American Resources Corp (AREC)

[RandyKCMO]

AREC raises $3,900,000 in recent underwriting.

https://finance.yahoo.com/news/american-resources-corporation-announces-pricing-124500998.html

At what I think seems like a pretty high cost.

Each Share/Warrant Unit was placed at $1.05. The warrants exercisable separable and exercisable at $1.20 each... so theoretically at least they could raise another $4.6 million if they are exercised (not sure if they're callable).

My assessment is Maxim must have figured out that AREC was in a cash crunch and had them over a barrel. They needed additional capital to advance their aggressive growth strategy... and of course, that means they needed additional capital.

On the bright side, which I'm having some difficulty seeing at this point, is that Maxim and their big money clients wanted to own a greater percentage of AREC than the funding levels the company had been hoping for (after the initial underwriting at $4.00 per share... I had heard they were hoping future financings would not less than @ $6.00 per share).

We'll guess what? Money talks and big money gets what it wants.

The bright side... Maxim has or will get to the point where they will become a strategic institutional partner... where AREC's success will be their success. They will have both a front-end fairly good control of the public float and a long-term overall ownership interest of the company. The press release talks about a limitation of 5% and 10% ownership from this and future fundings.

So, It's not too fun at this point. However, those who hold and build a sizable position at current levels (70-80 cents per share), will actually be investing at what amounts to the same level as the VC'ists have also invested.

None of the powers that (venture capital folks-- Maxim and ??) are involved because they think they're going to lose money. On the contrary, they believe in the future success of the company that what they're doing well maximize their overall return.

If anyone has a more cohesive explanation for what happened, I'd love to hear it.