Royalty Management Holding Corp 10-K, filed Mar 25, 2022

Royalty Management Holding Corp (RMCO)

10-K 2022-03-25 For: 2021-12-31

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Added on April 12, 2026

About this 10-K

Royalty Management Holding Corp filed this 10-K on March 25, 2022, covering the fiscal year ended December 31, 2021.

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Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Units, each consisting of one share of common stock and one redeemable warrant	AMAOU	The Nasdaq Stock Market LLC
Common stock par value $0.0001 per share	AMAO	The Nasdaq Stock Market LLC
Redeemable warrants, exercisable for shares of common stock at an exercise price of $11.50 per share	AMAOW	The Nasdaq Stock Market LLC

		Page
Special Note Regarding Forward Looking Statements		3

PART I

Item 1.	Business	4
Item 1A.	Risk Factors	5
Item 1B.	Unresolved Staff Comments	37
Item 2.	Properties	37
Item 3.	Legal Proceedings	37
Item 4.	Mine Safety Disclosures	37

PART II

Item 5.	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	38
Item 6.	Selected Financial Data	40
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	41
Item 7A.	Quantitative and Qualitative Disclosure About Market Risk	43
Item 8.	Financial Statements and Supplementary Data	44
Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	45
Item 9A.	Controls and Procedures	45
Item 9B.	Other Information	46

PART III

Item 10.	Directors, Executive Officers and Corporate Governance	47
Item 11.	Executive Compensation	54
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	55
Item 13.	Certain Relationships and Related Transactions, and Director Independence	56
Item 14.	Principal Accounting Fees and Services	57

PART IV

Item 15.	Exhibits, Financial Statement Schedules	58

Signatures		60

·	our ability to select an appropriate partner business or businesses;

·	our ability to complete our initial business combination;

·	our expectations around the performance of a prospective partner business or businesses;

·	our success in retaining or recruiting, or changes required in, our officers, key employees or directors following our initial business combination;

·	our officers and directors allocating their time to other businesses and potentially having conflicts of interest with our business or in approving our initial business combination;

·	our potential ability to obtain additional financing to complete our initial business combination; our pool of prospective partner businesses;

·	our ability to consummate an initial business combination due to the uncertainty resulting from the COVID-19 pandemic;

·	the ability of our officers and directors to generate a number of potential business combination opportunities; our public securities’ potential liquidity and trading;

·	the lack of a market for our securities;

·	the use of proceeds not held in the trust account or available to us from interest income on the trust account balance;

·	the trust account not being subject to claims of third parties; or

·	our financial performance following our Initial Public Offering.

	·	newly formed company without an operating history;

	·	our ability to continue as a “going concern;”

	·	lack of opportunity to vote on our proposed business combination;

	·	lack of protections afforded to investors of blank check companies;

	·	issuance of equity and/or debt securities to complete a business combination;

	·	lack of working capital;

	·	third-party claims reducing the per-share redemption price;

	·	negative interest rate for securities in which we invest the funds held in the trust account;

	·	our stockholders being held liable for claims by third parties against us;

	·	failure to enforce our sponsor’s indemnification obligations;

	·	the ability of warrant holders to obtain a favorable judicial forum for disputes with our company;

	·	dependence on key personnel;

	·	conflicts of interest of our sponsor, officers and directors and the representative;

	·	the delisting of our securities by Nasdaq;

	·	dependence on a single target business with a limited number of products or services;

	·	shares being redeemed and warrants becoming worthless;

	·	our competitors with advantages over us in seeking business combinations;

	·	ability to obtain additional financing;

	·	our initial stockholders controlling a substantial interest in us;

	·	warrants’ and founder shares’ adverse effect on the market price of our common stock;

	·	disadvantageous timing for redeeming warrants;

	·	registration rights’ adverse effect on the market price of our common stock;

	·	impact of COVID-19 and related risks;

	·	business combination with a company located in a foreign jurisdiction;

	·	changes in laws or regulations; tax consequences to business combinations; and

	·	exclusive forum provisions in our amended and restated certificate of incorporation.

	·	default and foreclosure on our assets if our operating revenues after an initial business combination are insufficient to repay our debt obligations;

	·	acceleration of our obligations to repay the indebtedness even if we make all principal and interest payments when due if we breach certain covenants that require the maintenance of certain financial ratios or reserves without a waiver or renegotiation of that covenant;

	·	our immediate payment of all principal and accrued interest, if any, if the debt is payable on demand;

	·	our inability to obtain necessary additional financing if the debt contains covenants restricting our ability to obtain such financing while the debt is outstanding;

	·	our inability to pay dividends on our Class A ordinary shares;

	·	using a substantial portion of our cash flow to pay principal and interest on our debt, which will reduce the funds available for dividends on our Class A ordinary shares if declared, expenses, capital expenditures, acquisitions and other general corporate purposes;

	·	limitations on our flexibility in planning for and reacting to changes in our business and in the industry in which we operate;

	·	increased vulnerability to adverse changes in general economic, industry and competitive conditions and adverse changes in government regulation; and

	·	limitations on our ability to borrow additional amounts for expenses, capital expenditures, acquisitions, debt service requirements, execution of our strategy and other purposes and other disadvantages compared to our competitors who have less debt.

12115 Visionary Way, Fishers, Indiana 46038
(Address of principal executive offices, including zip code)

Registrant's telephone number, including area code (317) 855-9926

	·	restrictions on the nature of our investments; and

	·	restrictions on the issuance of securities, each of which may make it difficult for us to complete our initial business combination.

	·	registration as an investment company with the SEC;

	·	adoption of a specific form of corporate structure; and

	·	reporting, record keeping, voting, proxy and disclosure requirements and other rules and regulations that we are currently not subject to.

	·	solely dependent upon the performance of a single business, property or asset, or

	·	dependent upon the development or market acceptance of a single or limited number of products, processes or services.

	·	higher costs and difficulties inherent in managing cross-border business operations and complying with different commercial and legal requirements of overseas markets;

	·	rules and regulations regarding currency redemption;

	·	complex corporate withholding taxes on individuals;

	·	laws governing the manner in which future business combinations may be effected;

	·	tariffs and trade barriers;

	·	regulations related to customs and import/export matters;

	·	longer payment cycles and challenges in collecting accounts receivable;

	·	tax issues, including but not limited to tax law changes and variations in tax laws as compared to the United States;

	·	currency fluctuations and exchange controls;

	·	rates of inflation;

	·	cultural and language differences;

	·	employment regulations;

	·	crime, strikes, riots, civil disturbances, terrorist attacks, natural disasters and wars;

	·	deterioration of political relations with the United States; and

	·	government appropriations of assets.

	·	a limited availability of market quotations for our securities;

	·	reduced liquidity for our securities;

	·	a determination that our Class A common stock is a “penny stock” which will require brokers trading in our Class A common stock to adhere to more stringent rules and possibly result in a reduced level of trading activity in the secondary trading market for our securities;

	·	a limited amount of news and analyst coverage; and

	·	a decreased ability to issue additional securities or obtain additional financing in the future.

	·	may significantly dilute the equity interest of investors in this offering, which dilution would increase if the anti-dilution provisions in the Class B common stock resulted in the issuance of Class A shares on a greater than one-to-one basis upon conversion of the Class B common stock;

	·	may subordinate the rights of holders of our common stock if preferred stock is issued with rights senior to those afforded our common stock;

	·	could cause a change of control if a substantial number of shares of our common stock are issued, which may affect, among other things, our ability to use our net operating loss carry forwards, if any, and could result in the resignation or removal of our present officers and directors;

	·	may have the effect of delaying or preventing a change of control of us by diluting the stock ownership or voting rights of a person seeking to obtain control of us; and

	·	may adversely affect prevailing market prices for our units, Class A common stock and/or warrants.

	(i)	we issue additional shares of Class A common stock or equity-linked securities for capital raising purposes in connection with the closing of our initial business combination at a Newly Issued Price of less than $9.20 per share;

	(ii)	the aggregate gross proceeds from such issuances represent more than 60% of the total equity proceeds, and interest thereon, available for the funding of our initial business combination on the date of the consummation of our initial business combination (net of redemptions), and

	(iii)	the Market Value is below $9.20 per share,

	·	the history and prospects of companies whose principal business is the acquisition of other companies;

	·	prior offerings of those companies;

	·	our prospects for acquiring an operating business;

	·	a review of debt-to-equity ratios in leveraged transactions;

	·	our capital structure;

	·	an assessment of our management and their experience in identifying operating companies;

	·	general conditions of the securities markets at the time of this offering; and

	·	other factors as were deemed relevant.

	High		Low

Quarters ending in 2021
March 31	$	9.98	$	9.91
June 30		9.86		9.85
September 30		10.06		9.85
December 31	$	10.25	$	9.93

		Page
FINANCIAL STATEMENTS

Report of Independent Registered Public Accounting Firm - 2021		F-1

Balance Sheet		F-2

Statement of Operations		F-3

Statement of Changes Stockholders' Deficit		F-4

Statement of Cash Flows		F-5

Notes to Financial Statements		F-6

ASSETS

CURRENT ASSETS
Cash	$	293,153
Account receivable – related party		675,000
Prepaid Insurance		102,534

Total Current Assets		1,070,687

Cash Held in Trust account		106,116,023

TOTAL ASSETS	$	107,186,710

LIABILITIES AND SHAREHOLDER’S EQUITY

CURRENT LIABILITIES
Accounts Payable	$	99,002
Total Current Liabilities		99,002

Deferred Underwriter commissions		3,500,000
Fair value liability of Public Warrants		3,036,301
Fair value liability of Private Warrants		2,262,941
TOTAL LIABILITIES		8,898,244

COMMITMENTS AND CONTINGENCIES
Class A Common Stock at $10.10 per share, 10,506,002 shares at redemption value:	$	106,112,020

SHAREHOLDER’S EQUITY
Class A Common Stock: $0.0001 par value; 100,000,000 shares authorized, 0 shares issued and outstanding for the period end (excluding 10,506,002 shares subject to possible redemption)		-

Class B Common Stock: $0.0001 par value; 10,000,000 shares authorized, 2,726,500 shares issued and outstanding for the period end (including 100,000 representative shares).⁽¹⁾		273

Additional paid-in capital		(10,140,613	)

Retained Earnings		2,316,786

Total Shareholder’s Equity		(7,823,554	)

TOTAL LIABILITIES AND SHAREHOLDER’S EQUITY	$	107,186,710

	December 31, 2021

Professional Fees	($513,762		)
General and Administrative		(503,057	)
Total Expenses	($1,016,819		)
Gain on Warrant Fair Value Adjustment		3,328,201
Other Income		5,404
Net Income		2,316,786

Weighted average shares outstanding, basic and diluted		11,115,481	(1)
Basic and diluted net loss per ordinary share		0.21

	Common Stock				Additional Paid-In			Accumulated		Total Stockholder’s
	Shares		Amount		Capital			Deficit		Equity
Balance January 20, 2021		—	$	—	$	—		$	—	$	—
Issuance of Class B common stock to Founders⁽¹⁾		2,626,500		263		24,737			—		25,000
Issuance of Class B Common to Representatives		100,000		10		990			—		1,000
Offering Costs		—		—		(4,910,297	)		—		(4,910,297	)
Warrant fair value and capital adjustments		—		—		357,556			—		357,556
Sale of private placement units to sponsor		—		—		139,400			—		139,400
Class A common stock						(5,752,999	)				(5,752,999	)
Net income				—		—			2,316,786		2,316,786	)
Balance – December 31, 2021		2,726,500	$	273	$	(5,062,638	)	$	2,316,786	$	(7,823,554	)

	For the Period from January 20, 2021 (inception) through December 31, 2021
Cash flows from Operating Activities:
Net Income	$	2,316,786
Adjustments to reconcile net income to net cash used in operations
Fair Value Adjustment of Public Warrants		(1,663,699	)
Fair Value Adjustment of Private Warrants		(1,347,059	)
Changes in operating assets and liabilities:
Account receivable – related party		(675,000	)
Prepaid Insurance		(102,534	)
Accounts Payable		99,002
Net used in operating activities		(1,372,504	)

Cash Flows from Investing Activities
Investment of cash in Trust Account		(106,116,023	)

Cash Flows from Financing Activities:
Proceeds from initial stockholders		25,975
Proceeds from sale of Units, net underwriting discounts paid		107,616,305
Proceeds from sale of Private Warrants		139,400
Proceeds from promissory note – related party		485,900
Repayment of promissory note – related party		(485,900	)
Proceeds from advance – related party		760,000
Repayment of advance – related party		(760,000	)
Net cash provided by financing activities		107,781,680

Net Change in Cash		293,153
Cash – Beginning of period		—
Cash – Ending of period	$	293,153

	As of March 17, 2021
	As Previously Reported		Adjustments			As Adjusted

Class A Subject to Redemption	$	90,472,172	$	6,099,748		$	96,571,920

Class A common	$	70	$	(70	)	$	-

APIC	$	5,015,083	$	(6,099,678	)	$	(1,084,595	)

	As of March 31, 2021 (Unaudited)
	As Previously Reported		Adjustments			As Adjusted

Class A Subject to Redemption	$	90,472,172	$	6,099,748		$	96,571,920

Class A common	$	70	$	(70	)	$	-

APIC	$	5,015,083	$	(6,099,678	)	$	(1,084,595	)

	As of June 30, 2021 (Unaudited)
	As Previously Reported		Adjustments			As Adjusted

Class A Subject to Redemption	$	94,259,273	$	6,099,748		$	100,359,021

Class A common	$	70	$	(70	)	$	-

APIC	$	5,015,083	$	(6,099,678	)	$	(1,084,595	)

	As of September 30, 2021 (Unaudited)
	As Previously Reported		Adjustments			As Adjusted

Class A Subject to Redemption	$	94,259,273	$	6,099,748		$	100,359,021

Class A common	$	70	$	(70	)	$	-

APIC	$	5,015,083	$	(6,099,678	)	$	(1,084,595	)

Description	Level		December 31, 2021
Assets:
Marketable securities held in Trust Account		1	$	106,116,023

Liabilities:
Warrant Liability – Public Warrants		3		3,036,301
Warrant Liability – Private Warrants		3		2,262,941

	Private Placement			Public			Warrant Liabilities
Fair value as of January 1, 2021	$	—		$	—		$	—
Initial measurement on March 19, 2021		3,610,000			4,700,000			8,310,000
Change in valuation inputs or other assumptions		(1,443,600	)		(1,884,601	)		(3,328,201	)
Fair value as of December 31, 2021		2,166,400			2,815,399			4,981,799

Name	Age	Positions

Daniel J. Hasler	63	Director
Edward Smid	44	Director
Gary T. Ehlebracht	36	Director
Mark C. Jensen	42	Director/Chief Executive Officer
Kirk P. Taylor	42	Director/President & Chief Financial Officer
Thomas M. Sauve	43	Director

	·	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.

	·	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.

	·	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.

	·	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.

	[Audit Committee]	[Compensation Committee]

Daniel J. Hasler	X	X
Edward Smid	X	X (Chairman)
Gary T. Ehlebracht	X	X
Mark C. Jensen
Kirk P. Taylor
Thomas M. Sauve	X (Chairman)	X

Name and principal position	Year	Salary ($)		Bonus ($)		Stock Awards ($)		Option Awards ($)		Nonequity incentive plan compen-sation ($)		Non-qualified deferred compen-sation earnings ($)		All other compen-sation ($)		Total ($)
Mark C. Jensen	2021		-		-		-		-		-		-		-		-
Kirk P. Taylor	2021		-		-		-		-		-		-		-		-
Thomas M. Sauve	2021		-		-		-		-		-		-		-		-
Daniel J. Hasler	2021		-		-		-		50,000		-		-		-		50,000
Edward Smid	2021		-		-		-		50,000		-		-		-		50,000
Gary T. Ehlebracht	2021		-		-		-		50,000		-		-		-		50,000

●	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.