Royalty Management Holding Corp 10-K for FY2023
Royalty Management Holding Corp (RMCO)
About this 10-K
Royalty Management Holding Corp filed this 10-K on April 16, 2024, covering the fiscal year ended December 31, 2023 (FY2023).
Headline figures
Fiscal year ended December 31, 2023, as reported in this filing, compared with the same period a year earlier where the filing states it.
- Revenue
- $361.62K
- up 109.4% from $172.69K a year earlier
- Net loss
- $2.07M
- compared with net income of $1.2M a year earlier
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 |
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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 second fiscal quarter; $
There were
TABLE OF CONTENTS
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EXPLANATORY NOTE
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”). As used in this Report, unless otherwise indicated or the context otherwise requires, references to “we,” “us,” “our,” the “company” and “Royalty” refer to the consolidated operations of Royalty Holdings Co. and its subsidiaries. References to “AMAO” refer to the company prior to the consummation of the Business Combination and references to “Legacy Royalty” refer to Royalty Management Co. prior to the consummation of the Business Combination.
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This annual report on Form 10-K of Royalty Management Holding Corporation for the year ended December 31, 2023 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 are 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”). Although the Company is not limited to a particular industry or geographic region for purposes of consummating a Business Combination, the Company intends to focus on companies in the land holdings and resources industry in the United States. We intend to effectuate our Business Combination using cash from the proceeds of the Initial Public Offering and the sale of the Private Warrants, our capital stock, debt or a combination of cash, stock and debt.
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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 at 1845 South KY Highway 15 South, Hazard, KY 41701. We pay $250.00 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, located at 12115 Visionary Way, Ste 174, Fishers, IN 46038. We pay $2,143.25 a month in rent 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.
As of December 31, 2023, there were 342 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 and without the Company’s immediate knowledge.
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 and do not have any current plans to pay any dividends.
Securities Authorized for Issuance Under Equity Compensation Plans
None.
Stock Performance Graph
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Quarters ending in 2022 |
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March 31 |
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June 30 |
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September 30 |
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December 31 |
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March 31 |
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June 30 |
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September 30 |
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December 31 |
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Recent Sales of Unregistered Sales of Equity Securities
None.
Use of Proceeds
None.
Repurchases
None.
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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.
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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, 2023 and our capital resources and liquidity as of December 31, 2023. 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.
RESULTS OF OPERATIONS
Year Ended December 31, 2023 compared to Year Ended December 31, 2022.
Revenues.
Revenues for the years ended December 31, 2023 and 2022 were $361,624 and $172,686, respectively. The increase is due to a full year of revenues for our environmental services subsidiary as well as an increase in fee income due to full year of income in the respective investments.
We generated non-operating income in the form of interest income on marketable securities held in the trust account.
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Expenses.
Total Operating Expenses for the year ended December 31, 2023 and 2022 were $2,048,531 and $3,647,578, respectively. The main driver of operating expenses were administrative, professional fees, and salaries.
Total Other Income and Expense for the year ended December 31, 2023 and 2022 were ($380,315) and $4,674,395, respectively, mostly from the fair value adjustments of warrant liabilities, convertible debt interest and amortization expense intangibles.
Financial Condition.
Total Assets as of December 31, 2023 and 2022 amounted to $13,610,731 and $20,257,417, respectively. The large decrease in assets was due to trust redemptions of $7,613,762.
Total Liabilities as of December 31, 2023 and 2022 amounted to $3,990,542 and $8,542,465, respectively. The primary drivers for the decrease in liability balance was the conversions of convertible notes payable and redemption of deferred underwriter commissions.
LIQUIDITY AND CAPITAL RESOURCES
In March 2021, the initial stockholders purchased 2,875,000 shares (the “Founder Shares”) of the Company’s common stock for an aggregate price of $25,000.
On March 17, 2021, we consummated an initial public offering of 10,000,000 Units at a price of $10.00 per Unit, generating gross proceeds of $100,000,000 (the “Initial Public Offering”). Simultaneously with the closing of the Initial Public Offering, we consummated the sale of 3,800,000 Private Warrants to our initial stockholders generating gross proceeds of $3,800,000. Following the Initial Public Offering and the sale of the Private Warrants, a total of $101,000,000 was placed in the trust account. We incurred $3,910,297 in Initial Public Offering related costs, including $3,500,000 of underwriting fees and $410,297 of other costs. For the period from its inception though June 30, 2021, cash used in operating activities was $618,833 mostly from administrative and due diligence costs. Cash generated from financing activities were $102,414,704 related to the proceeds of our Initial Public Offering and sale of Private Warrants.
On March 29, 2022 - trust redemption of $90,334,512,92, reducing the trust account balance to $15,788,742.13. The redemption was allowed under initial offering documents at the time of trust extension which was necessary because a business combination had not been completed.
On September 28, 2022, a second trust redemption of $8,331,836.23. The redemption was allowed under initial offering documents at the time of trust extension.
As of December 31, 2022 and October 31, 2023, the effective date of our business combination, the balance in the trust account was $7,613,761.76 and $0.00, respectively.
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We intended to use substantially all of the funds held in the trust account, including any amounts representing interest earned on the Trust Account (less income taxes payable), to complete our Business Combination. To the extent that our capital stock or debt is used, in whole or in part, as consideration to complete our Business Combination, the remaining proceeds held in the trust account will be used as working capital to finance the operations of the target business or businesses, make other acquisitions and pursue our growth strategies.
As of December 31, 2023, we have unrestricted cash of $77,023. We intend to use the funds held outside the trust account primarily to identify and evaluate target businesses, perform business due diligence on prospective target businesses, travel (to the extent necessary and practicable) to and from the offices, plants or similar locations of prospective target businesses or their representatives or owners, review corporate documents and material agreements of prospective target businesses, and structure, negotiate and complete a Business Combination.
In order to continue as a going concern, the Company will need, among other things, additional capital resources. Management’s plan to obtain such resources for the Company include, obtaining capital from management and significant stockholders sufficient to meet its minimal operating expenses. However, management cannot provide any assurance that the Company will be successful in accomplishing any of its plans.
There is no assurance that the Company will be able to obtain sufficient additional funds when needed or that such funds, if available, will be obtainable on terms satisfactory to the Company. In addition, profitability will ultimately depend upon the level of revenues received from business operations. However, there is no assurance that the Company will attain profitability.
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern which contemplates, among other things, the realization of assets and satisfaction of liabilities in the ordinary course of business.
We are not aware of any trends or known demands, commitments, events or uncertainties that will result in or that are reasonably likely to result in material increases or decreases in liquidity.
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OFF-BALANCE SHEET ARRANGEMENTS
We have no off-balance sheet arrangements as of December 31, 2023 and December 31, 2022. 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.
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. As of December 31, 2022 and October 31, 2023, the effective date of the business combination and termination of the services agreement, $120,000 and $0, respectively, has been paid under this agreement.
CRITICAL ACCOUNTING POLICIES AND ESTIMATES
Our Consolidated Financial Statements are prepared in accordance with GAAP. The preparation of financial statements in conformity with 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 815-40-15-7D and 7F 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, as well as other factors set forth under the caption “Item 1A, Risk Factors” in this Annual Report on Form 10-K 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 AND SUBSIDIARIES
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
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FINANCIAL STATEMENTS |
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Report of Independent Registered Public Accounting Firm - 2023 |
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Report of Independent Registered Public Accounting Firm
To the shareholders and the board of directors of Royalty Management Holding Corporation
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of Royalty Management Holding Corporation as of December 31, 2023 and 2022, the related statements of operations, stockholders' equity (deficit), and cash flows for the years then ended, and the related notes (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2023 and 2022, 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.
Substantial Doubt about the Company’s Ability to Continue as a Going Concern
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 2 to the financial statements, the Company’s significant operating losses raise substantial doubt about its ability to continue as a going concern. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Basis for Opinion
These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audit. 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 audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the 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 audit included performing procedures to assess the risks of material misstatement of the 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 financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audit provides a reasonable basis for our opinion.
/S/
BF Borgers CPA PC (PCAOB ID
We have served as the Company's auditor since 2022
April 16, 2024
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Royalty Management Holding Corporation Consolidated Balance Sheet
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Part I – Financial Information |
ASSETS
CURRENT ASSETS |
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Cash |
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Prepaid Insurance |
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Total Current Assets |
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LONG-TERM ASSETS |
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Interest Receivable |
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Fee Income Receivable |
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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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Intangible Assets, less accumulated amortization of $ |
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Restricted Cash |
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Cash Held in Trust account |
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Operating lease right-of-use assets |
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Total Long-Term Assets |
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TOTAL ASSETS |
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CURRENT LIABILITIES |
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Accounts payable – related party |
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Current portion of operating lease liabilities, net |
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Accrued expenses |
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Total Current Liabilities |
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LONG-TERM LIABILITIES |
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Convertible Notes Payable, Net |
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Notes Payable – Related Party, Net |
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Operating lease liabilities, net |
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Notes Payable |
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Deferred Underwriter commissions |
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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 LONG-TERM LIABILITIES |
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TOTAL LIABILITIES |
| $ |
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| $ |
| ||
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COMMITMENTS AND CONTINGENCIES |
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Class A Common Stock at $ |
| $ |
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| $ |
| ||
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SHAREHOLDERS’ EQUITY |
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Common Stock: $ |
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Class B Common Stock: $ |
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Additional paid-in capital |
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Shareholders’ Equity |
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Total Shareholders’ Equity |
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TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY |
| $ |
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| $ |
| ||
_________
(1) | Includes up to 375,000 shares of Class B common stock subject to forfeiture if the over-allotment option is not exercised in full or in part by the underwriter (see Note 12). |
The accompanying footnotes are integral to the consolidated financial statements.
| F-2 |
| Table of Contents |
Royalty Management Holding Corporation Consolidated Statements of Operations
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| December 31, 2023 |
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| December 31, 2022 |
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INCOME |
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RMC Environmental Services |
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Fee Income |
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Rental Income |
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TOTAL INCOME |
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OPERATING EXPENSES |
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Administrative Expenses |
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Bank Fees & Service Charges |
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Sponsorship Expense |
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Professional Fees |
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Printing |
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Software & apps |
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Payroll |
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Payroll Taxes |
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Employee Insurance |
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Board of Directors Comp |
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Consultant Fee |
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Officers’ Salaries |
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Rent/Lease |
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Hauling Services |
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Travel |
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Fuel |
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Equipment Rentals |
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Impairment Loss |
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Supplies & Materials |
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Repairs & Maintenance |
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Liability Insurance |
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Small Equipment |
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Telephone |
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Utilities |
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General and Administrative |
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TOTAL OPERATING EXPENSES |
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NET LOSS FROM OPERATIONS |
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| ( | ) |
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| ( | ) |
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OTHER INCOME AND EXPENSES |
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Interest Income |
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Income/Loss from Investment |
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Gain (Loss) on Warrant Fair Value Adjustment |
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Other Income |
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Amortization expense intangibles |
|
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Convertible Debt Interest |
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Net Income (Loss) |
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Weighted average shares outstanding, basic and diluted |
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| (1) | ||
Basic and diluted net income per ordinary share |
| $ | ( | ) |
| $ |
| |
_________
(1) | This number excludes an aggregate of up to 375,000 Class B common stock subject to forfeiture if the over-allotment option is not exercised in full or in part by the underwriters (see Note 12). |
The accompanying footnotes are integral to the consolidated financial statements.
| F-3 |
| Table of Contents |
Royalty Management Holding Corporation Statement of Shareholders’ Equity December 31, 2023 and 2022
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| Additional |
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| Total |
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| Common Stock |
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| Paid-In |
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| Accumulated |
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| Stockholder’s |
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| Shares |
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| Amount |
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| Capital |
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| Deficit |
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| Equity |
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Balance December 31, 2021 |
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| $ |
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Common shares issued for purchase of membership interest |
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Common shares issued for conversion of debt |
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Common shares issued for purchase of the payment rights |
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Shares issued for services |
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Amortization of debt discount and issuance costs |
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Net income |
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Balance December 31, 2022 |
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| $ |
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| $ |
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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 in connection with the combination merger exchange ratio |
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Shares issued for deferred underwriter fee |
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Shares issued in connection with combination merger to public spac shareholders |
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Change in par value of underlying shares |
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Amortization of debt discount and issuance costs |
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Net Loss |
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| ( | ) |
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| ( | ) |
Balance December 31, 2023 |
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| |||||
____________
(1) | Includes up to 375,000 shares of Class B common stock subject to forfeiture if the over-allotment option is not exercised in full or in part by the underwriter (see Note 12). |
The accompanying footnotes are integral to the consolidated financial statements.
| F-4 |
| Table of Contents |
Royalty Management Holding Corporation Consolidated Statements of Cash Flows
|
|
| December 31, 2023 |
|
| December 31, 2022 |
| ||
Cash flows from Operating Activities: |
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|
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| ||
Net Income (Loss) |
| $ | ( | ) |
| $ |
| |
Adjustments to reconcile net income (loss) to net cash used in operating activities: |
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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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Shares issued for services |
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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 – related party |
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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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Accounts payable – related party |
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Accounts payable |
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Accrued expenses |
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Net cash provided (used) in operating activities |
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Investing Activities |
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Withdrawal (Investment) of cash in Trust Account |
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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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| ( | ) | |
Intangible Assets |
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Net cash provided in investing activities |
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Financing Activities |
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(Return of Investment Proceeds) Proceeds from sale of Units, net underwriting fees paid |
|
| ( | ) |
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| ( | ) |
Shares issued in connection with the combination merger |
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| ||
Notes Payable |
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Proceeds from issuance of convertible notes |
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| ||
Convertible Note Conversion |
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| ||
Net cash used in financing activities |
|
| ( | ) |
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| ( | ) |
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Net Change in Cash |
|
| ( | ) |
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| |
Cash – Beginning of Year |
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| ||
Cash – Ending of Year |
| $ |
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| $ |
| ||
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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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| ||
Acquisition of right of use assets for lease obligations |
|
|
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| ||
Issuance of common shares for purchase of membership interest |
|
|
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|
|
| ||
Issuance of common shares for conversion of debt |
|
|
|
|
|
| ||
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, 2023 and 2022
|
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 on October 23, 2023 and at that point changed its name to Royalty Management Holding Corporation.
NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation and Consolidation
The accounting and reporting policies of the Company conform to accounting principles generally accepted in the United States of America (“GAAP”) and pursuant to the rules and regulations of the SEC. The Company adopted the calendar year as its basis of reporting.
The consolidated financial statements include the accounts of the Company and the merged Company Royalty Management Corporation and its wholly owned subsidiaries Coking Coal Financing LLC and RMC Environmental Services LLC. All significant intercompany accounts and transactions have been eliminated in consolidation.
Royalty Management Corporation (RMC) was organized under the laws of Indiana on June 21, 2021 for the purpose of investing or purchasing 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.
Coking Coal Financing LLC was acquired in April 2022 for the purpose of holding energy contracts.
RMC Environmental Services LLC was formed in August 2022 to conduct environmental consulting and services.
Emerging growth company
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.
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.
Use of Estimates
The preparation of financial statements in conformity with 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.
| F-6 |
| Table of Contents |
NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.)
Net income per share
The Company complies with accounting and disclosure requirements of ASC Topic 260, “Earnings Per Share.” Earnings per share is computed by dividing net income by the weighted average number of common stock outstanding during the period, excluding common stock subject to forfeiture. At December 31, 2023 and 2022, the Company did not have any dilutive securities and other contracts that could, potentially, be exercised or converted into common stock and then share in the earnings of the Company. As a result, diluted income per share is the same as basic income per share for the periods presented.
Risk and Uncertainties
The Company’s business and operations are sensitive to general business and economic conditions in the United States along with local, state, and federal governmental policy decisions. A host of factors beyond the Company’s control could cause fluctuations in these conditions, including but not limited to credit risk, and changes to regulations governing the Company’s industry. Adverse developments in these general business and economic conditions could have a material adverse effect on the Company’s financial condition and the results of its operations.
Related Party Policies
In accordance with FASB 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 $
Restricted Cash
RMC has $
The following table sets forth a reconciliation of cash 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 periods ended December 31, 2023 and 2022.
|
| December 31, |
|
| December 31, |
| ||
|
| 2023 |
|
| 2022 |
| ||
Cash |
| $ |
|
| $ |
| ||
Restricted Cash |
|
|
|
|
|
| ||
Total cash and restricted cash presented in the statement of cash flows |
| $ |
|
| $ |
| ||
Allowance for Credit Losses
In June 2016, the FASB issue d guidance (FASB ASC 326) 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 FASB ASC 326 were trade accounts receivable and other accounts receivable, including interest, fee, 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 as of December 31, 2023 and 2022 amounted to $
| F-7 |
| Table of Contents |
NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.)
Beneficial Conversion Features of Convertible Securities
Conversion options that are not bifurcated as a derivative pursuant to ASC 815 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 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.
All convertible notes outstanding were converted at the date of business combination. Principal and accrued interest were converted into common shares at $
Loan Issuance Costs and Convertible Note Discounts
Loan Issuance Costs and Convertible Note Discounts are amortized using the effective interest method. Amortization expense of $
Revenue Recognition
The Company recognizes revenue in accordance with ASC 606 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. As of December 31, 2023, all the revenue generating activity is undertaken in eastern Kentucky, Indiana, and Limpopo, South Africa.
Leases
In February 2016, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”) 2016-02, Leases (“ASU 2016-02). ASU 2016-02, along with related amendments issued from 2017 to 2018 (collectively, the “New Leases Standard), requires a lessee to recognize a right-of-use asset and a lease liability on the balance sheet. The Company adopted ASU 2016-02 upon inception.
The Company leases certain land and office space under noncancelable operating leases, typically with
| F-8 |
| Table of Contents |
NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.)
Fair Value of Financial Instruments
The fair value of the Company’s assets and liabilities, which qualify as financial instruments under ASC Topic 820, “Fair Value Measurements,” approximates the carrying amounts represented in the accompanying balance sheet, primarily due to their short-term nature.
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 Topic 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 815-40-15-7D and 7F 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.
| 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, 2023, 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 not been required to file any 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 year ending December 31, 2023.
| F-10 |
| Table of Contents |
NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.)
Recently issued accounting pronouncements
Management does not believe that any recently issued, but not yet effective, accounting pronouncements, if currently adopted, would have a material effect on the Company’s financial statements.
NOTE 3 – INVESTMENTS IN CORPORATIONS AND LLCS
Investments in corporations and limited liability companies as of December 31, 2023 and 2022 consisted of the following:
|
| December 31, 2023 |
|
| December 31, 2022 |
| ||
|
|
|
|
|
|
| ||
FUB Mineral LLC |
| $ |
|
| $ |
| ||
MaxPro Investment Holdings |
|
|
|
|
|
| ||
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 $
MaxPro Investment Holdings
On December 23, 2022, the Company entered into an agreement with Maxpro Invest Holdings Inc. (Maxpro) to purchase from Maxpro the sum of
NOTE 4 – CONVERTIBLE NOTES RECEIVABLE
Convertible notes receivable as of December 31, 2023 and 2022 consisted of the following:
|
| December 31, 2023 |
|
| December 31, 2022 |
| ||
|
|
|
|
|
|
| ||
Heart Water Inc. |
| $ |
|
| $ |
| ||
Advanced Magnetic Lab, Inc. |
|
|
|
|
|
| ||
Total convertible notes receivable |
| $ |
|
| $ |
| ||
Heart Water Inc.
On December 2, 2022, the Company advanced $
| F-11 |
| Table of Contents |
NOTE 4 – CONVERTIBLE NOTES RECEIVABLE (cont.)
Advanced Magnetic Lab, Inc.
On December 21, 2022, Advanced Magnetic Lab, Inc. (or AML) issued a Convertible Promissory Note to the Company in the amount of $
NOTE 5 – NOTES RECEIVABLE
Notes receivable as of December 31, 2023 and 2022 consisted of the following:
|
| December 31, 2023 |
|
| December 31, 2022 |
| ||
|
|
|
|
|
|
| ||
Ferrox Holdings Ltd |
| $ |
|
| $ |
| ||
Texas Tech University Note |
|
|
|
|
|
| ||
Total notes receivable |
| $ |
|
| $ |
| ||
Ferrox Holdings Ltd.
In March 2022 and September 2022, the Company made a series of investments totaling $
Texas Tech University
On July 31, 2022, the Company purchased certain payments that are owed to Texas Tech University from a third party for the agreement to participate in sponsored research services performed by Texas Tech University and agreed to assume responsibility for those payments. The payments that were due to Texas Tech University amounted to $
NOTE 6 – INTANGIBLE ASSETS
Intangible assets as of December 31, 2023 and 2022 consisted of the following:
|
| December 31, 2023 |
|
| December 31, 2022 |
| ||
|
|
|
|
|
|
| ||
Mining Permit Package |
| $ |
|
| $ |
| ||
MC Mining |
|
|
|
|
|
| ||
Carnegie ORR |
|
|
|
|
|
| ||
Energy Technologies Inc |
|
|
|
|
|
| ||
Coking Coal Financing LLC |
|
|
|
|
|
| ||
RMC Environmental Services LLC |
|
|
|
|
|
| ||
Texas Tech University |
|
|
|
|
|
| ||
Pollinate |
|
|
|
|
|
| ||
Less: Accumulated Amortization |
|
| ( | ) |
|
| ( | ) |
Total Intangible Assets |
| $ |
|
| $ |
| ||
| F-12 |
| Table of Contents |
NOTE 6 – INTANGIBLE ASSETS (cont.)
Amortization expense - Intangible Assets totaled $
As of December 31, 2023, future amortization expense are as follows:
2024 |
|
|
| |
2025 |
|
|
| |
2026 |
|
|
| |
2027 |
|
|
| |
2028 and thereafter |
|
|
| |
|
|
|
|
Land Betterment Exchange (LBX)
The Company is the holder of 250,000 LBX Tokens. The Company purchased the LBX Tokens for the consideration 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 $
Carnegie ORR
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. $
Energy Technologies Inc
On September 30, 2022, the Company entered into an agreement to purchase, for the consideration of $
| F-13 |
| Table of Contents |
NOTE 6 – INTANGIBLE ASSETS (cont.)
Coking Coal Financing LLC
On April 15, 2022, the Company entered into a membership interests purchase agreement with ENCECo, Inc., the sole owner and member of Coking Coal Leasing LLC (“CCL”), whereby the Company issued
RMC Environmental Services LLC
On August 17, 2022, the Company formed RMC Environmental Services LLC 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 Environmental Services for each load of clean fill material that is disposed on, or removed from, the landfill. The consideration paid by the Company was $
Pollinate
On July 15, 2022,
NOTE 7 – RIGHT OF USE ASSETS
The right-of-use asset 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’s discounted lease payment rate is
We lease an office from an affiliated entity, LRR, located at 1845 South KY Highway 15 South, Hazard, KY 41701. We pay $
We sublease an office from an affiliated entity, American Resources Corporation, located at 12115 Visionary Way, Ste 174, Fishers, IN 46038. We pay $
We lease land from an affiliated entity, LRR, located in Pike County, Kentucky. We pay $
We lease land from an affiliated entity, LRR, located in Hamilton County, Indiana. We pay a minimum of $
At December 31, 2023 and 2022, right of use assets and liabilities were comprised of the following:
|
| December 31, 2023 |
|
| December 31, 2022 |
| ||
Assets: |
|
|
|
|
|
| ||
ROU asset |
| $ |
|
| $ |
| ||
|
|
|
|
|
|
|
|
|
Liabilities |
|
|
|
|
|
|
|
|
Current: |
|
|
|
|
|
|
|
|
Operating lease assets |
| $ |
|
|
|
| ||
Non-current |
|
|
|
|
|
|
|
|
Operating lease assets |
|
|
|
| $ |
| ||
| F-14 |
| Table of Contents |
NOTE 7 – RIGHT OF USE ASSETS (cont.)
As of December 31, 2023, remaining maturities of lease liabilities were as follows:
2024 |
|
|
| |
2025 |
|
|
| |
2026 |
|
|
| |
2027 |
|
|
| |
2028 and thereafter |
|
|
| |
|
|
|
|
NOTE 8 – ROUND A CONVERTIBLE DEBT
As of December 31, 2023 and 2022, the amount outstanding under the Round A Convertible Debt amounted to:
|
| December 31, 2023 |
|
| December 31, 2022 |
| ||
|
|
|
|
|
|
| ||
Gross principal value of convertible notes – related party |
| $ |
|
| $ |
| ||
Gross principal value of convertible notes – non-related party |
|
|
|
|
|
| ||
Unamortized loan discounts |
|
|
|
|
| ( | ) | |
Total convertible notes payable, Net |
| $ |
|
| $ |
| ||
The principal and any accrued interest in the Round A Convertible Debt has a per share conversion price of $
NOTE 9 –NOTE PAYABLE - RELATED PARTY
As of December 31, 2023 and 2022, the amount outstanding of non-convertible Note Payable to related parties amounted to:
|
| December 31, 2023 |
|
| December 31, 2022 |
| ||
|
|
|
|
|
|
| ||
Gross principal value of note payable – related party |
| $ |
|
| $ |
| ||
Unamortized loan discounts |
|
| ( | ) |
|
| ( | ) |
Total notes payable – related party, Net |
| $ |
|
| $ |
| ||
The Note Payable bears a
| F-15 |
| Table of Contents |
NOTE 10 –NOTES PAYABLE
As of December 31, 2023 and 2022, the amount outstanding of non-convertible note payable amounted to:
|
| December 31, 2023 |
|
| December 31, 2022 |
| ||
|
|
|
|
|
|
| ||
MC Mining Note Payable |
| $ |
|
| $ |
| ||
Gross principal value of non-convertible notes payable |
|
|
|
|
|
|
| |
Total notes payable – related party, Net |
| $ |
|
| $ |
| ||
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 $
NOTE 11: SHAREHOLDERS’ EQUITY
Preferred Stock - The Company is authorized to issue
Class A Common Stock — The Company is authorized to issue
Class B Common Stock — The Company was previously authorized to issue
| F-16 |
| Table of Contents |
NOTE 11: SHAREHOLDERS’ EQUITY (cont.)
Representative Shares
On March 22, 2021, we issued the
The Representative Shares have been deemed compensation by FINRA and are therefore subject to a lock-up for a period of 180 days immediately following the effective date of the registration statement related to the Initial Public Offering pursuant to Rule 5110(e)(1) of FINRA’s NASD Conduct Rules. Pursuant to FINRA Rule 5110(e)(1), these securities will not be the subject of any hedging, short sale, derivative, put or call transaction that would result in the economic disposition of the securities by any person for a period of 180 days immediately following the effective date of the registration statements related to the Initial Public Offering, nor may they be sold, transferred, assigned, pledged or hypothecated for a period of 180 days immediately following the effective date of the registration statements related to the Initial Public Offering except to any underwriter and selected dealer participating in the Initial Public Offering and their bona fide officers or partners.
Founder Shares
On January 22, 2021 the Company issued the Sponsor an aggregate of
On March 22, 2021, our Sponsor transferred
NOTE 12: 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. As of December 31, 2023, the Company had 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 and its subsidiaries, an entity in which Thomas Sauve is a director and President, and Kirk Taylor is the Chief Financial Officer.
Westside Advisors LLC
The Company may at times in the future enter into agreements with Westside Advisors LLC, an entity managed by former management of the Company that resigned on October 31, 2023 as part of the Business Combination. In October 2021, Westside Advisors LLC sold
T Squared Partners LP
The Company has and may at times in the future enter into agreements with T Squared Partners LP, an entity managed by Westside Advisors LLC. On October 2, 2021, T Squared Partners LP invested $
| F-17 |
| Table of Contents |
NOTE 12: RELATED PARTY TRANSACTIONS (cont.)
White River Holdings LLC
The Company has and may at times in the future enter into agreements with White River Holdings LLC, an entity managed by former management of the Company that resigned on October 31, 2023 as part of the Business Combination. On January 1, 2022, the Company entered into a consulting agreement with White River Holdings LLC whereby we paid White River Holdings a monthly consulting fee of $
First Frontier Capital LLC
The Company may at times enter into agreements with First Frontier Capital LLC, an entity managed and beneficially owned by Thomas Sauve, Chief Executive Officer and Chairman of the Company. On February 1, 2022, First Frontier Capital LLC invested $
Related Party Loans
In order to finance transaction costs in connection with a Business Combination, the Sponsor or an affiliate of the Sponsor or certain of the Company’s directors and officers could, but were not obligated to, loan the Company funds as may be required, of which up to $
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 $
NOTE 13: 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 14: WARRANTS
Warrants—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.
| F-18 |
| Table of Contents |
NOTE 14: WARRANTS (cont.)
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.
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 (x) 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 $
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.
| F-19 |
| Table of Contents |
NOTE 14: WARRANTS (cont.)
The Company uses the black Scholes option pricing model to value its warrants and options. The significant inputs are as follows:
|
| 2023 |
|
| 2022 |
| ||
Expected Dividend Yield |
|
| 0.00 | % |
|
| 0.0 | % |
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 |
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Exercisable (vested) - December 31, 2021 |
|
| - |
|
| $ |
|
|
|
|
| $ | - |
| ||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
Granted |
|
| - |
|
| $ |
|
|
|
|
| $ | - |
| ||
Forfeited or Expired |
|
| - |
|
|
|
|
|
|
|
|
|
|
|
|
|
Exercised |
|
| - |
|
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding December 31, 2022 |
|
|
|
| $ |
|
|
|
|
| $ |
| ||||
Exercisable (vested) - December 31, 2022 |
|
|
|
| $ |
|
|
|
|
| $ |
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Granted |
|
| - |
|
| $ |
|
|
|
|
|
| $ | - |
| |
Forfeited or Expired |
|
| - |
|
| $ |
|
|
|
|
|
| $ | - |
| |
Exercised |
|
| - |
|
| $ |
|
|
|
|
|
| $ | - |
| |
Outstanding December 31, 2023 |
|
|
|
| $ |
|
|
|
|
| $ |
| ||||
Exercisable (vested) - December 31, 2023 |
|
|
|
| $ |
|
|
|
|
| $ |
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Weighted |
|
|
|
|
| |
|
|
|
|
|
| Weighted |
|
| Average |
|
| Aggregate |
| |||
|
| Number of |
|
| Average |
|
| Contractual |
|
| Intrinsic |
| ||||
Private Warrants |
| Warrants |
|
| Exercise Price |
|
| Life in Years |
|
| Value |
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exercisable (vested) - December 31, 2021 |
|
| - |
|
| $ |
|
|
|
|
|
| $ |
| ||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Granted |
|
| - |
|
| $ |
|
|
|
|
| $ | - |
| ||
Forfeited or Expired |
|
| - |
|
| $ |
|
|
|
|
|
| $ |
| ||
Exercised |
|
| - |
|
| $ |
|
|
|
|
|
| $ | - |
| |
Outstanding December 31, 2022 |
|
|
|
| $ |
|
|
|
|
| $ |
| ||||
Exercisable (vested) - December 31, 2022 |
|
|
|
| $ |
|
|
|
|
| $ |
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Granted |
|
| - |
|
| $ |
|
|
|
|
|
| $ | - |
| |
Forfeited or Expired |
|
| - |
|
| $ |
|
|
|
|
|
| $ |
| ||
Exercised |
|
| - |
|
| $ |
|
|
|
|
|
| $ | - |
| |
Outstanding December 31, 2023 |
|
|
|
| $ |
|
|
|
|
| $ |
| ||||
Exercisable (vested) - December 31, 2023 |
|
|
|
| $ |
|
|
|
|
| $ |
| ||||
NOTE 15: 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:
| F-20 |
| Table of Contents |
NOTE 15: FAIR VALUE MEASUREMENTS (cont.)
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. |
At December 31, 2023, the Company is the holder of
At December 31, 2023 and 2022, assets held in the Trust Account were comprised of $
The following table presents information about the Company’s assets, liabilities and redeemable class A common that are measured at fair value on a recurring basis at December 31, 2023 and 2022 and indicates the fair value hierarchy of the valuation inputs the Company utilized to determine such fair value:
Description |
| Level |
|
| December 31, 2023 |
|
| December 31, 2022 |
| |||
Assets: |
|
|
|
|
|
|
|
|
| |||
Marketable securities held in Trust Account |
|
| 1 |
|
| $ |
|
| $ |
| ||
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
Warrant Liability – Public Warrants |
|
| 3 |
|
|
|
|
|
|
| ||
Warrant Liability – Private Warrants |
|
| 3 |
|
|
|
|
|
|
| ||
|
|
|
|
|
|
|
|
|
|
|
|
|
Commitments and Contingencies: |
|
|
|
|
|
|
|
|
|
|
|
|
Class A Common Stock |
|
|
|
|
|
|
|
|
|
| ||
The Warrants were accounted for as liabilities in accordance with ASC 815-40 and are presented within warrant liabilities on our accompanying December 31, 2023 and December 31, 2022 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.
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 decrease in the fair value of the warrant liability from the date of the Private Placement (March 19, 2021) to December 31, 2022 reflects a change in the estimated fair value per private warrant for the period from $
| F-21 |
| Table of Contents |
NOTE 15: FAIR VALUE MEASUREMENTS (cont.)
The following tables present the changes in the fair value of warrant liabilities:
|
| Private Placement |
|
| Public |
|
| Warrant Liabilities |
| |||
Fair value as of January 1, 2022 |
| $ |
|
| $ |
|
| $ |
| |||
Change in valuation inputs or other assumptions |
|
| ( | ) |
|
| ( | ) |
|
| ( | ) |
Fair value as of December 31, 2022 |
|
|
|
|
|
|
|
|
| |||
|
| Private Placement |
|
| Public |
|
| Warrant Liabilities |
| |||
Fair value as of January 1, 2023 |
| $ |
|
| $ |
|
| $ |
| |||
Change in valuation inputs or other assumptions |
|
|
|
|
|
|
|
|
| |||
Fair value as of December 31, 2023 |
|
|
|
|
|
|
|
|
| |||
| F-22 |
| Table of Contents |
NOTE 16: 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 17: SUBSEQUENT EVENTS
On February 1, 2024, the Company entered into an agreement with T.R. Mining & Quarry Ltd., a Jamaican-based company (T.R. Mining), to
On January 29, 2024,
On February 7, 2024, Daniel Hasler and Gary Ehlebracht both stepped down as an independent directors of the Board of Directors and both Roy Smith and Benjamin Wrightsman were simultaneously appointed to the Board of Directors as independent directors. Furthermore, Mr. Smith was appointed as Chairman of the Compensation Committee of the Board of Directors and Mr. Wrightsman was appointed as Chairman of the Nominating Committee of the Board of Directors
On March 1, 2024,
On March 11, 2024, the Company deposited $
On March 19, 2024, the Company issued-a non-convertible promissory note to Westside Advisors in the amount of $
On March 20, 2024, the Company invested an additional $
On March 22, 2024, the Company deposited $
| F-23 |
| Table of Contents |
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.
Under the supervision and with the participation of our management, including our principal executive officer and principal financial and accounting officer, we conducted an evaluation of the effectiveness of our disclosure controls and procedures as of the end of the fiscal quarter ended December 31, 2023, as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act. Based on this evaluation, our principal executive officer and principal financial and accounting officer have concluded that during the period covered by this report, our disclosure controls and procedures were effective at a reasonable assurance level and, accordingly, provided reasonable assurance that the information required to be disclosed by us in reports filed under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms.
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, 2023 that have materially affected the Company’s internal controls over financial reporting.
Management’s 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. generally accepted accounting principles.
| 14 |
| Table of Contents |
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 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.
ITEM 9B. OTHER INFORMATION.
None.
ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS.
Not Applicable.
| 15 |
| Table of Contents |
PART III
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE.
Directors and Executive Officers
Name |
| Age |
| Positions |
|
|
|
|
|
Julie Griffith |
| 67 |
| Director |
Gary Ehlebracht |
| 39 |
| Director |
Daniel J. Hasler |
| 66 |
| Director |
Kirk P. Taylor |
| 44 |
| 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, Chairman of the Board of Directors, 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.
Gary T. Ehlebracht, Director, and has over 12 years of physical and financial commodity trading experience. He joined grain trading and merchandising firm Gavilon, LLC in 2008 where he spent over 10 years as a senior trader focused primarily on dairy commodities. In 2019 Mr. Ehlebracht joined Dairy Products Incorporated, a leading dairy trading firm, where he focuses on physical merchandising, financial risk management, global logistics and supply chain management working with some of the largest multinational food companies. We believe Mr. Ehlebracht is well qualified to serve as a director due to his over 20 years of commodities and agriculture experience. .
Daniel J. Hasler, Director, is the founder and President of Hasler Ventures LLC, a company working to advance groundbreaking technologies by moving them to the public through collaborations with industry. For the previous 5 years, Mr. Hasler was President of Purdue Research Foundation. Previously, Mr. Hasler was the Secretary of Commerce for the State of Indiana and spent 31 years at Eli Lilly and Co., (NYSE: LLY) in a number of leadership positions including Vice President for Global Marketing. We believe Mr. Hasler is well qualified to serve as a director due to his over 40 years of university, government and public company experience. .
| 16 |
| Table of Contents |
Number and Terms of Office of Officers and Directors
Our board of directors are divided into three classes with only one class of directors being elected in each year and each class (except for those directors appointed prior to our first annual meeting of stockholders) serving a three-year term. In accordance with Nasdaq corporate governance requirements, we are not required to hold an annual meeting until one year after our first fiscal year end following our listing on Nasdaq. The term of office of the first class of directors, originally consisting of Mr. Taylor and Mr. Hasler expired at our first annual meeting of stockholders. The term of office of the second class of directors, originally consisting of Mr. Ehlebracht and Mr. Smid, will expire at the second annual meeting of stockholders. The term of office of the third class of directors, consisting of Mr. Jensen and Mr. Sauve, will expire at the third annual meeting of stockholders.
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, Ehlebracht, and Hasler 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.
| 17 |
| Table of Contents |
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.
Audit Committee
Julie Griffith, Gary Ehlebracht, and Daniel Hasler, serve as members of our audit committee, and Julie Griffith is chair 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, Ehlebracht, and Hasler, 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. |
| 18 |
| Table of Contents |
Compensation Committee
Julie Griffith, Gary Ehlebracht, and Daniel Hasler 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 of our members are independent and Mr. Ehlebracht is chair the compensation committee.
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, Gary Ehlebracht, and Daniel Hasler 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 Mr. Hasler is chair 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.
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.
| 19 |
| Table of Contents |
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.
| 20 |
| Table of Contents |
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. |
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.
| 21 |
| Table of Contents |
Table of Committees and participating directors
|
| Audit Committee |
| Nominating Committee |
|
| Compensation Committee |
|
|
|
|
|
|
|
|
|
|
Julie Griffith |
| X (Chairwoman) |
| X |
|
| X |
|
Gary Ehlebracht |
| X |
| X |
|
| X (Chairman) |
|
Daniel Hasler |
| 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. In order 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; |
● | 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, 2023 and Forms 5 and amendments thereto furnished to us with respect to the year ended December 31, 2023, 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, 2023.
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| Table of Contents |
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 2022 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, 2023, 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, 2023, are:
| · | Thomas Sauve, Chief Executive Officer; and |
|
|
|
| · | Kirk Taylor, Chief Financial Officer |
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 ($) |
|
| Total ($) |
| ||||||||
Mark C. Jensen, Chief Executive Officer, Chairman (1) |
| 2023 |
|
| -0- |
|
|
| -0- |
|
|
| -0- |
|
|
| -0- |
|
|
| -0- |
|
|
| -0- |
|
|
| -0- |
|
|
| 2022 |
|
| -0- |
|
|
| -0- |
|
|
| -0- |
|
|
| -0- |
|
|
| -0- |
|
|
| -0- |
|
|
| -0- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
|
|
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|
|
|
|
|
|
|
|
Thomas M. Sauve, Chief Executive Officer, Director (2) |
| 2023 |
| $ | 150,000 |
|
|
| -0- |
|
|
| -0- |
|
|
| -0- |
|
|
| -0- |
|
|
| -0- |
|
| $ | 150,000 |
|
|
| 2022 |
| $ | 75,000 |
|
|
| -0- |
|
|
| -0- |
|
|
| -0- |
|
|
| -0- |
|
|
| -0- |
|
| $ | 75,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Kirk P. Taylor, Chief Financial Officer |
| 2023 |
|
| -0- |
|
|
| -0- |
|
|
| -0- |
|
|
| -0- |
|
|
| -0- |
|
|
| -0- |
|
|
| -0- |
|
|
| 2022 |
|
| -0- |
|
|
| -0- |
|
|
| -0- |
|
|
| -0- |
|
|
| -0- |
|
|
| -0- |
|
|
| -0- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Daniel Hasler, Director |
| 2023 |
|
| -0- |
|
|
| -0- |
|
|
| -0- |
|
|
| -0- |
|
|
| -0- |
|
|
| -0- |
|
|
| -0- |
|
|
| 2022 |
|
| -0- |
|
|
| -0- |
|
|
| -0- |
|
|
| -0- |
|
|
| -0- |
|
|
| -0- |
|
|
| -0- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gary Ehlebracht, Director |
| 2023 |
|
| -0- |
|
|
| -0- |
|
|
| -0- |
|
|
| -0- |
|
|
| -0- |
|
|
| -0- |
|
|
| -0- |
|
|
| 2022 |
|
| -0- |
|
|
| -0- |
|
|
| -0- |
|
|
| -0- |
|
|
| -0- |
|
|
| -0- |
|
|
| -0- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Julie Griffith, Director (3) |
| 2023 |
|
| -0- |
|
|
| -0- |
|
|
| -0- |
|
|
| -0- |
|
|
| -0- |
|
|
| -0- |
|
|
| -0- |
|
|
| 2022 |
|
| -0- |
|
|
| -0- |
|
|
| -0- |
|
|
| -0- |
|
|
| -0- |
|
|
| -0- |
|
|
| -0- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Edward Smid, Director (1) |
| 2023 |
|
| -0- |
|
|
| -0- |
|
|
| -0- |
|
|
| -0- |
|
|
| -0- |
|
|
| -0- |
|
|
| -0- |
|
|
| 2022 |
|
| -0- |
|
|
| -0- |
|
|
| -0- |
|
|
| -0- |
|
|
| -0- |
|
|
| -0- |
|
|
| -0- |
|
(1) | Resigned on October 31, 2023 from the Company as part of the Business Combination. |
|
|
(2) | Director of the Company prior to October 31, 2023; was appointed as Chairman on October 31, 2023 as part of the Business Combination. |
|
|
(3) | Appointed as Director of the Company on October 31, 2023 as part of the Business Combination. |
| 23 |
| Table of Contents |
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED SHAREHOLDER MATTERS.
At December 31, 2023, we had 14,270,761 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, 2023 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. |
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, 2021, 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 Chairman of the Board of Directors(3) |
|
| 1,167,208 |
|
|
| 8.18 | % |
Kirk Taylor, Chief Financial Officer(4) |
|
| 1,420,108 |
|
|
| 9.95 | % |
Daniel Hasler, Independent Director |
| -0- |
|
| * | % | ||
Julie Griffith, Independent Director |
| -0- |
|
| * | % | ||
Gary Ehlebracht, Independent Director |
| -0- |
|
| * | % | ||
Edward Smid, Independent Director |
| -0- |
|
| * | % | ||
All Directors and Executive Officers of the Company as a Group (5 Individuals) |
|
| 2,587,316 |
|
|
| 18.13 | % |
|
|
|
|
|
|
|
|
|
Five Percent Holders |
|
|
|
|
|
|
|
|
White River Holdings LLC(5) |
|
| 1,104,739 |
|
|
| 7.74 | % |
Homewood Holdings LLC (6) |
|
| 1,052,377 |
|
|
| 7.37 | % |
Midwest General Investment Company LLC(7) |
|
| 995,953 |
|
|
| 6.98 | % |
Maxpro Invest Holdings LLC(8) |
|
| 943,842 |
|
|
| 6.61 | % |
White River Ventures LLC(9) |
|
| 855,196 |
|
|
| 5.99 | % |
* | 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 the entity is Ferrox Holdings CEO, Terry Duffy |
(9) | Manager of entity is Thomas Sauve. Entity is owned by trust which certain members of the Jensen family are beneficiaries. |
| 24 |
| 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. As of December 31, 2023, the Company had 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 and its subsidiaries, an entity in which Thomas Sauve is a director and President, and Kirk Taylor is the Chief Financial Officer.
Westside Advisors LLC
The Company may at times in the future enter into agreements with Westside Advisors LLC, an entity managed by former management of the Company that resigned on October 31, 2023 as part of the Business Combination. In October 2021, Westside Advisors LLC sold 250,000 LBX Tokens it owned to the Company in exchange for the Round A Convertible Note of $2,000,000 and 76,924 warrants (Warrant “A-2”); no cash was part of this consideration. $1,681,756 was outstanding as of December 31, 2022 with no payments in cash of interest or principal paid. The note carries an interest rate of 10%. During 2022, $318,244.72 of principal was converted to common shares at a rate of $6.50 per share. On October 31, 2023, the Warrant A-2 was converted into Class A Common Stock of the Company as part of the Business Combination that is owned by Westside Advisors LLC.
T Squared Partners LP
The Company has and may at times in the future enter into agreements with T Squared Partners LP, an entity managed by Westside Advisors LLC. On October 2, 2021, T Squared Partners LP invested $250,000 cash into the Company in the form of the Round A Convertible Note and 9,616 warrants issued under Warrant “A- 1.” On January 31, 2022, T Squared Partners LP invested an additional $50,000 cash into the Company in the form of the Round A Convertible Note and 1,924 warrants issued under Warrant “A-5.” 5”, all of which was outstanding as of December 31, 2022 with no payments of interest or principal paid. The note carries an interest rate of 10%. On October 31, 2023, as part of the Business Combination, the notes and warrants held by T Squared Partners LP were converted into Class A Common Stock of the Company.
White River Holdings LLC
The Company has and may at times in the future enter into agreements with White River Holdings LLC, an entity managed by former management of the Company that resigned on October 31, 2023 as part of the Business Combination. On January 1, 2022, the Company entered into a consulting agreement with White River Holdings LLC whereby we paid White River Holdings a monthly consulting fee of $6,250, effective January 1, 2022, for 12 months. This consulting fee is not payable in cash to the Company until we raise a minimum of five million dollars of external capital. On February 1, 2022, White River Holdings LLC invested $10,000 cash into the Company in the form of the Round A Convertible Note and 385 warrants issued under Warrant “A-6.” On November 1, 2023, as part of the Business Combination, the notes and warrants held by White River Holdings LLC were converted into Class A Common Stock of the Company.
First Frontier Capital LLC
The Company may at times enter into agreements with First Frontier Capital LLC, an entity managed and beneficially owned by Thomas Sauve, Chief Executive Officer and Chairman 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.
Related Party Loans
In order to finance transaction costs in connection with a Business Combination, the Sponsor or an affiliate of the Sponsor or certain of the Company’s directors and officers could, but were not obligated to, loan the Company funds as may be required, of which up to $1,500,000 of such loans may be convertible into warrants at a price of $1.00 per warrant (“Working Capital Loans”). During the year ended December 31, 2022, no amount was advanced and as of December 31, 2022, $0 is outstanding. The advance bears no interest rate.
| 25 |
| Table of Contents |
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. As of December 31, 2022 and October 31, 2023, the effective date of the business combination and termination of the services agreement, $120,000 and $0, respectively 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. as of As of December 31, 2022 and 2021, $239,825 and $0 is due to the Sponsor respectively.
Director Independence
Each of Julie Griffith, Daniel Hasler, and Gary Ehlebracht, the directors of the Company at December 31, 2023, are independent directors as defined by the NASDAQ Company Guide.
ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES.
B.F. Borgers CPA, PC (PCAOB ID:
The following is a summary of fees paid or to be paid to B.F. Borgers CPA, PC, or B.F. Borgers, for services rendered for the period from January 1, 2023 through December 31, 2023.
|
| B.F. Borgers |
| |
Audit Fees |
| $ | 42,500 |
|
Audit-Related Fees |
| $ | - |
|
Tax Fees |
|
| - |
|
All Other Fees |
|
| - |
|
Total |
| $ | 42,500 |
|
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.
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).
| 26 |
| 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.
| 27 |
| Table of Contents |
(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, 2021, 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.
| 28 |
| 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: April 16, 2024 | 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 |
| April 16, 2024 |
Julie Griffith |
|
|
|
|
|
|
|
|
|
/s/ Roy Smith |
| Director |
| April 16, 2024 |
Roy Smith |
|
|
|
|
|
|
|
|
|
/s/ Benjamin Wrightsman |
| Director |
| April 16, 2024 |
Benjamin Wrightsman |
|
|
|
|
|
|
|
|
|
/s/ Thomas M. Sauve |
| Chief Executive Officer/ Director (Principal Executive Officer and the |
| April 16, 2024 |
Thomas M. Sauve |
| Registrant’s authorized signatory in the United Sates) |
|
|
|
|
|
|
|
/s/ Kirk P. Taylor |
| Chief Financial Officer |
| April 16, 2024 |
Kirk P. Taylor |
| (Principal Financial and Accounting Officer) |
|
|
| 29 |
EXHIBIT 31.1
CERTIFICATION PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
Certification of Principal Executive Officer
I, Thomas M. Sauve, certify that:
| 1. | I have reviewed this annual report on Form 10-K of Royalty Management Holding Corporation; |
| 2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
| 3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
| 4. | The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
| (a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; | |
|
|
| |
| (b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; | |
|
|
| |
| (c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and | |
|
|
| |
| (d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
| 5. | The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
| (a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and | |
|
|
| |
| (b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
| ROYALTY MANAGEMENT HOLDING CORPORATION | |||
|
| |||
| Date: April 16, 2024 | By: | /s/ Thomas M. Sauve | |
| Thomas M. Sauve, | |||
| Chief Executive Officer | |||
| Principal Executive Officer | |||
EXHIBIT 31.2
CERTIFICATION PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
Certification of Principal Financial Officer and
Principal Accounting Officer
I, Kirk P. Taylor, certify that:
| 1. | I have reviewed this annual report on Form 10-K of Royalty Management Holding Corporation; |
|
| |
| 2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
|
| |
| 3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
|
| |
| 4. | The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
|
| (a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
|
| ||
|
| (b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
|
| ||
|
| (c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
|
| ||
|
| (d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
| 5. | The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
|
| (a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
|
| ||
|
| (b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
|
| ROYALTY MANAGEMENT HOLDING CORPORATION | ||
|
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| Date: April 16, 2024 | By: | /s/ Kirk P. Taylor | |
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| Kirk P. Taylor, | ||
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| Chief Financial Officer | ||
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| Principal Financial Officer | ||
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| Principal Accounting Officer | ||
EXHIBIT 32.1
Certification of Principal Executive Officer
Pursuant to 18 U.S.C. SECTION 1350
In connection with the Annual Report of Royalty Management Holding Corporation, (the “Company”) on Form 10-K for the year ending December 31, 2023 to be filed with the Securities and Exchange Commission on or about the date hereof (the “Report”), I, Thomas M. Sauve, Principal Executive Officer of the Company, certify, to my knowledge, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350, that:
| (i) | the accompanying Report fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934, as amended; and |
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| (ii) | the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company as of the dates and for the periods covered by the Report. |
It is not intended that this statement be deemed to be filed for purposes of the Securities Exchange Act of 1934.
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| ROYALTY MANAGEMENT HOLDING CORPORATION | ||
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| Date: April 16, 2024 | By: | /s/ Thomas M. Sauve | |
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| Thomas M. Sauve, | ||
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| Chief Executive Officer | ||
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| Principal Executive Officer | ||
EXHIBIT 32.2
Certification of Principal Financial Officer
and Principal Accounting Officer
Pursuant to 18 U.S.C. SECTION 1350
In connection with the Annual Report of Royalty Management Holding Corporation (the “Company”) on Form 10-K for the year ending December 31, 2023 to be filed with the Securities and Exchange Commission on or about the date hereof (the “Report”), I, Kirk P. Taylor, Principal Financial Officer and Principal Accounting Officer of the Company, certify, to my knowledge, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350, that:
| (i) | the accompanying Report fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934, as amended; and |
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| (ii) | the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company as of the dates and for the periods covered by the Report. |
It is not intended that this statement be deemed to be filed for purposes of the Securities Exchange Act of 1934.
| ROYALTY MANAGEMENT HOLDING CORPORATION | |||
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| Date: April 16, 2024 | By: | /s/ Kirk P. Taylor | |
| Kirk P. Taylor, | |||
| Chief Financial Officer | |||
| Principal Financial Officer | |||
| Principal Accounting Officer | |||