# Royalty Management Holding Corp: Form 10-Q for the period ended Mar 31, 2024 - Company: [Royalty Management Holding Corp](/companies/rmco.md) (CIK 1843656) - Form: 10-Q - Filed: 2024-05-24 - Accepted by EDGAR: May 24, 2024, 16:06 ET - Period: 2024-03-31 - Accession: 0001477932-24-003296 - Inline XBRL: yes - Main document: https://www.sec.gov/Archives/edgar/data/1843656/000147793224003296/rmco_10q.htm - All documents and exhibits: https://www.sec.gov/Archives/edgar/data/1843656/000147793224003296/ ## Figures reported in this filing Standardized XBRL line items for the period ended 2024-03-31. | Line item | Period | Value | XBRL concept | | --- | --- | ---: | --- | | Revenue | 3 months, 2024-01-01 to 2024-03-31 | $162.1k | us-gaap:Revenues | | Cost of revenue | 3 months, 2024-01-01 to 2024-03-31 | $67.7k | us-gaap:CostOfRevenue | | Gross profit | 3 months, 2024-01-01 to 2024-03-31 | $94.4k | us-gaap:GrossProfit | | Operating income | 3 months, 2024-01-01 to 2024-03-31 | −$3.2k | us-gaap:OperatingIncomeLoss | | Interest expense | 3 months, 2024-01-01 to 2024-03-31 | $58.1k | us-gaap:InterestExpense | | Net income | 3 months, 2024-01-01 to 2024-03-31 | $135.2k | us-gaap:NetIncomeLoss | | Operating cash flow | 3 months, 2024-01-01 to 2024-03-31 | −$580.2k | us-gaap:NetCashProvidedByUsedInOperatingActivities | | Cash and equivalents | at 2024-03-31 | $124.8k | us-gaap:Cash | | Current assets | at 2024-03-31 | $927.7k | us-gaap:AssetsCurrent | | Total assets | at 2024-03-31 | $13.7m | us-gaap:Assets | | Current liabilities | at 2024-03-31 | $1.4m | us-gaap:LiabilitiesCurrent | | Total liabilities | at 2024-03-31 | $3.6m | us-gaap:Liabilities | | Long-term debt | at 2024-03-31 | $2.2m | us-gaap:LongTermDebt | | Shareholders' equity | at 2024-03-31 | $10.1m | us-gaap:StockholdersEquity | ## Management's discussion and analysis As filed, 12,156 characters. References in this report (the “Quarterly Report”) to “we,” “us” or the “Company” refer to Royalty Management Holding Corporation References to our “management” or our “management team” refer to our officers and directors. The following discussion and analysis of the Company’s financial condition and results of operations should be read in conjunction with the financial statements and the notes thereto contained elsewhere in this Quarterly Report. Certain information contained in the discussion and analysis set forth below includes forward-looking statements that involve risks and uncertainties. ### Special Note Regarding Forward-Looking Statements This Quarterly Report includes “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Exchange Act that are not historical facts and involve risks and uncertainties that could cause actual results to differ materially from those expected and projected. All statements, other than statements of historical fact included in this Form 10-Q including, without limitation, statements in this “Management’s Discussion and Analysis of Financial Condition and Results of Operations” regarding the Company’s financial position, business strategy and the plans and objectives of management for future operations, are forward-looking statements. Words such as “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intends,” “may,” “might,” “plan,” “possible,” “potential,” “predicts,” “project,” “shall,” “should,” “would and variations and similar words and expressions are intended to identify such forward-looking statements. Such forward-looking statements relate to future events or future performance, but reflect management’s current beliefs, based on information currently available. A number of factors could cause actual events, performance or results to differ materially from the events, performance and results discussed in the forward-looking statements. For information identifying important factors that could cause actual results to differ materially from those anticipated in the forward-looking statements, please refer to the Risk Factors section of the Registration Statement on Form S-1, as amended, filed with the U.S. Securities and Exchange Commission (the “SEC”). The Company’s securities filings can be accessed on the EDGAR section of the SEC’s website at www.sec.gov. Except as expressly required by applicable securities law, the Company disclaims any intention or obligation to update or revise any forward-looking statements whether as a result of new information, future events or otherwise. ### Overview 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. 27 #### Table of Contents ### Results of Operations Our total operating revenues for the three months ended March 31, 2024 and 2023, were $162,100 and $67,292, respectively. The increase was primarily due to an increase in RMC Environmental Services additional volume. Total operating expenses for the three months ended March 31, 2024 and 2023, were $146,498 and $202,902, respectively. The decrease was primarily due to lower professional fees. Total other income and expenses for the three months ended March 31, 2024 and 2023, were $119,578 and -$138,735, respectively. The primary reasons for the increase were due to a positive gain on warrant fair value adjustment and less interest expense. Total net income (loss) for the three months ended March 31, 2024 and 2023, were $135,180 and -$274,345, respectively. ### Liquidity and Capital Resources Liquidity describes the ability of a company to generate sufficient cash flows in the short- and long-term to meet the cash requirements of its business operations, including working capital needs, debt service, acquisitions, other commitments and contractual obligations. We consider liquidity in terms of cash flows from operations and other sources, including availability under our credit facility, and their sufficiency to fund our operating and investing activities. Historically, we have financed our operations and acquisitions from a combination of cash generated from operations and periodic borrowings under the convertible note as well as non-convertible note offerings. Our primary cash needs are for day-to- day operations, to fund working capital requirements, to fund our growth strategy, including acquisitions, and to pay interest and principal on our indebtedness. Royalty currently has no contractual and other arrangement cash requirements. In connection with the completion of the Business Combination, as a result of the redemption of 253,807 shares of American Acquisition Opportunity Class A Common Stock, we only received $986,617 in proceeds from the trust account prior to expense at the Closing. Our ability to raise additional funds will depend on financial, economic and other factors, many of which are beyond its control. Royalty cannot be certain that additional funding will be available on acceptable terms, or at all. Royalty has limited committed sources of additional capital and if it is unable to raise additional capital in sufficient amounts or on terms acceptable to it, it may have to significantly delay, scale back or discontinue its intended growth. *Capital Resources.* Currently we have no commitments to utilize cash on hand other than investments that have already been completed. Our acquisition strategy and our interest expense in particular may require that we seek additional sources of equity or debt financing in future periods. ***Class A Common Stock.*** The Company is able to issue shares of Royalty Class A Common Stock for investments as well as services. As of March 31, 2024 and December 31, 2023 the Company has issued 14,504,095 and 14,270,761, respectively shares of Royalty Class A Common Stock for execution of Royalty’s business plan and services. 28 #### Table of Contents Royalty’s ability to raise funds through the sale of equity capital is likely to be impacted by the significant number of shares of Class A Common Stock that were issued in the Business Combination. While our Class A Common Stock is listed for trading on the Nasdaq Capital Market, it is fairly thinly traded. Future sales of shares that have been registered may result in downward pressure on the stock price, thereby making it more difficult for us to raise additional equity capital without resulting in dilution to our existing stockholders. ***Convertible Notes.*** The Company has historically raised funds primarily through the issuance of convertible notes. The notes carried and interest rate of 10% and offered a conversion feature to common equity at $6.50 for each share. The Company may in the future utilize this structure to raise additional capital. All convertible notes were converted at the time of business combination, therefore the outstanding balance of the convertibles notes amounted to $0 at March 31, 2024 and December 31, 2023. *Warrants.* As of March 31, 2024, there are a total of 9,154,191 outstanding Warrants to purchase shares of our Class A Common Stock, each with a per share exercise price of $11.50. Upon exercise of any Warrants, we would receive the exercise price. The likelihood that holders of Warrants will exercise any Warrants is dependent upon the trading price of the Class A Common Stock. Until such time as the stock price for our Class A Common Stock exceeds $11.50, we do not anticipate there will be any exercises of the Warrants. As such, we do not consider the Warrants for purposes of budgeting our sources of cash. At March 31, 2024, cash and cash equivalents totaled $124,823. ### Off-Balance Sheet Arrangements We do not have any off-balance sheet arrangements that we are required to disclose pursuant to these regulations. In the ordinary course of business, we enter into operating lease commitments, purchase commitments, and other contractual obligations. These transactions are recognized in our financial statements in accordance with generally accepted accounting principles in the United States. ### Critical Accounting Policies The preparation of condensed financial statements and related disclosures in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and income and expenses during the periods reported. Actual results could materially differ from those estimates. We have identified the following critical accounting policies: #### Common stock subject to possible redemption We account for our common stock subject to possible conversion in accordance with the guidance in Accounting Standards Codification (“ASC”) Topic 480 “Distinguishing Liabilities from Equity.” Common stock subject to mandatory redemption is classified as a liability instrument and measured at fair value. Conditionally redeemable common stock (including common stock that features redemption rights that are either within the control of the holder or subject to redemption upon the occurrence of uncertain events not solely within our control) is classified as temporary equity. At all other times, common stock is classified as stockholders’ equity. Our common stock features certain redemption rights that are considered to be outside of our control and subject to occurrence of uncertain future events. Accordingly, common stock subject to possible redemption is presented at redemption value as temporary equity, outside of the stockholders’ equity section of our condensed balance sheets. 29 #### Table of Contents #### Net loss per common share We apply the two-class method in calculating loss per share. Common stock subject to possible redemption which is not currently redeemable and is not redeemable at fair value, has been excluded from the calculation of basic net loss per common share since such shares, if redeemed, only participate in their pro rata share of the Trust Account earnings. Our net loss is adjusted for the portion of loss that is attributable to common stock subject to possible redemption, as these shares only participate in the earnings of the Trust Account and not our income or losses. #### 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. #### Recent accounting standards Management does not believe that any recently issued, but not yet effective, accounting pronouncements, if currently adopted, would have a material effect on our condensed financial statements. ## Controls and procedures As filed, 1,824 characters. ### Evaluation of Disclosure Controls and Procedures Disclosure controls and procedures are designed to ensure that information required to be disclosed by us in our Exchange Act reports is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our principal executive officer and principal financial officer or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. 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 March 31, 2024, 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 was no change in our internal control over financial reporting that occurred during the fiscal quarter of 2024 covered by this Quarterly Report on Form 10-Q that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting. 30 #### Table of Contents ## Risk factors As filed, 1,530 characters. ***Our Private Warrants are accounted for as liabilities and the changes in value of our Private Warrants could have a material effect on our financial results.*** On April 12, 2021, the Acting Director of the Division of Corporation Finance and Acting Chief Accountant of the SEC issued SEC Statement, wherein the SEC staff expressed its view that certain terms and conditions common to SPAC warrants may require the warrants to be classified as liabilities on the SPAC’s balance sheet as opposed to being treated as equity. Specifically, the SEC Statement focused on certain settlement terms and provisions related to certain tender offers following a business combination, which terms are similar to those contained in the warrant agreement governing our warrants. As a result of the SEC Statement, we reevaluated the accounting treatment of our warrants, and pursuant to the guidance in ASC 815, Derivatives and Hedging (“ASC 815”), determined the Private Warrants should be classified as derivative liabilities measured at fair value on our balance sheet, with any changes in fair value to be reported each period in earnings on our statement of operations. As a result of the recurring fair value measurement, our financial statements may fluctuate quarterly, based on factors which are outside of our control. Due to the recurring fair value measurement, we expect that we will recognize non-cash gains or losses on our Private Warrants each reporting period and that the amount of such gains or losses could be material. Filed May 24, 2024. Source: SEC EDGAR, the filing index for accession 0001477932-24-003296. Last ingested by Listed: Oct 24, 2026, 15:16 ET. No prices; not investment advice.