UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2024
OR
☐ TRANSITION REPORT UNDER SECTION 13
OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition from _______to _______________
Commission file number 000-14319
AMERICAN CLEAN RESOURCES GROUP, INC.
(Exact Name of Small Business Issuer as Specified
in its Charter)
| Nevada | | 84-0991764 |
| (State or Other Jurisdiction of | | (I.R.S. Employer |
| Incorporation or Organization) | | Identification Number) |
12567 West Cedar Drive, Lakewood, CO 80228-2039
(Address of Principal Executive Offices)
(888) 960-7347
(Issuer’s Telephone Number, Including Area
Code)
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | | Trading Symbol | | Name of each exchange on which registered |
| Common Stock $0.001 par value | | ACRG | | OTC |
Indicate by check mark whether the Registrant:
(1) filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the issuer was required to file such reports) and (2) has been subject to such filing requirements for
the past 90 days. Yes ☒ No ☐
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 fi les).).
Yes ☒ No ☐
Indicate by check mark whether the Registrant
is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting 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. (Check one):
| Large accelerated filer ☐ | Accelerated filer ☐ |
| Non-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 7(a)(2)(B) of the Securities Act: ☐
Indicate by check mark whether the Registrant
is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒
As of July 16, 2024, there were 14,418,760 shares of common stock outstanding
which is the Registrant’s only class of voting stock.
Documents incorporated by reference
AMERICAN CLEAN RESOURCES GROUP, INC.
FORM 10-Q
FOR THE THREE MONTHS ENDED MARCH 31, 2024
TABLE OF CONTENTS
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Form 10-Q contains certain
statements which are forward-looking in nature and are based on the current beliefs of our management as well as assumptions made by and
information currently available to management, general trends in our operations or financial results, plans, expectations, estimates and
beliefs. In addition, when used in this Form 10-Q, the words “may,” “could,” “should,” “anticipate,”
“believe,” “estimate,” “expect,” “intend,” “plan,” “predict” and
similar expressions and their variants, as they relate to us or our management, may identify forward-looking statements. These statements
reflect our judgment as of the date of this Form 10-Q with respect to future events, the outcome of which is subject to risks. We have
attempted to identify, in context, certain of the factors that we believe may cause actual future experience and results to differ materially
from our current expectations, which may have a significant impact on our business, operating results, financial condition or your investment
in our common stock, as described in Part II, Item 1A entitled “Risk Factors” in our Annual Report on Form 10-K for the year
ended December 31, 2023, as filed with the Securities and Exchange Commission (“SEC”) on July 16, 2024.
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 publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. However,
your attention is directed to any further disclosures made on related subjects in our subsequent periodic reports filed with the SEC on
Forms 10-K, 10-Q and 8-K.
PART I – FINANCIAL INFORMATION
Item
1. Financial Statements
AMERICAN CLEAN RESOURCES GROUP, INC.
CONDENSED
Consolidated Balance Sheets
| | |
March 31,
2024 | | |
December 31,
2023 | |
| | |
(unaudited) | | |
| |
| Assets | |
| | |
| |
| Current assets: | |
| | |
| |
| Cash | |
$ | 9,311 | | |
$ | 36,254 | |
| Accounts receivable | |
| 5,000 | | |
| - | |
| Prepaid expenses and other current assets | |
| 3,260 | | |
| 140 | |
| Total current assets | |
| 17,571 | | |
| 36,394 | |
| Developed Technology, net amortization | |
| 4,799,333 | | |
| 4,888,762 | |
| Mining and mineral rights | |
| 3,883,524 | | |
| 3,883,524 | |
| | |
| | | |
| | |
| Total Assets | |
$ | 8,700,428 | | |
$ | 8,808,680 | |
| | |
| | | |
| | |
| Liabilities, Mezzanine, and Shareholders’ Deficit | |
| | | |
| | |
| Accounts payable | |
| 1,294,442 | | |
| 1,332,613 | |
| Accounts payable – related party | |
| 80,000 | | |
| 212,730 | |
| Accrued liabilities | |
| 3,925 | | |
| - | |
| Accrued interest, related party | |
| 1,606,714 | | |
| 1,528,818 | |
| Senior secured convertible promissory note, related party | |
| 329,661 | | |
| 191,231 | |
| Total current liabilities | |
| 3,314,742 | | |
| 3,265,392 | |
| | |
| | | |
| | |
| Commitments and Contingencies (Note 7) | |
| | | |
| | |
| | |
| | | |
| | |
| Preferred stock, Series A, $ .001 par value, 110,000,000 shares authorized: 10,000,000 shares issued and outstanding at March 31, 2024 and December 31, 2023 | |
| 10,000,000 | | |
| 10,000,000 | |
| | |
| | | |
| | |
| Shareholders’ deficit: | |
| | | |
| | |
| Common stock, $0.001 par value, 500,000,000 shares authorized: 14,418,760 issued and outstanding at March 31, 2024 and December 31, 2023 | |
| 14,419 | | |
| 14,419 | |
| Additional paid-in capital | |
| 103,680,994 | | |
| 103,680,994 | |
| Accumulated deficit | |
| (108,110,489 | ) | |
| (107,939,395 | ) |
| Total shareholders’ deficit | |
| (4,415,076 | ) | |
| (4,243,982 | ) |
| | |
| | | |
| | |
| Total Liabilities, Mezzanine, and Shareholders’ Deficit | |
$ | 8,700,428 | | |
$ | 8,808,680 | |
The accompanying footnotes are an integral part
of these unaudited condensed consolidated financial statements.
AMERICAN CLEAN RESOURCES GROUP, INC.
CONDENSED
Consolidated STATEMENTS OF OPERATIONS
(Unaudited)
| | |
Three months ended | |
| | |
March 31,
2024 | | |
March 31,
2023 | |
| | |
| | |
| |
| Revenues | |
$ | - | | |
$ | — | |
| | |
| | | |
| | |
| Operating expenses: | |
| | | |
| | |
| General and administrative | |
| 128,608 | | |
| 42,119 | |
| Amortization expense | |
| 89,429 | | |
| - | |
| Total operating expenses | |
| 218,037 | | |
| 42,119 | |
| Loss from operations | |
| (218,037 | ) | |
| (42,119 | ) |
| | |
| | | |
| | |
| Other income (expense): | |
| | | |
| | |
| Other income | |
| 5,601 | | |
| 2,099 | |
| Gain on derecognition of accounts payable | |
| - | | |
| 57,572 | |
| Interest expense | |
| (77,896 | ) | |
| (212,909 | ) |
| Total other expense, net | |
| (71,694 | ) | |
| (153,238 | ) |
| Loss before income tax provision | |
| | | |
| (195,357 | ) |
| | |
| | | |
| | |
| Income tax provision | |
| — | | |
| — | |
| Net loss | |
$ | (289,731 | ) | |
$ | (195,357 | ) |
| | |
| | | |
| | |
Basic diluted net loss per common share | |
$ | (0.02 | ) | |
$ | (0.07 | ) |
| | |
| | | |
| | |
Basic diluted weighted average common shares outstanding | |
| 14,418,760 | | |
| 2,674,530 | |
The accompanying footnotes are an integral part
of these unaudited condensed consolidated financial statements.
AMERICAN CLEAN RESOURCES GROUP, INC.
CONDENSED
Consolidated STATEMENTS OF CASH FLOWS
(Unaudited)
| | |
For the
Three months ended | |
| | |
March 31,
2024 | | |
March 31,
2023 | |
| Cash flows from operating activities: | |
| | |
| |
| Net loss | |
$ | (289,731 | ) | |
$ | (195,357 | ) |
| Adjustments to reconcile net loss to cash flows used in operating activities: | |
| | | |
| | |
| Amortization expense | |
| 89,429 | | |
| - | |
| Gain on derecognition of certain accounts payable | |
| - | | |
| (57,572 | ) |
| Expenses paid directly by related party | |
| 138,430 | | |
| 39,426 | |
| Changes in operating assets and liabilities: | |
| | | |
| | |
| Accounts receivable | |
| (5,000 | ) | |
| - | |
| Prepaid expenses and other assets | |
| (3,120 | ) | |
| - | |
| Accounts payable | |
| (38,171 | ) | |
| - | |
| Accrued liabilities | |
| 3,925 | | |
| - | |
| Accrued interest | |
| 77,896 | | |
| 170,361 | |
| Accrual for settlement of lawsuits, related party | |
| - | | |
| 42,549 | |
| Net cash used in operating activities | |
| (26,943 | ) | |
| (593 | ) |
| Cash Paid for investment | |
| - | | |
| - | |
| Cash flows from investing activities: | |
| - | | |
| — | |
| | |
| | | |
| | |
| Cash flows from financing activities: | |
| - | | |
| - | |
| | |
| | | |
| | |
| Proceeds from convertible debentures | |
| --- | | |
| --- | |
| | |
| | | |
| | |
| Net cash provided by financing activities | |
| --- | | |
| --- | |
| | |
| | | |
| | |
| Decrease in cash | |
| (26,943 | ) | |
| (593 | ) |
| Cash, beginning of period | |
| 36,254 | | |
| 1,251 | |
| Cash, end of period | |
$ | 9,311 | | |
$ | 658 | |
The accompanying footnotes are an integral part
of these unaudited condensed consolidated financial statements.
AMERICAN CLEAN RESOURCES GROUP, INC.
CONDENSED
CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS’ DEFICIT
FOR
THE THREE MONTHS ENDED MARCH 31, 2024 AND 2023
| | |
Common Stock | | |
| | |
Accumulated | | |
| |
| | |
Shares | | |
Amount | | |
APIC | | |
Deficit | | |
Total | |
| Balance at December 31, 2022 | |
| 2,674,530 | | |
$ | 2,674 | | |
$ | 88,061,298 | | |
$ | (106,530,496 | ) | |
$ | (18,466,524 | ) |
| | |
| | | |
| | | |
| | | |
| | | |
| | |
| Net loss | |
| --- | | |
| --- | | |
| --- | | |
| (195,357 | ) | |
| (195,357 | ) |
| | |
| | | |
| | | |
| | | |
| | | |
| | |
| Balance at March 31, 2023 | |
| 2,674,530 | | |
| 2,674 | | |
| 88,061,298 | | |
| (106,530,496 | ) | |
| (18,661,881 | ) |
| | |
| | | |
| | | |
| | | |
| | | |
| | |
| Balance at December 31, 2023 | |
| 14,418,760 | | |
| 14,419 | | |
| 103,680,994 | | |
| (107,820,157 | ) | |
| (4,243,982 | ) |
| | |
| | | |
| | | |
| | | |
| | | |
| | |
| Net loss | |
| --- | | |
| --- | | |
| --- | | |
| (289,731 | ) | |
| (289,731 | ) |
| | |
| | | |
| | | |
| | | |
| | | |
| | |
| Balance at March 31, 2024 | |
| 14,418,760 | | |
| 14,419 | | |
| 103,680,994 | | |
$ | (108,110,489 | ) | |
$ | (4,415,076 | ) |
The accompanying footnotes are an integral part
of these unaudited condensed consolidated financial statements.
AMERICAN CLEAN RESOURCES GROUP, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED MARCH 31, 2024
(unaudited)
NOTE 1 – NATURE OF BUSINESS
American Clean Resources Group, Inc. (“we,”
“us,” “our,” “ACRG” or the “Company”) is an exploration stage company, incorporated in
Nevada having offices in Lakewood, Colorado and through its subsidiary, a property in Tonopah, Nevada. The business plan is to purchase
equipment and build a facility on the 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 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.
On September 13,
2023, the Company executed an agreement to acquire a 100% interest in SWIS, L.L.C. (“SWIS”). SWIS has developed an
algorithm and a “smart” device that provides essential information to improve water quality from Combined Sewer Overflow
(“CSO”). Recently, we have 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. More importantly, SWIS along with other fellow
entrepreneurs and environmental stewards have assembled a team to launch SWIS, with stakeholders from the U of L, Municipal Sewer
Districts (“MSD”), and several state governments. SWIS is actively ready to launch a pilot project to test its
modernized approach to CSO Public Notification Programs. 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. SWIS has a management team well versed in the necessary strategies for market penetration and adoption and looks to
test its behavior modification program abilities with the University of Louisville.
Combined Sewer Systems
(“CSS”) were built over a century ago with the intention to divert wastewater away from households. CSS collect 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 CSS.
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 remains 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.
This project would greatly contribute to the universities’
expanding sustainability program and would put UofL and SWIS in an advanced position to compete to be one of six universities in the US
that the EPA will chose as stormwater research hubs. With the completion of a successful Research Project, these stated goals and deliverables
would revolutionize a major component of the $1 trillion water infrastructure issue plaguing a growing population and prime the U of L
and SWIS for nationwide Public Notification Program adoption. The development of our platform will modernize Public Education and Notification
Programs that will significantly reduce the monetary cost and health risk of CSO events for municipalities worldwide. The results to be
discovered at the U of L will give SWIS data and information capable of educating citizens of developed cities across the globe and seamlessly
integrating newly developed nations.
Going Concern
The accompanying condensed consolidated financial
statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“U.S.
GAAP”), assuming we will continue as a going concern, which contemplates the realization of assets and satisfaction of liabilities
in the normal course of business. For the three months ended March 31, 2024, the Company incurred net losses from operations of $289,731.
At March 31, 2024, the Company had an accumulated deficit of $108,110,489 and a working capital deficit of $3,683,588. In addition, virtually
all of the Company’s assets are encumbered or pledged under a senior secured convertible promissory note payable to a related party
that is in default. These circumstances raise substantial doubt about the Company’s ability to continue as a going concern. Our
ability to continue as a going concern is dependent on our ability to raise the required additional capital or debt financing to meet
short and long-term operating requirements. During the three months ended March 31, 2024, the Company had $138,430 of expenses that were
paid directly by GPR, a related party and the Company’s convertible note line of credit with GPR was increased by this same amount.
(See Notes 4 and 8).
Management believes that private placements of
equity capital and/or additional debt financing will be needed to fund our long-term operating requirements. The Company may also encounter
business endeavors that require significant cash commitments or unanticipated problems or expenses that could result in a requirement
for additional cash. If the Company raises additional funds through the issuance of equity or convertible debt securities, the percentage
ownership of our current shareholders could be reduced, and such securities might have rights, preferences, or privileges senior to our
common stock. Additional financing may not be available on acceptable terms, or at all. If adequate funds are not available or are not
available on acceptable terms, the Company may not be able to take advantage of prospective business endeavors or opportunities, which
could significantly and materially restrict our operations. We are continuing to pursue external financing alternatives to improve our
working capital position. If the Company is unable to obtain the necessary capital, the Company may have to cease operations.
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Principles of Consolidation
The consolidated financial statements include
the accounts of ACRG, its wholly owned subsidiary SWIS, and its wholly owned subsidiary Aurielle Enterprises Inc. (“AE”) and
its wholly owned subsidiaries Tonopah Custom Processing, Inc., (“TCP”) and Tonopah Resources, Inc. (“TR”) All
significant intercompany transactions, accounts and balances have been eliminated in consolidation.
Basis of Presentation
The accompanying unaudited condensed consolidated financial statements
have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”),
for interim financial information pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”).
Accordingly, they do not include all the information and footnotes required by US GAAP for complete financial statements. The unaudited
condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes
thereto included in our Form 10-K for the year ended December 31, 2023, filed July 16, 2024. In the opinion of management, all adjustments
(consisting of normal recurring adjustments unless otherwise indicated) considered necessary for a fair presentation have been included.
Operating results for the three months ended March 31, 2024, are not necessarily indicative of the results that may be expected for the
year as a whole.
The accompanying condensed 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 SEC.
Cash
We maintain our cash in high-quality financial
institutions. The balances, at times, may exceed federally insured limits, however the Company has not experienced any losses with respect
to uninsured balances.
Long-Lived Assets and Impairment of Long-Lived
Assets
The Company annually evaluates the carrying value
of long-lived assets to be held and used, including but not limited to, mineral properties, mine tailings, mine dumps, capital assets
and intangible assets, or sooner when events and circumstances warrant such a review. The carrying value of a long-lived asset is considered
impaired when the anticipated undiscounted cash flow from such asset is separately identifiable and is less than its carrying value. In
that event, a loss is recognized based on the amount by which the carrying value exceeds the fair value of the long-lived asset. Fair
value is determined primarily using the anticipated cash flows discounted at a rate commensurate with the risk involved. Losses on long-lived
assets to be disposed of are determined in a similar manner, except that fair values are reduced for the cost to dispose.
Developed Technology
The Company amortizes its developed technology
over its useful life. 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.
Use of Estimates
Preparing condensed 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.
Revenue Recognition and Deferred Revenue
As of March 31, 2024 and 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.
Financial Instruments
The carrying amounts for all financial instruments
approximates fair value. The carrying amounts for cash, accounts payable and accrued liabilities approximated fair value because of the
short maturity of these instruments. The fair value of short-term debt is approximated at their carrying amounts based upon the expected
borrowing rate for debt with similar remaining maturities and comparable risk.
Loss per Common Share
Basic earnings (loss) per common share is computed
by dividing net loss applicable to common shareholders by the weighted average number of common shares outstanding during the periods
presented. Diluted earnings per common share is determined using the weighted average number of common shares outstanding during the
periods presented, adjusted for the dilutive effect of common stock equivalents, consisting of shares that might be issued upon exercise
of options, warrants and conversion of convertible debt. In periods where losses are reported, the weighted average number of common
shares outstanding excludes common stock equivalents, because their inclusion would be antidilutive.
At March 31, 2024, and December 31, 2023, $348,240
and $208,615 respectively that, if converted, would be 365,652 and 219,046 shares of convertible notes payable that were excluded from
the diluted weighted average common share calculation due to the antidilutive effect such shares would have on net loss per common share.
Income Taxes
Income taxes are accounted for based upon an asset
and liability approach. Accordingly, deferred tax assets and liabilities arise from the difference between the tax basis of
an asset or liability and its reported amount in the financial statements. Deferred tax amounts are determined using the tax
rates expected to be in effect when the taxes will actually be paid or refunds received, as provided under currently enacted tax law. Valuation
allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized. Income tax expense
or benefit is the tax payable or refundable, respectively, for the period plus or minus the change in deferred tax assets and liabilities
during the period.
Accounting guidance requires the recognition of a financial statement
benefit of a tax position only after determining that the relevant tax authority would more likely than not sustain the position following
an audit. For tax positions meeting the more-likely-than-not threshold, the amount recognized in the consolidated financial
statements is the largest benefit that has a greater than fifty percent likelihood of being realized upon ultimate settlement with the
relevant tax authority. The Company believes its income tax filing positions and deductions will be sustained upon examination and accordingly,
no reserves, or related accruals for interest and penalties have been recorded at December 31, 2023 and March 31, 2024.
Recent Accounting Standards
During the three month period ended March 31, 2024, and through July
16, 2024, there were several new accounting pronouncements issued by the Financial Accounting Standards Board. Each of these pronouncements,
as applicable, has been or will be adopted by the Company. Management does not believe the adoption of any of these accounting pronouncements
has had or will have a material impact on the Company’s consolidated financial statements.
Management’s Evaluation of Subsequent
Events
The Company evaluates events that have occurred
after the consolidated balance sheet date of March 31, 2024, through the date which the consolidated financial statements were issued.
Based upon the review, the Company did not identify any recognized or non-recognized subsequent events that would have required adjustment
or disclosure in the condensed consolidated financial statements.
Mineral Properties
Mineral property acquisition costs are recorded
at cost and are deferred until the viability of the property is determined. No properties have produced operating revenues at this time.
Exploration, mineral property evaluation, option payments, related acquisition costs for mineral properties acquired under an option agreement,
general overhead, administrative and holding costs to maintain a property on a care and maintenance basis are expensed in the period they
are incurred. When reserves are determined for a property and a bankable feasibility study is completed, subsequent exploration and development
costs on the property would be capitalized. If a project were to be put into production, capitalized costs would be amortized on the unit
of production basis.
Management reviews the net carrying value of each
mineral property as changes may materialize with a property or at a minimum, on an annual basis. Where information and conditions suggest
impairment, estimated future net cash flows from each property are calculated using estimated future prices, proven and probable reserves
and value beyond proven and probable reserves, and operating, capital and reclamation costs on an undiscounted basis. If it is determined
that the future cash flows are less than the carrying value, a write-down to the estimated fair value is made with a charge to loss for
the period. Where estimates of future net cash flows are not available and where other conditions suggest impairment, management assesses
if the carrying value can be recovered.
Management’s estimates of gold prices, recoverable
reserves, probable outcomes, operating capital, and reclamation costs are subject to risks and uncertainties that may affect the recoverability
of mineral property costs.
The Company does not own any mining claims. It
owns tailings located on the Tonopah property and the rights to some tailings located in Manhattan, Nevada. The Company has not disturbed
or processed any of this material, but recently authorized GPR to examine the economic feasibility of processing the tailings to reclaim
their residual content of valuable metals in exchange for the exclusive right to process the tailings should their economic assessment
prove positive. The terms of such processing to be mutually agreed upon between GPR and the Company in the future based on the results
of the assessment.
NOTE 3 – MINING AND 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 mining and mineral rights. Based on an assessment the Company conducted in January 2023, the Company believes the carrying value
of the rights recorded on its books is not impaired. The Company determined that its land, mineral rights, and water rights of $3,883,524
was fairly stated and not exposed to impairment.
NOTE 4 – CONVERTIBLE NOTES PAYABLE
On March 16, 2020 the Company executed a Line of Credit (“LOC”)
with Granite Peak Resources, LLC (“GPR”), a related party, evidenced by a convertible promissory note. 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 at GPR’s
sole option. The LOC is for funding operating expenses critical to the Company’s basic operations and redirection and all requests
for funds may be approved or disapproved in GPR’s sole discretion. The LOC bears interest at 10% per annum, is convertible into
shares of the Company’s common stock at a per share price of $1.65 and is secured by the real and personal property of the Company
and its subsidiaries, and the subsidiaries’ stock GPR already has under lien (See Note 8). During the three months ended March 31,
2024, the Company had $138,430 of expenses that were paid directly by GPR, a related party and the Company’s convertible note line
of credit with GPR was increased by this same amount. During the year ended December 31, 2023, the Company had $496,173 of expenses that
were paid directly by GPR, a related party and the Company’s convertible note line of credit with GPR was increased by this same
amount certain accounts payable. At March 31, 2024 and December 31, 2023 the balance due GPR under the LOC is $329,661 and $191,231 principal
and $18,579 and $17,384 accrued interest, respectively.
The Company entered into an 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 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. Effective 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 Pure Path and acquired in 2019) and the Flechner Judgment (see the Company’s 10-K for 2022) were rolled into the balance
of the LOC and the Deed of Trust was increased to $250,000,000 and the appropriate paperwork was filed with the requisite government
office(s).
Advances by GPR to pay directly certain operating
expenses, reduce certain accounts payable, or acquire certain notes payable in default on the Company’s behalf have been included
in the convertible promissory issued by the Company in connection with the LOC and classified accordingly in the accompanying condensed
consolidated financial statements.
NOTE 5 – PREFERRED STOCK – SERIES
A
The Series A Preferred Stock is presented as mezzanine equity due to
its rights and preference. The Attributes of the 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 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 Issues 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. |
Written notice of any Liquidation Event (the “Liquidation
Notice”) shall be given by mail, postage prepaid, or by facsimile to non-U.S. residents, not less than five days prior to the anticipated
payment date state therein, to the holders of record of Series A Preferred Stock, such notice to be addressed to each such holder at its
address as shown by the records of the Company. The Liquidation Notice shall state (i) the anticipated payment date, and (ii) the total
Liquidation Value available for distribution to Series A Preferred Stock shareholders upon the occurrence of the Liquidation Event.
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.
NOTE 6 – COMMON STOCK
Common Stock - Option Grants
The Company recorded no compensation expense for
the three months ended March 31, 2024 and 2023. As of March 31, 2024, there was $0 in unrecognized compensation expense.
The Company did not grant any options during the
three months ended March 31, 2024, none expired, and none were cancelled. There are no unvested options as of March 31, 2024.
Common Stock issued on exercise of stock options
None.
Sale of Common Stock
None.
Option Grants
During the three months ended March 31, 2024 and
the year ended December 31, 2023, there were no option grants issued, cancelled, or outstanding.
Common Stock Purchase Warrants
For warrants granted to non-employees in exchange
for services, the Company recorded the fair value of the equity instrument using the Black-Scholes pricing model unless the value of the
services is more reliably measurable.
During the three months ended March 31, 2024 and
the year ended December 31, 2023, there were no stock purchase warrants issued, cancelled, or outstanding.
The aggregate intrinsic value of the outstanding
and exercisable warrants at March 31, 2024 and December 31, 2023, respectively, was $0, as there are no outstanding and exercisable warrants.
NOTE 7 – COMMITMENTS AND CONTINGENCIES
Merger with SMS
On January 10, 2022 the Company executed a definitive
agreement to acquire a controlling interest in Sustainable Metal Solutions LLC (“SMS”). The purchase price for the controlling
interest in SMS will be determined based upon the price of ACRG common stock on the date of closing, such date to be decided by the Parties
in good faith after all conditions precedent are met. 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.
Legal Matters
None.
NOTE 8 – related
party TRANSACTIONS
During March 2019, the Company was informed that
a change of control of the Company had occurred. GPR, through its members, including Pure Path Capital Management LLC acquired 1,389,289
shares of common stock (including 90,000 warrants to purchase common stock). The members transferred their shares of common stock of the
Company in exchange for a pro-rata ownership interest in GPR and are listed in the Schedule 13D filed by GPR on March 29, 2019. Since
March 2019, through March 31, 2023, GPR and its members, through several unsolicited transactions purchased another 43,206 shares of common
stock. GPR has not communicated to the Company any plans to change any of the current officers or directors or governing documents. GPR
has expressed the purpose of its acquisition is to assist the Company in resolving its current obligations and claims, as a critical step
in determining its future business plans.
As further detailed in Note 4, in March 2020,
the Company executed a Line of Credit (“LOC”) with GPR, a related party, evidenced by a 10% convertible promissory note. 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. As the LOC, like the Secured Note, is secured by all the Company’s assets including
a pledge of 100% of its subsidiaries’ stock. As such, the LOC’s outstanding balance and accrued interest increase the amount
of secured debt owned by GPR.
The Company entered Into an 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 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. Effective 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 Pure Path and acquired in 2019) and the Flechner Judgment (see the Company’s 10-K for 2022) were rolled into the balance
of the LOC and the Deed of Trust was increased to $250,000,000 and the appropriate paperwork was filed with the requisite government office(s).
NOTE 9 – EARNINGS (LOSS) PER SHARE
Basic net loss per common share is computed by
dividing net loss applicable to common shareholders by the weighted average number of common shares outstanding during the periods presented.
Diluted net loss per common share is determined using the weighted average number of common shares outstanding during the periods presented,
adjusted for the dilutive effect of common stock equivalents, consisting of shares that might be issued upon exercise of options, warrants
and conversion of convertible debt. In periods where losses are reported, the weighted average number of common shares outstanding excludes
common stock equivalents, because their inclusion would be anti-dilutive.
At March 31, 2024 and December 31, 2023, the weighted
average shares from no stock options or warrants outstanding and Convertible Promissory note equivalent shares of $348,240 and $208,615
respectively that, if converted, would be 365,652 and 219,046 respectively, were excluded from the diluted weighted average common share
calculation, due to the antidilutive effect such shares would have on net loss per common share.
NOTE 10 – 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.
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.
ITEM 2. MANAGEMENT’S DISCUSSION AND
ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following management discussion and analysis
of financial condition and results of operations should be read in connection with the accompanying unaudited condensed financial statements
and related notes thereto included elsewhere in this report and the audited consolidated financial statements and notes thereto included
in the Company’s Form 10-K for the fiscal year ended December 31, 2023, as filed with the SEC on July 16, 2024.
Cautionary Notice Regarding Forward Looking
Statements
Readers are cautioned that the following discussion
contains certain forward-looking statements and should be read in conjunction with the “Special Note Regarding Forward-Looking
Statements” appearing at the beginning of this Quarterly Report.
The information contained in this Item 2 contains
forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities
Exchange Act of 1934, as amended. Actual results may materially differ from those projected in the forward-looking statements as a result
of certain risks and uncertainties set forth in this report. Although management believes that the assumptions made and expectations
reflected in the forward-looking statements are reasonable, there is no assurance that the underlying assumptions will, in fact, prove
to be correct or that actual results will not be different from expectations expressed in this report.
As used in this Quarterly Report on Form 10-Q
and unless otherwise indicated, the terms “Company,” “we,” “us,” and “our” refer to American
Clean Resources Group, Inc. and our wholly owned subsidiary, SWIS L.L.C., Aurielle Enterprises Inc. (“AE”), and AE’s
wholly owned subsidiaries Tonopah Custom Processing, Inc. (“TCP”) and Tonopah Resources, Inc. (“TR”). Unless
otherwise specified, all dollar amounts are expressed in United States dollars.
Corporate History
We were incorporated in the State of Colorado
on July 10, 1985 and re-domiciled in Nevada in March 2013. In 2011, we closed a series of transactions, whereby we acquired certain assets
of Shea Mining & Milling, LLC, 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 in order to offer toll milling services of precious minerals. 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 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.
Overview of the Company
We have an office in Lakewood, Colorado and, through
a subsidiary, a property in Tonopah, Nevada. Our business plan is to purchase equipment and build a facility on the Tonopah property to
serve as a permitted custom processing toll milling facility which includes an analytical lab, pyrometallurgical plant, and hydrometallurgical
recovery plant. We are required to obtain several permits before we can begin construction of a small-scale mineral processing facility
and the required additional buildings to conduct permitted processing toll milling activities and commence operations.
Water Pollution Control Permit with Nevada
Department of Environmental Protection
Through Tonopah Custom Processing, Inc. (“TCP”), a Water
Pollution Control Permit (“WPCP”) Application was 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 permit process is currently on hold, the Company will reactivate such application when
it is closer to facilitating mineral processing. 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 our 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 Auto Cad 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 preparation of our planned new 21,875 square foot processing plant and have completed the removal of all the extra
and unnecessary materials and old equipment that has accumulated on the land. We have also refurbished a trailer that will act as our
construction office.
Business Plan
Our business plan is to purchase
equipment and build a facility on the Tonopah property to serve as a permitted custom processing toll milling facility which includes
an analytical lab, pyrometallurgical plant, and hydrometallurgical recovery plant. We are required to obtain several permits before we
can begin construction of a small-scale mineral processing facility and the required additional buildings to conduct permitted processing
toll milling activities and commence operations.
The Company owns tailings located on the Tonopah
property and the rights to some tailings located in Manhattan, Nevada. The Company has not disturbed or processed any of this material,
but recently authorized GPR to examine the economic feasibility of processing the tailings to reclaim their residual content of valuable
metals in exchange for the exclusive right to process the tailings should their economic assessment prove positive. The terms of such
processing to be mutually agreed upon between GPR and the Company in the future based on the results of the assessment.
Products and Services
We plan 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.
SWIS
On September 13, 2023,
the Company executed an agreement to acquire a 100% interest in SWIS, L.L.C. (“SWIS”). SWIS has developed an algorithm
and a “smart” device that provides essential information to improve water quality from Combined Sewer Overflow (“CSO”).
Recently, we have 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. More importantly, SWIS along with other fellow entrepreneurs and environmental
stewards have assembled a team to launch SWIS, with stakeholders from the U of L, Municipal Sewer Districts (“MSD”), and several
state governments. SWIS is actively ready to launch a pilot project to test its modernized approach to CSO Public Notification Programs.
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. SWIS has a management team well versed in the necessary
strategies for market penetration and adoption and looks to test its behavior modification program abilities with the University of Louisville.
Combined Sewer Systems
(“CSS”) were built over a century ago with the intention to divert wastewater away from households. CSS collect 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 CSS.
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 remains 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.
This project would greatly contribute to the universities’
expanding sustainability program and would put UofL and SWIS in an advanced position to compete to be one of six universities in the US
that the EPA will chose as stormwater research hubs. With the completion of a successful Research Project, these stated goals and deliverables
would revolutionize a major component of the $1 trillion water infrastructure issue plaguing a growing population and prime the U of L
and SWIS for nationwide Public Notification Program adoption. The development of our platform will modernize Public Education and Notification
Programs that will significantly reduce the monetary cost and health risk of CSO events for municipalities worldwide. The results to be
discovered at the U of L will give SWIS data and information capable of educating citizens of developed cities across the globe and seamlessly
integrating newly developed nations.
Comparison of the Three Months Ended March
31, 2024 and March 31, 2023
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 $128,608 for the three months
ended March 31, 2024, as compared to $42,119 for the same period in 2023. The increase for the three months ended March 31, 2024, was
principally a result of increased legal expenses, consulting fees and the expenses brought on by SWIS. In the three months ended March
31, 2023, the $42,119 of administrative expenses resulted in the substantial completion of that effort. We anticipate that operating expenses
will increase for fiscal 2024 as we continue to move forward with the merger with SMS.
Other Income and Expenses
We receive monthly lease payments of from American
Tower Corporation for a cellular tower located on our Tonopah land. As such Other Income for the three months ended March 31, 2024, was
$601. Additionally, the gain on derecognition of debt for the three months ended March 31, 2023 of $57,572 was not reproduced in the current
period.
Interest expense for the three months ended March
31, 2024, was $77,896, compared to $212,909 for the same period in 2023. The decrease in interest expense for the three months ended March
31, 2024 is due to the conversion of debt owed to GPR to common stock during the year ended December 31, 2023.
Liquidity and Capital Resources
Liquidity is a measure of an entity’s ability
to secure enough cash to meet its contractual and operating needs as they arise. We have funded our operations and satisfied our capital
requirements through increases in convertible debt pursuant to our LOC during the three months ended March 31, 2024 and 2023. We do not
anticipate generating sufficient net positive cash flows from our operations to fund the next twelve months. We had a working capital
deficit of $3,429,901 at March 31, 2024. Cash was $9,311 at March 31, 2024, as compared to cash of $36,254 at December 31, 2023.
Our cash reserves will not be sufficient to meet
our operational needs and thus, we need to raise additional capital to pay for our operational expenses and provide for capital expenditures.
Our basic operational expenses are currently estimated at approximately $49,000 per month. Above the basic operational expenses, we estimate
that we need approximately $10,000,000 to begin limited toll milling operations. If we are not able to raise additional working capital,
we may have to cease operations altogether.
Operating Activities
Net cash used in operating activities was $(26,943) and $(593) for
the three months ended March 31, 2024 and 2023, respectively. Cash was provided by operating activities during both periods primarily
due to payments advanced under the LOC for operating expenses offset by net increases in accrued liabilities.
Investing Activities
For the three months ended March 31, 2024, net cash used in investing
activities was $0 .
Financing Activities
For the three months ended March 31, 2024, net
cash provided by financing activities was $0. For the three months ended March 31, 2023, net cash provided by financing activities was
also $0.
Off-Balance Sheet Arrangements
During the three months ended March 31, 2024,
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 condensed consolidated financial statements included herein for the three months ended March 31, 2024 and
in the notes to our 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 financial condition and results
of operations.
Impairment of Long-lived Assets
We review our property and mining and mineral
rights subject to amortization and other long-lived assets for impairment whenever events or changes in circumstances indicate that the
carrying amount of an asset class may not be recoverable. Indicators of potential impairment include: an adverse change in legal factors
or in the business climate that could affect the value of the asset; an adverse change in the extent or manner in which the asset is used
or is expected to be used, or in its physical condition; and current or forecasted operating or cash flow losses that demonstrate continuing
losses associated with the use of the asset. If indicators of impairment are present, the asset is tested for recoverability by comparing
the carrying value of the asset to the related estimated undiscounted future cash flows expected to be derived from the asset. If the
expected cash flows are less than the carrying value of the asset, then the asset is considered to be impaired and its carrying value
is written down to fair value, based on the related estimated discounted cash flows. During the year ended December 31, 2018, we combined
the carrying value of our mining and mineral assets as they are inseparable and depend upon each other in value creation. See Note 3.
There were no impairment charges in the three months ended March 31, 2024.
Recent Accounting Standards
During the year ended December 31, 2023, and the
three months ended March 31, 2024 and through the date of this filing, there were several new accounting pronouncements issued by the
Financial Accounting Standards Board. Each of these pronouncements, as applicable, has been or will be adopted by the Company. Management
does not believe the adoption of any of these accounting pronouncements has had or will have a material impact on the Company’s
consolidated financial statements.
Item 3. Quantitative and
Qualitative Disclosures about Market Risk
Not Applicable.
Item 4. 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.
Changes in Internal Control Over Financial
Reporting
There were no changes in our internal control
over financial reporting during the three months ended March 31, 2024, that have materially affected, or are reasonably likely to materially
affect, our internal control over financial reporting.
PART II – OTHER INFORMATION
Item
1. Legal Proceedings
None.
ITEM 1A. RISK FACTORS
As a smaller reporting company, we are not required
to provide the information required by this Item. We note, however, that an investment in our common stock involves a number of very
significant risks. Investors should carefully consider the risk factors included in the “Risk Factors” section of our Annual
Report on Form 10-K for our fiscal year ended December 31, 2023, as filed with SEC on July 16, 2024, in addition to other information
contained in such Annual Report and in this Quarterly Report on Form 10-Q, in evaluating the Company and our business before purchasing
shares of our common stock. The Company’s business, operating results and financial condition could be
adversely affected due to any of those risks.
Item
2. Unregistered Sales of Equity Securities and Use Of Proceeds
None.
Item 3. Defaults upon Senior
Securities
None.
Item 4. Mine Safety Disclosures
Not Applicable.
Item 5. Other Information
None.
Item 6. Exhibits
SIGNATURES
Pursuant to the requirements
of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto
duly authorized.
| |
AMERICAN CLEAN RESOURCES GROUP, INC. |
| |
|
|
| |
By: |
/s/ Tawana
Bain |
| |
|
Tawana Bain |
| |
|
Chief Executive Officer |
| |
|
(Principal Executive Officer) |
| |
|
|
| |
|
Date: July 16, 2024 |
| |
|
|
| |
By: |
/s/ Sharon Ullman |
| |
|
Sharon Ullman |
| |
|
Chief Financial Officer |
| |
|
(Principal Financial Officer and
Principal Accounting Officer) |
| |
|
| |
|
Date: July 16, 2024 |
NONE
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In connection with this Quarterly
Report on Form 10-Q of American Clean Resources Group, Inc. (the “Company”) as filed with the Securities and Exchange Commission
on the date hereof (the “Report”), the undersigned, in the capacity and on the date indicated below, hereby certifies pursuant
to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to his knowledge:
In connection with this Quarterly
Report on Form 10-Q of American Clean Resources Group, Inc. (the “Company”) as filed with the Securities and Exchange Commission
on the date hereof (the “Report”), the undersigned, in the capacity and on the date indicated below, hereby certifies pursuant
to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to her knowledge:
