, the Company plans to report such revenues consistent with ASC Topic 606 Revenues from Contracts with Customers. The Company recognizes revenue when control of the promised goods or services is transferred to customers, in an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods or services. Significant judgments are required in determining the transaction price and the timing of revenue recognition.
Stock-Based Compensation
The stock-based payments are accounted for in accordance with the provisions of ASC 718, Compensation — Stock Compensation. The Company measures the estimated fair value of the stock-based award on the date of grant using the Black-Scholes-Merton option pricing model (“Black-Scholes Model”) and recognizes compensation expense for those awards over the requisite service period, which is generally the vesting period of the respective award. The Black-Scholes Model requires the use of a number of assumptions including volatility of the stock price, the weighted average risk-free interest rate, and the vesting period in determining the fair value of stock-based awards. The expected term is based on the “simplified method”, due to the Company’s limited stock award history. Under this method, the term is estimated using the weighted average of the service vesting period and contractual term of the option award. As the Company Class A common stock has a limited history in the public markets, the Company has identified several public entities of similar size, complexities and industry and calculates historical volatility based on the volatilities of these companies. Although the Company believes its assumptions used to calculate stock-based compensation expenses are reasonable, these assumptions can involve complex judgments about future events, which are open to interpretation and inherent uncertainty. In addition, significant changes to our assumptions could significantly impact the amount of expense recorded in a given period. The Company accounts for forfeitures in the period in which they occur, rather than estimate expected forfeitures.
F- 96
Concentration of Credit Risk
Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of cash and cash equivalents and trade accounts receivable. Cash and cash equivalents of the Company are exposed to credit risk, subject to federal deposit insurance, in the event of default by the financial institutions holding its cash and cash equivalents to the extent of amounts recorded on the balance sheet. The cash accounts are insured by the Federal Deposit Insurance Corporation (“FDIC”) up to $250,000. As of December 31, 2023 and 2022, the Company’s cash balance did not exceed the FDIC insured limit.
Fair Value of Financial Instruments
The Company accounts for financial instruments under Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 820, Fair Value Measurements. This statement defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles, and expands disclosures about fair value measurements. To increase consistency and comparability in fair value measurements, ASC 820 establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three levels as follows:
| Level 1 — | quoted prices (unadjusted) in active markets for identical assets or liabilities; |
| Level 2 — | observable inputs other than Level 1, quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets and liabilities in markets that are not active, and model-derived prices whose inputs are observable or whose significant value drivers are observable; and |
| Level 3 — | assets and liabilities whose significant value drivers are unobservable. |
The Company applies fair value accounting for all assets and liabilities that are recognized or disclosed at fair value in the financial statements. The carrying amounts reported in the financial statements for cash, accounts payables and accrued liabilities approximate their fair value due to their short-term nature.
Loss Contingencies
Certain conditions may exist as of the date the financial statements are issued, which may result in a loss to the Company, but which will only be resolved when one or more future events occur or fail to occur. The Company’s management and its legal counsel assess such contingent liabilities, and such assessment inherently involves an exercise of judgment. In assessing loss contingencies related to legal proceedings that are pended against the Company or unasserted claims that may result in such proceedings, the Company’s legal counsel evaluates the perceived merits of any legal proceedings or unasserted claims as well as the perceived merits of the amount of relief sought or expected to be sought therein.
If the assessment of a contingency indicates that it is probable that a material loss has been incurred and the amount of the liability can be estimated, then the estimated liability would be accrued in the Company’s financial statements. If the assessment indicates that a potentially material loss contingency is not probable, but is reasonably possible, or is probable but cannot be estimated, then the nature of the contingent liability, together with an estimate of the range of possible loss if determinable and material, would be disclosed.
Loss contingencies considered remote are generally not disclosed unless they involve guarantees, in which case the nature of the guarantee would be disclosed.
F- 97
Income Taxes
The Company and its U.S. subsidiaries file a consolidated federal income tax return and is taxed as a C-Corporation, whereby it is subject to federal and state income taxes. The Company accounts for income taxes in accordance with ASC 740, “Income Taxes”. ASC 740 requires an asset and liability approach for financial accounting and reporting for income taxes and established for all the entities a minimum threshold for financial statement recognition of the benefit of tax positions and requires certain expanded disclosures. The provision for income taxes is based upon income or loss after adjustment for those permanent items that are not considered in the determination of taxable income. Deferred income taxes represent the tax effects of differences between the financial reporting and tax basis of the Company’s assets and liabilities at the enacted tax rates in effect for the years in which the differences are expected to reverse. The Company evaluates the recoverability of deferred tax assets and establishes a valuation allowance when it is more likely than not that some portion or all the deferred tax assets will not be realized. Management makes judgments as to the interpretation of the tax laws that might be challenged upon an audit and cause changes to previous estimates of tax liability. In management’s opinion, adequate provisions for income taxes have been made. If actual taxable income by tax jurisdiction varies from estimates, additional allowances or reversals of reserves may be necessary.
Basic and Diluted Net Loss Per Share
Basic net loss per common share is computed by dividing net loss by the weighted-average number of common shares outstanding during each period. Diluted net loss per share of common shares includes the effect, if any, from the potential exercise or conversion of securities, such as convertible debt, share options and warrants, which would result in the issuance of incremental shares of common shares. For diluted net loss per share, the weighted-average number of common shares is the same for basic net loss per share due to the fact that when a net loss exists, dilutive securities are not included in the calculation as the impact is anti-dilutive. For all periods presented, basic and diluted net loss per share are the same, as any additional share equivalents would be anti-dilutive.
As of December 31, 2023 and 2022, the Company convertible promissory note – related party was convertible into 149,954 and 772,595 shares of common stock respectively.
Recent Accounting Standards
On November 27, 2023, the FASB issued ASU 2023-07, “Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures,” which requires incremental disclosures related to an entity’s reportable segments, effective for annual periods beginning after December 15, 2023. The Company adopted ASU 2023-07 on December 31, 2024, which resulted in additional disclosures in the notes to our consolidated financial statements that we applied retrospectively to all prior periods presented.
The FASB and other entities issued new or modifications to, or interpretations of, existing accounting guidance during 2023. Management has carefully considered the new pronouncements that altered generally accepted accounting principles and does not believe that any other new or modified principles will have a material impact on the Company’s reported financial position or operations in the near term.
Restatement of Previously Issued Consolidated Financial Statements
During the third quarter of 2024, and prior to the filing of the Company’s Form 10-K/A for the year ended December 31, 2023, the Company determined that it was necessary to re-evaluate the Company’s accounting treatment for certain debt obligations. In accordance with Staff Accounting Bulletins No. 99 (SAB No. 99) Topic 1.M, “Materiality” and SAB No. 99 Topic 1.N “Considering the Effects of Misstatements when Quantifying Misstatements in the Current Year Financial Statements,” the Company assessed the materiality of these errors to its previously issued consolidated financial statements. Based upon the Company’s evaluation of both quantitative and qualitative factors, the Company concluded the errors were material to the Company’s previously issued consolidated financial statements for the fiscal years ended December 31, 2023 and 2022. Accordingly, this Form 10-K presents the Company’s Restated Consolidated Financial Statements for the fiscal years ended December 31, 2023 and 2022. Additionally, the Company has restated its previously filed unaudited interim condensed consolidated financial statements for the periods ended March 31, 2023, June 30, 2023 and September 30, 2023 contained within this Form 10-K. See Note 11 for further information and the unaudited interim condensed consolidated financial statements contained within this From 10-K.
F- 98
3. Mineral rights
The Company is preparing the Tonopah property site for the construction of a permitted custom processing toll milling facility including grading the land, installing fencing, and working with contractors for our planned 21,875 square foot building and servicing and drilling various wells for our future operations.
The Company has continued to assess the realizability of its Mineral rights. Based on an assessment the Company conducted during 2023, the Company decided the combined carrying value of its land, mineral rights, and water rights of $3,883,524 was fairly stated and not exposed to impairment.
4. Developed Technology
On September 13, 2023, the Company executed an agreement to acquire a 100% interest in SWIS, L.L.C. (“SWIS”). The Company issued 1,500,000 shares of restricted common stock to SWIS's former owner, Launch IT, LLC, in exchange for 100% interest in SWIS. Upon the executed agreement, Launch IT, LLC became a significant owner of ACRG common stock and, as of December 31, 2023, owns 10% of ACRG restricted common stock.
The Company determined the acquisition to be an asset acquisition under ASC 805, Business Combinations, as all of the fair value of the gross assets acquired was concentrated in a single identifiable asset, the developed technology and exclusive license. The developed technology and exclusive license is a definite-lived intangible asset and is being amortized over the life of the patent life.
The total purchase consideration for the acquisition of SWIS was $5,007,730, which includes the issuance of restricted common stock valued at $4,875,000 and reimbursement of expenses totaling $132,730. The consideration paid is recorded on ACRG books as Developed Technology and Patent Rights, with a useful life of 14 years (150 months from the acquisition date of September 13, 2023). The monthly amortization of the Developed Technology and Patent Rights is $27,821.
During the years ended December 31, 2023 and 2022, the Company recorded total amortization expense of $99,011 and $0, respectively. Amortization expense is included in general and administrative expenses in the consolidated statements of operations.
5. Notes Payable
Convertible Promissory Notes Payable – Related Party
On March 16, 2020, the Company entered into a LOC agreement with GPR. GPR is a related party by virtue of its majority ownership of the Company’s common stock. Under the LOC, GPR has also paid expenses directly on behalf of the Company to support its operations.
On March 16, 2020, the Company entered into a Line of Credit (“LOC”) agreement with Granite Peak Resources LLC (“GPR”), a related party and the majority shareholder of the Company. The initial LOC provided for borrowings up to $2.5 million, with a maturity date of March 16, 2023. At GPR’s sole discretion, the LOC could be increased by an additional $1.0 million and extended for two years. The LOC accrued interest at 10% per annum and was convertible into common stock at $2.00 per share, based on the closing price on the date of issuance. The LOC was secured by substantially all of the Company’s real and personal property.
On July 12, 2021, the LOC was amended (the “First Amendment”) to:
| ● | Increase the borrowing limit to $5.0 million, |
| ● | Extend the maturity date to March 16, 2025, and |
| ● | Reduce the conversion price to $1.65 per share. |
F- 99
The First Amendment also granted GPR the option to further increase the LOC by $5.0 million and extend the maturity date by an additional five years.
On January 5, 2023, the Company entered into a Second Amendment to the LOC (the “Second Amendment”) with GPR. The amendment significantly restructured the existing LOC agreement. Key terms of the Second Amendment included:
| ● | Increase in Borrowing Capacity: From $5.0 million to $35.0 million. |
| ● | Extension of Maturity Date: To March 16, 2027. |
| ● | Reduction in Conversion Price: From $1.65 to $1.05 per share, based on the trailing three-day market price. |
| ● | Debt Consolidation: The following obligations, previously acquired by GPR, were formally consolidated into the LOC: |
| ● | Tina Gregerson Promissory Note: $477,500 principal and $293,963 accrued interest. |
| ● | Peter Krupp Promissory Note: $100,000 principal and $59,795 accrued interest. |
| ● | Forbearance: GPR agreed to forbear from exercising rights under the loan documents, including foreclosure rights related to the Stephen Flechner Judgment and the Pure Path Capital Senior Secured Convertible Promissory Note, both of which had been previously purchased by GPR. The forbearance period extends through January 12, 2024. |
The Company evaluated the amendment under ASC 470-50 and ASC 470-60 and concluded it constituted a debt extinguishment, as the present value of the revised cash flows exceeded the 10% threshold. No gain or loss was recognized, as the reacquisition price equaled the carrying amount of the extinguished debt.
On June 12, 2023, the Company entered into a Third Amendment to the LOC (the “Third Amendment”) with GPR. Key terms of the Third Amendment included:
| ● | Increase in Borrowing Capacity: From $35.0 million to $52.5 million. |
| ● | Expansion of Collateral: The Deed of Trust and Security Agreement was amended to increase the secured amount from $100 million to $250 million. |
| ● | Debt Consolidation: The following obligations, previously acquired by GPR, were formally consolidated into the LOC: |
| ● | The Pure Path Capital Senior Secured Convertible Promissory Note: $2,229,187 principal and $1,709,064 accrued interest. |
| ● | Stephen Flechner Judgment: $2,157,000 principal and $1,580,248 accrued interest. |
The Company determined the amendment met the criteria for a troubled debt restructuring (TDR) under ASC 470-60, as the Company was experiencing financial difficulty and GPR granted a concession. The amendment was accounted for as a debt extinguishment under ASC 470-50, with no gain or loss recognized.
On August 2, 2023, GPR converted $5,250,000 of LOC principal into 5,000,000 shares of restricted common stock. On August 15, 2023, GPR converted the remaining $4,969,551 (principal and accrued interest) into 4,732,906 shares of restricted common stock, at the conversion price of $1.05 per share, as provided in the Third Amendment.
As of December 31, 2023 the outstanding balance under the LOC consisted of $156,303 in principal and $1,149 in accrued interest. As of December 31, 2022, the outstanding balance was $1,103,961 in principal and $170,821 in accrued interest.
F- 100
During the years ended December 31, 2023 and 2022, the Company recognized non-cash borrowings of $272,481 and $148,052, respectively, under the LOC. These amounts represent expenses paid directly by GPR on behalf of the Company and were recorded as increases to the LOC principal balance.
During 2019 and 2021, GPR acquired several outstanding debt instruments and judgments originally held by third parties, including:
| ● | The Tina Gregerson Promissory Note, |
| ● | The Peter Krupp Promissory Note, |
| ● | The Pure Path Capital Senior Secured Convertible Promissory Note, and |
| ● | The Stephen E. Flechner Judgment. |
Peter Krupp Promissory Note
On August 4, 2011, the Company issued an unsecured promissory note (the “Krupp Note”) to Peter Krupp in the principal amount of $100,000, bearing interest at a rate of 5% per annum.
On August 12, 2021, GPR and Peter Krupp entered into an Exchange Agreement, under which GPR acquired the Krupp Note. Subsequently, on January 5, 2023, the outstanding balance of the Krupp Note was consolidated into the Company’s LOC with GPR as part of the Second Amendment to the LOC.
As of the date of consolidation, the total balance of the Krupp Note was $159,795, consisting of $100,000 in principal and $59,795 in accrued interest. Following the consolidation, the Krupp Note ceased to exist as a separate obligation and was included in the principal balance of the amended LOC.
Stephen Flechner Judgement
On August 12, 2015, the court entered an Amended Final Judgment in favor of Stephen E. Flechner and against the Company in connection with breach of contract claims. The judgment awarded $2,157,000, with interest accruing at 8% per annum from the date of judgment until paid in full.
On November 29, 2021, GPR, a related party and majority shareholder, entered into a Purchase and Sale Agreement with Mr. Flechner, under which GPR acquired all rights, title, and interest in the judgment.
On January 5, 2023, in connection with the Second Amendment to the Company’s LOC with GPR, GPR agreed to forbear from exercising its rights and remedies under the loan documents, including foreclosure rights related to the Flechner Judgment, through January 12, 2024.
On June 12, 2023, pursuant to the Third Amendment to the LOC, the Flechner Judgment was formally consolidated into the LOC. As of the date of consolidation, the total balance of the judgment was $3,737,248, consisting of the original $2,157,000 judgment amount and $1,580,248 in accrued interest. Following the consolidation, the judgment ceased to exist as a separate obligation and was included in the principal balance of the amended LOC.
Pure Path Capital Senior Secured Convertible Promissory Note
On October 10, 2013, the Company issued a Senior Secured Convertible Promissory Note (the “Senior Secured Note”) to Pure Path Capital Management Company, LLC (“PPMC”) in the principal amount of up to $2.5 million, pursuant to a Settlement and Release Agreement. As part of the settlement, the Company also issued 27 million shares of common stock to PPMC, resulting in PPMC becoming a related party.
F- 101
The Senior Secured Note was secured by a blanket lien on all of the Company’s tangible and intangible assets, whether currently owned or subsequently acquired. This included, but was not limited to, machinery, inventory, accounts receivable, cash, computer equipment, hardware, land, and mineral rights.
On March 29, 2019, GPR, a related party and majority shareholder, acquired the Senior Secured Note from PPMC pursuant to an Exchange and Assignment Agreement.
On June 12, 2023, in connection with the Third Amendment to the Company’s LOC with GPR, the Senior Secured Note was formally consolidated into the LOC. As of the date of consolidation, the total balance of the note was $3,938,251, consisting of $2,229,187 in principal and $1,709,064 in accrued interest. Following the consolidation, the Senior Secured Note ceased to exist as a separate obligation and was included in the principal balance of the amended LOC.
6. Related Parties
As part of its normal operations, the Company conducts financing through its largest shareholder, GPR. The details of the related party balances are disclosed as part of Note 5.
Granite Peak Resources, LLC
On March 16, 2020, the Company entered into a LOC agreement with GPR. GPR is a related party by virtue of its majority ownership of the Company’s common stock. Under the LOC, GPR has also paid expenses directly on behalf of the Company to support its operations.
During 2019 and 2021, GPR acquired several outstanding debt instruments and judgments originally held by third parties, including:
| ● | The Tina Gregerson Promissory Note, |
| ● | The Peter Krupp Promissory Note, |
| ● | The Pure Path Capital Senior Secured Convertible Promissory Note, and |
| ● | The Stephen E. Flechner Judgment. |
On January 5, 2023, and June 12, 2023, the Company entered into the Second and Third Amendments, respectively, to the LOC with GPR. These amendments formally consolidated the above obligations into the LOC, which was subsequently converted into equity.
On August 2, 2023, and August 15, 2023, GPR converted a total of $10,219,551 of principal and accrued interest under the LOC into 10,244,230 shares of restricted common stock at a conversion price of $1.05 per share, pursuant to the terms of the Third Amendment. As a result of these conversions, GPR became the majority owner, holding approximately 73% of the Company’s outstanding common stock as of December 31, 2024.
During the year ended December 31, 2023, the Company recorded:
| ● | $272,482 in non-cash borrowings for expenses paid directly by GPR, and |
These amounts were added to the LOC principal balance.
Sustainable Metals Solutions, LLC
On January 10, 2022, the Company entered into a definitive agreement to acquire a controlling interest in Sustainable Metals Solutions, LLC (“SMS”), a company majority-owned by GPR. SMS is an environmental development platform focused on producing carbon-neutral precious metals and minerals. The purchase price for the controlling interest will be determined based on the Company’s common stock price on the closing date, which will be mutually agreed upon once all closing conditions are satisfied. Additional details are provided in Note 8 – Commitments and Contingencies.
F- 102
Launch IT, LLC
On September 13, 2023, the Company acquired a 100% interest in SWIS, L.L.C. (“SWIS”) by assuming certain liabilities and issuing 1,500,000 shares of restricted common stock to its former owner, Launch IT, LLC. As a result of the transaction, Launch IT, LLC became a significant shareholder, holding over 10% of the Company’s outstanding common stock as of December 31, 2023.
In connection with the acquisition, the Company retained AJ Miller and Chris Laveson, both former owners of Launch IT, LLC, to continue supporting the SWIS business. AJ Miller is an officer and Chris Laveson is a manager of SWIS subsidiary following the acquisition and both hold 500,000 shares each of restricted common stock of the Company.
The following table summarizes the amounts related to these parties that were included in accounts payable – related party, expenses incurred, and cash paid during the year ended December 31, 2023:
| As of and for the Year Ending December 31, 2023 | ||||||||||||
| Related Party |
Included in
Accounts Payable - Related Party |
Expense
incurred |
Amount paid | |||||||||
| Launch IT, LLC | $ | 139,962 | $ | 7,232 | $ | - | ||||||
| Gazellig LLC - AJ Miller | 40,000 | 40,000 | - | |||||||||
| Chris Lavenson | 40,000 | 40,000 | - | |||||||||
| $ | 219,962 | $ | 87,232 | $ | - | |||||||
7. Stockholders’ Deficit and Mezzanine Equity
Preferred Stock
The Series A Preferred Stock is presented as mezzanine equity due to its rights and preferences. Attributes of Series A Preferred Stock include but are not limited to the following:
Distribution in Liquidation
The Series A Preferred Stock has a liquidation preference of $10,000,000, payable only upon certain liquidity events or upon the achievement of a market value of our equity equaling $200,000,000 or more. Upon any liquidation, dissolution or winding up of the Company, and after paying or adequately providing for the payment of all its obligations, the remainder of the assets of the Company shall be distributed, either in cash or in kind, first pro rata to the holders of the Series A Preferred Stock in an amount equal to the Liquidation Value (as described below); then, to any other series of Preferred Stock, until an amount to be determined by a resolution of the Board of Directors prior to issuances of such Preferred Stock, has been distributed per share, and, then, the remainder pro rata to the holders of the Common Stock. Upon the occurrence of any Liquidation Event (as defined below), each holder of Series A Preferred Stock will receive a payment equal to the Original Issue Price for each share of Series A Preferred Stock held by such holder (the “Liquidation Value”). A “Liquidation Event” will have occurred when:
| ● | The Company has an average market capitalization (calculated by adding the value of all outstanding shares of Common Stock valued at the Company’s closing sale price on the OTC Market or other applicable bulletin board or exchange, plus the value of the outstanding Series A Preferred Stock at the Original Issue Price per share) of $200,000,000 or more over any 90 day period. The holders of the Series A Preferred Stock would have the right, for 30 days after the end of such qualifying 90 day measurement period, to require the Company to purchase the Series A Preferred Stock for an amount equal to the Liquidation Value. |
F- 103
| ● | Any Liquidity Event in which the Company receives proceeds of $50,000,000 or more. For purposes hereof, a “Liquidity Event” means any (a) liquidation, dissolution or winding up of the Company; (b) acquisition of the Company by means of any transaction or series of related transactions (including, without limitation, any reorganization, merger, share exchange, share purchase or consolidation) provided that the applicable transaction shall not be deemed a liquidation unless the Company’s stockholders constituted immediately prior to such transaction hold less than 50% of the voting power of the surviving or acquiring entity; or (c) the sale, lease, transfer or other disposition, in a single transaction or series of related transactions, by the Company or any subsidiary of the Company of all or substantially all the assets of the Company and its subsidiaries taken as a whole, or the sale or disposition (whether by merger or otherwise) of one or more subsidiaries of the Company if substantially all of the assets of the Company and its subsidiaries taken as a whole are held by such subsidiary or subsidiaries. |
Redemption
The Series A Preferred Stock may be redeemed in whole or in part as determined by a resolution of the Board of Directors at any time, at a price equal to the Liquidation Value.
Voting Rights
Shares of Series A Preferred Stock shall have no rights to vote on any matter submitted to a vote of shareholders, except as required by law, in which case each share of Series A Preferred Stock shall be entitled to one vote.
Conversion Rights
Holders of Series A Preferred Stock will have no right to convert such shares into any other equity securities of the Company.
Common Stock
As of December 31, 2023 and 2022, the Company is authorized to issue 500,000,000 shares of common stock at a par value of $0.001 per share.
Voting Rights
Holders of our common stock are entitled to one vote for each share held of record on all matters to be voted on by stockholders. There is no cumulative voting with respect to the election of directors.
Dividend Rights
Holders of our common stock are entitled to receive dividends when, as and if declared by our board of directors out of funds legally available for this purpose.
Liquidation Preference
In the event of our liquidation, dissolution or winding up, holders of our common stock are entitled to receive on a proportional basis any assets remaining available for distribution after payment of our liabilities and Series A Preferred Stock.
Other Terms
Holders of common stock have no conversion, preemptive or other subscription rights and there are no sinking fund or redemption provisions applicable to the common stock. All outstanding shares of the common stock are fully paid and non-assessable.
F- 104
Common Stock Issuances
The following table summarizes the Company’s issuances of common stock during the year ended December 31, 2023:
| Date |
Shares
Issued |
Purpose |
Fair Value
per Share |
Total Value | ||||||||||
| 8/2/2023 | 5,000,000 | Debt conversion (LOC) | $ | 1.05 | (1) | $ | 5,250,000 | |||||||
| 8/15/2023 | 4,732,906 | Debt conversion (LOC) | $ | 1.05 | (1) | $ | 4,969,551 | |||||||
| 9/13/2023 | 1,500,000 | Acquisition of SWIS, LLC | $ | 3.25 | (2) | $ | 4,875,000 | |||||||
| 11) | Fair Value Basis: The fair value per share was determined based on the closing market price on the date of issuance or the agreed-upon conversion price under the applicable agreement. |
| 12) | Discounted Valuation: The fair value per share for the SWIS acquisition was determined using a 35% liquidity discount from the $5.00 market price as of the acquisition date. |
All issuances were accounted for in accordance with ASC 505-10 (Equity) and ASC 718 (Compensation—Stock Compensation), as applicable. o gain or loss was recognized on the debt conversions, as the carrying amount of the debt equaled the fair value of the equity issued. Advisory Board compensation was recorded as general and administrative expense, with a corresponding credit to additional paid-in capital.
8. Commitments and Contingencies
Merger with the SMS Group
On January 10, 2022 the Company executed a definitive agreement to acquire a controlling interest in Sustainable Metal Solutions LLC and its subsidiaries (“SMS” or the “SMS Group”). The purchase price for the controlling interest in SMS will be determined based upon the price of the Company’s common stock on the date of closing, such date to be decided by the Parties in good faith after all conditions precedent are met. These conditions precedent include, but are not limited to:
| ● | Completion of SMS’s audited financial statements by an independent PCAOB-registered accounting firm; |
| ● | Delivery of a completed and SEC-compliant SK-1300 technical report summary on SMS’s mineral reserves as of December 31, 2021 and 2022; |
| ● | Uplisting of ACRG’s common stock to the Nasdaq Capital Market; |
| ● | SEC clearance of the Form S-4 registration statement and proxy materials; |
| ● | Approval of the merger by ACRG’s shareholders; |
| ● | Satisfaction of customary closing conditions, including representations and warranties, covenants, and absence of material adverse changes. |
SMS is an American multi-company environmental development platform focused on producing carbon neutral precious metals and minerals thereby driving American mineral independence while revitalizing the environment and minimizing the impacts of climate change. The business of SMS is consistent with the Company’s posture to acquire, license or joint venture with other parties involved in toll milling, processing, or mining related activities, which may include GPR and its affiliated entities, including, but not limited to, NovaMetallix. Inc., and BlackBear Natural Resources, LTD.
SMS is a group of companies that has developed a significant primary source of metals for conventional mining and secondary sources of metals from previously discarded mining tailings for re-reprocessing and recovery. Access to the large amount of mine tailings on the Company’s Nevada property adds favorably to SMS’s plans. Its goal is to enhance the US’s supply chain of various metals produced locally using environmentally friendly methods. In addition, SMS’s sustainable resource program has developing interests in alternative sources of energy, including the Company’s Nevada property which is zoned for solar development, and the conservation of our water resources.
F- 105
9. Income Taxes
There was no income tax expense reflected in the results of operations for the years ended December 31, 2023 and 2022 because the Company carried forward net losses for tax purposes.
As of December 31, 2023, the Company had federal net operating loss carry forwards of $38,476,000 and state net operating loss carryforwards of $0 which may be used to offset future taxable income. Approximately $326,000 of federal and $245,000 of state NOL's will begin to expire in 2036, while $38,476,000 of federal NOL's and $0 of state NOL's will not expire but may be limited to 80% of taxable income.
The tax effects of temporary differences which give rise to deferred tax assets (liabilities) are summarized as follows:
| 2023 | 2022 | |||||||
| Deferred tax assets: | ||||||||
| Net operating loss carryforward and other tax attributes | $ | 7,327,752 | $ | 1,054,835 | ||||
| Stock based compensation | - | 55,580 | ||||||
| Operating lease assets | - | 18,081 | ||||||
| Capitalize research and development costs | - | 1,449 | ||||||
| Accrual to cash conversion | 9,067,276 | (91,532 | ) | |||||
| Depreciation and amortization | - | (149,043 | ) | |||||
| Total deferred tax asset | 16,395,028 | 889,370 | ||||||
| Valuation allowance | (16,395,028 | ) | (889,370 | ) | ||||
| $ | - | $ | - | |||||
For the year ended December 31, 2023, the net decrease in valuation allowance was $214,000
In assessing the realization of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Deferred tax assets consist primarily of the tax effect of NOL carry-forwards. The Company has provided a full valuation allowance on the deferred tax assets because of the uncertainty regarding its realizability.
F- 106
Reconciliation of the statutory federal income tax to the Company's effective tax:
| 2023 | 2022 | |||||||
| Statutory federal tax rate | 21.0 | % | 21.0 | % | ||||
| State tax, net of federal benefit | - | % | 2.49 | % | ||||
| NOL adjustment | (2.73 | )% | (3.41 | )% | ||||
| Other | - | % | 0.4 | % | ||||
| Valuation allowance | (18.27 | )% | (20.48 | )% | ||||
| Provision for income taxes | - | % | - | % | ||||
Internal Revenue Code Section 382 limits the ability to utilize net operating losses if a 50% change in ownership occurs over a three-year period. Such limitation of the net operating losses may have occurred, but we have not analyzed it at this time as the deferred tax asset is fully reserved.
The Company’s policy is to record interest and penalties associated with unrecognized tax benefits as additional income taxes in the statement of operations. As of December 31, 2024, the Company had no unrecognized tax benefits. There were no changes in the Company’s unrecognized tax benefits during the year ended December 31, 2024. The Company did not recognize any interest or penalties during 2024 related to unrecognized tax benefits.
Tax years 2020 through 2023 remain open to examination for federal income tax purposes and by other major taxing jurisdictions to which the Company is subject.
10. Segment Information
The Company views its operations and manages its business in one reportable segment, which is mining gold and silver from their Tonopah property.
The Company's Chief Executive Officer and Chairwoman of the Board of Directors, Tawana Bain, serves as the Chief Operating Decision Maker ("CODM"). The CODM evaluates performance and makes operating decisions about allocating resources based on net loss or income and cash balances presented in the accompanying statement of operations and balance sheet, respectively.
The measure of segment assets is reported on the balance sheets and income statements such as cash and net loss or income, respectively. All material long-lived assets are in the United States.
11. Restatement of Previously Issued Financial Statements
As described in Note 2 the Company determined that it was necessary to re-evaluate its accounting treatment for its debt obligations. The Company identified accrued interest calculations were performed incorrectly and borrowing on its related party promissory note with GPR included borrowings that weren’t related to the Company operations and should have not been included in the pri ncipal balance. Certain previously reported amounts within the financial statements did not mathematically reconcile (i.e., did not foot). These amounts are presented herein as originally reported in the previously issued financial statements for transparency and consistency. The restatement corrects these errors and reflects the appropriate adjustments.Below are the Company’s restated consolidated balance sheets, statement of operations, statement of stockholders’ deficit and statement of cash flows with the adjustments for the periods stated in the tables below.
F- 107
AMERICAN RESOURCES CORPORATION
RESTATED BALANCE SHEETS
| Balance Sheet as of December 31, 2023 | As Reported | Adjustment | As Restated | |||||||||
| Current assets: | ||||||||||||
| Cash | $ | 36,254 | $ | 151 | $ | 36,405 | ||||||
| Prepaid expenses | 140 | 6,634 | 6,774 | |||||||||
| Total current assets | 36,394 | 6,785 | 43,179 | |||||||||
| Mineral rights | 3,883,524 | - | 3,883,524 | |||||||||
| Intangible asset, net | 4,888,762 | 19,957 | 4,908,719 | |||||||||
| Total assets | $ | 8,808,680 | $ | 26,742 | $ | 8,835,422 | ||||||
| Liabilities, Mezzanine, and Stockholders’ Deficit | ||||||||||||
| Current liabilities: | ||||||||||||
| Convertible promissory notes, related party | $ | 191,231 | $ | (34,929 | ) | $ | 156,302 | |||||
| Accrual for settlement of lawsuits | - | - | - | |||||||||
| Accounts payable | 1,332,612 | (137,949 | ) | 1,194,663 | ||||||||
| Accounts payable – related party | 80,000 | 139,962 | 219,962 | |||||||||
| Accrued interest | - | 1,726,210 | 1,726,210 | |||||||||
| Accrued interest - related party | 1,528,818 | (1,527,669 | ) | 1,149 | ||||||||
| Total current liabilities | 3,132,661 | 165,625 | 3,298,286 | |||||||||
| Commitments and contingencies (Note 8) | ||||||||||||
| Preferred stock, 50,000,000 shares authorized: | ||||||||||||
| Preferred stock, 50,000,000 shares authorized Series A, $.001 par value, 10,000,000 shares issued and outstanding at December 31, 2023. | 10,000,000 | - | 10,000,000 | |||||||||
| Stockholders’ deficit: | ||||||||||||
| Common stock, $0.001 par value, 500,000,000 shares authorized: 14,418,760 issued and outstanding at December 31, 2023. | 14,419 | (511 | ) | 13,908 | ||||||||
| Additional paid-in capital | 103,680,994 | (536,379 | ) | 103,144,615 | ||||||||
| Accumulated deficit | (107,939,395 | ) | 318,008 | (107,621,387 | ) | |||||||
| Total stockholders’ deficit | (4,243,982 | ) | (218,882 | ) | (4,462,864 | ) | ||||||
| Total Liabilities, mezzanine and stockholders’ deficit | $ | 8,888,679 | $ | (53,257 | ) | $ | 8,835,422 | |||||
F- 108
AMERICAN RESOURCES CORPORATION
RESTATED INCOME STATEMENT
| Income Sheet as of December 31, 2023 | As Reported | Adjustment | As Restated | |||||||||
| Operating expenses: | ||||||||||||
| General and administrative expenses | $ | 593,993 | $ | (106,636 | ) | $ | 487,357 | |||||
| Amortization expense | 119,238 | (119,238 | ) | - | ||||||||
| Total operating expenses | 713,231 | (225,874 | ) | 487,357 | ||||||||
| Loss from operations | (713,231 | ) | 225,874 | (487,357 | ) | |||||||
| Other income (expense): | ||||||||||||
| Other income | 8,395 | - | 8,395 | |||||||||
| Gain on the settlement of accounts payable | 57,571 | (57,571 | ) | - | ||||||||
| Interest expense | (761,634 | ) | 69,430 | (692,204 | ) | |||||||
| Total other income expense, net | (695,668 | ) | 11,859 | (683,809 | ) | |||||||
| Loss before income tax provision | (1,408,899 | ) | 237,733 | (1,171,166 | ) | |||||||
| Income tax provision | - | - | - | |||||||||
| Net loss | $ | (1,289,661 | ) | $ | 118,495 | $ | (1,171,166 | ) | ||||
| Basic net loss per common share | $ | (0.23 | ) | $ | 0.06 | $ | (0.17 | ) | ||||
| Basic weighted average common shares outstanding | 6,033,469 | 944,732 | 6,978,201 | |||||||||
F- 109
|
As
Reported
Common Stock |
As
Restated
Common Stock |
As
Reported
Common Stock |
As
Restated
Common Stock |
As
Reported
Additional Paid-in |
As
Restated Additional Paid-in |
As
Reported Accumulated |
As
Restated Accumulated |
As Reported |
As
Restated |
|||||||||||||||||||||||||||||||||||||||||||||||||||
| Shares | Adjustments | Shares | Amount | Adjustments | Amount | Capital | Adjustments | Capital | Deficit | Adjustments | Deficit | Total | Adjustments | Total | ||||||||||||||||||||||||||||||||||||||||||||||
| Balance, December 31, 2022 | 2,674,530 | - | 2,674,530 | $ | 2,674 | $ | 1 | $ | 2,675 | $ | 88,061,298 | $ | (1 | ) | $ | 88,061,297 | $ | (106,530,496 | ) | $ | 80,275 | $ | (106,450,221 | ) | $ | (18,466,524 | ) | $ | 80,275 | $ | (18,386,249 | ) | ||||||||||||||||||||||||||||
| Issuance of stock for acquisition | 1,500,000 | - | 1,500,000 | 1,500 | - | 1,500 | 4,873,500 | - | 4,873,500 | - | - | - | 4,875,000 | - | 4,875,000 | |||||||||||||||||||||||||||||||||||||||||||||
| Issuance of common stock for conversion of debt and interest | 10,244,230 | (511,324.00 | ) | 9,732,906 | 10,245 | (512 | ) | 9,733 | 10,746,196 | (536,378 | ) | 10,209,818 | - | - | - | 10,756,441 | (536,890 | ) | 10,219,551 | |||||||||||||||||||||||||||||||||||||||||
| Net loss | - | - | - | - | - | - | - | - | - | (1,408,899 | ) | 237,733 | (1,171,166 | ) | (1,408,899 | ) | 237,733 | (1,171,166 | ) | |||||||||||||||||||||||||||||||||||||||||
| Balance, December 31, 2023 | 14,418,760 | (511,324 | ) | 13,907,436 | $ | 14,419 | $ | (511 | ) | $ | 13,908 | $ | 103,680,994 | $ | (536,379 | ) | $ | 103,144,615 | $ | (107,939,395 | ) | $ | 318,008 | $ | (107,621,387 | ) | $ | (4,243,982 | ) | $ | (218,882 | ) | $ | (4,462,864 | ) | |||||||||||||||||||||||||
F- 110
AMERICAN RESOURCES CORPORATION
RESTATED CASH FLOW STATEMENT
| Statement of Cash flows for the year ended December 31, 2023 | As Reported | Adjustment | As Restated | |||||||||
| Cash flows used in operating activities: | ||||||||||||
| Net loss | $ | (1,408,899 | ) | $ | 237,733 | $ | (1,171,166 | ) | ||||
| Adjustments to reconcile net loss to cash flows used in operating activities: | ||||||||||||
| Amortization expense | 119,238 | (20,227 | ) | 99,011 | ||||||||
| Gain on derecognition of certain accounts payable | (57,571 | ) | 57,571 | - | ||||||||
| Expenses paid directly by related party | 496,173 | (496,173 | ) | - | ||||||||
| Changes in operating assets and liabilities: | ||||||||||||
| Prepaid expenses | (140 | ) | (6,634 | ) | (6,774 | ) | ||||||
| Accounts payable | (88,161 | ) | 422,691 | 334,530 | ||||||||
| Accounts payable – related party | 170,186 | (82,954 | ) | 87,232 | ||||||||
| Accrual for settlement of lawsuits | 42,549 | 34,511 | 77,060 | |||||||||
| Accrued interest | - | 311,930 | 311,930 | |||||||||
| Accrued interest – related parties | 761,628 | (458,414 | ) | 303,214 | ||||||||
| Net cash used in operating activities | 35,003 | 34 | 35,037 | |||||||||
| Net (decrease in cash | 35,003 | 34 | 35,037 | |||||||||
| Cash, beginning of year | 1,251 | 117 | 1,368 | |||||||||
| Cash, end of year | $ | 36,254 | $ | 151 | $ | 36,405 | ||||||
| Noncash investing and financing activity: | ||||||||||||
| Payments made by related party on behalf of the Company | $ | - | $ | 272,481 | $ | 272,481 | ||||||
| Issuance of common stock for conversion of convertible promissory note payable - related party | $ | 10,756,441 | $ | (536,890 | ) | $ | 10,219,551 | |||||
| Issuance of common stock for purchase of intangible asset | $ | 4,875,000 | $ | 132,730 | $ | 5,007,730 | ||||||
F- 111
AMERICAN RESOURCES CORPORATION
RESTATED BALANCE SHEETS
| Balance Sheet as of December 31, 2022 | As Reported | Adjustment | As Restated | |||||||||
| Assets | ||||||||||||
| Current assets: | ||||||||||||
| Cash | $ | 1,251 | $ | 117 | $ | 1,368 | ||||||
| Total current assets | 1,251 | 117 | 1,368 | |||||||||
| Mineral rights | 3,883,524 | - | 3,883,524 | |||||||||
| Total assets | $ | 3,884,775 | $ | 117 | $ | 3,884,892 | ||||||
| Liabilities, Mezzanine, and Stockholders’ Deficit | ||||||||||||
| Current liabilities: | ||||||||||||
| Senior secured convertible promissory note payable, related party | $ | 2,229,187 | $ | - | $ | 2,229,187 | ||||||
| Promissory notes payable - related party | 477,500 | 100,000 | 577,500 | |||||||||
| Convertible promissory notes, related party | 1,299,527 | (195,566 | ) | 1,103,961 | ||||||||
| Accrual for settlement of lawsuits | 3,703,736 | (43,548 | ) | 3,660,188 | ||||||||
| Accounts payable | 1,132,614 | - | 1,132,614 | |||||||||
| Accrued interest | - | 1,414,280 | 1,414,280 | |||||||||
| Accrued interest - related party | 3,508,735 | (1,355,324 | ) | 2,153,411 | ||||||||
| Total current liabilities | 12,351,299 | (80,158 | ) | 12,271,141 | ||||||||
| Commitments and contingencies (Note 8) | ||||||||||||
| Preferred stock, 50,000,000 shares authorized: | ||||||||||||
| Preferred stock, 50,000,000 shares authorized Series A, $.001 par value, 10,000,000 shares issued and outstanding at December 31, 2022. | 10,000,000 | - | 10,000,000 | |||||||||
| Stockholders’ deficit: | ||||||||||||
| Common stock, $0.001 par value, 500,000,000 shares authorized: 2,674,530 issued and outstanding at December 31, 2022. | 2,674 | 1 | 2,675 | |||||||||
| Additional paid-in capital | 88,061,298 | (1 | ) | 88,061,297 | ||||||||
| Accumulated deficit | (106,530,496 | ) | 80,275 | (106,450,221 | ) | |||||||
| Total stockholders’ deficit | (18,466,524 | ) | 80,275 | (18,386,249 | ) | |||||||
| Total Liabilities, mezzanine and stockholders’ deficit | $ | 3,884,775 | $ | 117 | $ | 3,884,892 | ||||||
F- 112
AMERICAN RESOURCES CORPORATION
RESTATED INCOME STATEMENT
| Statement of operations for the year ended December 31, 2022 | As Reported | Adjustment | As Restated | |||||||||
| Operating expenses: | ||||||||||||
| General and administrative expenses | $ | 323,940 | $ | (166,499 | ) | $ | 157,441 | |||||
| Total operating expenses | 323,940 | (166,499 | ) | 157,441 | ||||||||
| Loss from operations | (323,940 | ) | 166,499 | (157,441 | ) | |||||||
| Other income (expense): | ||||||||||||
| Other income | 8,396 | (1 | ) | 8,395 | ||||||||
| Gain on the settlement of accounts payable | 15,137 | 1 | 15,138 | |||||||||
| Interest expense | (752,233 | ) | (19,015 | ) | (771,248 | ) | ||||||
| Total other expense, net | (728,700 | ) | (19,015 | ) | (747,715 | ) | ||||||
| Loss before income tax provision | (1,052,640 | ) | 147,484 | (905,156 | ) | |||||||
| Income tax provision | - | - | - | |||||||||
| Net loss | $ | (1,052,640 | ) | $ | 147,484 | $ | (905,156 | ) | ||||
| Basic net loss per common share | $ | (0.39 | ) | $ | 0.06 | $ | (0.34 | ) | ||||
| Basic weighted average common shares outstanding | 2,674,530 | - | 2,674,530 | |||||||||
F- 113
|
As
Reported
Common Stock |
As
Restated
Common Stock |
As
Reported
Common Stock |
As
Restated
Common Stock |
As
Reported
Additional Paid-in |
As
Restated
Additional Paid-in |
As
Reported
Accumulated |
As
Restated
Accumulated |
As Reported | As Restated | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Shares | Adjustments | Shares | Amount | Adjustments | Amount | Capital | Adjustments | Capital | Deficit | Adjustments | Deficit | Total | Adjustments | Total | ||||||||||||||||||||||||||||||||||||||||||||||
| Balance, December 31, 2020 | 2,674,530 | - | 2,674,530 | $ | 2,674 | $ | 1 | $ | 2,675 | $ | 88,061,298 | $ | (1 | ) | $ | 88,061,297 | $ | (104,350,402 | ) | $ | (7,095 | ) | $ | (104,357,497 | ) | $ | (16,286,430 | ) | $ | (7,095 | ) | $ | (16,293,525 | ) | ||||||||||||||||||||||||||
| Net loss | - | - | - | - | - | - | - | - | - | (1,127,454 | ) | (60,114 | ) | (1,187,568 | ) | (1,127,454 | ) | (60,114 | ) | (1,187,568 | ) | |||||||||||||||||||||||||||||||||||||||
| Balance, December 31, 2021 | 2,674,530 | - | 2,674,530 | 2,674 | 1 | 2,675 | 88,061,298 | (1 | ) | 88,061,297 | (105,477,856 | ) | (67,209 | ) | (105,545,065 | ) | (17,413,884 | ) | (67,209 | ) | (17,481,093 | ) | ||||||||||||||||||||||||||||||||||||||
| Net loss | - | - | - | - | - | - | - | - | - | (1,052,640 | ) | 147,484 | (905,156 | ) | (1,052,640 | ) | 147,484 | (905,156 | ) | |||||||||||||||||||||||||||||||||||||||||
| Balance, December 31, 2022 | 2,674,530 | - | 2,674,530 | $ | 2,674 | $ | 1 | $ | 2,675 | $ | 88,061,298 | $ | (1 | ) | $ | 88,061,297 | $ | (106,530,496 | ) | $ | 80,275 | $ | (106,450,221 | ) | $ | (18,466,524 | ) | $ | 80,275 | $ | (18,386,249 | ) | ||||||||||||||||||||||||||||
F- 114
AMERICAN RESOURCES CORPORATION
RESTATED CASH FLOW STATEMENT
| Statement of Cash flows for the year ended December 31, 2022 | As Reported | Adjustment | As Restated | |||||||||
| Cash flows used in operating activities: | ||||||||||||
| Net loss | $ | (1,052,640 | ) | $ | 147,484 | $ | (905,156 | ) | ||||
| Adjustments to reconcile net loss to cash flows used in operating activities: | ||||||||||||
| Gain on derecognition of certain accounts payable | (15,137 | ) | - | (15,137 | ) | |||||||
| Changes in operating assets and liabilities: | ||||||||||||
| Accounts payable | - | 148,051 | 148,051 | |||||||||
| Accrual for settlement of lawsuits | 172,557 | - | 172,557 | |||||||||
| Accrued interest | - | 276,822 | 276,822 | |||||||||
| Accrued interest – related parties | 579,675 | (257,807 | ) | 321,868 | ||||||||
| Net cash used in operating activities | (1,112 | ) | 117 | (995 | ) | |||||||
| Net (decrease in cash | (1,112 | ) | 117 | (995 | ) | |||||||
| Cash, beginning of year | 2,363 | - | 2,363 | |||||||||
| Cash, end of year | $ | 1,251 | $ | 117 | $ | 1,368 | ||||||
| Noncash investing and financing activity: | ||||||||||||
| Payments made by related party on behalf of the Company | $ | - | $ | 148,051 | $ | 148,051 | ||||||
F- 115
11. Subsequent Events
The Company follows the guidance in FASB ASC 855-10 for the disclosure of subsequent events. The Company evaluated subsequent events through the date the financial statements were issued and determined the Company had the following subsequent events:
Effective March 20, 2024, the Board executed a unanimous written consent of the Board of Directors setting the number of directors at three and appointing Tawana Bain as a Director and Chairwoman of the Board of Directors.
In March 2024, the Company appointed twelve members to its newly formed Advisory Board. Each of the Advisory Board members will earn 150 shares of restricted common stock per quarter provided they are in compliance with their agreement. See the Form 8-K filed with the SEC on March 29, 2024.
Effective June 3, 2024, the Company executed a Memorandum of Understanding for a Joint Venture with AMI Strategies, (“AMI”). The Parties intend to form a joint operation and utilize the technology and talent of both organizations for their mutual benefit which includes the Company’s planned renewable energy generation, specifically solar power through the operation, engineering, infrastructure, and construction of controlled solar power and AMI’s management of utility costs through a proprietary software platform that can bill, audit, invoice and manage the daily operations of suppliers and clients.
Joint Venture with AMI
Effective June 3, 2024, the Company executed a Memorandum of Understanding for a Joint Venture with AMI Strategies, (“AMI”). The Parties intend to form a joint operation and utilize the technology and talent of both organizations for their mutual benefit which includes the Company’s planned renewable energy generation, specifically solar power through the operation, engineering, infrastructure, and construction of controlled solar power and AMI’s management of utility costs through a proprietary software platform that can bill, audit, invoice and manage the daily operations of suppliers and clients.
About AMI:
AMI Strategies serves clients on every continent, offering a global suite of solutions for Telecom, Mobility, Cloud, Utility, ServiceNow, and Managed Automation deployments – all powered by cutting-edge technology and automation.
AMI’s platform is designed to manage any vendor that’s important to its customers – no matter what category it’s in. By establishing inventory that includes integrated data from vendors and enterprise systems, auditing charges against correlating contracts, automating allocations and payments, and centralizing how services are purchased, changed or decommissioned, AMI ensures its clients never waste time on vendor-related busywork, and never pay more than they’re supposed to.
Definitive Documents:
The Parties will work together to draft definitive documents including the formation of the joint venture and its governing documents.
F- 116