SEC Form 10-K filed by Royalty Management Holding Corporation
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
(Mark One)
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the fiscal year ended
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Commission File Number:
(Exact name of registrant as specified in its charter) |
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(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
(Address of principal executive offices, including zip code)
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Registrant's telephone number, including area code
Securities registered pursuant to Section 12(b) of the Act:
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Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark if the registrant is a well-known seasoned issuer as defined in Rule 405 of the Securities Act. Yes ☐
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐
Indicate by checkmark whether the registrant (1) has 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 the filing requirements for at least the past 90 days.
Indicate by check mark whether the registrant has submitted electronically 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 such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
☐ Large accelerated filer | ☐ Accelerated filer | ☒ |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes
State the aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was last sold, or the average bid and asked price of such common equity, as of the last business day of the registrant’s most recently completed fiscal year; $
There were
ROYALTY MANAGEMENT HOLDING CORPORATION
ANNUAL REPORT ON FORM 10-K
Fiscal Year Ended December 31, 2024
TABLE OF CONTENTS
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SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This annual report on Form 10-K of Royalty Management Holding Corporation for the year ended December 31, 2024 contains certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, which are intended to be covered by the safe harbors created thereby. To the extent that such statements are not recitations of historical fact, such statements constitute forward looking statements which, by definition involve risks and uncertainties. In particular, statements under the Sections; Description of Business, Management’s Discussion and Analysis of Financial Condition and Results of Operations contain forward looking statements. Where in any forward-looking statements, the Company expresses an expectation or belief as to future results or events, such expectation or belief is expressed in good faith and believed to have a reasonable basis, but there can be no assurance that the statement of expectation or belief will result or be achieved or accomplished. The following are factors that could cause actual results or events to differ materially from those anticipated and include but are not limited to: general economic, financial and business conditions; changes in tax laws; and the cost and effects of legal proceedings. You should not rely on forward looking statements in this annual report. This annual report contains forward looking statements that involve risks and uncertainties. We use words such as “anticipates,” “believes,” “continue,” “could,” “estimate,” “expects,” “future,” “intends,” “may,” “might,” “plans,” “possible,” “potential,” “predict,” “project,” “should,” “would” and similar expressions to identify these forward- looking statements. Prospective investors should not place undue reliance on these forward-looking statements, which apply only as of the date of this annual report. Our actual results could differ materially from those anticipated in these forward-looking statements. We undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required under applicable securities laws.
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PART I
ITEM 1. BUSINESS.
All references to “we,” “us,” “our,” “RMCO” “Royalty”, or the “Company” in this Annual Report on Form 10-K mean Royalty Management Holding Corporation.
We were a blank check company formed under the laws of the State of Delaware on January 20, 2021 for the purpose of effecting a merger, share exchange, asset acquisition, stock purchase, recapitalization, reorganization or other similar business combination with one or more target businesses (a “Business Combination”). On October 31, 2023, we consummated a merger with Royalty Management Corporation, an Indiana corporation (“RMC”), whereby RMC became a wholly owned subsidiary of RMCO. Through this combination, RMCO became a royalty company building shareholder value to benefit both its shareholders and communities by acquiring and developing high value assets in a variety of market environments. The model is to acquire and structure cashflow streams around assets that can support the communities by monetizing the current existing cash flow streams while identifying transitionary cash flow from the assets for the future. On March 20, 2025 we changed our state of incorporation from the State of Delaware to State of Florida.
ITEM 1A. RISK FACTORS.
Because we are an Emerging Growth Company, we are not required to provide the information required by this item.
ITEM 1B. UNRESOLVED STAFF COMMENTS.
None.
ITEM 2. PROPERTIES.
We lease an office from an affiliated entity, Land Resources & Royalties LLC (or “LRR”), located in Hazard, Kentucky. We pay $250 a month, plus common charges, in rent with an initial lease term of 10 years.
We sublease an office from an affiliated entity, American Resources Corporation (or “ARC”), located in Fishers, Indiana. Historically, we have paid $2,143 a month in rent, but starting January 2024 that rent was lowered to $1,500 per month, with an initial lease term of 10 years.
We lease land from an affiliated entity, LRR, located in Pike County, Kentucky. We pay $2,000 a month in rent with an initial lease term of 21 years.
We lease land from an affiliated entity, LRR, located in Hamilton County, Indiana. We pay a minimum of $2,000 a month in rent or 20% of the immediately prior month’s total monthly gross revenues from the lessee’s operations. The initial lease term is 5 years.
ITEM 3. LEGAL PROCEEDINGS.
To the knowledge of our management, there is no litigation currently pending or contemplated against us, any of our officers or directors in their capacity as such or against any of our property.
ITEM 4. MINE SAFETY DISCLOSURES.
Not applicable.
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PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES.
Market Information
Our units, Class A common shares and warrants, are traded on The NASDAQ Capital Markets, LLC under the symbols “RMCO” and “RMCOW,” respectively. Upon our business combination, which became effective on October 31, 2023, our units commenced public trading on November 6, 2023. The following table sets forth information as reported by the Nasdaq Capital Markets for the high and low bid and ask prices for each of the eight quarters ending December 31, 2024 for our common stock.
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March 31 |
| $ | 10.74 |
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June 30 |
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September 30 |
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| 11.25 |
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December 31 |
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| 22.97 |
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March 31 |
| $ | 2.30 |
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| $ | 1.10 |
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June 30 |
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| 0.70 |
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September 30 |
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| 1.12 |
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| 0.74 |
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December 31 |
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| 1.28 |
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| 0.86 |
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Holders
As of December 31, 2024, there were 343 shareholders of record of our common stock. This number includes one position at Cede & Co., which includes an unknown number of shareholders holding shares of 94,261. The number of both shareholders of record and beneficial shareholders may change on a daily basis.
Dividends
Holders of common stock are entitled to receive dividends as may be declared by our Board of Directors and, in the event of liquidation, to share pro rata in any distribution of assets after payment of liabilities and preferred shareholders. Our Board of Directors has sole discretion to determine: (i) whether to declare a dividend; (ii) the dividend rate, if any, on the shares of any class of series of our capital stock, and if so, from which date or dates; and (iii) the relative rights of priority of payment of dividends, if any, between the various classes and series of our capital stock. We have not paid any dividends in the past and do not have any current plans to pay any dividends in the future.
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Securities Authorized for Issuance Under Equity Compensation Plans
None.
Recent Sales of Unregistered Sales of Equity Securities
Series A Preferred Stock
The Company is authorized to issue 10,000,000 shares of “blank check” preferred stock with a par value of $0.0001 per share with such designations, voting and other rights and preferences as may be determined from time to time by the Company’s Board of Directors. On August 30, 2024, the Company amended and restated its Certificate of Incorporation to designate 5,000,000 shares of the Preferred Stock as a newly-designed Series A Preferred Stock. Series A Preferred Stock will have a $1.00 par value, while the remainder of preferred stock will remain at $0.0001. At December 31, 2024 and 2023, there were 1,607,886 and 0, respectively, shares of preferred stock issued or outstanding.
Stock Warrants
During 4th quarter 2024, the Company issued 225,000 stock warrants for the Board of Directors compensation for 2024 and 2025. The warrant provides the option to purchase up to a total of 225,000 Class A Common Stock at an average exercise price of 1.19 per share. The warrants expire three years after issuance.
During the period the warrants are outstanding, we will reserve from our authorized and unissued common stock a sufficient number of shares to provide for the issuance of shares of common stock underlying the warrants upon the exercise of the warrants. No fractional shares will be issued upon the exercise of the warrants. The warrants are not listed on any securities exchange. Except as otherwise provided within the warrant, the warrant holders have no rights or privileges as members of the Company until they exercise their warrants.
Use of Proceeds
None.
Repurchases
On April 13, 2024, the Company’s Board of Directors voted unanimously to institute a stock repurchase program of Royalty Management Holding Corporation’s Class A Common Shares. Under the program, stock purchases will occur either through open market purchases or through privately negotiated transactions, at prices determined by an officer of the Company. Unless otherwise modified by the Board of Directors, the stock repurchase program terminates at the earlier of: (i) upon a total purchase of Two Million Dollars ($2,000,000) of Company Common Stock; (ii) Twenty-Four (24) months after the date of Board approval, or (iii) upon termination by action of the Board. The stock repurchase program does not obligate the Company to repurchase any dollar amount or number of shares of common stock, and the program may be suspended or discontinued at any time.
As of December 31, 2024, the Company has repurchased a total of 31,177 shares of Common Stock at an average price of $0.9201 per share.
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ITEM 6. SELECTED CONSOLIDATED FINANCIAL DATA
The registrant qualifies as a smaller reporting company, as defined by Rule 229.10(f)(1) and is not required to provide the information required by this Item.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
This Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) describes the matters that we consider to be important to understanding the results of our operations for the one-year period ended December 31, 2024 and our capital resources and liquidity as of December 31, 2024. Use of the terms “RMCO,” the “Company,” “we,” “us” and “our” in this discussion refer to Royalty Management Holding Corporation and its subsidiaries. Our fiscal year begins on January 1 and ends on December 31. We analyze the results of our operations for the last year, including the trends in the overall business followed by a discussion of our cash flows and liquidity, our credit facility, and contractual commitments. We then provide a review of the critical accounting judgments and estimates that we have made that we believe are most important to an understanding of our MD&A and our consolidated financial statements. We conclude our MD&A with information on recent accounting pronouncements which we adopted during the year, as well as those not yet adopted that are expected to have an impact on our financial accounting practices.
The following discussion should be read in conjunction with the “Selected Consolidated Financial Data” and our consolidated financial statements and the notes thereto, all included elsewhere herein. The forward-looking statements in this section and other parts of this document involve risks and uncertainties including statements regarding our plans, objectives, goals, strategies, and financial performance. Our actual results could differ materially from the results anticipated in these forward-looking statements as a result of factors set forth under the caption “Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995” below. The Private Securities Litigation Reform Act of 1995 provides a “safe harbor” for forward-looking statements made by or on behalf of the Company.
Overview
The following discussion and analysis of the company’s financial condition and results of operations should be read in conjunction with our audited financial statements and the notes related thereto which are included in “Item 8. Financial Statements and Supplementary Data” of this Annual Report on Form 10-K. Certain information contained in the discussion and analysis set forth below includes forward-looking statements. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of many factors, including those set forth under “Special Note Regarding Forward-Looking Statements,” “Item 1A. Risk Factors” and elsewhere in this Annual Report on Form 10-K.
We are a blank check company incorporated in Delaware on January 20, 2021, formed for the purpose of effecting a merger, amalgamation, share exchange, asset acquisition, share purchase, reorganization or other similar business combination with one or more businesses. We intend to effectuate our business combination using cash derived from the proceeds of the Initial Public Offering and the sale of the private placement units, our shares, debt or a combination of cash, shares and debt. On March 20, 2025 we changed our state of incorporation from the State of Delaware to State of Florida.
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RESULTS OF OPERATIONS
Year Ended December 31, 2024 compared to Year Ended December 31, 2023.
Revenues.
Revenues for the years ended December 31, 2024 and 2023 were $807,089 and $488,520, respectively. The increase is due to increased volume for our environmental services subsidiary.
Expenses.
Total cost of revenues for the year ended December 31, 2024 and 2023 were $22,699 and $16,594, respectively. The increase is due to increased volume for our environmental services subsidiary.
Total Operating Expenses for the year ended December 31, 2024 and 2023 were $1,096,748 and $777,600, respectively. The main reason for the increase to operating expenses were due to additional public company listing fees in addition to professional fees to keep the company compliant.
Total Other Income and Expense for the year ended December 31, 2024 were other income of $198,097, mostly from interest income, income from investment in FUB Mineral which is accounted for on the equity method of accounting, the fair value adjustments of warrant liabilities, and interest expense.
Total Other Income and Expense for the year ended December 31, 2023 were other expense of $807,971. The increase was primarily due to a gain on fair value of warrants liabilities, an increase in interest income, and a decrease in interest expense due to all convertible notes being converted at time of business combination.
Financial Condition.
Total Assets as of December 31, 2024 and 2023 amounted to $15,040,664 and $15,040,123, respectively. The increase in assets was due to an increase in accounts and interest receivables.
Total Liabilities as of December 31, 2024 and 2023 amounted to $1,414,940 and $3,926,243, respectively. The primary driver for the decrease in liability balance was the conversions of accrued wages and notes payable to preferred stock shares. See Note 12 for additional information.
LIQUIDITY AND CAPITAL RESOURCES
The Company’s primary use of positive cash flow has been to fund corporate holding and public company costs. As of December 31, 2024, the Company had retained earnings of $1,231,588. The Company has limited financial resources. As of December 31, 2024, the Company had a working capital deficit of $236,740, a cash balance of $114,138 and cash flow from operations totaling $690,443. Management believes that the Company has sufficient liquidity to meet its obligations through at least the first quarter of 2026. In order to execute on its investment and growth plans, the Company will likely be required to raise additional proceeds, through the issuance of equity or debt securities. See Note 11 to the Company’s consolidated financial statements for more information on its Debt Facilities.
OFF-BALANCE SHEET ARRANGEMENTS
We have no off-balance sheet arrangements as of December 31, 2024 and 2023. We do not participate in transactions that create relationships with unconsolidated entities or financial partnerships, often referred to as variable interest entities, which would have been established for the purpose of facilitating off-balance sheet arrangements. We have not entered into any off-balance sheet financing arrangements, established any special purpose entities, guaranteed any debt or commitments of other entities, or purchased any non-financial assets.
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CONTRACTUAL OBLIGATIONS AND COMMERCIAL COMMITMENTS
Administrative Services Arrangement
The Company’s Sponsor agreed, commencing from the date that the Company’s securities are first listed on NASDAQ through the earlier of the Company’s consummation of a Business Combination and its liquidation, to make available to the Company certain general and administrative services, including office space, utilities and administrative services, as the Company may require from time to time. The Company agreed to pay the Sponsor $10,000 per month for these services. At the date of business combination, the services agreement terminated. As of the year ended December 31, 2024, $120,000, is accrued and owed under this agreement.
CRITICAL ACCOUNTING POLICIES AND ESTIMATES
Our Consolidated Financial Statements are prepared in accordance with United States generally accepted accounting principles (“U.S. GAAP”). The preparation of financial statements in conformity with U.S. GAAP requires us to establish accounting policies and make estimates that affect amounts reported in our Consolidated Financial Statements. Note 2 of the Notes to Consolidated Financial Statements, which is incorporated by reference into this MD&A, describes the significant accounting policies we use in our Consolidated Financial Statements.
An accounting estimate requires assumptions and judgments about uncertain matters that could have a material effect on the Consolidated Financial Statements. Estimates are made under facts and circumstances at a point in time, and changes in those facts and circumstances could produce results substantially different from those estimates. The most significant accounting policies and estimates and their related application are discussed below.
Warrant Liability
The Company accounts for the Warrants in accordance with the guidance contained in ASC 815 under which the Warrants do not meet the criteria for equity treatment and must be recorded as liabilities. Accordingly, the Company classifies the Warrants as liabilities at their fair value and adjust the Warrants to fair value at each reporting period. This liability is subject to re-measurement at each balance sheet date until exercised, and any change in fair value is recognized in our statement of operations. The Private Warrants and the Public Warrants for periods where no observable traded price was available are valued using a Monte Carlo simulation. For periods subsequent to the detachment of the Public Warrants from the Units, the Public Warrant quoted market price was used as the fair value as of each relevant date.
SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995
This report, including Management’s Discussion and Analysis of Financial Conditions and Results of Operations, contains forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, and Section 27A of the Securities Act of 1933, as amended, which are intended to be covered by the safe harbors created thereby. Those statements include, but may not be limited to, all statements regarding our and management’s intent, belief, expectations, such as statements concerning our future profitability and our operating and growth strategy. Words such as “believe,” “anticipate,” “expect,” “will,” “may,” “should,” “intend,” “plan,” “estimate,” “predict,” “potential,” “continue,” “likely,” “would,” “could” and similar expressions are intended to identify forward-looking statements. Investors are cautioned that all forward-looking statements involve risk and uncertainties including, without limitations, dependence on sales forecasts, changes in consumer demand, seasonality, impact of weather, competition, reliance on suppliers, risks inherent to international trade, changing retail trends, the loss or disruption of our manufacturing and distribution operations, cyber security breaches or disruption of our digital systems, fluctuations in foreign currency exchange rates, economic changes, and other factors detailed from time to time in our filings with the Securities and Exchange Commission. Although we believe that the assumptions underlying the forward-looking statements contained herein are reasonable, any of the assumptions could be inaccurate. Therefore, there can be no assurance that the forward-looking statements included herein will prove to be accurate. In light of the significant uncertainties inherent in the forward-looking statements included herein, the inclusion of such information should not be regarded as a representation by us or any other person that our objectives and plans will be achieved. We assume no obligation to update any forward-looking statements.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
The Company qualifies as a smaller reporting company, as defined by SEC Rule 229.10(f)(1) and is not required to provide the information required by this Item.
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ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
ROYALTY MANAGEMENT HOLDING COPRORATION
December 31, 2024 and 2023
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CONSOLIDATED FINANCIAL STATEMENTS |
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Report of Independent Registered Public Accounting Firm - 2024 |
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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Stockholders of Royalty Management Holding Corporation
Opinion on the Consolidated Financial Statements
We have audited the accompanying consolidated balance sheets of Royalty Management Holding Corporation and its subsidiaries (the “Company”) as of December 31, 2024 and 2023, and the related consolidated statements of operations, stockholders’ equity, and cash flows for the years then ended, and the related notes (collectively referred to as the consolidated financial statements). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2024 and 2023, and the results of its operations and its cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States of America.
Basis for Opinion
These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.
/s/
CM3 Advisory (PCAOB ID
March 28, 2025
We have served as the Company’s auditor since 2024.
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ROYALTY MANAGEMENT HOLDING CORPORATION CONSOLIDATED BALANCE SHEETS |
ASSETS |
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Prepaid Insurance |
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Interest Receivable |
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Fee Income Receivable |
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Total Current Assets |
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Investments in Corporations and LLCs |
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Convertible Notes Receivable |
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Notes Receivable |
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Due from Related Party |
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Intangible Assets, Net |
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Restricted Cash |
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Tools, Machinery & Equipment, Net |
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Operating Lease Right-Of-Use Assets, Net |
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TOTAL ASSETS |
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LIABILITIES |
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Due to Related Party |
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Current Portion of Operating Lease Liabilities |
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Current Portion of Notes Payable |
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Deferred Income |
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Accrued Expenses |
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Total Current Liabilities |
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Notes Payable – Related Party, Net |
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Operating Lease Liabilities |
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Notes Payable, Net of Current Portion |
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Fair Value Liability of Public Warrants |
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Fair Value Liability of Private Warrants |
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TOTAL LIABILITIES |
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COMMITMENTS AND CONTINGENCIES (Note 17) |
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STOCKHOLDERS’ EQUITY |
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Preferred Stock: $ |
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Preferred Stock: $ |
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Class A Common Stock: $ |
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Total Stockholders’ Equity |
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TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY |
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The accompanying footnotes are integral to the consolidated financial statements.
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ROYALTY MANAGEMENT HOLDING CORPORATION CONSOLIDATED STATEMENTS OF OPERATIONS |
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Fee Income |
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Rental Income |
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TOTAL REVENUE |
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Cost of Revenue |
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GROSS PROFIT |
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Intangibles Amortization Expense |
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Depreciation Expense |
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General and Administrative Expenses |
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Professional Fees |
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Impairment Loss |
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Total Operating Expenses |
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NET LOSS FROM OPERATIONS |
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OTHER INCOME (EXPENSE) |
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Interest Income |
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Income from Investment |
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Gain (Loss) on Warrant Fair Value Adjustment |
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Other Income |
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Interest Expense |
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Total Other Income (Expense) |
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NET LOSS |
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Weighted Average Shares Outstanding, Basic |
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Net Loss Per Share, Basic |
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| $ | ( | ) |
The accompanying footnotes are integral to the consolidated financial statements.
| F-3 |
| Table of Contents |
ROYALTY MANAGEMENT HOLDING CORPORATION STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY |
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Balance December 31, 2022 |
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Shares Issued for Services |
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Shares Forfeited for Services |
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Shares Issued in Connection with Warrant and Note Conversions |
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Shares Issued for Deferred Underwriter Fee |
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Reverse Recapitalization on October 23, 2023 |
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Warrants Issued with Convertible Notes |
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Net Loss |
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Balance December 31, 2023 |
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| $ |
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Shares Issued for Purchase of Debt |
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Shares Issued for Services |
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Share Buyback |
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Stock Compensation - Warrants |
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Preferred Stock – Stock Dividends |
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Net Loss |
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Balance December 31, 2024 |
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The accompanying footnotes are integral to the consolidated financial statements.
| F-4 |
| Table of Contents |
ROYALTY MANAGEMENT HOLDING CORPORATION CONSOLIDATED STATEMENTS OF CASH FLOWS |
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| December 31, 2024 |
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| December 31, 2023 |
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Cash flows from Operating Activities: |
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Net Loss |
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Adjustments to Reconcile Net Loss to Net Cash Provided by (Used in) Operations |
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Amortization of Debt Discount |
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Amortization Expense of Right-of-Use Assets |
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Amortization of Intangibles |
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Depreciation Expense |
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Issuance of Common Shares for Service |
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Issuance of Preferred Shares for Service |
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Stock Compensation - Warrants |
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Impairment Loss on Intangible Asset |
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Fair Value Adjustment of Public Warrants |
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Fair Value Adjustment of Private Warrants |
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Changes in Operating Assets and Liabilities: |
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Accounts Receivable |
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Prepaid Insurance |
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Interest Receivable |
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Fee Income Receivable |
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Due from Related Party |
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Accounts Payable – Related Party |
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Accounts Payable |
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Due to Related Party |
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Deferred Revenue |
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Accrued Expenses |
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Net Cash Provided by (Used in) Operating Activities |
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Cash Flows from Investing Activities |
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Investments in Corporations and LLCs |
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Investments in Convertible Notes Receivable |
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Withdrawal from Notes Receivable |
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Investments in Intangible Assets |
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Net Cash Used in Investing Activities |
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Cash Flows from Financing Activities |
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Payments on Reverse Capitalization |
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Proceeds from Deferred Underwriter Fee |
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Shares Buyback |
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Proceeds from Notes Payable |
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Payments on Notes Payable |
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Proceeds from Issuance of Convertible Notes |
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Payments on Convertible Notes |
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Proceeds from Convertible Note Conversion |
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Net Cash (Used in) Provided by Financing Activities |
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Net Change in Cash |
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Cash – Beginning of Year |
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Cash – End of Year |
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Supplemental Information |
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Discount on Convertible Notes |
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Notes Receivable |
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Intangible Assets |
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Cash Paid for Interest |
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The accompanying footnotes are integral to the consolidated financial statements.
| F-5 |
| Table of Contents |
ROYALTY MANAGEMENT HOLDING COPRORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS December 31, 2024 and 2023 |
NOTE 1 - NATURE OF OPERATIONS
American Acquisition Opportunity Inc was a blank check company organized on January 20, 2021 under the laws of the State of Delaware and effectuated its combination with Royalty Management Corporation (“RMC”) on October 23, 2023 and at that point changed its name to Royalty Management Holding Corporation (“RMHC” or the “Company”). The Company’s business model is to invest or purchase assets that have near and medium-term income potential to provide RMC with accretive cash flow from which it can reinvest in new assets or expand cash flow from those existing assets. These assets typically are natural resources assets (including real estate and mining permits), patents, intellectual property, and emerging technologies.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation and Consolidation
The Company’s financial statements subsidiaries include the accounts of the Company and the merged corporation RMC, and RMC’s wholly owned subsidiary, RMC Environmental Services LLC (“RMC ES”) All significant intercompany accounts and transactions have been eliminated in consolidation.
Use of Estimates
The preparation of financial statements in conformity with United States generally accepted accounting principles (“U.S. GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures 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.
Earnings Per Share
The Company’s basic earnings per share (“EPS”) amounts have been computed based on the average number of shares of common stock outstanding for the period and include the effect of any participating securities as appropriate. Diluted EPS includes the effect of the Company’s outstanding stock warrants, if inclusion of these items is dilutive.
Related Party Policies
In accordance with ASC 850, “Related Parties” are defined as either an executive, director or nominee, greater than 10% beneficial owner, or an immediate family member of any of the proceeding. Transactions with related parties are reviewed and approved by the directors of the Company, as per internal policies.
Cash Equivalents and Concentration of Cash Balance
The Company considers all highly liquid securities with an original maturity of less than three months to be cash equivalents. The Company’s cash and cash equivalents in bank deposit accounts, at times, may exceed federally insured limit of $
| F-6 |
| Table of Contents |
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.)
Restricted Cash
At December 31, 2024 and 2023, RMC has $
The following table sets forth a reconciliation of cash, cash equivalents, and restricted cash reported in the consolidated balance sheet that agrees to the total of those amounts as presented in the consolidated statement of cash flows for the years ended December 31, 2024 and 2023.
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| December 31, |
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| December 31, |
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| 2024 |
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| 2023 |
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Cash and Cash Equivalents |
| $ |
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| $ |
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Restricted Cash |
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Total Cash, Cash Equivalents, and Restricted Cash presented in the Statement of Cash Flows |
| $ |
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| $ |
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Allowance for Credit Losses
In June 2016, FASB issued guidance ASC 326, “Credit Losses” which significantly changed how entities will measure credit losses for most financial assets and certain other instruments that aren’t measured at fair value through net income. The most significant change in this standard is a shift from the incurred loss model to the expected loss model. Under the standard, disclosures are required to provide users of the financial statements with useful information in analyzing an entity’s exposure to credit risk and the measurement of credit losses. Financial assets held by the Company that are subject to the guidance in ASC 326 were trade accounts receivable and other accounts receivable, including interest, fees, rental income, convertible notes, and notes receivable.
We adopted the standard effective January 1, 2023. The impact of the adoption was not considered material to the financial statements and primarily resulted in new/enhanced disclosures only. Allowance for credit losses amounted to $
Property and Equipment
The Company records property and equipment at cost. For tools, machinery & equipment, depreciation is calculated using the straight-line method over the estimated useful lives of the assets.
Property and equipment are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability is measured by comparison of the carrying amount to the future net undiscounted cash flows expected to be generated by the related assets. If these assets are determined to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount exceeds the fair market value of the assets.
There was no impairment loss recognized during the periods ending December 31, 2024 and 2023, respectively.
Costs related to maintenance and repairs which do not prolong the asset’s useful life are expensed as incurred.
The estimated useful lives are as follows:
Tools, Machinery & Equipment |
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|
|
Beneficial Conversion Features of Convertible Securities
Conversion options that are not bifurcated as a derivative pursuant to ASC 815, “Derivatives and Hedging” and not accounted for as a separate equity component under the cash conversion guidance are evaluated to determine whether they are beneficial to the investor at inception (a beneficial conversion feature) or may become beneficial in the future due to potential adjustments. The beneficial conversion feature guidance in ASC 470-20, “Debt with Conversion and Other Options” applies to convertible stock as well as convertible debt which are outside the scope of ASC 815. A beneficial conversion feature is defined as a nondetachable conversion feature that is in the money at the commitment date. In addition, our convertible debt issuances contain conversion terms that may change upon the occurrence of a future event, such as antidilution adjustment provisions. The beneficial conversion feature guidance requires recognition of the conversion option’s in-the-money portion, the intrinsic value of the option, in equity, with an offsetting reduction to the carrying amount of the instrument. The resulting discount is amortized as a dividend over either the life of the instrument, if a stated maturity date exists, or to the earliest conversion date, if there is no stated maturity date. If the earliest conversion date is immediately upon issuance, the dividend must be recognized at inception. When there is a subsequent change to the conversion ratio based on a future occurrence, the new conversion price may trigger the recognition of an additional beneficial conversion feature on occurrence. The conversion feature is linked to the Company’s own equity value, therefore there is no requirement to quantify the beneficial conversion feature.
| F-7 |
| Table of Contents |
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.)
All convertible notes outstanding were converted at the date of business combination on November 1, 2023. Principal and accrued interest were converted into common shares at $
Amortization expense of the debt discount for the convertible debt of $
Revenue Recognition
The Company recognizes revenue in accordance with ASC 606, “Revenue Recognition” from services provided when (a) persuasive evidence that an agreement exists; (b) the products or services has been delivered or completed; (c) the prices are fixed and determinable and not subject to refund or adjustment; and (d) collection of the amounts due is reasonably assured.
Our revenue is comprised of the performance of environmental services and royalty and lease revenue governed by the underlying contracts. The Company only has one reportable revenue segment. As of December 31, 2024, all the revenue generating activity is undertaken in eastern Kentucky, Indiana, and Limpopo, South Africa.
Deferred revenue of $
The following table disaggregates our revenue by major service line for the years ended:
|
| December 31, |
|
| December 31, |
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| 2024 |
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| 2023 |
| ||
Environmental Services |
| $ |
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| $ |
| ||
Fee Income |
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Rental Income |
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Total Revenue |
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Interest Income from Interest Bearing Accounts |
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Notes Receivable Interest Income |
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Income from Investment |
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Other Income |
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| F-8 |
| Table of Contents |
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.)
Derivative Financial Instruments
The Company evaluates its financial instruments to determine if such instruments are derivatives or contain features that qualify as embedded derivatives in accordance with ASC 815, "Derivatives and Hedging". For derivative financial instruments that are accounted for as liabilities, the derivative instrument is initially recorded at its fair value on the grant date and is then re-valued at each reporting date, with changes in the fair value reported in the statements of operations. The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is evaluated at the end of each reporting period. Derivative liabilities are classified in the balance sheet as current or non-current based on whether or not net-cash settlement or conversion of the instrument could be required within 12 months of the balance sheet date.
Warrant Liability
The Company accounts for the Warrants in accordance with the guidance contained in ASC 815 under which the Warrants do not meet the criteria for equity treatment and must be recorded as liabilities. Accordingly, the Company classifies the Warrants as liabilities at their fair value and adjust the Warrants to fair value at each reporting period. This liability is subject to re-measurement at each balance sheet date until exercised, and any change in fair value is recognized in our statement of operations. The Private Warrants and the Public Warrants for periods where no observable traded price was available are valued using a Monte Carlo simulation. For periods subsequent to the detachment of the Public Warrants from the Units, the Public Warrant quoted market price was used as the fair value as of each relevant date.
Stock-based Compensation
Stock-based compensation is measured at the grant date based on the fair value of the award and is recognized as expense over the applicable vesting period of the stock award (generally 0 to 3 years) using the straight-line method.
Stock-based compensation to board members is accounted for under ASC 718, “Compensation-Stock Compensation”. Stock-based compensation expense related to stock awards granted to a board member is recognized based on the grant-date estimated fair values of the awards using the Black Scholes option pricing model (“Black Scholes”). The value is recognized as expense ratably over the requisite service period, which is generally the vesting term of the award. We adjust the expense for actual forfeitures as they occur. Stock-based compensation expense is classified in the accompanying consolidated statements of operations based on the function to which the related services are provided.
Black-Scholes requires a number of assumptions, of which the most significant are expected volatility, expected option term (the time from the grant date until the options are exercised or expire) and risk-free rate. Expected volatility is determined using the historical volatility for the Company. The risk-free interest rate is based on the yield of US treasury government bonds with a remaining term equal to the expected life of the option. Expected dividend yield is zero because the Company has never paid cash dividends on common shares.
| F-9 |
| Table of Contents |
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.)
Income Taxes
The Company uses the liability method of accounting for income taxes as set forth in ASC 740, “Income Taxes”. Under the liability method, deferred taxes are determined based on the temporary differences between the financial statement and tax basis of assets and liabilities using tax rates expected to be in effect during the years in which the basis differences reverse. A valuation allowance is recorded when it is unlikely that the deferred tax assets will not be realized.
The Company assesses its income tax positions and record tax benefits for all years subject to examination based upon our evaluation of the facts, circumstances and information available at the reporting date. In accordance with ASC 740-10, for those
The Company has evaluated its income tax positions and has determined that it does not have any uncertain tax positions. As of the year ended December 31, 2024, the Company will recognize interest and penalties related to any uncertain tax positions through its income tax expense.
The Company accounts for income taxes with the recognition of estimated income taxes payable or refundable on income tax returns for the current period and for the estimated future tax effect attributable to temporary differences and carry forwards. Measurement of deferred income items is based on enacted tax laws including tax rates, with the measurement of deferred income tax assets being reduced by available tax benefits not expected to be realized in the immediate future.
The Company expects to file U.S. federal and various state income tax returns. The Company was formed in 2021 and has filed all required tax returns. All tax periods since inception remain open to examination by the taxing jurisdictions to which the Company is subject.
The provision for income taxes was deemed to be de minimis for the years ending December 31, 2024 and 2023.
Recently Issued Accounting Pronouncements
The Company is an “emerging growth company,” as defined in Section 2(a) of the Securities Act, as modified by the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”), and it may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in its periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved.
| F-10 |
| Table of Contents |
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.)
Further, Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered under the Exchange Act) are required to comply with the new or revised financial accounting standards. The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies but any such election to opt out is irrevocable. The Company has elected not to opt out of such extended transition period which means that when a standard is issued or revised and it has different application dates for public or private companies, the Company, as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard. This may make comparison of the Company’s financial statements with another public company which is neither an emerging growth company nor an emerging growth company which has opted out of using the extended transition period difficult or impossible because of the potential differences in accounting standards used.
In November of 2023, the FASB issued ASU 2023-07, “Segment Reporting 280: Improvements to Reportable Segment Disclosures”. ASU 2023-07 increases the disclosures about a public entity’s reportable segments. Under ASU 2023-07, a public entity would be required to disclose significant segment expenses that are regularly provided to the chief operating decision maker (“CODM”), a description of other segment items by reportable segment, annual disclosures about a reportable segment’s profit or loss and assets required by 280 in interim periods, any additional measures of a segment’s profit or loss used by the CODM to allocate resources, and the title and position of the CODM.
ASU 2023-07 is effective for annual reporting periods beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. ASU 2023-07 allows for early adoption and requires retrospective adoption. The Company has adopted this guidance for the year ending December 31, 2024. The application of this new guidance is not expected to have a material impact on the Company’s consolidated financial condition, results of operations, or cash flows, as the guidance pertains to disclosure only.
In December of 2023, FASB issued ASU No. 2023-09, “Income Taxes (740): Improvements to Income Tax Disclosures” ASU 2023-09. Under ASU 2023-09, a public entity will be required to disclose specific categories in the rate reconciliation and provide additional information for reconciling items that meet a quantitative threshold, such as if the effect of the reconciling item is equal to or greater than five percent of the amount computed by multiplying pretax income/loss by the applicable statutory income tax rate. Entities would also have to disclose the amount of income taxes paid disaggregated by federal, state, and foreign taxes and the amount of income taxes paid disaggregated by individual jurisdictions in which income taxes paid is equal to or greater than five percent of total income taxes paid, along with income/loss from continuing operations before income tax expense disaggregated between domestic and foreign and income tax expense from continuing operations disaggregated by federal, state, and foreign. ASU 2023-09 is effective for annual reporting periods beginning after December 15, 2024. ASU 2023-09 allows for early adoption for annual financial statements that have not yet been issued and allows retrospective and prospective adoption. The Company will adopt this guidance beginning with its fourth quarter ending December 31, 2025. The application of this new guidance is not expected to have a material impact on the Company’s consolidated financial condition, results of operations, or cash flows, as the guidance pertains to disclosure only.
Reclassification of Prior Year Presentation
Certain prior year amounts have been reclassified for consistency with the current year presentation. These reclassifications had no effect on the reported results of operations.
| F-11 |
| Table of Contents |
NOTE 3 – BUSINESS COMBINATION
On October 31, 2023, we consummated the business combination, or the Business Combination, contemplated by the Agreement and Plan of Merger, with RMC Sub Inc. (“Merger Sub”), a wholly-owned subsidiary of American Acquisition Opportunity Inc. (“AMAO”), a special purpose acquisition company, which is our predecessor, and Royalty Management Co. (“Legacy Royalty”). Pursuant to the Merger Agreement, Merger Sub was merged with and into Legacy Royalty, with Legacy Royalty surviving the merger as a wholly owned subsidiary of AMAO (the “Business Combination”). Upon the closing of the Business Combination, AMAO changed its name to Royalty Management Holdings Co. with its Class A common stock continuing to be listed on Nasdaq under the ticker symbol “RMCO,” its warrants continuing to be listed on Nasdaq under the symbol “RMCOW. Royalty Management Holding co. became the successor entity to AMAO pursuant to Rule 12g-3(a) promulgated under the Securities Exchange Act of 1934, as amended (the “Exchange Act”).
All Round A Convertible Debt notes, accrued interest, and warrants were converted into
At the closing of Business Combination, all shares of Class B Common Stock were automatically converted into
NOTE 4 – INVESTMENTS IN CORPORATIONS AND LLCS
Investments in corporations and limited liability companies as of December 31, 2024 and 2023 consisted of the following:
|
| December 31, 2024 |
|
| December 31, 2023 |
| ||
|
|
|
|
|
|
| ||
FUB Mineral LLC |
| $ |
|
| $ |
| ||
Ferrox Holdings Ltd. |
|
|
|
|
|
| ||
Total Investments in Corporations and LLCs |
| $ |
|
| $ |
| ||
FUB Mineral LLC
On October 1, 2021, the Company made an investment into FUB Mineral LLC (“FUB”) in the amount of $
Ferrox Holdings Ltd.
On December 23, 2022, the Company entered into an agreement with Maxpro Invest Holdings Inc. (“Maxpro”) to purchase from Maxpro the sum of
| F-12 |
| Table of Contents |
NOTE 5 – CONVERTIBLE NOTES RECEIVABLE
Convertible notes receivable as of December 31, 2024 and 2023 consisted of the following:
|
| December 31, 2024 |
|
| December 31, 2023 |
| ||
|
|
|
|
|
|
| ||
Heart Water Inc. |
| $ |
|
| $ |
| ||
Ferrox Holdings Ltd. |
|
|
|
|
|
| ||
Advanced Magnetic Lab, Inc. |
|
|
|
|
|
| ||
Total Convertible Notes Receivable |
| $ |
|
| $ |
| ||
Heart Water Inc.
On December 2, 2022, the Company advanced $
Ferrox Holdings Ltd.
In March 2022 and September 2022, the Company made a series of investments totaling $
Advanced Magnetic Lab, Inc.
On December 21, 2022, Advanced Magnetic Lab, Inc. (“AML”) issued a Convertible Promissory Note to the Company in the amount of $
| F-13 |
| Table of Contents |
NOTE 6 – NOTES RECEIVABLE
Notes receivable as of December 31, 2024 and 2023 consisted of the following:
|
| December 31, 2024 |
|
| December 31, 2023 |
| ||
McCoy Elkhorn Coal LLC |
| $ |
|
| $ |
| ||
American Resources Corporation |
|
|
|
|
|
| ||
T.R. Mining & Equipment Ltd. |
|
|
|
|
|
| ||
Total Notes Receivable |
| $ |
|
| $ |
| ||
McCoy Elkhorn Coal LLC
On May 20, 2022, the Company entered into an agreement to fund the development of a series of coal mines located in Pike County, Kentucky in exchange for a promissory note to repay the Company its capital invested, plus interest, and then an ongoing overriding royalty from coal sold from the mines. $
American Resources Corporation
On July 31, 2022, the Company purchased certain payments that are owed to Texas Tech University (“TTU”) from American Resources Corporation for the agreement to participate in sponsored research services performed by TTU and agreed to assume responsibility for those payments. The payments that were due to TTU amounted to $
T. R. Mining & Equipment Ltd.
On February 2, 2024, February 29, 2024, April 4, 2024, May 7, 2024, and June 14, 2024, the Company invested the amount of $
| F-14 |
| Table of Contents |
NOTE 7 – INTANGIBLE ASSETS
Intangible assets as of December 31, 2024 and 2023 consisted of the following:
|
| December 31, 2024 |
|
| December 31, 2023 |
| ||
|
|
|
|
|
|
| ||
Mining Permit Package |
| $ |
|
| $ |
| ||
MC Mining |
|
|
|
|
|
| ||
Coking Coal Leasing LLC |
|
|
|
|
|
| ||
RMC Environmental Services LLC |
|
|
|
|
|
| ||
Heliponix LLC |
|
|
|
|
|
| ||
Reelement Technologies Corporation |
|
|
|
|
|
| ||
Less: Accumulated Amortization |
|
| ( | ) |
|
| ( | ) |
Total Intangible Assets |
| $ |
|
| $ |
| ||
Amortization expense - Intangible Assets totaled $
Land Betterment Exchange (LBX)
The Company is the holder of
Mining Permit Package
On January 3, 2022,
MC Mining
On April 1, 2022, the Company purchased the rights to receive rental income from property located in Pike County, Kentucky. The rental income is $
Coking Coal Leasing LLC
On April 15, 2022, the Company entered into a purchase agreement with ENCECo, Inc., (“ENCECo”) the sole owner and member of Coking Coal Leasing LLC (“CCL”), whereby the Company issued
| F-15 |
| Table of Contents |
NOTE 7 – INTANGIBLE ASSETS (cont.)
RMC Environmental Services LLC
On August 17, 2022, the Company formed RMC ES as a wholly owned subsidiary of the Company for the purpose of purchasing certain rights to operate a clean fill landfill located in Hamilton County, Indiana that pays RMC ES for each load of clean fill material that is disposed on, or removed from, the landfill. The consideration paid by the Company was $
Heliponix LLC
On September 9, 2024, the Company entered into a royalty and unit purchase agreement and assignment agreement with eko Solutions LLC (“eko”) that provided the Company with certain royalty rights originating from a Commercialization Agreement that was previously signed between Heliponix LLC (“ANU”) and eko on June 18, 2024, which granted to eko revenue sharing and royalty rights to seed pod sales produced by ANU. The Company also received assignment of Class B units in ANU resulting from a previously-executed Equity Award Agreement dated June 10, 2024, whereby ANU issued to eko 6,100 Class B Units.
Reelement Technologies Corporation
On September 12, 2024, the Company into a Technology Development Services Agreement with ReElement Technologies Corporation (“ReElement”) whereby the Company will pay for certain research and development by ReElement to produce technologies related to the purification and separation of platinum group metals, gold, and silver from ore bodies and recycled products (the “PGM Technology”). The maximum total fees to be paid by RMC in connection with each of the deliverables and the services is an agreed-to-amount of up to $200,000. As of December 31, 2024, $
Concurrently, on September 12, 2024, the Company also entered into a Royalty Agreement with ReElement whereby RMC shall receive a royalty from the gross sales resulting from the use or license of the PGM Technology that is developed from the Technology Development Services Agreement. This royalty is equal to 5% of the gross sales from the PGM Technology, occurring until RMC receives royalty payments amounting to the service fee, and then a 1.5% royalty occurring through the remainder of the royalty term. The intangible will be treated as an indefinite lived asset as the ongoing royalty rights will remain in place indefinitely.
As of December 31, 2024, future amortization expense are as follows:
2025 |
|
|
| |
2026 |
|
|
| |
2027 |
|
|
| |
2028 |
|
|
| |
2029 |
|
|
| |
Thereafter |
|
|
| |
|
|
|
|
| F-16 |
| Table of Contents |
NOTE 8 – PROPERTY AND EQUIPMENT
At December 31, 2024 and 2023, property and equipment were comprised of the following:
|
| December 31, 2024 |
|
| December 31, 2023 |
| ||
|
|
|
|
|
|
| ||
Tools, Machinery & Equipment |
| $ |
|
| $ |
| ||
Less: Accumulated Depreciation |
|
| ( | ) |
|
| ( | ) |
Total Property and Equipment, Net |
| $ |
|
| $ |
| ||
Depreciation expense amounted to $
NOTE 9 – LEASES
The operating right-of-use asset (“ROU”) is the Company’s right to use an asset over the life of a lease. The asset is calculated as the initial amount of the lease liability, plus any lease payments made to the lessor before the lease commencement date, plus any initial direct costs incurred, minus any lease incentives received. The Company leases certain land and office space under noncancelable operating leases, typically with initial terms of
The Company leases an office from an affiliated entity, Land Resources & Royalties (“LRR”), located in Hazard, Kentucky. We pay $
The Company subleases an office from an affiliated entity, American Resources Corporation (“ARC”), located in Fishers, Indiana. Historically we have paid $
The Company leases land from an affiliated entity, LRR, located in Pike County, Kentucky. We pay $
The Company leases land from an affiliated entity, LRR, located in Hamilton County, Indiana. We pay a minimum of $
| F-17 |
| Table of Contents |
NOTE 9 – LEASES (cont.)
As of December 31, 2024 and 2023 right of use assets and liabilities were comprised of the following:
|
| December 31, 2024 |
|
| December 31, 2023 |
| ||
Assets: |
|
|
|
|
|
| ||
ROU Assets |
| $ |
|
| $ |
| ||
Accumulated Amortization |
|
| ( | ) |
|
| ( | ) |
ROU Assets, Net |
|
|
|
|
|
| ||
|
|
|
|
|
|
|
|
|
Liabilities |
|
|
|
|
|
|
|
|
Current: |
|
|
|
|
|
|
|
|
Operating Lease Liabilities |
| $ |
|
|
|
| ||
Non-Current |
|
|
|
|
|
|
|
|
Operating Lease Liabilities |
|
|
|
| $ |
| ||
|
|
|
| For the Years Ended December 31, |
| |||||
|
| Expense Classification |
| 2024 |
|
| 2023 |
| ||
Operating Lease Expenses: |
|
|
|
|
|
|
|
| ||
Amortization of ROU Assets |
| General and Administrative |
| $ |
|
| $ |
| ||
Accretion of Operating Lease Liabilities |
| General and Administrative |
|
|
|
|
|
| ||
Total Operating Lease Expenses |
|
|
| $ |
|
| $ |
| ||
Other information related to leases is as follows: |
| As of |
|
| As of |
| ||
|
| December 31, |
|
| December 31, |
| ||
|
| 2024 |
|
| 2023 |
| ||
|
|
|
|
|
|
| ||
Weighted-Average Remaining Lease Term: Operating Leases (in Years) |
|
|
|
|
|
| ||
|
|
|
|
|
|
|
|
|
Weighted-Average Discount Rate: Operating Leases |
|
| % |
|
| % | ||
As of December 31, 2024, remaining maturities of lease liabilities were as follows:
2025 |
|
|
| |
2026 |
|
|
| |
2027 |
|
|
| |
2028 |
|
|
| |
2029 |
|
|
| |
Thereafter |
|
|
| |
Total Lease Payments |
|
|
| |
Less Imputed Interest |
|
| ( | ) |
Present Value of Lease Liabilities |
|
|
|
| F-18 |
| Table of Contents |
NOTE 10 –NOTE PAYABLE - RELATED PARTY
As of December 31, 2024 and 2023, the amount outstanding of non-convertible Note Payable to related parties amounted to:
|
| December 31, 2024 |
|
| December 31, 2023 |
| ||
|
|
|
|
|
|
| ||
Gross Principal Value of Note Payable – Related Party |
| $ |
|
| $ |
| ||
Unamortized Loan Discounts |
|
|
|
|
|
| ||
Total Note Payable – Related Party, Net |
| $ |
|
| $ |
| ||
As of first quarter 2024, this note will no longer be required to be classified as related party. At the effective date of our business combination on October 31, 2023, the Manager of Westside Advisors LLC was no longer an officer of the Company.
NOTE 11 –NOTES PAYABLE
As of December 31, 2024 and 2023, notes payable amounted to:
|
| December 31, 2024 |
|
| December 31, 2023 |
| ||
|
|
|
|
|
|
| ||
Notes Payable – Round B |
| $ |
|
| $ |
| ||
MC Mining |
|
|
|
|
|
| ||
Total Notes Payable |
| $ | 250,000 |
|
| $ |
| |
As of December 31, 2024, remaining maturities of notes payable were as follows:
2025 |
|
|
| |
2026 |
|
|
| |
2027 |
|
|
| |
2028 |
|
|
| |
2029 and Thereafter |
|
|
| |
|
|
|
|
Notes Payable – Round B
These notes bear a
MC Mining
On April 1, 2022, the Company purchased the rights to receive rental income from a related party from property located in Pike County, Kentucky. The rental income is $
| F-19 |
| Table of Contents |
NOTE 12: STOCKHOLDERS’ EQUITY
Preferred Stock - The Company is authorized to issue
Class A Common Stock — The Company is authorized to issue
Stock-based Compensation - Effective December 17, 2024, the Board of Directors of the Company adopted a board compensation plan. The plan provides for the allocation and issuance of stock warrants to directors of the Company for annual compensation for their services on the Company’s Board of Directors.
Total stock-based compensation expense for warrants to directors was $
As of December 31, 2024 and 2023, the Company has $
The following table summarizes the activity of our stock warrants for the year ended December 31, 2024:
|
|
|
|
|
|
|
| Weighted |
|
|
|
| ||||
|
|
|
|
| Weighted |
|
| Average |
|
| Aggregate |
| ||||
|
| Number of |
|
| Average |
|
| Contractual |
|
| Intrinsic |
| ||||
|
| Warrants |
|
| Exercise Price |
|
| Life in Years |
|
| Value |
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Outstanding December 31, 2023 |
|
|
|
| $ |
|
|
| - |
|
|
|
| |||
Granted |
|
|
|
| $ |
|
|
|
|
| $ |
| ||||
Forfeited or Expired |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exercised |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding December 31, 2024 |
|
|
|
| $ |
|
|
|
|
| $ |
| ||||
Exercisable (Vested) - December 31, 2024 |
|
|
|
| $ |
|
|
|
|
| $ |
| ||||
| F-20 |
| Table of Contents |
NOTE 13: RELATED PARTY TRANSACTIONS
Land Resources & Royalties LLC / Wabash Enterprises LLC
The Company may at times in the future lease property from Land Resources & Royalties LLC (“LRR”) and enter into various other agreements with LRR and/or its parent company, Wabash Enterprises LLC, an entity managed by Thomas Sauve and which Kirk Taylor is also part beneficial owner. Furthermore, on October 31, 2023, as part of the Business Combination, Wabash Enterprises LLC and LRR became an owner of Class A Common Stock of the Company and several leases and agreements exist between LRR and the Company, for which LRR receives income.
Land Betterment Corporation
The Company may at times in the future enter into agreements with Land Betterment Corporation, an entity in which Kirk Taylor is a director, President and Chief Financial Officer and Thomas Sauve who is a director and Chief Development Officer. The Company has entered into a contractor services agreement with Land Betterment Corporation for environmental services personnel.
American Resources Corporation
The Company may at times enter into agreements with American Resources Corporation (“ARC”) and its subsidiaries and affiliates, including McCoy Elkhorn Coal LLC and Perry County Resources LLC, an entity in which Thomas Sauve is a director and President, and Kirk Taylor is the Chief Financial Officer.
First Frontier Capital LLC
The Company may at times enter into financing agreements with First Frontier Capital LLC, an entity managed and beneficially owned by Thomas Sauve, Chief Executive Officer of the Company. On February 1, 2022, First Frontier Capital LLC invested $
T.R. Mining & Equipment Ltd.
The Company may at times enter into agreements with T. R. Mining & Equipment Ltd., an entity owned
Administrative Services Arrangement
The Company’s Sponsor agreed, commencing from the date that the Company’s securities are first listed on NASDAQ through the earlier of the Company’s consummation of a Business Combination and its liquidation, to make available to the Company certain general and administrative services, including office space, utilities and administrative services, as the Company may require from time to time. The Company agreed to pay the Sponsor $
Promissory Note — Related Party
On March 22, 2021, the Sponsor agreed to loan the Company an aggregate of up to $
| F-21 |
| Table of Contents |
NOTE 14: INCOME TAXES
Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. The primary temporary differences that give rise to the deferred tax assets and liabilities are as follows: accrued expenses.
Deferred tax assets consisted of $
The Company’s effective income tax rate is lower than what would be expected if the U.S. federal statutory rate (
NOTE 15: WARRANTS
Upon the Company initial capitalization, private warrants were issued to its founding investors. Upon the Company’s initial public offering, public warrants were issued to the participating investors. Details of each are below.
Public Warrants may only be exercised for a whole number of shares. No fractional shares will be issued upon exercise of the Public Warrants. The Public Warrants will become exercisable on the later of (a) 30 days after the completion of a Business Combination and (b) one year from the closing of the Initial Public Offering. The Public Warrants will expire five years from the completion of a Business Combination or earlier upon redemption or liquidation.
The Company will not be obligated to deliver any Class A common stock pursuant to the exercise of a warrant and will have no obligation to settle such warrant exercise unless a registration statement under the Securities Act with respect to the Class A common stock underlying the warrants is then effective and a prospectus relating thereto is current, subject to the Company satisfying its obligations with respect to registration, or a valid exemption from registration is available. No warrant will be exercisable, and the Company will not be obligated to issue a Class A common stock upon exercise of a warrant unless the Class A common stock issuable upon such warrant exercise has been registered, qualified or deemed to be exempt under the securities laws of the state of residence of the registered holder of the warrants.
The Company has agreed that as soon as practicable, but in no event later than 20 business days, after the closing of a Business Combination, it will use its commercially reasonable efforts to file with the SEC a registration statement for the registration, under the Securities Act, of the Class A common stock issuable upon exercise of the warrants. The Company will use its best efforts to cause the same to become effective and to maintain the effectiveness of such registration statement, and a current prospectus relating thereto, until the expiration of the warrants in accordance with the provisions of the warrant agreement. If a registration statement covering the shares of Class A common stock issuable upon exercise of the warrants is not effective by the sixtieth (60th) business day after the closing of a Business Combination, warrant holders may, until such time as there is an effective registration statement and during any period when the Company will have failed to maintain an effective registration statement, exercise warrants on a “cashless basis” in accordance with Section 3(a)(9) of the Securities Act or another exemption. Notwithstanding the above, if shares of Class A common stock are at the time of any exercise of a warrant not listed on a national securities exchange such that they satisfy the definition of a “covered security” under Section 18(b)(1) of the Securities Act, the Company may, at its option, require holders of Public Warrants who exercise their warrants to do so on a “cashless basis” in accordance with Section 3(a)(9) of the Securities Act and, in the event the Company so elect, it will not be required to file or maintain in effect a registration statement, and in the event the Company does not so elect, it will use its best efforts to register or qualify the shares under applicable blue sky laws to the extent an exemption is not available.
| F-22 |
| Table of Contents |
NOTE 15: WARRANTS (cont.)
Once the warrants become exercisable, the Company may redeem the outstanding warrants:
● | in whole and not in part; |
● | at a price of $ |
● | upon not less than 30 days’ prior written notice of redemption, or the 30-day redemption period, to each warrant holder; and |
● | if, and only if, |
If and when the warrants become redeemable by the Company, the Company may exercise its redemption right even if it is unable to register or qualify the underlying securities for sale under all applicable state securities laws.
If the Company calls the Public Warrants for redemption, management will have the option to require any holder that wishes to exercise the Public Warrants to do so on a “cashless basis,” as described in the warrant agreement. The exercise price and number of shares of Class A common stock issuable upon exercise of the Public Warrants may be adjusted in certain circumstances including in the event of a stock dividend, or recapitalization, reorganization, merger or consolidation. However, except as described below, the Public Warrants will not be adjusted for issuances of Class A common stock at a price below its exercise price. Additionally, in no event will the Company be required to net cash settle the Public Warrants. If the Company is unable to complete a Business Combination within the Combination Period and the Company liquidates the funds held in the Trust Account, holders of Public Warrants will not receive any of such funds with respect to their Public Warrants, nor will they receive any distribution from the Company’s assets held outside of the Trust Account with respect to such Public Warrants. Accordingly, the Public Warrants may expire worthless.
In addition, if (a) the Company issues additional Class A common stock or equity-linked securities for capital raising purposes in connection with the closing of a Business Combination at an issue price or effective issue price of less than $
| F-23 |
| Table of Contents |
NOTE 15: WARRANTS (cont.)
The Private Warrants are identical to the Public Warrants underlying the Units sold in the Initial Public Offering, except that the Private Warrants and the Class A common stock issuable upon the exercise of the Private Warrants will not be transferable, assignable or salable until 30 days after the completion of a Business Combination, subject to certain limited exceptions. Additionally, the Private Warrants will be exercisable on a cashless basis and be non-redeemable, except as described above, so long as they are held by the initial purchasers or their permitted transferees. If the Private Warrants are held by someone other than the initial purchasers or their permitted transferees, the Private Warrants will be redeemable by the Company and exercisable by such holders on the same basis as the Public Warrants.
The Company uses the black Scholes option pricing model to value its warrants and options. The significant inputs are as follows:
|
| 2024 |
|
| 2023 |
| ||
Expected Dividend Yield |
|
| % |
|
| % | ||
Expected Volatility |
|
| % |
|
| % | ||
Risk-Free Rate |
|
| % |
|
| % | ||
Expected Life of Warrants |
|
|
|
|
|
| ||
|
|
|
|
|
|
|
| Weighted |
|
|
|
| ||||
|
|
|
|
| Weighted |
|
| Average |
|
| Aggregate |
| ||||
|
| Number of |
|
| Average |
|
| Contractual |
|
| Intrinsic |
| ||||
Public Warrants |
| Warrants |
|
| Exercise Price |
|
| Life in Years |
|
| Value |
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Outstanding December 31, 2023 |
|
|
|
| $ |
|
|
|
|
| $ |
| ||||
Exercisable (Vested) - December 31, 2023 |
|
|
|
| $ |
|
|
|
|
| $ |
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding December 31, 2024 |
|
|
|
| $ |
|
|
|
|
| $ |
| ||||
Exercisable (Vested) - December 31, 2024 |
|
|
|
| $ |
|
|
|
|
| $ |
| ||||
|
|
|
|
|
|
|
|
|
| Weighted |
|
|
|
|
| |
|
|
|
|
|
| Weighted |
|
| Average |
|
| Aggregate |
| |||
|
| Number of |
|
| Average |
|
| Contractual |
|
| Intrinsic |
| ||||
Private Warrants |
| Warrants |
|
| Exercise Price |
|
| Life in Years |
|
| Value |
| ||||
|
|
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Outstanding December 31, 2023 |
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Exercisable (Vested) - December 31, 2023 |
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| ||||
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Outstanding December 31, 2024 |
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| $ |
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| $ |
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Exercisable (Vested) - December 31, 2024 |
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| $ |
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| $ |
| ||||
| F-24 |
| Table of Contents |
NOTE 16: FAIR VALUE MEASUREMENTS
The Company follows the guidance in ASC 820 for its financial assets and liabilities that are re-measured and reported at fair value at each reporting period, and non-financial assets and liabilities that are re-measured and reported at fair value at least annually.
The fair value of the Company’s financial assets and liabilities reflects management’s estimate of amounts that the Company would have received in connection with the sale of the assets or paid in connection with the transfer of the liabilities in an orderly transaction between market participants at the measurement date. In connection with measuring the fair value of its assets and liabilities, the Company seeks to maximize the use of observable inputs (market data obtained from independent sources) and to minimize the use of unobservable inputs (internal assumptions about how market participants would price assets and liabilities). The following fair value hierarchy is used to classify assets and liabilities based on the observable inputs and unobservable inputs used in order to value the assets and liabilities:
Level 1:
| Quoted prices in active markets for identical assets or liabilities. An active market for an asset or liability is a market in which transactions for the asset or liability occur with sufficient frequency and volume to provide pricing information on an ongoing basis. |
Level 2:
| Observable inputs other than Level 1 inputs. Examples of Level 2 inputs include quoted prices in active markets for similar assets or liabilities and quoted prices for identical assets or liabilities in markets that are not active. |
Level 3: | Unobservable inputs based on our assessment of the assumptions that market participants would use in pricing the asset or liability. |
On October 18, 2021, the Company acquired
The following table presents information about the Company’s liabilities that are measured at fair value on a recurring basis at December 31, 2024 and 2023 and indicates the fair value hierarchy of the valuation inputs the Company utilized to determine such fair value: |
Description |
| Level |
|
| December 31, 2024 |
|
| December 31, 2023 |
| |||
Liabilities: |
|
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|
|
|
|
|
|
| |||
Warrant Liability – Public Warrants |
|
| 3 |
|
|
|
|
|
|
| ||
Warrant Liability – Private Warrants |
|
| 3 |
|
|
|
|
|
|
| ||
The Warrants were accounted for as liabilities in accordance with ASC 815-40 and are presented within warrant liabilities on our accompanying December 31, 2024 and 2023 consolidated balance sheets. The warrant liabilities are measured at fair value at inception and on a recurring basis, with changes in fair value presented within change in fair value of warrant liabilities in the consolidated statement of operations.
| F-25 |
| Table of Contents |
NOTE 16: FAIR VALUE MEASUREMENTS (cont.)
The Private Warrants were initially valued using a Modified Black Scholes Option Pricing Model, which is considered to be a Level 3 fair value measurement. The Modified Black Scholes model’s primary unobservable input utilized in determining the fair value of the Private Warrants is the expected volatility of the common stock. The expected volatility as of the IPO date was derived from observable public warrant pricing on comparable ‘blank-check’ companies without an identified target. The expected volatility as of subsequent valuation dates was implied from the Company’s own Public Warrant pricing. A Monte Carlo simulation methodology was used in estimating the fair value of the Public Warrants for periods where no observable traded price was available, using the same expected volatility as was used in measuring the fair value of the Private Warrants. For periods subsequent to the detachment of the warrants from the Units, the close price of the public warrant price was used as the fair value as of each relevant date.
The following tables present the changes in the fair value of warrant liabilities:
|
| Private Placement |
|
| Public |
|
| Warrant Liabilities |
| |||
Fair Value as of January 1, 2023 |
| $ |
|
| $ |
|
| $ |
| |||
Change in Valuation Inputs or Other Assumptions |
|
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|
|
|
| |||
Fair Value as of December 31, 2023 |
|
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| |||
|
| Private Placement |
|
| Public |
|
| Warrant Liabilities |
| |||
Fair Value as of January 1, 2024 |
| $ |
|
| $ |
|
| $ |
| |||
Change in Valuation Inputs or Other Assumptions |
|
| ( | ) |
|
| ( | ) |
|
| ( | ) |
Fair Value as of December 31, 2024 |
|
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| |||
NOTE 17: COMMITMENTS AND CONTINGENCIES
In the course of normal operations, the Company is involved in various claims and litigation that management intends to defend. The range of loss, if any, from potential claims cannot be reasonably estimated. However, management believes the ultimate resolution of matters will not have a material adverse impact on the Company’s business or financial position.
Right of First Refusal
For a period beginning on March 21, 2021 and ending 24 months from the closing of a business combination, we have granted the Representative a right of first refusal to act as sole book runner, and/or sole placement agent, at the representative’s sole discretion, for each and every future public and private equity and debt offering, including all equity linked financings for us or any of our successors or subsidiaries. In accordance with FINRA Rule 5110(f)(2)(E)(i), such right of first refusal shall not have a duration of more than three years from the effective date of the registration statement of which this prospectus forms a part.
NOTE 18: SEGMENT REPORT
The Company operates and evaluates its business as a single reportable segment. This segment invests or purchases assets that have near and medium-term income potential to provide the Company with accretive cash flow from which it can reinvest in new assets or expand cash flow from those existing assets. This single segment is identified because it engages in business activities in which it generates revenues and expenses, its performance is reviewed by the Company’s Chief Executive Officer who is the chief operating decision maker (“CODM”), and it has distinct financial information available. The CODM assesses performance of the reportable segment and decides how to allocate resources based on consolidated net income, which is also reported on the consolidated statements of operations. The CODM uses this information to compare actual results against expectations in assessing the performance of the segment. The Company’s long-lived assets and its revenues are located in the United States. The accounting policies of the reportable segment are the same as those described in Note 2. The total segment assets are the same as the consolidated total assets reported on the consolidated balance sheets. Refer to the consolidated statements of operations for the details of this reportable segment.
NOTE 19: SUBSEQUENT EVENTS
On January 13, 2025, the Company entered into a stock purchase agreement with a shareholder to purchase a total of
On March 1, 2025, the Company and American Resources Corporation negotiated the settlement of the full amount $
| F-26 |
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.
None.
ITEM 9A. CONTROLS AND PROCEDURES.
Evaluation of Disclosure Controls and Procedures
The management, with participation of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures pursuant to Rule 12a-15 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), as of the end of the period covered by this Annual Report. In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. In addition, the design of disclosure controls and procedures must reflect the fact that there are resource constraints, and that management is required to apply is judgement in evaluating the benefits of possible controls and procedures relative to their costs.
Based on management’s evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, as of December 31, 2024, due to the weaknesses in internal control over financial reporting described below, our disclosure controls and procedures are not designed at a reasonable assurance level or effective to provide reasonable assurance that information we are required to disclose in reports that we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in SEC rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. As discussed below, we plan on increasing the size of our accounting staff at the appropriate time for our business and its size to ameliorate the concern that the Company does not effectively segregate certain accounting duties, which we believe would resolve the material weakness in internal control over financial reporting and similarly improve disclosure controls and procedures, but there can be no assurances as to the timing of any such action or that the Company will be able to do so.
Management’s Annual Report on Internal Control over Financial Reporting
The management of the Company is responsible for establishing and maintaining adequate internal control over financial reporting, as defined in Exchange Act Rule 13a-15(f). The Company’s internal control over financial reporting is a process designed under the supervision of the Company’s Principal Executive Officer and Principal Financial Officer to provide reasonable assurance regarding the reliability of financial reporting and the preparation of the Company’s financial statements for external purposes in accordance with the U.S. GAAP.
As of December 31, 2024, under the supervision and with the participation of our management, we conducted an evaluation of the effectiveness of the design and operations of our disclosure controls and procedures, as defined in Rule 13a-15(e) and 15d-15(e) promulgated under the Securities Exchange Act of 1934 and based on the criteria for effective internal control described Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.. Based on this evaluation, management concluded that our internal controls over financial reporting were not effective for the purposes for which it is intended. Specifically, managements determination was based on the following material weakness which existed as of December 31, 2024:
Due to the Company’s insufficient number of staff performing accounting and reporting functions, there is a lack of segregation of duties within the financial reporting function resulting in limited level of multiple reviews among those tasked with preparing the financial statements, resulting in the need for adjustments.
The Company did not maintain a fully integrated financial consolidation and reporting system throughout the period and as a result, manual analysis, reconciliation and adjustments were required in order to produce financial statements for external reporting purposes.
| 11 |
| Table of Contents |
A material weakness is a deficiency, or a combination of control deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of our annual or interim consolidated financial statements will not be prevented or detected on a timely basis. Notwithstanding the determination that our internal control over financial reporting was not effective, as of December 31, 2024, and that there was a material weakness as identified in this Annual Report, we believe that our consolidated financial statements contained in this Annual Report fairly present our financial position, results of operations and cash flows for the years covered hereby in all material respects.
The management, including its Principal Executive Officer and Principal Financial Officer, does not expect that its disclosure controls and procedures, or its internal controls over financial reporting will prevent all error and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable not absolute assurance that the objectives of the control system are met. Further, the design of the control system must reflect the fact that there are resource constraints, and the benefit of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any within the Company, have been detected.
This Annual Report does not include an attestation report of the Company’s independent registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by the Company’s independent registered public accounting firm pursuant to the temporary rules of the SEC that permit the Company to provide only management’s report in this Annual Report.
This report shall not be deemed to be filed for purposes of Section 18 of the Securities Exchange Act of 1934, or otherwise subject to the liabilities of this section, and is not incorporated by reference into any filing of the Company, whether made before or after the date hereof, regardless of any general incorporation language in such filing.
Changes in Internal Control over Financial Reporting
There have been no changes in the Company’s internal control over financial reporting during the period ended December 31, 2024 that have materially affected the Company’s internal controls over financial reporting.
ITEM 9B. OTHER INFORMATION.
None.
ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS.
Not Applicable.
| 12 |
| Table of Contents |
PART III
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE.
Directors and Executive Officers
The following individuals serve as our executive officers and members of our Board of Directors as of December 31, 2024:
Name |
| Age |
| Positions |
|
|
|
|
|
Julie Griffith |
| 68 |
| Independent Director |
Josh Hawes |
| 39 |
| Independent Director, Chairman of the Board of Directors |
Roy Smith |
| 58 |
| Independent Director |
William Kincaid |
| 47 |
| Independent Director |
Kirk P. Taylor |
| 45 |
| Chief Financial Officer |
Thomas M. Sauve |
| 45 |
| Director/Chief Executive Officer |
Executive officers of the Company are appointed by our Board of Directors and serve at the pleasure of the Board of directors.
Kirk P. Taylor, CPA, Chief Financial Officer, has over 18 years of financial, accounting and tax structuring experience. After working in national public accounting firms, he has been the Chief Financial Officer of American Resources Corporation (Nasdaq: AREC) since 2015, leading the public process as well as integrations of 8 different acquisitions within the infrastructure and resource space. Mr. Taylor is also a founder and President of Land Betterment Corp, a benefit corporation, focused on positive environmental and social communities facing a changing industrial landscape.
Thomas M. Sauve, Director/Chief Executive Officer, has over 12 years leading and managing mining operations and over 15 years investing, restructuring and building businesses. Having managed the due diligence process and closing, staffing and ramp up of three acquisitions in twelve months, he has a history of successfully identifying mining operations that have the ability to meet the company’s model of cost cutting and efficiency. As President of American Resources Corporation (Nasdaq: AREC) since 2015, Mr. Sauve has successfully integrated 8 acquisitions into a streamlined operating model.
Julie Griffith, Director, has held leadership roles for the Indiana Innovation Institute. Within this role, she was able to highlight her strategic vision, rich background in government affairs, and business development and marketing experience. Before joining the Indiana Innovation Institute, Griffith served as the vice president of Public Affairs for Purdue University and worked with Duke Energy in a variety of roles, including vice president for Government Affairs and Foundation Relations. Before that she worked for the Texas-based energy company Spectra Energy and its predecessor companies. Griffith has an extensive background in marketing, business development, and government and regulatory affairs. She graduated from Ball State in 1979 with a Bachelor of Science degree in Political Science, and now serves on the Foundation board and the Dean's Advisory Council for the University's College of Sciences and Humanities. She has previously represented Ball State as a State House intern, London Center participant, Above & Beyond Campaign Development Committee member, Bold Campaign Regional Subcommittee member, Indianapolis Alumni Club board member, and a National Philanthropy Council member.
Josh Hawes, Director/Chairman of the Board, brings over 15+ years of leadership experience, specializing in commodities, buy-side/sell-side investments, and advanced technologies, to assist RMHC with its capital markets plan and corporate strategy. He has a vast knowledge of capital markets integration with strategic vision and vertical integration. His prior experience includes chief strategy officer of USA Rare Earth, CEO of Delta1x and Hawking Alpha. Hawes holds licenses spanning commodities, investment banking, public, and private securities, including Series 3, 63, 65, 7, 79, 82, and SIE. As well, Josh holds several professional designations, such as Wharton Business School’s Corporate Governance program certificate, “Maximizing Your Effectiveness in the Boardroom,” and University of Cambridge Judge Business School, “Circular Economy and Sustainability Strategies.” He is also holder of the Chartered Market Technician, Certified Hedge Fund Professional, and Qualified Family Office Professional. A Wireless Software Engineering graduate from Auburn University.
| 13 |
| Table of Contents |
Roy Smith, Director, has had an extensive career in the financial services industry with a focus on publicly traded small and mid-capitalized companies. His expertise includes portfolio equity management, capital markets, institutional equity sales and trading, and investment banking with experience underwriting both equity and debt. Roy is currently a Managing Director at MZ Group, a firm that provides full-scale investor relations to both private and public companies across all industries. Prior to joining MZ, Roy was a Principal at Class VI Capital-New River Fund. New River is a Long/Short US equity strategy investing in small and mid-capitalized companies. Prior to Class VI, he was a Portfolio Manager with Bardin Hill Investment Partners (formerly Halcyon Asset Management), Friess Associates – The Brandywine Funds, and Pequot Capital. Roy’s investment history is characterized as a broadly diversified approach by the number of portfolio positions and sectors. With an emphasis on management execution, Roy has developed many relationships with public company management teams and has a unique perspective as to how institutional investors evaluate public companies and interpret their external communications. Roy is a graduate of Syracuse University with degrees in Finance and Marketing and is involved with several philanthropic organizations.
Ben Kincaid, Director, joined ReElement Technologies Corporation after a career as a U.S. Diplomat serving and leading teams in multiple countries in Africa, the Middle East, and South Asia. Ben spent the last several years living and working throughout Africa, supporting strategic national security imperatives in partnership with several African nations. Working across the U.S. interagency and with senior foreign officials, Ben drove partnered approaches to America's most pressing national security challenges, and in some of the world's most troubled places. Consistently chosen to lead teams in challenging environments, Ben served the entirety of his national security service career in the field. Ben is also a leadership advisor with Allegro Group, a talent and leadership transformation company. Ben lives with his wife and daughter in Santo Domingo, where his wife is currently posted to the U.S. Embassy. He holds a BA in International Studies and Political Science from Virginia Military Institute and an MA in Latin American Studies from Georgetown University. Ben speaks French, Spanish, and Pashto.
Our officers are appointed by the Board of Directors and serve at the discretion of the Board of Directors, rather than for specific terms of office. Our Board of Directors is authorized to appoint persons to the offices set forth in our bylaws as it deems appropriate. Our bylaws provide that our officers may consist of a Chairman of the Board, Chief Executive Officer, Chief Financial Officer, President, Vice Presidents, Secretary, Treasurer, Assistant Secretaries and such other offices as may be determined by the Board of Directors.
Director Independence
Nasdaq listing standards require that a majority of our Board of Directors be independent. An “independent director” is defined generally as a person other than an officer or employee of the company or its subsidiaries or any other individual having a relationship which in the opinion of the company’s Board of Directors, would interfere with the director’s exercise of independent judgment in carrying out the responsibilities of a director. We expect that our Board of Directors will determine that Griffith, Hawes, Smith, and Kincaid are “independent directors” as defined in the Nasdaq listing standards and applicable SEC rules. Our independent directors will have regularly scheduled meetings at which only independent directors are present.
Corporate Governance; Code of Conduct and Business Code of Ethics
Committees of the Board of Directors
Our Board of Directors will have three standing committees: an audit committee, a compensation committee, and a nomination committee. Subject to phase-in rules and a limited exception, Nasdaq rules and Rule 10A-3 of the Exchange Act require that the audit committee, compensation committee, and nomination committee of a listed company be comprised solely of independent directors. The composition and responsibilities of the three committees are described below.
| 14 |
| Table of Contents |
Audit Committee
Julie Griffith, Roy Smith, and Ben Kincaid, serve as members of our audit committee, and Julie Griffith is chair of the audit committee. Under the Nasdaq listing standards and applicable SEC rules, we are required to have at least three members of the audit committee, all of whom must be independent. Each of Griffith, Smith, and Kincaid, meet the independent director standard under Nasdaq listing standards and under Rule 10-A-3(b)(1) of the Exchange Act.
Each member of the audit committee is financially literate, and our Board of Directors has determined that Julie Griffith qualifies as an “audit committee financial expert” as defined in applicable SEC rules.
Our audit committee charter, which details the principal functions of the audit committee, including:
| · | the appointment, compensation, retention, replacement, and oversight of the work of the independent registered public accounting firm engaged by us; |
|
|
|
| · | pre-approving all audit and permitted non-audit services to be provided by the independent registered public accounting firm engaged by us, and establishing pre-approval policies and procedures; |
|
|
|
| · | setting clear hiring policies for employees or former employees of the independent registered public accounting firm, including but not limited to, as required by applicable laws and regulations; |
|
|
|
| · | setting clear policies for audit partner rotation in compliance with applicable laws and regulations; |
|
|
|
| · | obtaining and reviewing a report, at least annually, from the independent registered public accounting firm describing (i) the independent registered public accounting firm’s internal quality-control procedures, (ii) any material issues raised by the most recent internal quality-control review, or peer review, of the audit firm, or by any inquiry or investigation by governmental or professional authorities within the preceding five years respecting one or more independent audits carried out by the firm and any steps taken to deal with such issues and (iii) all relationships between the independent registered public accounting firm and us to assess the independent registered public accounting firm’s independence; |
|
|
|
| · | reviewing and approving any related party transaction required to be disclosed pursuant to Item 404 of Regulation S-K promulgated by the SEC prior to us entering into such transaction; and |
|
|
|
| · | reviewing with management, the independent registered public accounting firm, and our legal advisors, as appropriate, any legal, regulatory or compliance matters, including any correspondence with regulators or government agencies and any employee complaints or published reports that raise material issues regarding our financial statements or accounting policies and any significant changes in accounting standards or rules promulgated by the Financial Accounting Standards Board, the SEC or other regulatory authorities. |
Compensation Committee
Julie Griffith, Roy Smith, and Ben Kincaid serve as members of our compensation committee. Under the Nasdaq listing standards and applicable SEC rules, we are required to have at least two members of the compensation committee, all of whom must be independent. All our members are independent, and Roy Smith is chair of the compensation committee.
| 15 |
| Table of Contents |
Our compensation committee charter, details the principal functions of the compensation committee, including:
| · | reviewing and approving on an annual basis the corporate goals and objectives relevant to our Chief Executive Officer’s compensation, if any is paid by us, evaluating our Chief Executive Officer’s performance in light of such goals and objectives and determining and approving the remuneration (if any) of our Chief Executive Officer based on such evaluation; |
|
|
|
| · | reviewing and approving on an annual basis the compensation, if any is paid by us, of all of our other officers; |
|
|
|
| · | reviewing on an annual basis our executive compensation policies and plans; |
|
|
|
| · | implementing and administering our incentive compensation equity-based remuneration plans; |
|
|
|
| · | assisting management in complying with our proxy statement and annual report disclosure requirements; |
|
|
|
| · | approving all special perquisites, special cash payments and other special compensation and benefit arrangements for our officers and employees; |
|
|
|
| · | if required, producing a report on executive compensation to be included in our annual proxy statement; and |
|
|
|
| · | reviewing, evaluating and recommending changes, if appropriate, to the remuneration for directors. |
Notwithstanding the foregoing, as indicated above, other than the payment to American Resources Corporation, an affiliate of our sponsor, of $10,000 per month, for up to 12 months, for office space, utilities and secretarial and administrative support, no compensation of any kind, including finders, consulting or other similar fees, will be paid to any of our existing stockholders, officers, directors or any of their respective affiliates, prior to, or for any services they render in order to effectuate the consummation of an initial business combination. Accordingly, it is likely that prior to the consummation of an initial business combination, the compensation committee will only be responsible for the review and recommendation of any compensation arrangements to be entered into in connection with such initial business combination.
The charter will also provide that the compensation committee may, in its sole discretion, retain or obtain the advice of a compensation consultant, legal counsel or other adviser and will be directly responsible for the appointment, compensation and oversight of the work of any such adviser. However, before engaging or receiving advice from a compensation consultant, external legal counsel or any other adviser, the compensation committee will consider the independence of each such adviser, including the factors required by Nasdaq and the SEC.
Director Nominations
Julie Griffith, Roy Smith, and Ben Kincaid serve as members of our nomination committee. Under the Nasdaq listing standards and applicable SEC rules, we are not required to have this committee. All of our members are independent, and Ben Kincaid is chair of the nomination committee. The Board of Directors believes that the independent directors can satisfactorily carry out the responsibility of properly selecting or approving director nominees.
The Board of Directors will also consider director candidates recommended for nomination by our stockholders during such times as they are seeking proposed nominees to stand for election at the next annual meeting of stockholders (or, if applicable, a special meeting of stockholders). Our stockholders that wish to nominate a director for election to our Board of Directors should follow the procedures set forth in our bylaws.
| 16 |
| Table of Contents |
We have not formally established any specific, minimum qualifications that must be met or skills that are necessary for directors to possess. In general, in identifying and evaluating nominees for director, the Board of Directors considers educational background, diversity of professional experience, knowledge of our business, integrity, professional reputation, independence, wisdom, and the ability to represent the best interests of our stockholders.
Code of Ethics
We have adopted a Code of Ethics applicable to our directors, officers and employees. We have filed a copy of our Code of Ethics and our audit and compensation committee charters as exhibits to the registration statement of which this prospectus is a part. You can review these documents by accessing our public filings at the SEC’s web site at www.sec.gov. In addition, a copy of the Code of Ethics will be provided without charge upon request from us. We will disclose any amendments to or waivers of certain provisions of our Code of Ethics in a Current Report on Form 8-K.
Conflicts of Interest
Subject to pre-existing fiduciary or contractual duties as described below, our officers and directors have agreed to present any business opportunities presented to them in their capacity as a director or officer of our company to us. Certain of our officers and directors presently have fiduciary or contractual obligations to other entities pursuant to which such officer or director is or will be required to present a business combination opportunity. Accordingly, if any of our officers or directors becomes aware of a business combination opportunity which is suitable for an entity to which he or she has then-current fiduciary or contractual obligations, he or she will honor his or her fiduciary or contractual obligations to present such opportunity to such entity. We believe, however, that the fiduciary duties or contractual obligations of our officers or directors will not materially affect our ability to complete our initial business combination. Our amended and restated certificate of incorporation will provide that we renounce our interest in any corporate opportunity offered to any director or officer unless such opportunity is expressly offered to such person solely in his or her capacity as a director or officer of our company and such opportunity is one we are legally and contractually permitted to undertake and would otherwise be reasonable for us to pursue, and to the extent the director or officer is permitted to refer that opportunity to us without violating another legal obligation.
Potential investors should also be aware of the following other potential conflicts of interest:
| · | None of our officers or directors is required to commit his or her full time to our affairs and, accordingly, may have conflicts of interest in allocating his or her time among various business activities. |
|
|
|
| · | In the course of their other business activities, our officers and directors may become aware of investment and business opportunities which may be appropriate for presentation to us as well as the other entities with which they are affiliated. Our management may have conflicts of interest in determining to which entity a particular business opportunity should be presented. |
|
|
|
| · | Our initial stockholders have agreed to waive their redemption rights with respect to any founder shares and any public shares held by them in connection with the consummation of our initial business combination. Additionally, our initial stockholders have agreed to waive their redemption rights with respect to any founder shares held by them if we fail to consummate our initial business combination within 12 months after the closing of this offering. If we do not complete our initial business combination within such applicable time period, the proceeds of the sale of the placement warrants held in the trust account will be used to fund the redemption of our public shares, and the placement warrants will expire worthless. With certain limited exceptions, the founder shares will not be transferable, assignable by our sponsor until the earlier to occur of: (A) six months after the completion of our initial business combination and (B) subsequent to our initial business combination, if the reported last sale price of our Class A common stock equals or exceeds $12.00 per share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations and the like) for any 20 trading days within any 30-trading day period commencing after our initial business combination. With certain limited exceptions, the placement warrants and the Class A common stock underlying such warrants, will not be transferable, assignable or saleable by our sponsor or its permitted transferees until 30 days after the completion of our initial business combination. Since our sponsor and officers and directors may directly or indirectly own common stock and warrants following this offering, our officers and directors may have a conflict of interest in determining whether a particular target business is an appropriate business with which to effectuate our initial business combination. |
|
|
|
| · | Our officers and directors may have a conflict of interest with respect to evaluating a particular business combination if the retention or resignation of any such officers and directors was included by a target business as a condition to any agreement with respect to our initial business combination. |
|
|
|
| · | Our sponsor, officers or directors may have a conflict of interest with respect to evaluating a business combination and financing arrangements as we may obtain loans from our sponsor or an affiliate of our sponsor or any of our officers or directors to finance transaction costs in connection with an intended initial business combination. Up to $1,500,000 of such loans may be convertible into warrants, at a price of $1.00 per warrant at the option of the lender, upon consummation of our initial business combination. The units would be identical to the placement warrants. |
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| Table of Contents |
The conflicts described above may not be resolved in our favor.
In general, officers and directors of a corporation incorporated under the laws of the State of Delaware are required to present business opportunities to a corporation if:
| · | the corporation could financially undertake the opportunity; |
|
|
|
| · | the opportunity is within the corporation’s line of business; and |
|
|
|
| · | it would not be fair to our company and its stockholders for the opportunity not to be brought to the attention of the corporation. |
Accordingly, as a result of multiple business affiliations, our officers and directors may have similar legal obligations relating to presenting business opportunities meeting the above-listed criteria to multiple entities. Furthermore, our amended and restated certificate of incorporation will provide that we renounce our interest in any corporate opportunity offered to any director or officer unless such opportunity is expressly offered to such person solely in his or her capacity as a director or officer of our company and such opportunity is one we are legally and contractually permitted to undertake and would otherwise be reasonable for us to pursue, and to the extent the director or officer is permitted to refer that opportunity to us without violating another legal obligation.
Table of Committees and participating directors
|
| Audit Committee |
| Nominating Committee |
|
| Compensation Committee |
|
|
|
|
|
|
|
|
|
|
Julie Griffith |
| X (Chairwoman) |
| X |
|
| X |
|
Josh Hawes |
|
|
|
|
|
|
|
|
Roy Smith |
| X |
| X |
|
| X (Chairman) |
|
Ben Kincaid |
| X |
| X (Chairman) |
|
| X |
|
Thomas M. Sauve |
|
|
|
|
|
|
|
Stockholder Nominations
Stockholders who would like to propose a candidate to serve on our Board of Directors may do so by submitting the candidate’s name, resume and biographical information to the attention of our corporate secretary. All proposals for nomination received by the corporate secretary will be presented to the committee for appropriate consideration. It is the policy of the compensation committee to consider director candidates recommended by stockholders who appear to be qualified to serve on our Board of Directors. The compensation committee may choose not to consider an unsolicited recommendation if no vacancy exists on our Board of Directors and the compensation committee does not perceive a need to increase the size of our Board of Directors. To avoid the unnecessary use of the compensation committee’s resources, the compensation committee will consider only those director candidates recommended in accordance with the procedures set forth below. To submit a recommendation of a director candidate to the compensation committee, a stockholder should submit the following information in writing, addressed to the corporate secretary of the Company at our main office:
● | the name and address of the person recommended as a director candidate; |
● | all information relating to such person that is required to be disclosed in solicitations of proxies for election of directors pursuant to Regulation 14A under the Securities Exchange Act of 1934, as amended; |
● | the written consent of the person being recommended as a director candidate to be named in the proxy statement as a nominee and to serve as a director if elected; |
| 18 |
| Table of Contents |
● | as to the person making the recommendation, the name and address, as they appear on our books, of such person, and number of shares of our common stock owned by such person; provided, however, that if the person is not a registered holder of our common stock, the person should submit his or her name and address along with a current written statement from the record holder of the shares that reflects the recommending person’s beneficial ownership of our common stock; and |
● | a statement disclosing whether the person making the recommendation is acting with or on behalf of any other person and, if applicable, the identity of such person. |
Delinquent Section 16(a) Reports
Based solely upon a review of Forms 3 and 4 and amendments thereto furnished to us under Rule 16a-3(d) of the Securities Exchange Act of 1934 during the year ended December 31, 2024 and Forms 5 and amendments thereto furnished to us with respect to the year ended December 31, 2024, as well as any written representation from a reporting person that no Form 5 is required, we are not aware that any officer, director or 10% or greater stockholder failed to file on a timely basis, as disclosed in the aforementioned Forms, reports required by Section 16(a) of the Securities Exchange Act of 1934 during the year ended December 31, 2024.
ITEM 11. EXECUTIVE COMPENSATION.
Executive Officer and Director Compensation
Overview
As an “emerging growth company” as defined in the JOBS Act, we are not required to include a Compensation Discussion and Analysis section and have opted to comply with the scaled disclosure requirements applicable to emerging growth companies.
The named executive officer and director compensation described in this section discusses our 2024 compensation programs. This discussion may contain forward-looking statements that are based on the Company’s current plans, considerations, expectations and determinations regarding future compensation programs.
Executive and Director Compensation
The Company’s Board of Directors, with input from our Chief Executive Officer, has historically determined the compensation for our named executive officers. Our named executive officers for the fiscal year ended December 31, 2024, which consist of our principal executive officer and the next two most highly compensated executive officers who were serving as executive officers as of December 31, 2024, are:
| · | Thomas Sauve, Chief Executive Officer; and |
|
|
|
| · | Kirk Taylor, Chief Financial Officer |
| 19 |
| Table of Contents |
Summary Compensation Table
The following table sets forth information concerning the annual and long-term compensation of our executive officers and directors for services rendered in all capacities to us during the last completed fiscal year. The listed individuals shall hereinafter be referred to as the “Named Executive Officers.” We also have included below a table regarding compensation paid to our directors who served during the last completed fiscal year.
(a) |
|
|
| (b) |
|
| (c) |
| (d) |
|
| (e) |
| (f) |
| (g) |
| (h) |
| |||
Name and principal position |
|
| Fees Earned or Paid in Cash ($) |
|
| Stock Awards ($) |
| Option Awards ($) |
|
| Non-Equity Incentive Plan Compensation ($) |
| Nonqualified deferred compensation earnings ($) |
| All Other Compensation ($) |
| Total ($) |
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||
Thomas M. Sauve, Chief Executive Officer, Director (1) |
| 2024 |
| $ | 100,000 |
|
| -0- |
|
| 8,310 |
|
| -0- |
| -0- |
| -0- |
| $ | 108,310 |
|
|
| 2023 |
| $ | 165,000 |
|
| -0- |
| -0- |
|
| -0- |
| -0- |
| -0- |
| $ | 165,000 |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Kirk P. Taylor, Chief Financial Officer |
| 2024 |
| -0- |
|
| -0- |
| -0- |
|
| -0- |
| -0- |
| -0- |
| -0- |
| |||
|
| 2023 |
| -0- |
|
| -0- |
| -0- |
|
| -0- |
| -0- |
| -0- |
| -0- |
| |||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Julie Griffith, Director (2) |
| 2024 |
| -0- |
|
| -0- |
|
| 9,476 |
|
| -0- |
| -0- |
| -0- |
|
| 9,476 |
| |
|
| 2023 |
| -0- |
|
| -0- |
| -0- |
|
| -0- |
| -0- |
| -0- |
| -0- |
| |||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Josh Hawes, Director (3) |
| 2024 |
| -0- |
|
| -0- |
| -0- |
|
| -0- |
| -0- |
| -0- |
| -0- |
| |||
|
| 2023 |
| -0- |
|
| -0- |
| -0- |
|
| -0- |
| -0- |
| -0- |
| -0- |
| |||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Roy Smith, Director (4) |
| 2024 |
| -0- |
|
| -0- |
|
| 9,476 |
|
| -0- |
| -0- |
| -0- |
|
| 9,476 |
| |
|
| 2023 |
| -0- |
|
| -0- |
| -0- |
|
| -0- |
| -0- |
| -0- |
| -0- |
| |||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ben Kincaid, Director (5) |
| 2024 |
| -0- |
|
| -0- |
| -0- |
|
| -0- |
| -0- |
| -0- |
| -0- |
| |||
|
| 2023 |
| -0- |
|
| -0- |
| -0- |
|
| -0- |
| -0- |
| -0- |
| -0- |
| |||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gary Ehlebracht, Director (6) |
| 2024 |
| -0- |
|
| -0- |
| -0- |
|
| -0- |
| -0- |
| -0- |
| -0- |
| |||
|
| 2023 |
| -0- |
|
| -0- |
| -0- |
|
| -0- |
| -0- |
| -0- |
| -0- |
| |||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Daniel Hasler, Director (7) |
| 2024 |
| -0- |
|
| -0- |
| -0- |
|
| -0- |
| -0- |
| -0- |
| -0- |
| |||
|
| 2023 |
| -0- |
|
| -0- |
| -0- |
|
| -0- |
| -0- |
| -0- |
| -0- |
| |||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
|
Mark Laverghetta, Director (8) |
| 2024 |
| -0- |
|
| -0- |
| -0- |
|
| -0- |
| -0- |
| -0- |
| -0- |
| |||
|
| 2023 |
|
| 15,000 |
|
| -0- |
| -0- |
|
| -0- |
| -0- |
| -0- |
|
| 15,000 |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Peter Rodriguez, Director (9) |
| 2024 |
| -0- |
|
| -0- |
| -0- |
|
| -0- |
| -0- |
| -0- |
| -0- |
| |||
|
| 2023 |
|
| 15,000 |
|
| -0- |
| -0- |
|
| -0- |
| -0- |
| -0- |
|
| 15,000 |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Benjamin Wrightsman, Director (10) |
| 2024 |
| -0- |
|
| -0- |
|
| 9,403 |
|
| -0- |
| -0- |
| -0- |
|
| 9,403 |
| |
|
| 2023 |
| -0- |
|
| -0- |
| -0- |
|
| -0- |
| -0- |
| -0- |
| -0- |
| |||
| 20 |
| Table of Contents |
(1) | Thomas Sauve was appointed a Director of the Company prior to October 31, 2023. 2024 accrued compensation of $100,000 was converted to preferred stock on September 1, 2024 and December 31, 2024. The value of the stock warrants in Column (d) represents amortized book value of warrants valued using the Black-Scholes Options Pricing Model and does not represent the actual cash value of the warrants to the warrant holder. During 2024, 25,000 stock warrants were issued for board service. 2023 compensation of $150,000 was converted to preferred stock on September 1, 2024. 2023 Board compensation of $15,000 was also converted to preferred stock on September 1, 2024. |
|
|
(2) | Julie Griffith was appointed as a director on October 31, 2023, as part of the Business Combination. The value of the stock warrants in Column (d) represents amortized book value of warrants valued using the Black-Scholes Options Pricing Model and does not represent the actual cash value of the warrants to the warrant holder. During 2024, 25,000 stock warrants were issued for board service. |
|
|
(3) | Josh Hawes was appointed as a director on November 25, 2024. |
|
|
(4) | Roy Smith was appointed as a director on February 12, 2024. The value of the stock warrants in Column (d) represents amortized book value of warrants valued using the Black-Scholes Options Pricing Model and does not represent the actual cash value of the warrants to the warrant holder. During 2024, 25,000 stock warrants were issued for board service. |
|
|
(5) | Ben Kincaid was appointed as a director on November 25, 2024. |
|
|
(6) | Gary Ehlebracht was appointed as a director at the Company’s inception on January 10, 2021. His board service ended on February 7, 2024. |
|
|
(7) | Daniel Hasler was appointed as a director at the Company’s inception on January 10, 2021. His board service ended on February 7, 2024. |
|
|
(8) | Mark Laverghetta was appointed as a director of Royalty Management Corporation, the wholly owned subsidiary of the Company, at its inception on June 21, 2021. $15,000 of board comp was accrued and later converted to preferred stock of the Company on October 16, 2024. His board service ended on October 31, 2023. |
|
|
(9) | Peter Rodriguez was appointed as a director of Royalty Management Corporation, the wholly owned subsidiary of the Company, at its inception on June 21, 2021. $15,000 of board comp was accrued and later converted to preferred stock of the Company on October 16, 2024. His board service ended on October 31, 2023. |
|
|
(10) | Benjamin Wrightsman was appointed as a director on February 12, 2024. The value of the stock warrants in Column (d) represents amortized book value of warrants valued using the Black-Scholes Options Pricing Model and does not represent the actual cash value of the warrants to the warrant holder. During 2024, 25,000 stock warrants were issued for board service. His board service ended on November 25, 2024. |
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED SHAREHOLDER MATTERS.
At December 31, 2024, we had 14,958,817 shares of common stock issued and outstanding. Voting power represents the voting power of common stock owned beneficially by such person. On all matters to be voted upon, the holders of the common stock vote together as a single class. Except as otherwise set forth below, the following table sets forth information known to us as of December 31, 2024 relating to the beneficial ownership of shares of our common stock by:
● | each person who is known by us to be the beneficial owner of more than 5% of our outstanding common stock; |
● | each director and nominee; |
● | each named executive officer; and |
● | all named executive officers and directors as a group. |
| 21 |
| Table of Contents |
Unless otherwise indicated, the address of each beneficial owner in the table set forth below is care of 12115 Visionary Way, Suite 174, Fishers IN 40638. We believe that all persons, unless otherwise noted, named in the table have sole voting and investment power with respect to all shares of common stock shown as being owned by them. Under securities laws, a person is considered to be the beneficial owner of securities owned by him or her (or certain persons whose ownership is attributed to him or her) and that can be acquired by him or her within 60 days from December 31, 2024, including upon the exercise of options, warrants or convertible securities. We determine a beneficial owner’s percentage ownership by assuming that options, warrants or convertible securities that are held by him or her, but not those held by any other person, and which are exercisable within 60 days of the that date, have been exercised or converted.
Name and Address of Beneficial Owner(1)(2) |
| Number of Shares Beneficially Owned |
|
| % |
| ||
Directors and Named Executive Officers of the Company |
|
|
|
|
|
| ||
Thomas Sauve, Chief Executive Officer and Director(3) |
|
| 1,204,708 |
|
|
| 8.04 | % |
Kirk Taylor, Chief Financial Officer(4) |
|
| 1,420,108 |
|
|
| 9.47 | % |
Julie Griffith, Independent Director |
|
| 376 |
|
| * | % | |
Josh Hawes, Independent Director |
|
| 1,503 |
|
| * | % | |
Roy Smith, Independent Director |
| -0- |
|
| * | % | ||
Ben Kincaid, Independent Director |
|
| 376 |
|
| * | % | |
All Directors and Executive Officers of the Company as a Group (6 Individuals) |
|
| 2,627,071 |
|
|
| 17.53 | % |
All |
|
|
|
|
|
|
|
|
Five Percent Holders |
|
|
|
|
|
|
|
|
White River Holdings LLC(5) |
|
| 1,106,886 |
|
|
| 7.38 | % |
Homewood Holdings LLC (6) |
|
| 1,052,377 |
|
|
| 7.02 | % |
Midwest General Investment Company LLC(7) |
|
| 1,000,472 |
|
|
| 6.67 | % |
White River Ventures LLC(8) |
|
| 855,196 |
|
|
| 5.71 | % |
* | Less than one percent. |
(1) | Unless otherwise noted, the business address of each of the following individuals is c/o Royalty Management Holding Corporation, 12115 Visionary Way, Suite 174, Fishers, IN 46038. |
(2) | Excludes shares issuable pursuant to any warrants outstanding. |
(3) | Owned through First Frontier Capital LLC, of which Thomas Sauve is manager and a beneficial owner. |
(4) | Owned through Liberty Hill Capital Management LLC, of which Kirk Taylor is manager and a beneficial owner. |
(5) | Managed by former management of the Company that resigned on October 31, 2023 as part of the Business Combination. |
(6) | Beneficial owner is Mark LaVerghetta. |
(7) | Manager of entity is Mark Jensen. Entity is owned by trust which certain members of the Sauve family are beneficiaries. |
(8) | Manager of entity is Thomas Sauve. Entity is owned by trust which certain members of the Jensen family are beneficiaries. |
| 22 |
| Table of Contents |
Our initial shareholders beneficially own approximately 20% of the issued and outstanding shares of common stock and will have the right to appoint all of our directors prior to the completion of our initial business combination. Holders of our public shares will not have the right to appoint any directors to our Board of Directors prior to the completion of our initial business combination. Because of this ownership block, our initial shareholders may be able to effectively influence the outcome of all other matters requiring approval by our shareholders, including amendments to our amended and restated certificate of incorporation and bylaws and approval of significant corporate transactions including our initial business combination.
Our sponsor and our founding team have entered into an agreement with us, pursuant to which they have agreed to waive their redemption rights with respect to their founder shares and any public shares purchased during or after our Initial Public Offering in connection with (i) the completion of our initial business combination and (ii) a shareholder vote to approve an amendment to our amended and restated certificate of incorporation (A) that would modify the substance or timing of our obligation to provide holders of our Class A shares of common stock the right to have their shares redeemed in connection with our initial business combination or to redeem 100% of our public shares if we do not complete our initial business combination within 12 months from the closing of our Initial Public Offering or (B) with respect to any other provision relating to the rights of holders of our Class A shares of common stock or pre-initial business combination activity. Further, our sponsor and each member of our founding team have agreed to vote their founder shares and public shares purchased during or after our Initial Public Offering in favor of our initial business combination.
Our sponsor is deemed to be our “promoter” as such term is defined under the federal securities laws.
Changes in Control.
None.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE.
Related Party Transactions
Land Resources & Royalties LLC / Wabash Enterprises LLC
The Company may at times in the future lease property from Land Resources & Royalties LLC (“LRR”) and enter into various other agreements with LRR and/or its parent company, Wabash Enterprises LLC, an entity managed by Thomas Sauve and which Kirk Taylor is also part beneficial owner. Furthermore, on October 31, 2023, as part of the Business Combination, Wabash Enterprises LLC and LRR became an owner of Class A Common Stock of the Company and several leases and agreements exist between LRR and the Company, for which LRR receives income.
Land Betterment Corporation
The Company may at times in the future enter into agreements with Land Betterment Corporation, an entity in which Kirk Taylor is a director, President and Chief Financial Officer and Thomas Sauve who is a director and Chief Development Officer. The Company has entered into a contractor services agreement with Land Betterment Corporation for environmental services personnel. The contract called for cost plus 12.5% margin.
American Resources Corporation
The Company may at times enter into agreements with American Resources Corporation (“ARC”) and its subsidiaries and affiliates, including McCoy Elkhorn Coal LLC and Perry County Resources LLC, an entity in which Thomas Sauve is a director and President, and Kirk Taylor is the Chief Financial Officer.
First Frontier Capital LLC
The Company may at times enter into financing agreements with First Frontier Capital LLC, an entity managed and beneficially owned by Thomas Sauve, Chief Executive Officer of the Company. On February 1, 2022, First Frontier Capital LLC invested $10,000 cash into the Company in the form of the Round A Convertible Note and 385 warrants issued under Warrant “A-7.” On October 31, 2023, as part of the Business Combination, the notes and warrants held by First Frontier Capital LLC were converted into Class A Common Stock of the Company.
| 23 |
| Table of Contents |
T.R. Mining & Equipment Ltd.
The Company may at times enter into agreements with T. R. Mining & Equipment Ltd., an entity owned 51% by a subsidiary of American Resources Corporation.
Administrative Services Arrangement
The Company’s Sponsor agreed, commencing from the date that the Company’s securities are first listed on NASDAQ through the earlier of the Company’s consummation of a Business Combination and its liquidation, to make available to the Company certain general and administrative services, including office space, utilities and administrative services, as the Company may require from time to time. The Company agreed to pay the Sponsor $10,000 per month for these services. At the date of business combination, the services agreement terminated. As of both years ended December 31, 2024 and 2023, $120,000, is accrued and owed under this agreement.
Promissory Note — Related Party
On March 22, 2021, the Sponsor agreed to loan the Company an aggregate of up to $800,000 to cover expenses related to Initial Public Offering pursuant to a promissory note (the "Note"). This loan was non-interest bearing and payable in full on or before March 22, 2022 or could be converted into equity on March 22, 2022. From inception to date, $485,900 was advanced and repaid. As of both years ended December 31, 2024 and 2023, $261,243 is outstanding.
Director Independence
Each of Julie Griffith, Josh Hawes, Roy Smith, and Ben Kincaid, the directors of the Company at December 31, 2024, are independent directors as defined by the NASDAQ Company Guide.
ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES.
CM3 Advisory (PCAOB ID: 6866), services as the Company’s independent registered public accounting firm.
B.F. Borgers CPA, PC (PCAOB ID: 5041), served as the Company’s independent registered public accounting firm during 2023.
The following is a summary of fees paid or to be paid to CM3 Advisory during 2024 and B.F. Borgers CPA, PC, or B.F. Borgers, for 2023.
|
| 2024 |
|
| 2023 |
| ||
Audit Fees |
| $ | 107,000 |
|
|
| 46,000 |
|
Audit-Related Fees |
| $ | - |
|
|
| - |
|
Tax Fees |
|
| - |
|
|
| - |
|
All Other Fees |
|
| - |
|
|
| - |
|
Total |
| $ | 107,000 |
|
|
| 46,000 |
|
Audit Fees — This category includes the audit of our annual financial statements, review of financial statements included in our quarterly reports on Form 10-Q and services that are normally provided by the independent registered public accounting firm in connection with engagements for those fiscal years. This category also includes advice on audit and accounting matters that arose during, or as a result of, the audit or the review of interim financial statements.
| 24 |
| Table of Contents |
Audit-Related Fees — This category consists of assurance and related services by the independent registered public accounting firm that are reasonably related to the performance of the audit or review of our financial statements and are not reported above under “Audit Fees.” The services for the fees disclosed under this category include consultation regarding our correspondence with the Securities and Exchange Commission and other accounting consulting.
Tax Fees — This category consists of professional services rendered for tax compliance and tax advice. The services for the fees disclosed under this category include tax return preparation and technical tax advice.
All Other Fees — This category consists of fees for other miscellaneous items.
Pre-Approval Policy
Our audit committee was formed upon the consummation of our Initial Public Offering. As a result, the audit committee did not pre-approve all of the foregoing services, although any services rendered prior to the formation of our audit committee were approved by our Board of Directors. Since the formation of our audit committee, and on a going-forward basis, the audit committee has and will pre-approve all auditing services and permitted non-audit services to be performed for us by our auditors, including the fees and terms thereof (subject to the de minimis exceptions for non-audit services described in the Exchange Act which are approved by the audit committee prior to the completion of the audit).
| 25 |
| Table of Contents |
PART IV
ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
(a) THE FOLLOWING DOCUMENTS ARE FILED AS PART OF THIS REPORT:
(1) The following Financial Statements are included in this Annual Report on Form 10-K in Item 8:
|
| Page |
|
FINANCIAL STATEMENTS |
|
|
|
|
|
|
|
| F-2 |
| |
|
|
|
|
| F-3 |
| |
|
|
|
|
| F-4 |
| |
|
|
|
|
| F-5 |
|
Schedules not listed above are omitted because of the absence of the conditions under which they are required or because the required information is included in the Consolidated Financial Statements or the notes thereto.
(2) Financial Statement Schedules:
None.
(3) Exhibits:
Exhibit Number |
| Description |
| ||
| ||
| ||
| ||
| ||
| ||
| ||
| ||
| ||
| ||
| ||
| ||
| ||
| ||
| ||
| ||
| ||
| ||
| ||
| Certification of the Chief Executive Officer required by Rule 13a-14(a) or Rule 15d-14(a)* | |
| Certification of the Chief Financial Officer required by Rule 13a-14(a) or Rule 15d-14(a)* | |
| ||
| ||
101.INS |
| Inline XBRL Instance Document |
101.SCH |
| Inline XBRL Taxonomy Extension Schema Document |
101.CAL |
| Inline Taxonomy Extension Calculation Linkbase Document |
101.DEF |
| Inline XBRL Taxonomy Extension Definitions Linkbase Document |
101.LAB |
| Inline XBRL Taxonomy Extension Label Linkbase Document |
101.PRE |
| Inline XBRL Taxonomy Extension Presentation Linkbase Document |
104 |
| The cover page for the Company’s annual report on Form 10-K for the period ended December 31, 2024, formatted in Inline XBRL (included in Exhibit 101 attachments). |
* Filed herewith
** Furnished herewith
(1) Previously filed as an exhibit to our Form S-1, dated February 2, 2021, as amended, and incorporated by reference herein.
(2) Previously filed as an exhibit to our Current Report on Form 8-K filed on March 23, 2021, and incorporated by reference herein.
| 26 |
| Table of Contents |
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| ROYALTY MANAGEMENT HOLDING CORPORATION |
| |
|
|
|
|
Date: March 28, 2025 | By: | /s/ Thomas M. Sauve |
|
|
| Thomas M. Sauve, Chief Executive Officer |
|
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities indicated on the dates indicated.
Signature |
| Title |
| Date |
|
|
|
|
|
/s/ Julie Griffith |
| Director |
| March 28, 2025 |
Julie Griffith |
|
|
|
|
|
|
|
|
|
/s/ Josh Hawes |
| Director, Chairman of the Board |
| March 28, 2025 |
Josh Hawes |
|
|
|
|
|
|
|
|
|
/s/ Roy Smith |
| Director |
| March 28, 2025 |
Roy Smith |
|
|
|
|
|
|
|
|
|
/s/ Ben Kincaid |
| Director |
| March 28, 2025 |
Ben Kincaid |
|
|
|
|
|
|
|
|
|
/s/ Thomas M. Sauve |
| Chief Executive Officer/ Director (Principal Executive Officer and the |
| March 28, 2025 |
Thomas M. Sauve |
| Registrant’s authorized signatory in the United Sates) |
|
|
|
|
|
|
|
/s/ Kirk P. Taylor |
| Chief Financial Officer |
| March 28, 2025 |
Kirk P. Taylor |
| (Principal Financial and Accounting Officer) |
|
|
27 |