SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

~~xQUARTERLY~~X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) ~~OF THE SECURITIES EXCHANGE ACT OF 1934~~

~~For~~OF ~~the~~THE ~~quarterly~~SECURITIES ~~period~~EXCHANGE ~~ended~~ACT ~~March~~OF ~~31, 2010~~1934

~~oTRANSITION~~For ~~REPORT~~the ~~PURSUANT~~quarterly TOperiod ~~SECTION~~ended 13September OR30, ~~15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934~~2010

__TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d)

OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from __________ to __________________

Commission File No. 0-15260

~~Element~~American 21Rare ~~Golf~~Earths ~~Company~~and Materials, Corp.

(Exact name of Registrant as specified in its charter)

Delaware		88-0218411
Nevada		98-0669413
(State or other jurisdiction of incorporation or organization)		(Internal Revenue Service Employer Identification No.)
	200 Queens Quay East, Unit #1, Toronto, Ontario, Canada, M5A 4K9
	(Address of Principal Executive Offices)
	416-362-2121
	Registrant’s telephone number, including area code

Element 21 Golf Company

(Former name and former address, if changed since last Report)

Indicate by check 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 Registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. Yes x No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted 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 and post such files). Yes o No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a small reporting company. See the definition of “large accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer o[ ] Accelerated filer o[ ] Non-accelerated filer o[ ] Smaller reporting company x[ X ]

Check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes o No x

Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the last practicable date, 2123,~~266~~240,~~467~~244 shares of common stock, par value $0.01001 per share as of ~~May~~November 1412, 2010.

~~Element~~American 21Rare ~~Golf~~Earths ~~Company~~and Materials, Corp. and Subsidiaries

(Formerly known as Element 21 Golf Company)

INDEX

		Page Number
PART I.	FINANCIAL INFORMATION
Item 1	Condensed Consolidated Financial Statements:
	Condensed Consolidated Balance Sheets as of March 31, 2010 and June 30, 2009 (Unaudited)	3
	Condensed Consolidated Balance Sheets as of September 30, 2010 and June 30, 2010 (Unaudited)	3
	Condensed Consolidated Statements of Operations for the Nine and Three Months Ended March 31, 2010 and 2009 (Unaudited)	4
	Condensed Consolidated Statements of Operations for the Three Months Ended September 30, 2010 and 2009 (Unaudited)	4
	Condensed Consolidated Statements of Cash Flows for the Nine Months Ended March 31, 2010 and 2009 (Unaudited)	5
	Condensed Consolidated Statement of Changes in Shareholders’ Equity for the Three Months Ended September 30, 2010 (Unaudited)	5
	Notes to Condensed Consolidated Financial Statements (Unaudited)	6
	Condensed Consolidated Statements of Cash Flows for the Three Months Ended September 30, 2010 and 2009 (Unaudited)	6
Item 2	Management's Discussion and Analysis of Financial Condition and Results of Operations	17
	Notes to Condensed Consolidated Financial Statements (Unaudited)	7
Item 3	Quantitative and Qualitative Disclosures About Market Risk	21
Item 2	Management's Discussion and Analysis of Financial Condition and Results of Operations	15
Item 4	Controls and Procedures	21
Item 3	Quantitative and Qualitative Disclosures About Market Risk	18
Item 4	Controls and Procedures	18
PART II	OTHER INFORMATION
Item 2	Unregistered Sales of Equity Securities and Use of Proceeds	21
Item 1	Legal Proceedings	18
Item 3	Defaults upon Senior Securities	21
Item 1A	Risk Factors	18
Item 6	Exhibits	22
Item 2	Unregistered Sales of Equity Securities and Use of Proceeds	19
SIGNATURES		23
Item 3	Defaults upon Senior Securities	19
EXHIBITS		24
Item 4	Removed and Reserved	19
Item 5	Other Information	19
Item 6	Exhibits	19
SIGNATURES		22
EXHIBITS

PART 1 - FINANCIAL INFORMATION

Item 1 - Financial Statements

~~ELEMENT~~AMERICAN 21RARE ~~GOLF~~EARTHS ~~COMPANY~~AND MATERIALS, CORP. AND SUBSIDIARIES

(FORMERLY KNOWN AS ELEMENT 21 GOLF COMPANY)

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

	March 31, 2010				June 30, 2009
	September 30, 2010				June 30, 2010
- ASSETS -
CURRENT ASSETS:
Cash and cash equivalents (includes restricted cash of $72,040, Note 13)		$	331,187			$	1,048,402
Cash and cash equivalents (includes restricted cash of $79,609, Note 13)		$	857,900			$	513,035
Short-term investments			~~251,192~~-				-251,659
Accounts receivable - net of allowance for doubtful accounts of $23,328			706,756				515,577
Accounts receivable - net of allowance for doubtful accounts of $21,037			420,414				789,920
Inventories			1,114,730				1,276,891
Accrued receivable			-				554,143
Prepaid expenses			1,113,071				399,604
Inventories, net			787,910				919,158
TOTAL CURRENT ASSETS			3,516,936				3,240,474
Prepaid expenses and other current assets			360,537				625,143
FIXED ASSETS, NET			65,148				53,690
TOTAL CURRENT ASSETS			2,426,761				3,653,058
INTANGIBLE ASSET SUBJECT TO AMORTIZATION, NET			3,~~726~~336,~~940~~986				-3,533,029
TOTAL ASSETS		$	7,309,024			$	3,294,164
FIXED ASSETS, NET			55,750				60,900
- LIABILITIES AND SHAREHOLDERS’ EQUITY (DEFICIT) -
TOTAL ASSETS		$	5,819,497			$	7,246,987
- LIABILITIES AND SHAREHOLDERS’ EQUITY -
CURRENT LIABILITIES:
Accounts payable		$	~~647~~599,~~680~~302			$	~~815~~681,~~498~~394
Royalty payable			~~980~~1,~~562~~204,103				~~640~~1,~~564~~139,776
Accrued expenses			21,~~290~~005,~~954~~965				1688,~~981,432~~996
Deferred revenue			-				24,000
Accrued expenses – related parties			1,406,992				-
Dividends payable			60,000				-
Deferred revenue			199,721				7,781
Due to Zeroloft Corp.			1,000,000				-
Dividends payable			60,000				60,000
Loan payable – shareholder			~~350~~150,000				~~675~~350,000
Convertible Debenture, net of debt discount of $0			-				229,546
Due to Zeroloft Corp.			334,503				850,000
TOTAL CURRENT LIABILITIES			54,~~329~~960,~~196~~586				43,~~366~~777,~~040~~947
LONG-TERM LIABILITIES:
Accounts payable - related parties			242,076				242,076
Accrued expenses			-				428,505
Loans and advances – officer/shareholder			159,356				156,613
Accrued expenses – related parties			-				1,394,932
TOTAL LONG-TERM LIABILITIES			401,432				398,689
Accounts payable – related parties			242,076				242,076
SHAREHOLDERS’ EQUITY (DEFICIT):
Loans and advances – officer/shareholder			158,738				158,738
Preferred stock, $.10 par value, authorized undesignated 2,447,000 shares, no shares issued and outstanding			-				-
TOTAL LONG-TERM LIABILITIES			400,814				2,224,251
Series A Convertible Preferred stock, $.001 par value, authorized 2,200,000 shares, 2,113,556 shares issued and outstanding as of March 31, 2010 and June 30, 2009			2,114				2,114
SHAREHOLDERS’ EQUITY:
Series B Convertible Preferred stock, $.10 par value, authorized 353,000 shares, 352,945 shares and 294,126 issued and outstanding as of March 31, 2010 and June 30, 2009, respectively			35,295				29,413
Preferred stock, $0.10 par value, authorized undesignated 2,447,000 shares, no shares issued and outstanding			-				-
Common stock, $.01 par value; 300,000,000 shares authorized, 20,756,934 and 9,592,363 issued and outstanding at March 31, 2010 and June 30, 2009, respectively			207,569				95,924
Series A Convertible Preferred stock, $0.001 par value, authorized 2,200,000 shares, 2,113,556 shares issued and outstanding as of September 30, 2010 and June 30, 2010			2,114				2,114
Additional paid-in capital			31,398,889				24,065,711
Series B Convertible Preferred stock, $0.10 par value, authorized 353,000 shares, 352,945 shares issued and outstanding as of September 30, 2010 and June 30, 2010			35,295				35,295
Accumulated deficit			(30,065,471	)			(25,663,727	)
Common stock, $0.001 par value; 300,000,000 shares authorized, 22,685,550 and 21,877,608 issued and outstanding at September 30, 2010 and June 30, 2010, respectively			22,686				21,878
TOTAL SHAREHOLDERS’ EQUITY (DEFICIT)			1,578,396				(1,470,565	)
Additional paid-in capital			32,646,842				32,424,471
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY (DEFICIT)		$	7,309,024			$	3,294,164
Accumulated deficit			(32,248,840	)			(31,238,969	)
TOTAL SHAREHOLDERS’ EQUITY			458,097				1,244,789
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY		$	5,819,497			$	7,246,987

See notes to condensed consolidated financial statements

~~ELEMENT~~AMERICAN 21RARE ~~GOLF~~EARTHS ~~COMPANY~~AND MATERIALS, CORP. AND SUBSIDIARIES

(FORMERLY KNOWN AS ELEMENT 21 GOLF COMPANY)

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

FOR THE ~~NINE AND~~ THREE MONTHS ENDED ~~MARCH~~SEPTEMBER 3130, 2010 AND 2009

(Unaudited)

	Nine months Ended March 31,						Three months Ended March 31,
	2010			2009
	2010			2009			2010			2009
REVENUES	$	650,902		$	758,818
REVENUES	$	2,661,631		$	2,811,328		$	1,001,178		$	1,825,421
COSTS OF SALES		425,978			424,465
COSTS OF SALES		1,822,254			1,594,589			954,874			959,542
GROSS PROFIT		224,924			334,353
GROSS PROFIT		839,377			1,216,739			46,304			865,879
GENERAL AND ADMINISTRATIVE EXPENSES		1,171,183			835,241
GENERAL AND ADMINISTRATIVE EXPENSES		4,085,855			2,468,407			2,037,810			910,591
LOSS FROM OPERATIONS		(946,259	)		(500,888	)
LOSS FROM OPERATIONS		(3,246,478	)		(1,251,668	)		(1,991,506	)		(44,712	)
OTHER INCOME (EXPENSE)
OTHER INCOME (EXPENSE)
Interest income		224			302
Interest income		1,257			2,888			482			259
Interest expense		(3,836	)		(90,829	)
Interest expense		(118,845	)		(104,875	)		(12,041	)		(63,284	)
		(3,612	)		(90,527	)
Derivative income		-			95,250			-			(8,275	)
LOSS BEFORE PROVISION FOR INCOME TAXES		(949,871	)		(591,415	)
		(117,588	)		(6,737	)		(11,559	)		(71,300	)
Provision for income taxes		-			-
LOSS BEFORE PROVISION FOR INCOME TAXES		(3,364,066	)		(1,258,405	)		(2,003,065	)		(116,012	)
NET LOSS		(949,871	)		(591,415	)
Provision for income taxes		-			-			-			-
Dividends on Series B Preferred Convertible stock		(60,000	)		(917,678	)
NET LOSS	$	(3,364,066	)	$	(1,258,405	)	$	(2,003,065	)	$	(116,012	)
NET LOSS AVAILABLE TO COMMON STOCKHOLDERS	$	(1,009,871	)	$	(1,509,093	)
Basic and diluted loss per share	$	(0.25	)	$	(0.16	)	$	(0.12	)	$	(0.01	)
Basic and diluted net loss available to common stockholders per share	$	(0.04	)	$	(0.13	)
Basic and diluted weighted average shares outstanding		1322,~~411~~269,~~080~~667			811,~~093~~526,~~543~~603			~~16,409,458~~			~~9,032,778~~

See notes to condensed consolidated financial statements.

~~ELEMENT~~AMERICAN 21RARE ~~GOLF~~EARTHS ~~COMPANY~~AND MATERIALS, CORP. AND SUBSIDIARIES

~~CONDENSED~~(FORMERLY ~~CONSOLIDATED~~KNOWN ~~STATEMENTS~~AS OFELEMENT ~~CASH~~21 ~~FLOWS~~GOLF COMPANY)

~~FOR~~CONDENSED ~~THE~~CONSOLIDATED ~~NINE~~STATEMENT ~~MONTHS~~OF ~~ENDED~~CHANGES ~~MARCH~~IN ~~31,~~SHAREHOLDERS' ~~2010 AND 2009~~EQUITY

FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2010

(Unaudited)

	2010			2009
	Series A Convertible Preferred Stock			Series B Convertible Preferred Stock			Number of Shares in Common Stock		Common Stock		Additional Paid-In Capital		Accumulated Deficit			Total Shareholders’ Equity
CASH FLOWS FROM OPERATING ACTIVITIES:
Balance June 30, 2010	$	2,114		$	35,295			21,877,608	$	21,878	$	32,424,471	$	(31,238,969	)	$	1,244,789
Net loss	$	(3,364,066	)	$	(1,258,405	)
Issuance of common stock for services		-			-			616,858		617		146,341		-			146,958
Adjustments to reconcile net loss to net cash (used in) operating activities:
Issuance of stock warrants for services		-			-			-		-		16,221		-			16,221
Compensatory common stock and warrants		2,901,334			1,394,217
Dividends on Series B Convertible Preferred stock, paid in common stock		-			-			191,084		191		59,809		(60,000	)		-
Depreciation		24,086			47,525
Net loss		-			-			-		-		-		(949,871	)		(949,871	)
Amortization of intangible asset		161,948			-
Balance September 30, 2010	$	2,114		$	35,295			22,685,550	$	22,686	$	32,646,842	$	(32,248,840	)	$	458,097
Amortization of debt discount		70,454			(197,344	)
Non-cash foreign exchange		2,743			-
Derivative liability income		-			(117,284	)
Accrued interest		(1,192	)		74,470
Changes in:
Accounts receivable		(191,179	)		(494,873	)
Inventories		162,161			284,936
Prepaid expenses		(713,467	)		(120,551	)
Accounts payable, accrued expenses and royalty payable		536,957			34,741
Deferred revenue		(24,000	)		(36,720	)
Net cash used in operating activities		(434,221	)		(389,288	)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of short-term investment		(250,000	)		-
Purchase of fixed assets		(35,544	)		-
Net cash used in investing activities		(285,544	)		-
CASH FLOWS FROM FINANCING ACTIVITIES:
Loans and advances received by officers/stockholders		-			64,996
Repayment of short term debt		(325,000	)		(50,000	)
Proceeds from issuance of convertible note		-			300,000
Exercise of warrants		327,550			-
Net cash provided by financing activities		2,550			314,996
DECREASE IN CASH AND CASH EQUIVALENTS		(717,215	)		(74,292	)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD		1,048,402			770,602
CASH AND CASH EQUIVALENTS, END OF PERIOD	$	331,187		$	696,310

SUPPLEMENTAL CASH FLOW INFORMATION:
Interest paid	$	-	$	-
Income taxes paid	$	-	$	-
Due to Zeroloft Corp. issued for intangible asset	$	1,000,000	$	-
Issue of shares of common stock for intangible asset	$	2,888,888	$	-
Issue of shares of common stock for dividends	$	60,000	$	-

See notes to condensed consolidated financial statements.

~~ELEMENT~~AMERICAN 21RARE ~~GOLF~~EARTHS ~~COMPANY~~AND MATERIALS, CORP. AND SUBSIDIARIES

(FORMERLY KNOWN AS ELEMENT 21 GOLF COMPANY)

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2010 AND 2009

(Unaudited)

	2010			2009
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$	(949,871	)	$	(591,415	)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Compensatory common stock and warrants		163,179			361,697
Depreciation		5,150			9,935
Amortization of intangible asset		196,043			-
Amortization of debt discount		-			70,454
Non-cash foreign exchange		-			1,377
Accrued interest		(216	)		-
Changes in:
Accounts receivable		369,506			277,417
Inventories		131,248			(241,624	)
Prepaid expenses and other current assets		264,606			30,413
Accounts payable, accrued expenses and royalty payable		(117,241	)		(56,589	)
Deferred revenue		303,171			(24,000	)
Due to Zeroloft		(72,585	)		-
Net cash provided by (used in) operating activities		292,990			(162,335	)

CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from short-term investments		251,875			-
Net cash provided by financing activities		251,875			-

CASH FLOWS FROM FINANCING ACTIVITIES:
Repayment of loan payable - shareholder		(200,000	)		(150,000	)
Net cash used in financing activities		(200,000	)		(150,000	)

INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS		344,865			(312,335	)

CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD		513,035			1,048,402

CASH AND CASH EQUIVALENTS, END OF PERIOD	$	857,900		$	736,067

SUPPLEMENTAL CASH FLOW INFORMATION:
Interest paid	$	-		$	-
Income taxes paid	$	-		$	-
Issuance of shares of common stock for dividends	$	60,000		$	857,678
Repayment of amount due to Zeroloft Corp. through application of receivable from Zeroloft Corp. for certain reimbursable costs	$	442,912		$	-

See notes to condensed consolidated financial statements.

AMERICAN RARE EARTHS AND MATERIALS, CORP. AND SUBSIDIARIES

(FORMERLY KNOWN AS ELEMENT 21 GOLF COMPANY)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

NOTE 1 NATURE OF BUSINESS AND OPERATIONS

~~Element~~American 21Rare ~~Golf~~Earths ~~Company~~and Materials, Corp. and subsidiaries (the “Company” and or “~~Element 21~~AREM”) is a developer of applications of high tech materials used in the sports industry including advanced Scandium Alloy golf products, bio-fiber fishing equipment and Zeroloft Aerogel insulation for sports apparel and footwear. New materials applications developed by ~~Element~~AREM 21 are incorporated by manufacturers and original equipment manufacturers (“OEM”) into their product lines including ~~Element 21~~AREM’s own line of Scandium Sc™ TM golf and Carrot Stix™ TM fishing equipment.

~~Element~~AREM 21 has developed proprietary Scandium Alloys, bio-fiber composites and ~~ZeroLoft~~Zeroloft insulation manufacturing paths and product engineering for various sports, apparel and footwear applications. ~~Element~~AREM 21 secured international recognition by winning several top honors at shows, and recording wins for professional athletes using equipment manufactured by ~~Element~~AREM 21 or incorporating ~~Element~~AREM 21 materials.

In September of 2002, BRL Holdings, Inc. (“BRL”) acquired Element 21 Technologies, Inc. (“Technologies”) under an Amended and Restated Agreement (the “Agreement”) wherein BRL issued 106,181 shares of its common stock to shareholders of Technologies and assumed Technologies’ obligations under option agreements allowing for the purchase of 16,080 additional shares of common stock. Technologies was a development stage company formed to design, develop and market AREM alloy golf clubs. This acquisition was accounted for as a reverse acquisition using the purchase method of accounting, as the shareholders of Technologies assumed control immediately following the acquisition.

In October 2003, BRL Holdings, Inc. changed its name to Element 21 Golf Company (“Element 21”).

Upon the closing of the Technologies acquisition, as discussed above, Element 21 reported as a development stage enterprise effective September 17, 2002. During fiscal year 2005, Element 21 commenced active operations and began reporting revenues during the last quarter of the year.

The first products manufactured using the Company’s proprietary golf technology have been produced and the Company commenced distribution to wholesalers and retail markets during the last quarter of its fiscal year ended June 30, 2006.

In ~~June,~~May 2007, the ~~Company~~Board ~~expanded~~of ~~into~~Directors ~~recreational~~adopted ~~fishing~~resolutions ~~equipment.~~approving Onan ~~June~~amendment ~~21,~~and ~~2007, the Company entered into~~ a ~~non-exclusive,~~majority ~~world-wide~~of ~~patent~~shareholders ~~license~~also ~~with~~approved ~~Advanced~~amending ~~Light~~the ~~Alloys~~AREM’s ~~Corporation,~~Certificate aof ~~Barbados~~Incorporation ~~Corporation (“Advanced”) pursuant~~ to ~~which~~increase ~~Element~~the 21number ~~received~~of aauthorized ~~license~~shares ~~from~~of ~~Advanced~~capital stock to ~~make~~300, ~~use~~000,000 ~~and~~shares ~~sell fishing equipment utilizing certain~~ of ~~Advanced’s~~common ~~technologies.~~stock ~~The~~and ~~Carrot Stix line of fishing rods is sold in major box stores (such as Bass Pro~~5, ~~Gander Mountain~~000,000 ~~Cabelas~~shares ~~and~~of ~~Academy)~~preferred ~~and smaller retailers across North America and internationally~~stock.

In June 2007, the Company expanded into recreational fishing equipment. On ~~January~~June 1421, ~~2010~~2007, the Company ~~signed~~entered aninto a non-exclusive, ~~Trademark~~worldwide ~~License~~patent ~~and~~license ~~Product~~with ~~Distribution~~Advanced ~~Agreement~~Light ~~(“License~~Alloys ~~Agreement”)~~Corporation, ~~with~~a ~~Zeroloft~~Barbados ~~Corp.~~Corporation (“Advanced”) pursuant to which ~~the~~AREM ~~Company~~ received ana ~~exclusive~~ license ~~for~~from ~~the~~Advanced ~~applications~~to make, use, and sell fishing equipment utilizing certain of ~~the~~Advanced’s ~~Zeroloft~~technologies. ~~Aspen~~The ~~Aerogels~~Carrot ~~patented~~Stix™ ~~technology~~line of fishing rods is sold in ~~the~~big ~~sports~~box ~~apparel~~retail stores (such as Bass Pro, Gander Mountain, Cabelas and ~~footwear~~Academy) ~~market~~and smaller retailers across North America and internationally.

On April 25, 2008, the AREM effected a 1 for 20 reverse stock split. All share and per share amounts in this report have been retroactively restated to reflect the 1 for 20 reverse split.

On January 14, 2010, the Company signed an exclusive Trademark License and Product Distribution Agreement (“License Agreement”) with Zeroloft Corp. pursuant to which the Company received an exclusive license for the applications of the Zeroloft Aspen Aerogels patented technology in the sports apparel and footwear market.

On July 12, 2010, Element 21 Golf Company effected a re-domestication merger from the State of Delaware to the State of Nevada and changed its name to American Rare Earths and Materials, Corp.

The Company is subject to a number of risks similar to those of other companies in the early stages of operations. Principal among these risks are dependencies on key individuals, competition from other current or substitute products and larger companies, the successful marketing of its products and the need to obtain adequate additional financing necessary to fund future operations.

~~NOTE 2 BASIS OF PREPARATION~~7

~~Pursuant~~AMERICAN toRARE ~~the~~EARTHS ~~rules~~AND ~~and regulations of the Securities and Exchange Commission for Form 10-Q~~MATERIALS, the consolidated financial statements, footnote disclosures and other information normally included in consolidated financial statements prepared in accordance with generally accepted accounting principles have been condensed or omittedCORP. ~~The~~AND financial statements contained in this report are unaudited but, in the opinion of management, reflect all adjustments, consisting of only normal recurring adjustments necessary for a fair presentation of the condensed consolidated financial statements. All significant inter-company accounts and transactions have been eliminated in consolidation. The results of operations for any interim period are not necessarily indicative of results for the full year. The balance sheet at June 30, 2009 has been derived from the audited consolidated financial statements at that date but does not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements.SUBSIDIARIES

~~For~~(FORMERLY ~~further~~KNOWN ~~information,~~AS ~~refer~~ELEMENT to21 ~~the~~GOLF ~~consolidated financial statements and notes thereto included in the Company’s Form 10-K for the year ended June 30, 2009.~~COMPANY)

The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, 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.

ELEMENT 21 GOLF COMPANY AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

NOTE 2 BASIS OF PREPARATION ~~(continued)~~

~~Inventories,~~Pursuant ~~which~~to ~~consist~~the ~~primarily~~rules and regulations of ~~goods~~the ~~held~~Securities and Exchange Commission for ~~resale~~Form 10-Q, the condensed consolidated financial statements, footnote disclosures and other information normally included in condensed consolidated financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted. The condensed consolidated financial statements contained in this report are ~~stated~~unaudited atbut, in the ~~lower~~opinion of ~~cost~~management, ~~(first-in~~reflect all adjustments, ~~first-out~~consisting ~~method)~~of oronly ~~market~~normal recurring adjustments necessary for a fair presentation of the condensed consolidated financial statements. All significant inter-company accounts and transactions have been eliminated on consolidation. The results of operations for any interim period are ~~comprised~~not asnecessarily ~~follows:~~indicative of results for the full year. The condensed consolidated balance sheet at June 30, 2010 has been derived from the audited consolidated financial statements at that date but does not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements.

	March 31, 2010			June 30, 2009
Finished goods	$	1,350,582		$	1,230,297
Components		222,814			224,594
Less: Provision for obsolescence		(458,666	)		(178,000	)
Total	$	1,114,730		$	1,276,891

For further information, refer to the consolidated financial statements and notes thereto included in the Company’s Form 10-K for the year ended June 30, 2010. Interest payable of $137,624 has been reclassified from accounts payable to accrued expenses in the comparative June 30, 2010 condensed consolidated balance sheet presented.

Inventories, which consist primarily of goods held for resale, are stated at the lower of cost (weighted-average method) or market and are comprised as follows:

	September 30, 2010			June 30, 2010
Finished goods	$	1,107,590		$	1,238,370
Components		222,515			222,983
Less: Provision for obsolescence		(542,195	)		(542,195	)
Total	$	787,910		$	919,158

NOTE 3 GOING CONCERN

These condensed consolidated financial statements have been presented on the basis that the Company is a going concern, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The Company began generating revenues in fiscal 2005. Even with the generation of revenues from the sale of golf, fishing and ~~fishing~~Zeroloft products now being produced and sold ~~and Zeroloft royalties and management fees~~, the Company expects to incur expenses in excess of revenues for an indefinite period.

Key financial information follows:

	Nine Months Ended March 31, 2010			Year Ended June 30, 2009
	As at and for the three months ended September 30, 2010			As at and for the year ended June 30, 2010
Negative working capital	$	(12,~~812~~533,~~260~~825	)	$	(1124,~~125,566~~889	)
Net loss	$	(3949,~~364,066~~871	)	$	(14,~~593~~477,~~160~~564	)
Accumulated deficit	$	(3032,~~065~~248,~~471~~840	)	$	(2531,~~663~~238,~~727~~969	)

As shown in the accompanying condensed consolidated financial statements, during the ~~nine~~three months ended ~~March~~September 3130, 2010, the Company incurred a net loss of $3949,~~364,066~~871 and generated cash ~~utilized~~from in operations during this period was $~~434~~292,~~221~~990. ~~For the fiscal year ended June 30, 2009, the Company realized a net loss of $1,593,160 and utilized cash of $96,224 from operations.~~

These factors, among others, raise substantial doubt about the Company’s ability to continue as a going concern. The unaudited condensed consolidated financial statements do not include any adjustments relating to the recoverability and classification of assets or the amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.

The Company’s continuation as a going concern is dependent upon its ability to generate sufficient cash flow and meet its obligations on a timely basis and ultimately attain profitability. Since acquiring the proprietary technology golf development business, the Company has depended on financings and consulting services from consultants engaged by the Company some of whom have agreed to accept full or partial compensation for services with the share-based compensation rather than cash.

Absent these continuing advances, services and financings, the Company could not continue with the development and marketing of its golf and fishing products and Zeroloft. Managements’ plans for the Company include more aggressive marketing, obtaining additional capital to fund operations and other strategies designed to optimize stockholder value. However, no assurance can be given that management will be successful in fulfilling all components of its plan. The failure to achieve these plans will have a material adverse effect on the Company’s consolidated financial position, results of operations and ability to continue as a going concern.

ELEMENT 21 GOLF COMPANY AND SUBSIDIARY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

NOTE 4 RECENT ACCOUNTING PRONOUNCEMENTS AFFECTING THE COMPANY

Effective July 1, 2009, the Company adopted the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 105-10, Generally Accepted Accounting Principles – Overall (“ASC 105-10”). ASC 105-10 establishes the FASB Accounting Standards Codification (the “Codification”) as the source of authoritative accounting principles recognized by the FASB to be applied by nongovernmental entities in the preparation of financial statements in conformity with U.S. GAAP. Rules and interpretive releases of the SEC under authority of federal securities laws are also sources of authoritative U.S. GAAP for SEC registrants. All guidance contained in the Codification carries an equal level of authority. The Codification superseded all existing non-SEC accounting and reporting standards. All other non-grandfathered, non-SEC accounting literature not included in the Codification is non-authoritative. The FASB will not issue new standards in the form of Statements, FASB Staff Positions or Emerging Issues Task Force Abstracts. Instead, it will issue Accounting Standards Updates (“ASUs”). The FASB will not consider ASUs as authoritative in their own right. ASUs will serve only to update the Codification, provide background information about the guidance and provide the bases for conclusions on the change(s) in the Codification. References made to FASB guidance throughout this document have been updated for the Codification.

In September 2006, the Financial Accounting Standards Board ("FASB") issued SFAS No. 157, Fair Value Measurements ("SFAS 157"), which was primarily codified into Topic 820 in the Accounting Standards Codification ("ASC"). SFAS 157 defines fair value, establishes a framework for measuring fair value, and expands disclosures about fair value measurements required under other accounting pronouncements, but does not change existing guidance as to whether or not an instrument is carried at fair value. It also establishes a fair value hierarchy that prioritizes information used in developing assumptions when pricing an asset or liability. SFAS 157 is effective for financial statements issued for fiscal years beginning after November 15, 2007, and interim periods within those fiscal years. In February 2008, FASB issued Staff Position No. 157-2, which provides a one-year delayed application of SFAS 157 for nonfinancial assets and liabilities, except for items that are recognized or disclosed at fair value in the financial statements on a recurring basis (at least annually). The Company's adoption of the provisions of SFAS 157 with respect to the financial assets and liabilities measured at fair value did not have a material impact on the fair value measurements or the condensed consolidated financial statements. In accordance with SFAS 157-2, the Company's adoption did not have a material impact on nonfinancial assets and nonfinancial liabilities, including, but not limited to, the valuation of the Company's reporting units for the purpose of assessing goodwill impairment, the valuation of property and equipment when assessing long-lived asset impairment, and the valuation of assets acquired and liabilities assumed in business combinations. In October 2008, FASB issued SFAS 157-3, Determining the Fair Value of a Financial Asset When the Market for That Asset is Not Active, which became effective upon issuance, including periods for which financial statements have not been issued. SFAS 157-3 clarifies the application of SFAS 157. The Company's adoption of SFAS 157-3 in determination of fair values did not have a material impact on the condensed consolidated financial statements

In December 2007, FASB issued SFAS No. 141R (revised 2007), Business Combinations ("SFAS 141R"), which was primarily codified into Topic 805 Business Combinations in the ASC. The statement retains the purchase method of accounting for acquisitions, but requires a number of changes, including changes in the way assets and liabilities are recognized in the purchase accounting. It also

changes the recognition of assets acquired and liabilities assumed arising from contingencies, requires the capitalization of in-process research and development at fair value, and requires the expensing of acquisition-related costs as incurred. SFAS 141R was effective for us beginning July 1, 2009 and will apply prospectively to business combinations completed after that date.

In December 2007, FASB issued SFAS No. 160, Noncontrolling Interests in Consolidated Financial Statements, an amendment of ARB 51 ("SFAS 160"), which was primarily codified in to Topic 810 Consolidations in the ASC, and changes the accounting and reporting for minority interests. Minority interests will be recharacterized as noncontrolling interests and will be reported as a component of equity separate from the parent's equity, and purchases or sales of equity interests that do not result in a change in control will be accounted for as equity transactions. In addition, net income attributable to the noncontrolling interest will be included in condensed consolidated net income on the face of the income statement and, upon a loss of control, the interest sold, as well as any interest retained, will be recorded at fair value with any gain or loss recognized in earnings. SFAS 160 was effective for us beginning July 1, 2009 and did not have a material impact on the condensed consolidated financial statements.

~~ELEMENT~~AMERICAN 21RARE ~~GOLF~~EARTHS ~~COMPANY~~AND MATERIALS, CORP. AND ~~SUBSIDIARY~~SUBSIDIARIES

(FORMERLY KNOWN AS ELEMENT 21 GOLF COMPANY)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

NOTE ~~4 RECENT~~3 GOING ~~ACCOUNTING~~CONCERN ~~PRONOUNCEMENTS AFFECTING THE COMPANY~~ (Continued)

InThese ~~March 2008~~factors, ~~FASB~~among ~~issued~~others, ~~SFAS~~raise ~~No.~~substantial ~~161,~~doubt ~~Disclosures~~ about ~~Derivative~~the ~~Instruments~~Company’s ~~and~~ability ~~Hedging~~to ~~Activities—an~~continue ~~amendment~~as ofa ~~FASB~~going ~~Statement No~~concern. The ~~133~~unaudited ~~("SFAS~~condensed ~~161"),~~consolidated ~~which~~financial ~~was~~statements ~~primarily~~do ~~codified~~not ~~into~~include ~~Topic~~any ~~815~~adjustments ~~Derivatives~~relating ~~and~~to ~~Hedging in~~ the ~~ASC. SFAS~~recoverability ~~161 requires enhanced disclosures about an entity's derivative~~ and ~~hedging~~classification ~~activities,~~of ~~including~~assets ~~(i)~~or ~~how~~the ~~and~~amounts ~~why an entity uses derivative instruments, (ii) how derivative instruments~~ and ~~related~~classification ~~hedged~~of ~~items~~liabilities ~~are~~that ~~accounted~~might ~~for~~be ~~under~~necessary ~~SFAS~~should ~~No.~~the ~~133,~~Company ~~and~~be ~~(iii)~~unable ~~how~~to ~~derivative~~continue ~~instruments~~as ~~and related hedged items affect an entity's financial position, financial performance, and cash flows. SFAS 161 was effective for us beginning July 1, 2009 and did not have~~ a ~~material~~going ~~impact on the condensed consolidated financial statements~~concern.

InThe ~~May~~Company’s ~~2009,~~continuation ~~FASB~~as ~~issued~~a ~~SFAS~~going ~~No.~~concern ~~165,~~is ~~Subsequent~~dependent ~~Events,~~upon ~~which~~its ~~was~~ability ~~primarily codified into Topic 855 Subsequent Events in the ASC. This standard is intended~~ to ~~establish~~generate ~~general~~sufficient ~~standards~~cash offlow ~~accounting for~~ and ~~disclosures~~meet ofits ~~events~~obligations ~~that~~on ~~occur~~a ~~after~~timely ~~the~~basis ~~balance~~and ~~sheet~~ultimately ~~date~~attain ~~but before financial statements are issued or are available to be issued~~profitability. ~~Specifically,~~Since ~~this~~acquiring ~~standard sets forth~~ the ~~period~~proprietary ~~after~~technology ~~the~~golf ~~balance~~development ~~sheet date during which management of a reporting entity should evaluate events or transactions that may occur for potential recognition or disclosure in the financial statements~~business, the ~~circumstances~~Company ~~under~~has ~~which~~depended anon ~~entity~~financings ~~should~~and ~~recognize~~consulting ~~events~~services orfrom ~~transactions~~consultants ~~occurring~~engaged ~~after~~by the ~~balance~~Company ~~sheet~~some ~~date~~of inwhom ~~its~~have ~~financial~~agreed ~~statements,~~to ~~and~~accept ~~the~~full ~~disclosures that an entity should make about events~~ or ~~transactions~~partial ~~that~~compensation ~~occurred after the balance sheet date. SFAS No. 165 is effective~~ for ~~fiscal~~services ~~years and interim periods ended after June 15, 2009.~~with Weshare-based ~~adopted~~compensation ~~this~~rather ~~statement~~than ~~effective July 1, 2009~~cash.

InAbsent ~~April~~these ~~2009~~continuing advances, ~~the~~services ~~FASB~~and ~~issued~~financings, ~~FSP~~the ~~No.~~Company ~~FAS~~could ~~107-1~~not ~~and~~continue ~~APB~~with ~~28-1,~~the ~~Interim~~development ~~Disclosures~~and ~~about~~marketing ~~Fair Value~~ of ~~Financial~~its ~~Instruments,~~golf ~~which~~and ~~were~~fishing ~~primarily~~products ~~codified~~and ~~into~~Zeroloft. ~~Topic~~Managements’ ~~825~~plans ~~Fair~~for ~~Value Option into~~ the ~~ASC. This~~Company ~~FSP~~include ~~amends~~more ~~FASB~~aggressive ~~Statement No. 107~~marketing, toobtaining ~~require~~additional ~~disclosures~~capital ~~about~~to ~~fair~~fund ~~values~~operations ofand ~~financial~~other ~~instruments~~strategies ~~for~~designed ~~interim~~to ~~reporting~~optimize ~~periods~~stockholder asvalue. ~~well~~However, asno inassurance ~~annual~~can ~~financial~~be ~~statements.~~given ~~The~~that ~~FSP~~management ~~also~~will ~~amends~~be ~~APB~~successful ~~Opinion~~in ~~No.~~fulfilling 28all tocomponents ~~require~~of ~~those~~its ~~disclosures~~plan. inThe ~~summarized~~failure ~~financial~~to ~~information~~achieve atthese ~~interim~~plans ~~reporting~~will ~~periods.~~have ~~This~~a ~~FSP~~material ~~was~~adverse ~~effective~~effect ~~for~~on ~~interim~~the ~~reporting~~Company’s ~~periods~~consolidated ~~ending~~financial ~~after June 15~~position, ~~2009.~~results ~~The adoption~~ of ~~this~~operations ~~FSP~~and ~~did~~ability ~~not~~to ~~affect~~continue ~~the~~as ~~Company’s~~a ~~condensed~~going ~~consolidated financial statements~~concern.

InNOTE ~~September~~4 RECENT ~~2009,~~ACCOUNTING ~~the~~PRONOUNCEMENTS ~~FASB~~AFFECTING ~~issued~~THE ASC 820-10 Measuring Liabilities at Fair Value (“ASC 820-10”). ASC 820-10 provides additional guidance on how companies should measure liabilities at fair value. Specifically, the fair value of a liability is not adjusted to reflect the impact of contractual restrictions that prevent its transfer. ASC 820-10 was adopted by the Company in the third quarter of fiscal year 2010. The Company evaluated the impact of ASC 820-10 and its adoption did not have a material impact on financial position, results of operations, and cash flows.COMPANY

In October 2009, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2009-13, “Multiple Deliverable Revenue Arrangements — A Consensus of the FASB Emerging Issues Task Force.” This update provides application guidance on whether multiple deliverables exist, how the deliverables should be separated and how the consideration should be allocated to one or more units of accounting. This update establishes a selling price hierarchy for determining the selling price of a deliverable. The selling price used for each deliverable will be based on vendor-specific objective evidence, if available, third party evidence if vendor-specific objective evidence is not available, or estimated selling price if neither vendor-specific or third-party evidence is available. The Company ~~will~~applied ~~be required to apply~~ this guidance prospectively for revenue arrangements entered into or materially modified after ~~January~~July 1, ~~2011~~2010. The ~~Company~~adoption isof ~~currently~~ASU ~~evaluating~~2009-13 ~~the~~did ~~impact~~not ofhave ~~the~~a ~~provisions~~material ofimpact ~~ASU 2009-13~~ on the Company’s condensed consolidated financial statements.

In December 2009, the FASB issued ~~Accounting Standards Update (“~~ASU”) No. 2009-17, “Improvements to Financial Reporting by Enterprises Involved with Variable Interest Entities” (“ASU 2009-17”). ASU 2009-17 changes how a reporting entity determines when an entity that is insufficiently capitalized or is not controlled through voting (or similar rights) should be consolidated. The determination of whether a reporting entity is required to consolidate another entity is based on, among other things, the other entity’s purpose and design and the reporting entity’s ability to direct the activities of the other entity that most significantly impact the other entity’s economic performance. The new standard requires a number of new disclosures, including additional disclosures about the reporting entity’s involvement with variable interest entities and any significant changes in risk exposure due to that involvement. A reporting entity is required to disclose how its involvement with a variable interest entity affects the reporting entity’s financial statements. ASU 2009-17 is effective at the start of a reporting entity’s first fiscal year beginning after November 15, 2009, or July 1, 2010, for ~~Element 21~~AREM. Based on the Company’s evaluation of ASU 2009-17, the adoption of this ~~statement~~update is not expected to impact the Company’s condensed consolidated financial statements.

~~ELEMENT~~AMERICAN 21RARE ~~GOLF~~EARTHS ~~COMPANY~~AND MATERIALS, CORP. AND ~~SUBSIDIARY~~SUBSIDIARIES

(FORMERLY KNOWN AS ELEMENT 21 GOLF COMPANY)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

NOTE 4 RECENT ACCOUNTING PRONOUNCEMENTS AFFECTING THE COMPANY (Continued)

In April 2010, the FASB issued ASU No. 2010-13, “Compensation – Stock Compensation (Topic 718): “Effect of Denominating the Exercise Price of a Share-Based Payment Award in the Currency of the Market in Which the Underlying Equity Security Trades” (“ASU 2010-13”). ASU 2010-13 provides guidance on the classification of a share-based payment award as either equity or a liability. A share-based payment that contains a condition that is not a market, performance, or service condition is required to be classified as a liability. ASU 2010-13 is effective for fiscal years, and interim periods within those fiscal years, beginning on or after December 15, 2010 and is not expected to have a significant impact on the Company’s condensed consolidated financial statements.

NOTE 5 INTANGIBLE ASSET SUBJECT TO AMORTIZATION, NET

Intangible asset represents a Trademark License and Product Distribution Agreement (“License Agreement”) entered into with Zeroloft Corp. (“Zeroloft”) on January 14, 2010. License Agreement acquisition costs ~~were~~was $3,~~726~~888,~~940~~888 ~~and $0~~ at ~~March~~September 3130, 2010 and at June 30, ~~2009, respectively~~2010. These costs are presented on the condensed consolidated balance sheet net of accumulated amortization of $~~161~~551,~~948~~902 and $0355,859 at ~~March~~September 3130, 2010 and June 30, ~~2009~~2010, respectively. The Company amortizes the License Agreement using the straight line method over its estimated remaining useful life, which is estimated at 5 years. The Company recorded amortization expense of $~~161~~196,~~948~~043 and $0 related to intangible asset subject to amortization during the ~~nine~~three month periods ended ~~March~~September 3130, 2010 and ~~March 31,~~ 2009, respectively. In each of the next five years annualized amortization expense is projected to be $777,778 per year.

~~Within~~The ~~the~~Company ~~field~~evaluates ofits ~~sport~~long-lived ~~wear~~assets ~~apparel,~~for ~~footwear~~indicators ~~and~~of ~~related~~possible ~~sports~~impairment. ~~specialty~~Intangible ~~items,~~asset ~~the~~subject ~~Company obtained: (i) an exclusive license (the “License”)~~ to ~~the~~amortization ~~Zeroloft~~held ~~Aspen Aerogels trademarks;~~ and ~~(ii)~~used aby ~~limited,~~the ~~worldwide,~~Company ~~exclusive~~is ~~right~~reviewed tofor ~~distribute~~impairment ~~the~~whenever ~~products~~events ~~bearing~~or ~~the~~changes ~~Zeroloft~~in ~~Aspen~~circumstances ~~Aerogels~~indicate ~~Trademark~~that ~~for~~its ~~production~~net ~~and~~book ~~sales~~value ofmay ~~items~~not inbe ~~such field~~recoverable. ~~The~~ ~~License~~When ~~Agreement~~such ~~has~~factors aand ~~term~~circumstances ~~of five years~~exist, ~~which~~the isCompany ~~automatically~~compares ~~renewable~~the ~~for~~projected ~~one~~undiscounted ~~year~~future ~~terms~~cash ~~unless~~flows ~~terminated~~associated bywith ~~either~~the ~~party~~related ~~pursuant~~asset toor agroup ~~notice~~ of ~~termination~~assets ~~delivered~~over attheir ~~least~~estimated ~~ninety~~useful ~~days~~lives ~~prior~~against totheir ~~any~~respective ~~such~~carrying ~~anniversary date~~amounts. In ~~consideration for the License~~Impairment, ~~the~~if ~~Company issued to Zeroloft 4~~any,~~444,444~~ ~~shares~~is ~~of our common stock valued at $2,888,888~~ based on the ~~closing~~excess ~~price~~ of ~~$0.65 per share on January 14, 2010. In addition,~~ the ~~Company~~carrying ~~agreed~~amount toover ~~pay, at~~ the ~~sole~~fair ~~discretion~~value of ~~Zeroloft,~~those ~~either:~~assets ~~(i)~~and ais ~~further~~recorded ~~$1,000,000~~ in the ~~form~~period ofin ~~additional~~which ~~Company shares of common stock at~~ the ~~then~~determination ~~market~~was ~~price;~~made. orNo ~~installment~~impairment ~~payments~~was ofrecorded ~~$200,000~~during ~~per~~the ~~year~~three ~~for~~month ~~five~~periods ~~years.The~~ended ~~balance~~September ~~due~~30, to2010 ~~Zeroloft~~and, ~~is non-interest bearing~~2009.

~~Pursuant~~NOTE to6 RELATED ~~the~~PARTY ~~License~~ADVANCES ~~Agreement,~~AND ~~the~~LOANS Company has the right to sublicense and receive from sublicensees a minimum royalty of at least two and one half cents and up to ten cents ($0.025 - $0.10) US per square foot of thermal insulation or insulating fabric using or relating to one or more of the Trademarks or underlying technology and shall pay to Zeroloft a royalty of 50% of the net license revenue resulting from the manufacture, distribution or sale of products by sub-licensees.PAYABLE

InAs ~~conjunction~~of ~~with~~September ~~the License Agreement~~30, ~~on January 14,~~ 2010, ~~the Company entered into a Management Agreement (“Management Agreement”) with Zeroloft pursuant to which the Company will render services for the operation~~ and ~~expansion~~June ~~of Zeroloft’s manufacturing and licensing of its proprietary~~30, ~~Zeroloft Aspen Aerogels branded weather-resistant fabric~~2010, ~~product made of such fabric~~$120,627 ~~thermal insulation and related insulating fabrics. In consideration for providing such services, the Company will receive a management fee~~ of ~~approximately:~~trade ~~(i)~~payables ~~five~~were ~~percent~~due ~~(5%)~~to ~~on gross receipts of sales of items made of Zeroloft product with~~ a ~~value~~Series ofA ~~less~~Convertible ~~than~~Preferred ~~two (2) US dollars per square foot~~stockholder, ~~less~~ASA ~~royalties; and (ii) ten percent 10% on gross receipts of sales of items made of Zeroloft product with a value greater than $2~~Commerce.00 per square foot, less royalties. The Management Agreement has a one year term which is automatically renewable, unless terminated by either party according to conditions set out in the Management Agreement.

~~The~~On ~~Company~~November ~~evaluates~~23, ~~its~~2009, ~~long-lived~~the ~~assets~~Board ~~for~~of ~~indicators~~Directors resolved to permit $250,000 of ~~possible~~debt ~~impairment.~~due ~~Intangible~~to ~~assets~~the ~~subject~~President to ~~amortization~~be ~~held~~converted ~~and~~into ~~used~~shares byof common stock of the Company isat ~~reviewed~~$0.45 ~~for~~per ~~impairment~~share. ~~whenever~~The ~~events~~Board orof ~~changes~~Directors infurther ~~circumstances~~resolved ~~indicate~~ that ~~its~~the ~~net~~remaining ~~book~~debt ~~value~~outstanding ~~may~~at ~~not~~November 23, 2009 of $1,436,415 due to the President may be ~~recoverable.~~converted ~~When~~into ~~such~~shares ~~factors~~of ~~and~~common ~~circumstances~~stock ~~exist,~~of the Company ~~compares~~at $0.45 per share upon the ~~projected~~Company’s ~~undiscounted~~common ~~future~~stock ~~cash~~reaching ~~flows~~a ~~associated~~price ~~with~~of ~~the~~$1.50 ~~related~~per ~~asset~~share. orAt ~~group~~September of30, ~~assets~~2010, ~~over~~$1,807,806 ~~their~~(which ~~estimated~~was ~~useful~~at ~~lives~~June ~~against~~30, ~~their~~2010, ~~respective~~$1,795,746) ~~carrying~~was ~~amounts.~~owed ~~Impairment~~by the Company to the President of which $400,814 if(which ~~any~~was at June 30, 2010, $400,814) is ~~based~~included in long-term liabilities on the ~~excess~~balance ofsheet ~~the~~and ~~carrying~~$1,406,992 ~~amount~~is ~~over~~included in accrued expenses classified as current liabilities on the ~~fair~~balance ~~value~~sheet of(which ~~those~~was ~~assets~~at ~~and~~June 30, 2010, $1,394,932 is ~~recorded~~included in accrued expenses classified as long-term liabilities on the ~~period~~balance). The President agreed not to demand, within 12 months of June 30, 2010, the payment of $1,795,746 in ~~which~~accrued compensation owning to the ~~determination~~President ~~was~~by ~~made~~the Company. NoAmounts ~~impairment~~due ~~was~~to ~~recorded~~the ~~during~~President ~~the~~are ~~nine~~payable ~~month~~on ~~periods~~demand, ~~ended~~non-interest ~~March~~bearing 31and unsecured. At September 30, 2010, ~~and~~this ~~March~~waiver 31ceased to cover a 12 month period. Accordingly, ~~2009~~the amounts were reclassified to their current presentation.

The Company entered into an unsecured promissory note of $825,000 with a stockholder on May 27, 2008 with a stated interest rate of 10% and a repayment date of November 1, 2008. This note went in default However, during the three month period ended September 30, 2010, the Company has been negotiating an extension of the repayment date. During the three month period ended September 30, 2010, the Company repaid $200,000 of the loan. The remaining unpaid balance as of September 30, 2010 was $150,000 (June 30, 2009 - $350,000). Subsequent to the period end on October 12, 2010, the Company paid the remaining $150,000 principal due.

~~ELEMENT~~AMERICAN 21RARE ~~GOLF~~EARTHS ~~COMPANY~~AND MATERIALS, CORP. AND ~~SUBSIDIARY~~SUBSIDIARIES

(FORMERLY KNOWN AS ELEMENT 21 GOLF COMPANY)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

NOTE 6 RELATED PARTY ADVANCES AND LOANS PAYABLE

As of March 31, 2010 and June 30, 2009, $95,500 of trade payables was due to a Series A Convertible Preferred stockholder, ASA Commerce.

On November 23, 2009, the Board of Directors resolved to permit $250,000 of debt due to the President to be converted into shares of common stock of the Company at $0.45 per share. The Board of Directors further resolved that the remaining debt due to the President may be converted into shares of common stock of the Company at $0.45 per share upon the Company’s common stock reaching a price of $1.50 per share. At March 31, 2010, $1,751,364 (which was at June 30, 2009, $1,640,039) was owed by the Company to the President of which $401,432 (which was at June 30, 2009, $398,689) is included in long-term liabilities on the balance sheet and $1,349,932 (which was at June 30, 2009, $1,241,350) is included in accrued expenses on the balance sheet. The President agreed not to demand, within 12 months of March 31, 2010, the repayment of $401,432 of the loans and advances due to the President by the Company. Except as indicated, amounts due to the President are payable on demand, non-interest bearing and unsecured.

The Company entered into an unsecured promissory note of $825,000 with a stockholder on May 27, 2008 with a stated interest rate of 10% and a repayment date of November 1, 2008. The Company went into default; however, during the quarter ended March 31, 2010, the Company has been negotiating an extension of the repayment date. During the nine months ended March 31, 2010, the Company repaid $325,000 of the loan. The remaining unpaid balance as of March 31, 2010 was $350,000.

NOTE 7 ROYALTY PAYABLE

During the ~~nine~~three ~~months~~month period ended ~~March~~September 3130, 2010, the Company incurred a royalty expense of $~~389~~64,~~997~~327 (which was at ~~March~~September 3130, 2009, $~~379~~97,~~661~~802) for the sale of fishing equipment which is included in cost of sales. The royalty is calculated as 20% of the net selling price of fishing products sold by the Company and any sub licensee. The royalty is payable to Advanced. During the ~~nine~~three ~~month~~months ~~period~~ ended ~~March~~September 3130, 2010, the Company paid $~~50,000~~0 (~~March~~September 3130, 2009 - $050,000) to Advanced. Royalty payable at ~~March~~September 3130, 2010 is $~~980~~1,~~562~~204,103 (which was at June 30, ~~2009~~2010, $~~640~~1,~~564~~139,776).

NOTE 8 ~~CONVERTIBLE~~ LOSS ~~DEBENTURE~~PER SHARE

~~The~~Basic ~~Company~~loss ~~consummated~~per ashare ~~three~~is ~~hundred~~computed ~~thousand~~by ~~dollar~~dividing ~~($300,000)~~net ~~Convertible~~loss ~~Bridge~~by ~~financing~~the onweighted ~~January~~average ~~20,~~number ~~2009~~of bycommon ~~entering~~shares ~~into~~outstanding afor ~~Convertible~~the ~~Bridge~~periods. Diluted ~~Loan~~loss ~~Note~~per ~~(“Convertible~~share ~~Note”)~~reflects, ~~Warrant~~in ~~Agreement~~addition to the weighted average number of common shares, the potential dilution of stock options and ~~Subscription~~warrants ~~Agreement~~outstanding, ~~(collectively~~exercised and/or converted into common stock, unless the ~~“Subscription~~effect ~~Agreements”)~~of such equivalent shares was anti-dilutive.

~~Pursuant~~For to the ~~Subscription~~three ~~Agreements,~~months aended ~~purchaser~~September ~~made~~30, a2010 ~~loan~~and to2009, the ~~Company~~effect of ~~$300,000~~stock inoptions ~~exchange~~and ~~for~~other apotentially ~~nine~~dilutive ~~month~~shares ~~Convertible~~was ~~Note~~excluded atfrom the ~~rate~~calculation of 7%diluted loss per ~~annum~~common share, ~~payable~~as attheir ~~maturity~~inclusion would have been anti-dilutive. ~~The~~Therefore, ~~Convertible~~diluted ~~Note~~loss ~~can~~per beshare ~~converted~~is byequal ~~the~~to ~~purchaser~~basic ~~(“Purchaser”)~~loss atper ~~anytime~~share. ~~prior~~Such orsecurities, onshown ~~the~~below, ~~maturity~~presented ~~date~~on at a ~~conversion~~common ~~price~~share ~~equal~~equivalent tobasis 45and ~~cents~~outstanding ~~per~~as ~~share. On~~at ~~November~~September 1230, 2010 and 2009, ~~the~~have ~~note~~been ~~was~~excluded ~~fully~~from ~~converted~~the ~~into~~three ~~666,667~~month ~~shares~~diluted ofloss ~~common~~per ~~stock.~~share computations:

In addition the Company issued to the Purchaser a warrant to purchase 857,143 shares of our common stock at $0.35 per share for a period of 12 months, commencing on January 30, 2009. The warrant was exercised for stock on January 19, 2010.

	September 30, 2010		September 30, 2009
Warrants		2,810,000		2,097,643
Convertible Preferred stock		2,380,326		2,380,310
Convertible Note		-		666,667
Due to Related Party		3,747,590		-

~~The~~NOTE ~~convertible~~9 SHAREHOLDERS’ debenture was accounted for in accordance with Topic 470-20 Debt With Conversion and Other Options. The following summarizes the significant terms and accounting for each convertible debenture entered into by the Company.EQUITY

During the three months ended September 30, 2010, the Company issued 616,858 shares of its common stock to consultants for services rendered by them for an aggregate fair value of $146,958 based on the quoted market price of the shares at time of issuance.

At July 1, 2010, the Company issued 191,084 shares of its common stock valued at $60,000 to the holders of the Series B Convertible Preferred Stock for accrued dividends through June 30, 2010.

On July 1, 2010, the Company issued 75,000 warrants to its CFO with an exercise price of $0.25 and term of three years which vest immediately. The warrants were measured at their fair value on July 1, 2010 using the following Black-Scholes Model Assumptions: risk free interest (1.01%); expected volatility (172%); expected life (36 months) and no dividends. These warrants were valued at $16,221 and expensed immediately.

On July 12, 2010, the Company reduced the par value of common stock per share from $0.01 to $0.001 upon a redomestication merger from the State of Delaware to the State of Nevada. The reduction in the par value from $0.01 to $0.001 has been adjusted on a retroactive basis; accordingly, all previous balances have been adjusted.

~~ELEMENT~~AMERICAN 21RARE ~~GOLF~~EARTHS ~~COMPANY~~AND MATERIALS, CORP. AND ~~SUBSIDIARY~~SUBSIDIARIES

(FORMERLY KNOWN AS ELEMENT 21 GOLF COMPANY)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

NOTE ~~8 CONVERTIBLE~~10 STOCK ~~DEBENTURE~~OPTION ~~(Continued)~~PLANS:

Date Issued	1/20/2009
Promissory Note Amount	$	300,000
Conversion Price	$	0.45
Gross Proceeds	$	300,000
Net Cash Proceeds	$	300,000
Warrants Issued to Investors		857,143
Warrants Exercise Price	$	0.35
Warrants Fair Value (WFV)	$	246,017
Warrants Relative Fair Value	$	135,170
Beneficial Conversion Feature (BCF)	$	101,837
Amortization of WFV and BCF as non-cash interest expense	$	237,007

As of June 30, 2010, there are three stock option plans in effect; the 1992 Directors' Stock Option Plan (“Directors' Plan”), 1992 Stock Option Plan (“Option Plan”) and the 2006 Equity Incentive Plan (“Incentive Plan”).

~~Black-Scholes~~Directors’ ~~Model Assumptions: risk free interest (1.96%); expected volatility (205%); expected life (12 months); no dividends.~~Plan

~~NOTE~~The ~~9 LOSS~~Directors' ~~PER~~Plan ~~SHARE~~allows for the grant of options to purchase up to 12,500 shares of the Company’s common stock at an exercise price no less than the stock market price at the date of grant. Options granted under this Plan vest immediately and expire 10 years from the date of grant. The Board sets vesting and expiration dates. No stock options have been granted under this plan since 2002. During the period ended September 30, 2010, 80 options expired and as at September 30, 2010, no stock options to purchase shares of common stock are outstanding under the Directors’ Plan.

~~Basic~~Option loss per share is computed by dividing net loss by the weighted average number of common shares outstanding for the periods. Diluted loss per share reflects, in addition to the weighted average number of common shares, the potential dilution of stock options and warrants outstanding, exercised and/or converted into common stock, unless the effect of such equivalent shares was anti-dilutive.Plan

~~For~~The ~~the~~Option ~~nine~~Plan ~~months~~allows ~~ended~~for ~~March 31, 2010 and 2009,~~ the ~~effect~~grant of ~~stock~~ options ~~and~~to ~~other~~employees ~~potentially~~to ~~dilutive~~purchase ~~shares~~up ~~were~~to ~~excluded~~10% ~~from~~of the ~~calculation~~issued ofand ~~diluted~~outstanding ~~loss~~shares ~~per~~of ~~common~~the ~~share~~Company, asnot ~~their~~to ~~inclusion~~exceed ~~would~~50,000 ~~have~~shares, ~~been~~at ~~anti-dilutive. Therefore~~an ~~diluted~~exercise ~~loss~~price ~~per~~equal ~~share~~to isthe ~~equal~~stock’s tomarket ~~basic~~price ~~loss~~at ~~per~~the ~~share.~~date ~~Such~~of ~~securities,~~grant. ~~shown~~The ~~below,~~Board ~~presented~~sets onvesting aand ~~common~~expiration ~~share~~dates. There ~~equivalent~~were ~~basis~~no ~~and~~stock options outstanding asunder the Option Plan at ~~March~~September 3130, 2010. No ~~and~~stock ~~2009~~options have been ~~excluded~~granted ~~from~~under ~~the~~this ~~nine~~plan ~~month~~since ~~diluted loss per share computations:~~2002.

	March 31, 2010		March 31, 2009
Warrants		2,653,000		677,828
Convertible Preferred Stock		2,380,326		2,407,682
Convertible Note		-		666,667
Due to Related Party		3,747,590		-

Incentive Plan

The Incentive Plan allows for the grant of options to employees, officers, directors, consultants, advisors of the Company and to any other person who is determined by the Board of Directors to have made (or is expected to make) contributions to the Company. The number of common stock that may be issued under the Plan is 1,000,000 shares. No participant of the Plan may be awarded more than 500,000 shares of common stock in any one fiscal year. The exercise price cannot be less than 100% of the fair market value of the common stock on the date of the grant and may not have a life greater than ten years from the date of grant. In the case of a shareholder representing more than 10% of the voting power of all classes of shares of the Company, the exercise price cannot be less than 110% of the fair market value of the common stock on the date of the grant and may not have a life greater than five years from the date of grant. At September 30, 2010, options to purchase 425,000 shares of common stock were outstanding under the Incentive Plan.

The following is a summary of the common stock options granted, forfeited or expired and exercised:

	Number of Options			Weighted Average Exercise Price Per Share
Outstanding – July 1, 2009		160		$	18.75
Granted		425,000		$	0.50
Forfeited or expired		(80	)	$	12.50
Exercised		-			-
Outstanding - June 30, 2010		425,080		$	0.50
Granted		-			-
Forfeited or expired		(80	)	$	12.50
Exercised		-			-
Outstanding and exercisable – September 30, 2010		425,000		$	0.50

The following table summarizes information on stock options outstanding and exercisable as of September 30, 2010:

Exercise Price				Number Outstanding at September 30, 2010				Average Remaining Life (Years)				Aggregate Aggregate Intrinsic Value
$	0.50				425,000				1.63				-

~~ELEMENT~~AMERICAN 21RARE ~~GOLF~~EARTHS ~~COMPANY~~AND MATERIALS, CORP. AND SUBSIDIARIES

(FORMERLY KNOWN AS ELEMENT 21 GOLF COMPANY)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

NOTE 10 SHAREHOLDERS’ EQUITY (DEFICIT)

During the nine months ended March 31, 2010, the Company issued 3,287,346 shares of its common stock to consultants for services rendered by them for an aggregate fair value of $1,789,684 based on the quoted market price of the shares at time of issuance.

On July 20, 2009, the Company filed with the Secretary of State of the State of Delaware an Amended and Restated Certificate of the Powers, Designations, Preferences and Rights of the Series B Convertible Preferred Stock of the Company dated July 10, 2009 (the “Amendment”). In connection with the Amendment, the Company agreed to pay quarterly dividends on the Series B Convertible Preferred Stock of the Company (the “Series B Stock”) and the current holders of the Series B Stock (the “Holders”) agreed that such dividends could be paid by delivery of the Company’s common shares valued at the price that is the average of the closing price for Common Stock for the 20 trading days immediately preceding the payment date for such dividends. In connection with the Amendment, each Series B Stock is convertible into 5.57 shares of Common Stock. A Holder returned to the Company 294,118 unregistered common shares received by reason of the conversion of its Series B Stock in consideration for the reissuance to the Holder of 58,823 shares of unregistered post-Amendment Series B Stock. On July 16, 2009, the Company issued 1,715,354 shares of its common stock valued at $857,678 to the holders of the Series B Stock for accrued dividends through June 30, 2009. Prior to this Amendment the Holders of the Series B Stock had waived all dividends.

On August 2, 2009, 22,059 warrants with an exercise price of $3.40 expired.

On August 3, 2009, 50,000 warrants were exercised at $0.10 per share of common stock resulting in the Company receiving $5,000.

At October 22, 2009 the Company issued 120,000 shares of its common stock valued at $60,000 to the holders of the Series B Stock for accrued dividends through September 30, 2009.

On November 12, 2009 the Convertible Note of $300,000 was fully converted into 666,667 shares of common stock.

On November 10, 2009, three shares of Series B Convertible preferred stock were issued for $51.

On November 15, 2009, 12,500 warrants with an exercise price of $4.00 expired.

On December 1, 2009, the Company entered into an Investment Banking Agreement for a twelve month period. As part of the Agreement, the Company issued 350,000 warrants to the consultant with an exercise price of $0.47 and a term of three years. 87,500 warrants vested immediately, 87,500 warrants vest in 90 days, 87,500 warrants vest in 180 days and the remaining 87,500 warrants vest in 270 days. The warrants are accounted for in accordance with Topic 505-50 Equity-Based payments to Non-Employees. The warrants were initially measured at their fair value on December 1, 2009 using the following Black-Scholes Model Assumptions: risk free interest (1.09%); expected volatility (182%); expected life (36 months); no dividends. On March 25, 2010 the Company and the consultant mutually agreed to cancel the Agreement. All warrants which had been vested were re-measured at their fair value on this date using the following Black-Scholes Model Assumptions: risk free interest (0.80%); expected volatility (190%); expected life (33 months); no dividends. Consulting expense is recognized over the period services are received. For the nine period ended March 31, 2010, the Company recognized $92,018 of expense with a corresponding increase in additional paid-in-capital.

At December 31, 2009, the Company reclassified warrants from liabilities to equity in amount of $55,254.

On January 1, 2010, the Company issued 200,000 warrants, which vested immediately, to the President with an exercise price of $0.12 and a term of two years. The warrants were measured at their fair value on January 1, 2010 using the following Black-Scholes Model Assumptions: risk free interest (1.090%); expected volatility (187%); expected life (24 months); no dividends. These warrants were valued at $135,803 and expensed immediately.

On January 11, 2010, 75,000 warrants were exercised at $0.10 per share of common stock resulting in the Company receiving $7,500.

On January 14, 2010, the Company issued 4,444,444 shares of its common stock valued at $2,888,888 to Zeroloft for the License Agreement.

ELEMENT 21 GOLF COMPANY AND SUBSIDIARY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

NOTE 10 SHAREHOLDERS’ DEFICIT (continued)

On January 15, 2010, 150,000 warrants were exercised at $0.10 per share of common stock, resulting in the Company receiving $15,000.

On January 19, 2010 a warrant to purchase 857,143 shares of our common stock at $0.35 per share was exercised.

On January 20, 2010, the Company entered into a Financial Advisor and Consulting Agreement for a one year period. As part of the Agreement, the Company issued 350,000, 350,000, 200,000 and 100,000 warrants with exercise prices of $0.45, $0.75, $1.00 and $1.50, respectively which have lives of two years. The warrants are accounted for in accordance with Topic 505-50 Equity-Based payments to Non-Employees. The warrants were measured at their fair value on January 20, 2010 using the following Black-Scholes Model Assumptions: risk free interest (0.92%); expected volatility (190%); expected life (24 months); no dividends. These warrants were valued at $787,990 with $151,537 expensed during the three months ended March 31, 2010 and $636,453 included in prepaid expenses.

At January 11, 2010 and February 18, 2010, the Company issued 92,736 shares of its common stock valued at $60,000 to the holders of the Series B Stock for accrued dividends through December 31, 2009.

On February 17, 2010, the Company issued 75,000 warrants to its CFO with an exercise price of $0.60 and term of three years which vest immediately. The warrants were measured at their fair value on February 17, 2010 using the following Black-Scholes Model Assumptions: risk free interest (1.42%); expected volatility (216%); expected life (36 months); no dividends. These warrants were valued at $42,271 and expensed immediately.

On February 17, 2010, the Company entered into a Consulting Agreement for a six month period. As part of the Agreement, the Company issued 100,000 warrants with an exercise price of $1.25 and 100,000 warrants with an exercise price of $1.50 which have lives of one year. The warrants are accounted for in accordance with Topic 505-50 Equity-Based payments to Non-Employees. The warrants were measured at their fair value on February 17, 2010 using the following Black-Scholes Model Assumptions: risk free interest (0.35%); expected volatility (173%); expected life (12 months); no dividends. These warrants were valued at $53,570 with $12,657 expensed during the nine months ended March 31, 2010 and $40,913 included in prepaid expenses.

NOTE 11 RISK MANAGEMENT

Foreign exchange risk

The Company is exposed to foreign exchange risks on purchases of inventory, which are made in US dollars, from two companies. This risk, however, is mitigated by the fact that a significant portion of its sales to customers are made in US dollars. The Company does not use derivative instruments to hedge its foreign exchange risk.

Credit risk

The Company is subject to risk of non-payment of its trade accounts receivable. For the ~~nine~~three months ended ~~March~~September 3130, 2010, ~~four~~three customers (which was as of 2009, three customers) respectively represent approximately 5146.5561% of sales (which was as of 2009, 4936.8059%) and 5260.3872% (which was as of 2009, 6984.2015%) of the total outstanding accounts receivable. Management continually monitors its credit terms with customers to reduce credit risk exposure.

ELEMENT 21 GOLF COMPANY AND SUBSIDIARY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

NOTE 12 FAIR VALUE MEASUREMENTS

The Company adopted FASB ASC 820 for all financial assets and liabilities measured at fair value on a recurring basis. The Company adopted FASB ASC 820 effective July 1, 2009 for all non-financial assets and liabilities. FASB ASC 820 defines fair value as the price that would be received to sell an asset or paid to transfer a liability (exit price) in an orderly transaction between market participants at the measurement date. The statement establishes market or observable inputs as the preferred sources of values, followed by assumptions based on hypothetical transactions in the absence of market inputs. The statement requires fair value measurements be classified and disclosed in one of the following categories:

Level 1 – Quoted prices in active markets for identical assets and liabilities.

Level 2 – Quoted prices in active markets for similar assets and liabilities, quoted prices for identical or similar instruments in markets that are not active and model-derived valuations whose inputs are observable or whose significant value drivers are observable.

Level 3 – Significant inputs to the valuation model are unobservable.

Financial assets and liabilities are classified based on the lowest level of input that is significant to the fair value measurement.

The carrying amounts on the accompanying condensed consolidated balance sheet for cash and cash equivalents, ~~short-term investments,~~ accounts receivable, accounts payable, royalty payable, accrued expenses and current and long-term debt are carried at cost, which approximates market value. Short-term investments ~~comprise~~comprised a redeemable guaranteed investment certificate earning interest at 0.75% per annum and ~~maturing~~matured on August 12, 2010. The proceeds upon maturity from the redeemable guaranteed investment certificate were transferred to cash and cash equivalents.

AMERICAN RARE EARTHS AND MATERIALS, CORP. AND SUBSIDIARIES

(FORMERLY KNOWN AS ELEMENT 21 GOLF COMPANY)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

NOTE 13 CONTINGENCIES

Legal Matters

The Company is involved in litigation claims arising in the ordinary course of business. Legal fees and other costs associated with such actions are expensed as incurred. In addition, the Company assesses, in conjunction with its legal counsel, the need to record a liability for litigation and contingencies. The Company reserves for costs relating to these matters when a loss is probable and the amount can be reasonably estimated. The Company believes that the ultimate disposition of these matters will not have a material effect on its financial position, results of operations or cash flows. However, the amount of future reserves required associated with these claims, if any, cannot be determined with certainty.

In March 2010, John Grippo, the former CFO of the Company, and John Grippo Inc. (“Plaintiffs”) filed suit against the Company in the Superior Court in the County of Westchester, New York. The Plaintiffs are seeking in excess of $75,000 in damages and prejudgment interest related to allegations involving breach of contract. The Company believes the claim is without merit and is vigorously defending the lawsuit and has filed a counterclaim in excess of $375,000 plus costs. On March 13, 2010, the Plaintiffs obtained a temporary restraining order over our bank accounts held at JP Morgan Chase and Bank of America. As such, included in cash and cash equivalents is restricted cash of $7279,~~040~~609 and $079,842 at ~~March~~September 3130, 2010 and June 30, ~~2009~~2010, respectively.

15In June 2010, Rick Smith Enterprises, Inc. (“Plaintiff”), filed a complaint against the Company in the Circuit Court of the Ninth Judicial Circuit of the State of Florida in and for Orange County Civil Division. The Plaintiff is seeking cash of $175,000 and shares of common stock of the Company valued at $175,000 plus costs and interest for allegations involving breach of contract. The Plaintiff is also seeking additional cash of $100,000 and shares of common stock of the Company valued at $100,000 for alleged continuing and anticipatory breach of contract. The action is in its very preliminary stages. As a result, we are unable to estimate a potential loss or range of loss, if any, at this time.

ELEMENT 21 GOLF COMPANY AND SUBSIDIARY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

NOTE 14 SUBSEQUENT EVENTS

Subsequent to period end, the Company issued ~~423~~304,~~695~~952 shares of its common stock to consultants for an aggregate value of $~~203~~91,~~656~~486 based on the quoted market price of the shares at time of issuance.

On ~~April~~October 1, 2010, the Company issued 8575,~~838~~000 ~~shares~~warrants ~~of its common stock~~ to ~~holders~~the ofCFO ~~Series~~with Ban ~~Stock~~exercise ~~for~~price ~~accrued dividends~~ of $~~60,000~~0.30 ~~through~~and toa ~~March~~life ~~31,~~of ~~2010~~three years.

On ~~April~~October 1, 2010, the Company issued 75249,~~000~~742 ~~warrants~~shares toof ~~the~~its ~~CFO~~common ~~with~~stock anto ~~exercise~~holders ~~price~~ of ~~$0.62~~Series ~~and~~B aConvertible ~~life~~Preferred Stock for accrued dividends of ~~three~~$60,000 ~~years~~through September 30, 2010.

OnSuch ~~April~~issuances ~~16,~~of ~~2010,~~securities of the Company ~~issued~~were ~~110,000~~made ~~warrants~~pursuant to athe ~~consultant~~exemptions ~~with~~from anregistration ~~exercise~~contained ~~price~~in ofRule ~~$0.001~~4(2) ~~and~~of athe ~~life~~Securities Act of ~~five~~1933, ~~years~~as amended (the “Securities Act”).

~~Such~~On ~~issuance~~November of1, ~~securities~~2010, of110,000 ~~the~~warrants ~~Company~~ were ~~made~~exercised ~~pursuant~~at to$0.001 ~~the~~per ~~exemptions~~share ~~from registration contained in Rule 4(2)~~ of ~~the~~common ~~Securities Act of 1933, as amended (the “Securities Act”)~~stock.

On May 6, 2010, the Company filed with the Securities Exchange Commission an Information Statement to notify stockholders the Company received, on or about March 23, 2010, written consent in lieu of a meeting of stockholders of the majority of the Company’s voting securities approving the reincorporation of the Company to Nevada from Delaware by merging the Company into its newly formed and wholly owned subsidiary Nevada corporation under the name of “American Rare Earths and Materials, Corp.”14

ITEM 2

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

CAUTIONARY NOTE ON FORWARD LOOKING STATEMENTS

In addition to historical information, this Quarterly Report on Form 10-Q contains forward looking statements ~~within~~regarding ~~the~~our ~~meaning~~business ofand ~~the~~performance ~~Private~~that ~~Securities Litigation Reform Act of 1995. The forward looking statements~~ are subject to certain risks and uncertainties that could cause actual results to differ materially from those reflected in such forward looking statements. In some cases, you can identify forward looking statements by terminology such as “may,” “will,” “should,” “expects,” “plans,” “anticipates,” “believes,” “estimates,” “predicts,” “projects,” “potential,” “proposed,” “intended,” or “continue” or the negative of these terms or other comparable terminology. Readers are cautioned not to place undue reliance on these forward looking statements, which reflect management’s opinions only as of the date thereof. In evaluating such forward looking statements, readers should carefully review the discussion of risks and uncertainties in this Quarterly Report on Form 10-Q and in our most recent Annual Report on Form 10-K as well as in other filings with the Securities and Exchange Commission regarding, without limitation, statements about our business plans, statements about the potential for the development, and public acceptance of new products, estimates of future financial performance, predictions of national or international economic, political or market conditions, statements regarding other factors that could affect our future operations or financial condition, and other statements that are not matters of historical fact. Our ability to achieve our goals depends on many known and unknown risks and uncertainties, including changes in general economic and business conditions. Although we believe that the expectations reflected in the forward looking statements are reasonable, we cannot guarantee future results, growth rates, and levels of activity, performance or achievements. Except as expressly required by the federal securities laws, there is no undertaking to publicly update or revise any forward-looking statements, whether as a result of new information, future events, changed circumstances or any other reason.

The discussion of risks and uncertainties may be found under “Management’s Discussion and Analysis of Financial Condition and Results of Operations set forth in this Quarterly Report on Form 10-Q and in our most recent Annual Report on Form 10-K as well as in other filings with the SEC, is not necessarily a complete or exhaustive list of all risks facing the Company at any particular point in time. These forward looking statements speak only as of the date of this Form 10-Q and we disclaim any obligation to revise or update any forward looking statement that may be made from time to time by us or on our behalf.

Overview

Since 2002, our Company has been commercializing Rare Earth metals and advanced materials. This led to a vertical integration that began with the extraction of pure Scandium and ~~its~~other ~~application~~Rare toEarths ~~sports~~applications ~~equipment~~in the form of extruded, rolled or forged products and ~~apparel~~components. Today, that expertise has positioned us to become a leader in commercializing Rare Earth metals and advanced materials and quickly delivering revolutionary new products to consumer and industrial markets. Our objective is to become North America’s best, most reliable source for Rare Earth metals and provide solutions to their applications. We are developing opportunities to distribute Rare Earths like Scandium, Neodymium, Europium and Lithium that will help major industries launch major industrial brands such as hybrid cars, flat screen televisions, LED light bulbs and wind turbines. We will also have significant exposure to large market categories such as transportation, shipbuilding, power transmission, automotive and aerospace.

In January 2010, the Company entered into a Trademark License, Product Distribution Agreement and Management Agreement with Zeroloft Corp. Within the field of ~~sport~~sportswear ~~wear~~ apparel, footwear and related sports specialty items, the Company obtained: (i) an exclusive license to the Zeroloft Aspen Aerogels trademarks; and (ii) a limited, worldwide, exclusive right to distribute the products bearing the Zeroloft Aspen Aerogels Trademark for production and sales of items in such field. The License Agreement has a term of five years, which term is automatically renewable for one year terms. We are currently working with major footwear and apparel manufacturers to incorporate ~~ZeroLoft~~Zeroloft into their lines of products. Russell Athletics, Hanesbrands and Camelbak have tested and incorporated ~~ZeroLoft~~Zeroloft into their product lines which we anticipate will be available to consumers in 2010 and 2011.

17Our business, financial condition, cash flows and results from operations are subject to seasonality resulting from factors such as weather and spending patterns. Due to seasonality of our business, one quarter’s results are not indicative of the full fiscal year’s expected financial results. A majority of our revenue is earned in the second and third quarters of the year and revenues generally decline in the first and fourth quarters. During the current fiscal year, a greater portion of our annual fishing sales took place in the second quarter when compared to the prior year because we moved our production schedule forward and shipping to our customers earlier.

Our business, financial condition, cash flows and results from operations are subject to seasonality resulting from factors such as weather and spending patterns. Due to seasonality of our business, one quarter’s results are not indicative of the full fiscal year’s expected financial results. A majority of our revenue is earned in the third and fourth quarters of the year and revenues generally decline in the first and second quarters. During the current fiscal year, a greater portion of our annual fishing sales took place in the second quarter when compared to the prior year because we moved our production schedule forward and shipping to our customers earlier.15

Results of Operations

~~Nine~~Three Months Ended ~~March~~September 3130, 2010 and 2009

For the ~~nine~~three months ended ~~March~~September 3130, 2010, the Company had revenue of $2650,~~661~~902,~~631,~~ which includes non-cash barter revenue of $521,~~109~~720 and recovery of out of pocket expenses paid on behalf of Zeroloft Corp. of $267,220, and incurred costs of sales of $1425,~~822,254~~978 and general and administrative expenses of $41,~~085~~171,~~855~~183, and interest income of $1224,~~257,~~ and interest expense of $~~118~~3,~~845~~836. Included in general and administrative expense is a non-cash charge of $1163,~~907,097~~179 representing the value of compensatory common stock and warrants for services provided by consultants. This resulted in a net loss of $3949,~~364~~871,~~066,~~ as compared with the ~~nine~~three months ended ~~March~~September 3130, 2009 in which the Company had revenue of $2758,~~811~~818,~~328,~~ which includes non-cash barter revenue of $~~172~~8,~~757~~066, incurred costs of sales of $1424,~~594,589~~465 and general and administrative expenses of $2835,~~468~~241,~~407,~~ and interest income of $2302,~~888,~~ and interest expense of $~~104~~90,~~875~~829, ~~offset by derivative income of $95,250,~~ resulting in a net loss of $1591,~~258,405~~415. ~~In fiscal 2010, we launched the Micro Guided series of fishing rods.~~

~~The~~Interest ~~Company~~expense ~~has expanded its number~~ of ~~stock-keeping~~$3,836 ~~units~~and or$90,829 ~~SKUs~~for in the ~~fishing~~three ~~rods~~months ~~segment~~ended ~~to over 100 SKUs with new lines. Compensatory expenses~~September, ~~which~~2010 ~~are included in general~~ and ~~administrative~~2009, ~~expenses~~respectively, ~~have~~primarily ~~increased~~relates ~~from~~to ~~prior~~paid ~~periods~~and asaccreted weinterest ~~have~~on ~~incurred~~the ~~additional~~Convertible ~~consultant~~Debenture and ~~professional~~Loan ~~fees related~~ payable to ~~the rollout of ZeroLoft~~shareholder.

~~Interest~~Our ~~expense~~net ofaccounts receivable balances were $~~118~~420,~~845~~414, $789,920 and $~~104~~238,~~875~~160 ~~for~~at ~~the~~September ~~nine~~30, ~~months~~2010, June ~~ended March 31~~30, 2010 and September 30, 2009, respectively. The increase in accounts receivable compared to September 30, 2009 is primarily ~~relates~~due to ~~paid~~the ~~and~~increase ~~accreted~~in ~~interest~~sales onin the ~~Convertible~~fourth ~~Debenture~~quarter of the previous fiscal year. The Company is subject to risk of non-payment of its trade accounts receivable. For the three months ended September 30, 2010, three customers (which was as of comparable prior year period, three customers) respectively represent approximately 46.61% of sales (which was 36.59% as of the comparable prior year period) and ~~Loan~~60.72% ~~payable~~ (or 84.15% for the comparable prior year period) of the total outstanding accounts receivable. Management continually monitors its credit terms with customers to ~~shareholder~~reduce credit risk exposure.

Our net ~~accounts~~inventory ~~receivable~~ balances were $~~706~~787,~~756~~910, $~~515~~919,~~577~~158 and $~~965~~1,~~880~~518,515 at ~~March~~September 3130, 2010, June 30, ~~2009~~2010 and ~~March~~September 3130, 2009, respectively. The decrease in ~~accounts~~our ~~receivable~~inventory balance compared to ~~March~~September 3130, 2009 is ~~primarily~~ due to ~~the~~an ~~decrease~~increase in ~~revenues~~our inprovision ~~the~~for ~~third~~inventory ~~quarter~~obsolescence ofwhich ~~the~~was ~~current~~$542,196 ~~fiscal~~and ~~year. The~~$178,000 ~~Company~~at isSeptember ~~subject~~30, to2010 ~~risk~~and ofSeptember ~~non-payment of its trade accounts receivable. For the nine months ended March 31~~30, ~~2010~~2009, ~~four~~respectively. The ~~customers~~provision ~~(which~~only ~~was~~relates asto ofgolf ~~2009,~~equipment ~~three~~and ~~customers)~~components ~~respectively~~other ~~represent~~than ~~approximately~~golf 51shafts.~~55%~~ ofOur ~~sales~~inventory ~~(which~~comprises ~~was~~golf asand offishing ~~2009,~~products ~~49.80%)~~ and 52components.~~38%~~ We ~~(which~~concentrate ~~was~~our asnew ofpurchases ~~2009, 69.20%)~~ of ~~the~~inventory ~~total~~on ~~outstanding~~where ~~accounts~~we ~~receivable.~~anticipate ~~Management~~our ~~continually~~future ~~monitors~~sales; ~~its~~golf ~~credit~~shafts ~~terms~~and ~~with~~our ~~customers~~best toselling ~~reduce credit risk exposure~~SKUs.

Our ~~net~~royalty ~~inventory~~payable ~~balances~~was ~~were~~ $1,~~114~~204,~~730,~~103 ~~$1,276,891~~ and $1738,~~271,852~~366 at ~~March~~September 3130, 2010, ~~June 30, 2009~~ and ~~March 31,~~ 2009, respectively. The ~~decrease~~increase in ~~our~~the ~~inventory~~ balance is due to anroyalties ~~increase~~on sales in ~~our~~the ~~provision~~current ~~for~~period ~~inventory~~which ~~obsolescence~~are ~~from~~unpaid ~~$178,000~~ to ~~$458,666 during this quarter~~Advanced. The ~~provision~~royalty ~~only~~is ~~relates~~calculated toas ~~golf~~20% ~~equipment~~of ~~and~~the ~~components~~net ~~other~~selling ~~than~~price ~~golf~~of ~~shafts. Our inventory comprises golf and~~ fishing products ~~and~~sold ~~components. We~~by ~~concentrate~~the ~~our~~Company ~~new purchases of inventory on where we anticipate our future sales; golf shafts~~ and ~~our~~any ~~best~~sub ~~selling SKUs~~licensee. ~~During the third quarter of the year we were successful in placing our fishing rods in Dick’s Sporting Goods.~~

Our royalty payable and accrued expenses were in total $3,271,517 and $2,621,996 at March 31, 2010 and June 30, 2009 respectively. The increase in the balances is primarily due to unpaid royalties to Advanced and unpaid compensation to senior management. The royalty is calculated as 20% of the net selling price of fishing products sold by the Company and any sub licensee.

Three Months Ended March 31, 2010 and 2009

For the three months ended March 31, 2010, the Company had revenue of $1,001,178, which includes non-cash barter revenue of $10,000, and incurred costs of sales of $954,874 and general and administrative expenses of $2,037,810, and interest income of $482, and interest expenses of $12,041. Included in general and administrative expense is a non-cash charge of $993,729 representing the value of compensatory common stock and warrants for services provided by consultants. This resulted in a net loss of $2,003,065, as compared with the three months ended March 31, 2009 in which the Company had revenue of $1,825,421, which included non-cash barter revenue of $54,286, incurred costs of sales of $959,542 and general and administrative expenses of $910,591, and interest income of $259, and interest expense of $63,284, offset by derivative income of $8,275 resulting in a net loss of $116,012. The reasons for these changes are as described in our Overview and Results of Operations for the nine months ended March 31, 2010 and 2009.

In the third quarter, the Company entered into a Trademark License and Product Distribution Agreement (“License Agreement”) with Zeroloft pursuant to which the Company diversified its business to include an exclusive license to the Zeroloft Aspen AerogelsTM and a limited worldwide, exclusive right to distribute the precuts bearing the Zeroloft Aspen AerogelsTM trademarks in the field of sports apparel and footwear. The initial research and development efforts of the Company with respect to the ZeroLoft product have been completed. The Company has also received initial orders for products incorporating Zeroloft trademarks from Hanesbrands, Russell and Camelbak. The ZeroLoft business line is focused on business to business sales and does not require Element 21 to expend funds on marketing and consumer education. The Company expects the Zeroloft business line will provide additional revenues and growth of the Element 21 brand and its product lines. The revenue stream from ZeroLoft will be based on the percentage of sales and royalty payments, thus the Company expects to have a positive gross margin on every such contract, which is priced at cost plus basis. The ZeroLoft apparel applications have been fully developed and no additional R&D costs are expected to be incurred in the near future. The sole source of the material is made by Aspen Aerogel, which owns the patented technology on this material.

During the current fiscal year we have entered into various investor relations, public relations and marketing contracts in order to increase the visibility of the Company. In consideration for these consulting services we have issued shares and warrants of our common stock as indicated in Note 10 of the financial statements.

Financial Condition, Liquidity and Capital Resources

The Company has negative working capital as of ~~March~~September 3130, 2010 of $12,~~812~~533,~~260~~825. The Company retains consultants to perform development and public company reporting activities in exchange for stock of the Company. At June 30, ~~2009~~2010, we had a working capital deficiency of $1124,~~125,566~~889. Our working capital deficiency is due to unpaid management compensation and royalties. Our continuation as a going concern will require that we raise significant additional capital. ~~Included~~At inSeptember ~~accrued~~30, ~~expenses~~2010, is$1,807,806 (which was at June 30, 2010, $1,~~751~~795,~~364~~746) was owed by the Company to the President of which $400,814 (which was at June 30, ~~2009~~2010, $400,814) is included in long-term liabilities on the balance sheet and $1,~~640~~406,~~039). There~~992 is noincluded ~~assurance~~in ~~that~~accrued ~~consultants~~expenses ~~will~~classified ~~continue~~as tocurrent ~~accept~~liabilities ~~stock~~on ~~compensation~~the ~~for~~balance ~~services~~sheet (which was at June 30, 2010, $1,394,932 is included in accrued expenses classified as long-term liabilities on the balance). IfThe ~~consultants~~President ~~discontinue~~agreed not to ~~accept~~demand, ~~stock~~within 12 months of June 30, 2010, the payment of $1,795,746 in accrued compensation weowing to ~~may~~the ~~not~~President beby ~~able~~the Company. Amounts due to ~~continue~~the President are payable on demand, non-interest bearing and unsecured. At September 30, 2010, ths waiver ceased to ~~retain~~cover a 12 month period. Accordingly, the ~~services~~amounts ofwere ~~such~~reclassified ~~consultants~~to their current presentation.

~~During~~There ~~the~~is ~~nine~~no ~~months~~assurance ~~ended~~that ~~March~~consultants ~~31,~~will ~~2010,~~continue ~~the~~to ~~Company~~accept ~~purchased~~stock acompensation ~~vehicle~~ for ~~$35,544,~~services. If ~~purchased~~consultants adiscontinue ~~redeemable~~to ~~guaranteed~~accept ~~investment~~stock ~~certificate~~compensation ~~for~~we ~~$250,000~~may ~~earning~~not ~~interest~~be atable ~~0.75%~~to ~~per~~continue ~~annum~~to ~~and~~retain ~~repaid~~the ~~short-term~~services ~~debt~~ of ~~$325,000~~such consultants.

OnAbsent ~~January~~continued ~~11,~~stock payment ~~2010,~~for ~~75,000~~services ~~warrants~~to ~~were~~our ~~exercised~~consultants atand ~~$0.10~~continued ~~per~~advances ~~share~~by stockholders of ~~common stock resulting in~~ the Company ~~receiving $7~~,~~500. On~~ ~~January 15, 2010, 150,000 warrants were exercised at $0.10 per share of common stock, resulting in~~ the Company ~~receiving~~cannot ~~$15,000. On~~manufacture ~~January~~its ~~25,~~golf ~~2010~~shaft, ~~857,142~~fishing ~~warrants~~product ~~were~~lines, ~~exercised~~Zeroloft ator ~~$0.35~~market ~~per~~its ~~share~~products ofbased ~~common~~on ~~stock,~~its ~~resulting in the Company receiving approximately $300,000~~technologies.

~~Absent~~For ~~continued~~the ~~stock~~three ~~payment~~month ~~for~~period ~~services~~ended toSeptember ~~our~~30, ~~consultants~~2010, ~~and~~the ~~continued~~Company ~~advances~~has bygenerated ~~stockholders~~gross revenue of $267,220, related to the ~~Company~~recovery of out-of-pocket expenses paid on behalf of Zeroloft Corp. (September 30, ~~the~~2009 ~~Company~~- ~~cannot~~$4,883) ~~manufacture~~from ~~its~~Zeroloft. ~~golf~~The ~~shaft~~terms orof ~~fishing~~our ~~product~~contract ~~lines~~with orour ~~market~~Zeroloft ~~its~~customers ~~products~~will ~~based~~require ona ~~its~~prepayment ~~technologies~~which will cover our expected upfront costs.

In consideration for the License Agreement, the Company issued to Zeroloft 4,444,444 of shares of common stock of the Company valued at $2,888,888 on January 14, 2010 and, at the sole discretion of Zeroloft, it will either: (i) issue an additional $1 million worth of Shares upon execution of the License Agreement, at the then market price; or make installment payments of $200,000 per year for five years. Pursuant to the License Agreement, the Company shall have the right to sublicense and shall pay to Zeroloft a royalty of 50% of the net license revenue resulting from the manufacture, distribution or sale of products by sublicensees. Since payments of royalties only arrive upon the occurrence of sales, the Company expects that royalty payments will not have a negative effect on its revenues and it will have sufficient liquidity to meet its obligation.16

In this third quarter, the Company entered into a Management Agreement with Zeroloft (“Management Agreement”) pursuant to which the Company will render services for the operation and expansion of Zeroloft’s manufacturing and licensing of its proprietary, Zeroloft Aspen AerogelsTM branded weather-resistant fabric, product made of such fabric, thermal insulation and related insulating fabrics in the field of use. In consideration for providing such services, the Company will receive a management fee of approximately: (i) five percent (5%) on gross receipts of sales of items made of Zeroloft product with a value of less than two (2) US dollars per square foot, less royalties; and (ii) ten percent 10% on gross receipts of sales of items made of Zeroloft product with a value greater than two (2) US dollars per square foot from sales made through the efforts of the Company. For the nine month period ended March 31, 2010, the Company has generate gross fees of $86,106 from royalties and services and remitted $68,040 to Zeroloft resulting in revenue of $18,066. The terms of our contract with our Zeroloft customers will require a prepayment which will cover our expected upfront costs.

Although the Company has previously been able to raise capital as needed, such capital may not continue to be available at all, or if available, that the terms of such financing will not be dilutive to existing stockholders or otherwise on terms not favorable to the Company or existing stockholders. Further, the current global financial situation may offer additional challenges to raising the required capital. If the Company is unable to secure additional capital, as circumstances require, it may not be able to continue operations.

If adequate funds are not available or not available on acceptable terms, we may be unable to continue operations; develop, enhance and market products,; retain qualified personnel; take advantage of future operations; or respond to competitive pressures, any of which could have a material adverse effect on our business; operating results; financial condition and/or liquidity.

With the introduction of new materials in fishing and apparel markets, Element 21 will change its name from Element 21 Golf Company to American Rare Earths and Materials, Corp. thus expanding our market designation from golf and recreation products to materials and their applications. In addition, Element 21 is planning to re-domesticate from the State of Delaware to the State of Nevada. The Element 21 brand name, Carrotstix, and all related consumer brands will remain as is. The Company has a new corporate master brand and it will expand its portfolio of products to provide metals and materials.

Recent Accounting Pronouncements

See Note 34 “Recent Accounting Pronouncements Affecting the Company” into the Notes to Condensed Consolidated Financial Statements in Item 1 for a full description of recent accounting pronouncements, including the expected dates of adoption and estimated effects on results of operations and financial condition, which is incorporated herein.

Dividend Policy

The Company has not declared or paid any cash dividends on its common stock since its inception and does not anticipate the declaration or payment of cash dividends in the foreseeable future. The Company intends to retain earnings, if any, to finance the development and expansion of its business. The Company is prohibited from paying dividends on common stock as long as there are any unpaid accrued dividends due to the Series B Convertible ~~Stock~~Preferred stock stockholders. Therefore, there can be no assurance that dividends of any kind will ever be paid. Pursuant to the Amended and Restated Certificate of the Powers, Designations, Preferences and Rights of the Series B Convertible Preferred ~~Stock~~stock of the Company, we are required to pay dividends on our Series B Stock. We have this quarter and we expect to continue to pay such dividends in the form of the Company’s common stock.

Effect of Inflation

Management believes that inflation has not had a material effect on its operations for the periods presented.

Climate Change

Management believes that neither climate change, nor governmental regulations related to climate change, have had, or are expected to have, any material effect on our operations.

Critical Accounting Policies

The preparation of our consolidated financial statements in conformity with U.S. generally accepted accounting principles (“GAAP”) requires the use of estimates and assumptions that affect the reported amount of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. We base our estimates on historical experience and on various other assumptions that we believe are reasonable under the circumstances, and provide a basis for making judgments about the carrying value of assets and liabilities that are not readily available through open market quotes. Estimates and assumptions are reviewed periodically, and actual results may differ from those estimates under different assumptions or conditions. We must use our judgment related to uncertainties in order to make these estimates and assumptions.

For a description of our critical accounting policies and estimates as well as certain sensitivity disclosures related to those estimates, see our Annual Report on Form 10-K for the year ended June 30, ~~2009~~2010. See Note 5 to these interim consolidated financial statements for the accounting policy adopted for Intangible Asset Subject to Amortization, Net. Our critical accounting policies and estimates have not changed materially during the ~~nine~~three months ended ~~March~~September 3130, 2010.

Off Balance Sheet Arrangements

None

2017

ITEM 3 QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

As a Smaller Reporting Company, as defined by Rule 12b-2 of the Exchange Act and in Item 10(f)(1) of Regulation S-K, we are electing scaled disclosure reporting obligations and therefore are not required to provide the information requested by this Item.

ITEM 4 CONTROLS AND PROCEDURES:

Evaluation of Disclosure Controls and Procedures

Under the supervision and with the participation of our management, including our Chief Executive Officer and our Chief Financial Officer, (together, the “Certifying Officers”), we carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Based on the foregoing, our Certifying Officers concluded that our disclosure controls and procedures were effective as of the end of the period covered by this quarterly report.

Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act is accumulated and communicated to management, including our Certifying Officers, or persons performing similar functions, as appropriate, to allow timely decisions regarding required disclosure.

Changes in Internal Control over Financial Reporting

There have not been any changes in the Company’s internal control over financial reporting identified in connection with the evaluation of the Company’s last fiscal quarter that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

PART II - OTHER INFORMATION

ITEM 1 LEGAL PROCEEDINGS

In June 2010, Rick Smith Enterprises, Inc. (“Plaintiff”), filed a complaint against the Company in the Circuit Court of the Ninth Judicial Circuit of the State of Florida in and for Orange County Civil Division. The Plaintiff is seeking cash of $175,000 and shares of common stock of the Company valued at $175,000 plus costs and interest for allegations involving breach of contract. The Plaintiff is also seeking additional cash of $100,000 and shares of common stock of the Company valued at $100,000 for alleged continuing and anticipatory breach of contract. The action is in its very preliminary stages. As a result, we are unable to estimate a potential loss or range of loss, if any, at this time.

ITEM 1A RISK FACTORS

There have been no material changes in our risk factors from those disclosed in Part I, Item 1A of our Annual Report on Form 10-K for the fiscal year ended June 30, 2010.

ITEM 2 UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

During the three months ended ~~March~~September 3130, 2010, the Company issued ~~870~~210,000 shares of its common stock to consultants for services rendered and to be rendered by them and for an aggregate value of $~~642~~46,~~850 and 1,082,142 warrants were exercised for shares of its common stock resulting in the Company receiving $322,500~~200. The shares were issued in reliance on exemptions from registration pursuant to Section 4(2) of the Securities Act of 1933, as amended (the “Act”). At ~~January~~July 111, 2010 ~~and February 18~~, ~~2010,~~ the Company issued 92191,~~736~~084 shares of its common stock valued at $60,000 to the holders of the Series B ~~Stock~~Convertible Preferred stock for accrued dividends through ~~December~~June 3130, ~~2009. On January 14,~~ 2010~~, the Company issued 4,444,444 shares of its common stock valued at $2,888,888 to Zeroloft for the License Agreement~~. The shares were issued in reliance upon the exemption from registration pursuant to Section 3(a)(9) of the Act.

ITEM 3 DEFAULT UPON SENIOR SECURITIES

The Company entered into an unsecured promissory note of $825,000 with a stockholder on May 27, 2008 with a stated interest rate of 10% and a repayment date of November 1, 2008. The loan agreement contains default provisions and the Company went into default;. The ~~however, during the quarter ended March 31, 2010, the~~ Company has been negotiating an extension of the repayment date. ~~During~~The ~~the nine months ended March 31, 2010, the~~ Company repaid $~~325~~675,000 of the loan ~~($150,000 was previously repaid)~~. The remaining unpaid balance as of ~~March~~September 3130, 2010 was $~~350~~150,000.

ITEM 4 REMOVED AND RESERVED

ITEM 5 OTHER INFORMATION

None

ITEM 6 EXHIBITS

Exhibit No.		Exhibit Description
3(i)(1)		Amended Certificate of Incorporation of the Company, incorporated herein by reference to the Company’s Registration Statement on Form S-1, as amended, File No. 33-43976 filed on November 14, 1991.

3(i)(2)		Certificate of Amendment to Amended Certificate of Incorporation of the Company, incorporated herein by reference to Exhibit 3.1 to the Company’s Form 8-K dated May 12, 2006.

3(i)(3)		Certificate of the Powers, Designations, Preferences and Rights of the Series A Convertible Preferred Stock, $0.10 par value per share, incorporated herein by reference to Exhibit 4.1 to the Company’s Form 8-K dated February 24, 2006.

3(i)(4)		Certificate of the Powers, Designations, Preferences and Rights of the Series B Convertible Preferred Stock, $0.10 par value per share, incorporated herein by reference to Exhibit 3(i) to the Company’s Form 8-K dated August 3, 2006.

3(i)(5)		Certificate of the Powers, Designations, Preferences and Rights of the Series B Convertible Preferred Stock, $0.10 par value per share, incorporated herein by reference to Exhibit 3(i) to the Company’s Form 8-K dated June 18, 2007.

3(i)(6)		Amended and Restated Certificate of the Powers, Designations, Preferences and Rights of the Series B Convertible Preferred Stock, $0.10 par value per share, dated July 10, 2009, incorporated herein by reference to Exhibit 4.12 to the Company’s Form 8-K filed on August 3, 2009.

3(ii)(1)		Amended and Restated Bylaws of the Company, incorporated herein by reference to the Company’s Registration Statement on Form S-1, as amended, File No. 33-43976 filed on November 14, 1991.

3(ii)(2)		Certificate of Amendment to the Certificate of Incorporation of the Company to effectuate a 1 for 20 reverse stock split of the Company’s issued and outstanding shares of common stock, incorporated herein by reference to the Company’s Form 8-K dated April 24, 2008.

3(iii)		Audit Committee Charter, incorporated by reference to Exhibit 3(iii) to the Company’s Form 10-K, filed on September 24, 2010.


4.1		Form of Element 21 Golf Company 10% Convertible Promissory Note, incorporated herein by reference to Exhibit 4.2 to the Company’s Form 8-K dated February 24, 2006.

4.2		Element 21 Golf Company 10% Convertible Promissory Note issued to Oleg Muzyrya, incorporated herein by reference to Exhibit 4.3 to the Company’s Form 8-K dated February 24, 2006.

4.3		Common Stock Purchase Warrant, incorporated herein by reference to Exhibit 4.4 to the Company’s Form 8-K dated February 24, 2006.

4.4		Form of Element 21 Golf Company 10% Convertible Promissory Note, incorporated herein by reference to Exhibit 4.1 to the Company’s Form 8-K dated May 23, 2006.

4.5		Common Stock Purchase Warrant, incorporated herein by reference to Exhibit 4.2 to the Company’s Form 8-K dated May 23, 2006.

4.6		Form of Warrant for Purchase of 3,750,000 Shares of Common Stock dated July 31, 2006, incorporated herein by reference to Exhibit 4.1 to the Company’s Form 8-K dated August 3, 2006.

4.7		Form of Warrant for Purchase of 5,073,530 Shares of Common Stock dated July 31, 2006, incorporated herein by reference to Exhibit 4.2 to the Company’s Form 8-K dated August 3, 2006.

4.8		Form of Warrant for Purchase of 3,750,000 Shares of Common Stock dated July 31, 2006, incorporated herein by reference to Exhibit 4.1 to the Company’s Form 8-K dated December 1, 2006.

4.9		Form of Warrant for Purchase of 5,073,530 Shares of Common Stock dated July 31, 2006, incorporated herein by reference to Exhibit 4.2 to the Company’s Form 8-K dated December 1, 2006.

4.10		Common Stock Purchase Warrant, incorporated herein by reference to Exhibit 4.1 to the Company’s Form 8-K dated June 18, 2006.

4.11		Form of Warrant for Purchase of 5,882,400 Shares of Common Stock dated June 15, 2007, incorporated herein by reference to Exhibit 4.2 to the Company’s Form 8-K dated June 18, 2007.

10.1		Series A Convertible Preferred Stock Exchange Agreement and Acknowledgement dated as of February 22, 2006, incorporated herein by reference to Exhibit 10.1 to the Company’s Form 8-K dated February 24, 2006.

10.2		Element 21 Golf Company 2006 Equity Incentive Plan, incorporated herein by reference to Annex C to the Company’s Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934 filed on April 7, 2006.

10.3		Form of Subscription Agreement for Shares of Series B Convertible Preferred Stock dated as of July 31, 2006, incorporated herein by reference to Exhibit 10.1 to the Company’s Form 8-K dated August 3, 2006.

10.4		Form of Subscription Agreement for Shares of Series B Convertible Preferred Stock dated as of November 30, 2006, incorporated herein by reference to Exhibit 10.1 to the Company’s Form 8-K dated August 3, 2006.

10.5		Form of Subscription Agreement for Shares of Series B Convertible Preferred Stock dated as of June 15, 2007, incorporated herein by reference to Exhibit 10.2 to the Company’s Form 8-K dated June 18, 2007.

10.6		Form of Subscription Agreement for Shares of Common Stock dated as of June, 2007, incorporated herein by reference to Exhibit 10.1 to the Company’s Form 8-K dated June 18, 2007


10.7		License Agreement with Advanced Light Alloys Corporation dated as of June 21, 2007 incorporated by reference to exhibit 10.1 to the Company’s Form 10K dated June 21, 2007.

10.8		Consulting Agreement with Nataliya Hearn dated as of January 4, 2006 incorporated by reference to exhibit 10.4 to the Company’s Form 10K dated October 13, 2006.

10.9		Consulting Agreement with John Grippo dated as of November 10, 2005 incorporated by reference to exhibit 10.5 to the Company’s Form 10K dated October 13, 2006.

10.10		Extension and Modification of Promissory Note, incorporated by reference to Exhibit 10.1 to the Company's Form 8-K filed on April 22, 2009.

10.11		Investment Banking Agreement with Legend Securities, Inc., incorporated by reference to Exhibit 10.1 to the Company's Form 8-K filed on December 15, 2009.

10.12		Trademark License and Product Distribution Agreement, incorporated by reference to Exhibit 10.1 to the Company's Form 8-K filed on January 20, 2010.

10.13		Management Agreement with Zeroloft Corp., incorporated by reference to Exhibit 10.2 to the Company's Form 8-K filed on January 20, 2009

10.14		Consulting Agreement with Gaynell Douglas dated May 1, 2010, incorporated by reference to Exhibit 10.14 to the Company’s Form 10-K/A, filed on October 15, 2010.

10.15		Consulting Agreement with Yell Services, dated October 1, 2009, incorporated by reference to Exhibit 10.15 to the Company’s Form 10-K/A, filed on October 15, 2010.

10.16		Consulting Agreement with Altaf Kassam, dated October 1, 2009, incorporated by reference to Exhibit 10.16 to the Company’s Form 10-K/A, filed on October 15, 2010.

10.17		Consulting Agreement with Tolkun Salieva, dated October 1, 2009, incorporated by reference to Exhibit 10.17 to the Company’s Form 10-K/A, filed on October 15, 2010.

10.18		Consulting Agreement with Charles E. Fitzgerald, dated May 1, 2010, incorporated by reference to Exhibit 10.18 to the Company’s Form 10-K/A, filed on October 15, 2010.

10.19		Employment Agreement with Nataliya Hearn, Ph.D., dated January 1, 2009, incorporated by reference to Exhibit 10.19 to the Company’s Form 10-K/A, filed on October 15, 2010.

10.20		Consulting Agreement with Dorset Solutions, Inc, dated November 19, 2009, incorporated by reference to Exhibit 10.20 to the Company’s Form 10-K/A, filed on October 15, 2010.

10.21		Consulting Agreement with Dorset Solutions, Inc, dated January 1, 2010, incorporated by reference to Exhibit 10.20 to the Company’s Form 10-K/A, filed on October 15, 2010.

14.1		Code of Conduct and Ethics, incorporated by reference to Exhibit 14.1 to the Company’s Form 10-K, filed on September 24, 2010.

31.1		Rule 13a-14(a)/15a-14(a) Certifications of Chief Executive Officer.++

31.2		Rule 13a-14(a)/15a-14(a) Certifications of Chief Financial Officer.++

32.1		Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.++

32.2		Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.++

~~Item 6 EXHIBITS~~SIGNATURES

Exhibit No.	Exhibit Description
31.1	Certification of principal executive officer pursuant to section 302 of the Sarbanes-Oxley Act of 2002
31.2	Certification of principal financial and accounting officer pursuant to Section 302 of the Sarbanes Oxley Act of 2002
32.1	Certification of principal executive officer pursuant to Section 906 of the Sarbanes Oxley Act of 2002
32.2	Certification of principal financial and executive officer pursuant to Section 906 of the Sarbanes Oxley Act of 2002

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	Element 21 Golf Company
	American Rare Earths and Materials, Corp.
May 14, 2010	By:	/s/ Nataliya Hearn
November 12, 2010	By:	/s/ Nataliya Hearn
		Nataliya Hearn, Ph.D.
		Chairman, Chief Executive Officer and President
May 14, 2010	By:	/s/ Philip Clark
November 12, 2010	By:	/s/ Philip Clark
		Philip Clark, CA, CPA, CFA Chief Financial Officer

2322

Filing Compare · American Rare Earths & Materials, Corp.