Royalty Management Holding Corp 10-K/A

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA. ROYALTY MANAGEMENT HOLDING COPRORATION December 31, 2024 and 2023 Page CONSOLIDATED FINANCIAL STATEMENTS Report of Independent Registered Public Accounting Firm - 2024 F-1 Consolidated Balance Sheets F-2 Consolidated Statements of Operations F-3 Consolidated Statements of Changes Stockholders' Equity F-4 Consolidated Statements of Cash Flows F-5 Consolidated Notes to Financial Statements F-6 11 Table of Contents REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Board of Directors and Stockholders of Royalty Management Holding Corporation Opinion on the Consolidated Financial Statements We have audited the accompanying consolidated balance sheets of Royalty Management Holding Corporation and its subsidiaries (the “Company”) as of December 31, 2024 and 2023, and the related consolidated statements of operations, stockholders’ equity, and cash flows for the years then ended, and the related notes (collectively referred to as the consolidated financial statements). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2024 and 2023, and the results of its operations and its cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States of America. Basis for Opinion These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion. /s/ CM3 Advisory CM3 Advisory (PCAOB ID 6866 ) San Diego, California March 28, 2025 We have served as the Company’s auditor since 2024. F-1 Table of Contents ROYALTY MANAGEMENT HOLDING CORPORATION CONSOLIDATED BALANCE SHEETS ASSETS December 31, 2024 December 31, 2023 Cash and Cash Equivalents $ 114,138 $ 195,486 Accounts Receivable 180,881 70,322 Prepaid Insurance 3,626 - Interest Receivable 260,069 124,727 Fee Income Receivable 194,482 309,787 Total Current Assets 753,196 700,322 Investments in Corporations and LLCs 10,235,925 10,230,434 Convertible Notes Receivable 1,430,000 1,400,000 Notes Receivable 93,422 235,267 Due from Related Party 316 - Intangible Assets, Net 1,972,899 1,904,745 Restricted Cash 195,350 176,800 Tools, Machinery & Equipment, Net 3,832 5,417 Operating Lease Right-Of-Use Assets, Net 355,724 387,138 TOTAL ASSETS $ 15,040,664 $ 15,040,123 LIABILITIES AND STOCKHOLDERS’ EQUITY LIABILITIES Accounts Payable – Related Party $ 381,243 $ 381,243 Accounts Payable 105,326 96,071 Due to Related Party 1,500 - Current Portion of Operating Lease Liabilities 33,490 26,527 Current Portion of Notes Payable 250,000 20,000 Deferred Income - 17,643 Accrued Expenses 218,377 818,646 Total Current Liabilities 989,936 1,360,130 Notes Payable – Related Party, Net - 1,681,755 Operating Lease Liabilities 326,248 359,738 Notes Payable, Net of Current Portion - 250,000 Fair Value Liability of Public Warrants 98,756 157,584 Fair Value Liability of Private Warrants - 117,036 TOTAL LIABILITIES $ 1,414,940 $ 3,926,243 COMMITMENTS AND CONTINGENCIES (Note 17) - - STOCKHOLDERS’ EQUITY Preferred Stock: $ 0.0001 par value; 5,000,000 shares authorized, 0 shares issued and outstanding as of the years ended December 31, 2024 and 2023 - - Preferred Stock: $ 1.00 par value; 5,000,000 shares authorized, 1,607,886 and 0 shares issued and outstanding as of the years ended December 31, 2024 and 2023 1,607,886 - Class A Common Stock: $ 0.0001 par value; 100,000,000 shares authorized, 14,958,817 and 14,270,761 shares issued and outstanding as of the years ended December 31, 2024 and 2023 1,496 1,427 Additional Paid-In Capital 10,784,754 9,766,604 Retained Earnings 1,231,588 1,345,849 Total Stockholders’ Equity 13,625,724 11,113,880 TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY $ 15,040,664 $ 15,040,123 The accompanying footnotes are integral to the consolidated financial statements. F-2 Table of Contents ROYALTY MANAGEMENT HOLDING CORPORATION CONSOLIDATED STATEMENTS OF OPERATIONS December 31, 2024 December 31, 2023 Environmental Services 686,230 202,723 Fee Income 30,859 198,297 Rental Income 90,000 87,500 TOTAL REVENUE 807,089 488,520 Cost of Revenue ( 22,699 ) ( 16,594 ) GROSS PROFIT 784,390 471,926 Intangibles Amortization Expense ( 56,846 ) ( 67,386 ) Depreciation Expense ( 1,586 ) ( 1,586 ) General and Administrative Expenses ( 761,369 ) ( 532,781 ) Professional Fees ( 276,947 ) ( 136,322 ) Impairment Loss - ( 39,525 ) Total Operating Expenses ( 1,096,748 ) ( 777,600 ) NET LOSS FROM OPERATIONS ( 312,358 ) ( 305,674 ) OTHER INCOME (EXPENSE) Interest Income 152,123 104,214 Income from Investment 5,491 13,147 Gain (Loss) on Warrant Fair Value Adjustment 175,864 ( 223,798 ) Other Income - 13,567 Interest Expense ( 135,381 ) ( 715,101 ) Total Other Income (Expense) 198,097 ( 807,971 ) NET LOSS ( 114,261 ) ( 1,113,645 ) Weighted Average Shares Outstanding, Basic 14,958,817 14,270,761 Net Loss Per Share, Basic $ ( 0.01 ) $ ( 0.08 ) The accompanying footnotes are integral to the consolidated financial statements. F-3 Table of Contents ROYALTY MANAGEMENT HOLDING CORPORATION STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY Retained Common Stock Preferred Stock Additional Paid-In Earnings (Accumulated Total Stockholders’ Shares Amount Shares Amount Capital Deficit) Equity Balance December 31, 2022 6,890,281 $ 68,903 - - $ 12,369,697 $ ( 2,766,749 ) $ 9,671,851 Shares Issued for Services 770 8 4,992 5,000 Shares Forfeited for Services ( 3,080 ) ( 31 ) 31 - Shares Issued in Connection with Warrant and Note Conversions 539,736 54 2,949,720 2,949,774 Shares Issued for Deferred Underwriter Fee 350,000 35 3,499,965 3,500,000 Reverse Recapitalization on October 23, 2023 6,493,054 (67,542 ) (9,088,571 ) 5,226,243 (3,929,870 ) Warrants Issued with Convertible Notes 30,770 30,770 Net Loss ( 1,113,645 ) ( 1,113,645 ) Balance December 31, 2023 14,270,761 $ 1,427 $ 9,766,604 $ 1,345,849 $ 11,113,880 Shares Issued for Purchase of Debt 693,334 69 1,110,053 1,110,053 1,039,931 2,150,053 Shares Issued for Services 497,833 497,833 497,833 Share Buyback ( 31,177 ) ( 3 ) ( 28,684 ) ( 28,687 ) Stock Compensation - Warrants 6,906 6,906 Preferred Stock – Stock Dividends 25,899 3 ( 3 ) - Net Loss ( 114,261 ) ( 114,261 ) Balance December 31, 2024 14,958,817 $ 1,496 1,607,886 $ 1,607,886 $ 10,784,754 $ 1,231,588 $ 13,625,724 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, 2024 December 31, 2023 Cash flows from Operating Activities: Net Loss $ ( 114,261 ) $ ( 1,113,645 ) Adjustments to Reconcile Net Loss to Net Cash Provided by (Used in) Operations Amortization of Debt Discount - 30,770 Amortization Expense of Right-of-Use Assets 4,887 2,264 Amortization of Intangibles 56,846 75,227 Depreciation Expense 1,586 1,586 Issuance of Common Shares for Service - 5,000 Issuance of Preferred Shares for Service 1,607,886 - Stock Compensation - Warrants 6,906 - Impairment Loss on Intangible Asset - 39,525 Fair Value Adjustment of Public Warrants ( 58,828 ) 157,584 Fair Value Adjustment of Private Warrants ( 117,036 ) 117,036 Changes in Operating Assets and Liabilities: Accounts Receivable ( 110,558 ) 1,219 Prepaid Insurance ( 3,626 ) - Interest Receivable ( 135,343 ) ( 101,833 ) Fee Income Receivable 115,304 ( 258,297 ) Due from Related Party ( 316 ) - Accounts Payable – Related Party - 381,243 Accounts Payable 9,255 96,071 Due to Related Party 1,500 - Deferred Revenue ( 17,643 ) - Accrued Expenses ( 600,269 ) 329,373 Net Cash Provided by (Used in) Operating Activities 646,290 ( 236,877 ) Cash Flows from Investing Activities Investments in Corporations and LLCs ( 5,491 ) ( 13,147 ) Investments in Convertible Notes Receivable ( 30,000 ) ( 800,000 ) Withdrawal from Notes Receivable 141,845 100,000 Investments in Intangible Assets ( 125,000 ) ( 107,842 ) Net Cash Used in Investing Activities ( 18,646 ) ( 820,989 ) Cash Flows from Financing Activities Payments on Reverse Capitalization - ( 3,929,870 ) Proceeds from Deferred Underwriter Fee - 3,500,000 Shares Buyback ( 28,687 ) - Proceeds from Notes Payable 1,040,000 228,000 Payments on Notes Payable ( 20,000 ) - Proceeds from Issuance of Convertible Notes - 259,617 Payments on Convertible Notes ( 1,681,755 ) - Proceeds from Convertible Note Conversion - 762,262 Net Cash (Used in) Provided by Financing Activities ( 690,442 ) 820,009 Net Change in Cash ( 62,798 ) ( 237,857 ) Cash – Beginning of Year 372,286 610,143 Cash – End of Year $ 309,488 $ 372,286 Supplemental Information Discount on Convertible Notes - 30,770 Notes Receivable - ( 100,000 ) Intangible Assets 100,000 Cash Paid for Interest - - Cash Paid for Taxes - - The accompanying footnotes are integral to the consolidated financial statements. F-5 Table of Contents ROYALTY MANAGEMENT HOLDING COPRORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS December 31, 2024 and 2023 NOTE 1 - NATURE OF OPERATIONS American Acquisition Opportunity Inc was a blank check company organized on January 20, 2021 under the laws of the State of Delaware and effectuated its combination with Royalty Management Corporation (“RMC”) on October 23, 2023 and at that point changed its name to Royalty Management Holding Corporation (“RMHC” or the “Company”). The Company’s business model is to invest or purchase assets that have near and medium-term income potential to provide RMC with accretive cash flow from which it can reinvest in new assets or expand cash flow from those existing assets. These assets typically are natural resources assets (including real estate and mining permits), patents, intellectual property, and emerging technologies. NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation and Consolidation The Company’s financial statements subsidiaries include the accounts of the Company and the merged corporation RMC, and RMC’s wholly owned subsidiary, RMC Environmental Services LLC (“RMC ES”) All significant intercompany accounts and transactions have been eliminated in consolidation. Use of Estimates The preparation of financial statements in conformity with United States generally accepted accounting principles (“U.S. GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Earnings Per Share The Company’s basic earnings per share (“EPS”) amounts have been computed based on the average number of shares of common stock outstanding for the period and include the effect of any participating securities as appropriate. Diluted EPS includes the effect of the Company’s outstanding stock warrants, if inclusion of these items is dilutive. Related Party Policies In accordance with ASC 850, “Related Parties” are defined as either an executive, director or nominee, greater than 10% beneficial owner, or an immediate family member of any of the proceeding. Transactions with related parties are reviewed and approved by the directors of the Company, as per internal policies. Cash Equivalents and Concentration of Cash Balance The Company considers all highly liquid securities with an original maturity of less than three months to be cash equivalents. The Company’s cash and cash equivalents in bank deposit accounts, at times, may exceed federally insured limit of $ 250,000 . As of December 31, 2024 and 2023, the Company has not experienced losses on these accounts and management believes the Company is not exposed to significant risks on such account. F-6 Table of Contents NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.) Restricted Cash At December 31, 2024 and 2023, RMC has $ 195,350 and $ 176,800 , respectively in restricted cash that is at deposit with the Kentucky State Treasurer that serves as a performance bond required for a mining permit held by McCoy Elkhorn Coal LLC. The following table sets forth a reconciliation of cash, cash equivalents, and restricted cash reported in the consolidated balance sheet that agrees to the total of those amounts as presented in the consolidated statement of cash flows for the years ended December 31, 2024 and 2023. December 31, December 31, 2024 2023 Cash and Cash Equivalents $ 114,138 $ 195,486 Restricted Cash 195,350 176,800 Total Cash, Cash Equivalents, and Restricted Cash presented in the Statement of Cash Flows $ 309,488 $ 372,286 Allowance for Credit Losses In June 2016, FASB issued guidance ASC 326, “Credit Losses” which significantly changed how entities will measure credit losses for most financial assets and certain other instruments that aren’t measured at fair value through net income. The most significant change in this standard is a shift from the incurred loss model to the expected loss model. Under the standard, disclosures are required to provide users of the financial statements with useful information in analyzing an entity’s exposure to credit risk and the measurement of credit losses. Financial assets held by the Company that are subject to the guidance in ASC 326 were trade accounts receivable and other accounts receivable, including interest, fees, rental income, convertible notes, and notes receivable. We adopted the standard effective January 1, 2023. The impact of the adoption was not considered material to the financial statements and primarily resulted in new/enhanced disclosures only. Allowance for credit losses amounted to $ 0 for both years ended December 31, 2024 and 2023. Property and Equipment The Company records property and equipment at cost. For tools, machinery & equipment, depreciation is calculated using the straight-line method over the estimated useful lives of the assets. Property and equipment are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability is measured by comparison of the carrying amount to the future net undiscounted cash flows expected to be generated by the related assets. If these assets are determined to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount exceeds the fair market value of the assets. There was no impairment loss recognized during the periods ending December 31, 2024 and 2023, respectively. Costs related to maintenance and repairs which do not prolong the asset’s useful life are expensed as incurred. The estimated useful lives are as follows: Tools, Machinery & Equipment 5 Years Beneficial Conversion Features of Convertible Securities Conversion options that are not bifurcated as a derivative pursuant to ASC 815, “Derivatives and Hedging” and not accounted for as a separate equity component under the cash conversion guidance are evaluated to determine whether they are beneficial to the investor at inception (a beneficial conversion feature) or may become beneficial in the future due to potential adjustments. The beneficial conversion feature guidance in ASC 470-20, “Debt with Conversion and Other Options” applies to convertible stock as well as convertible debt which are outside the scope of ASC 815. A beneficial conversion feature is defined as a nondetachable conversion feature that is in the money at the commitment date. In addition, our convertible debt issuances contain conversion terms that may change upon the occurrence of a future event, such as antidilution adjustment provisions. The beneficial conversion feature guidance requires recognition of the conversion option’s in-the-money portion, the intrinsic value of the option, in equity, with an offsetting reduction to the carrying amount of the instrument. The resulting discount is amortized as a dividend over either the life of the instrument, if a stated maturity date exists, or to the earliest conversion date, if there is no stated maturity date. If the earliest conversion date is immediately upon issuance, the dividend must be recognized at inception. When there is a subsequent change to the conversion ratio based on a future occurrence, the new conversion price may trigger the recognition of an additional beneficial conversion feature on occurrence. The conversion feature is linked to the Company’s own equity value, therefore there is no requirement to quantify the beneficial conversion feature. F-7 Table of Contents NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.) All convertible notes outstanding were converted at the date of business combination on November 1, 2023. Principal and accrued interest were converted into common shares at $ 6.50 per share. Amortization expense of the debt discount for the convertible debt of $ 0 and $ 351,460 , which was included in interest expense of $ 135,381 and $ 715,101 , for the years ended December 31, 2024 and 2023, respectively. Revenue Recognition The Company recognizes revenue in accordance with ASC 606, “Revenue Recognition” from services provided when (a) persuasive evidence that an agreement exists; (b) the products or services has been delivered or completed; (c) the prices are fixed and determinable and not subject to refund or adjustment; and (d) collection of the amounts due is reasonably assured. Our revenue is comprised of the performance of environmental services and royalty and lease revenue governed by the underlying contracts. The Company only has one reportable revenue segment. As of December 31, 2024, all the revenue generating activity is undertaken in eastern Kentucky, Indiana, and Limpopo, South Africa. Deferred revenue of $ 17,643 was recorded at both years ended December 31, 2023 and 2022. This deferred revenue consisted of an agreement with McCoy Elkhorn Coal LLC (“McCoy”). Deferred revenue of $ 17,643 and $ 0 , respectively was recognized during the years ended December 31, 2024 and 2023. The following table disaggregates our revenue by major service line for the years ended: December 31, December 31, 2024 2023 Environmental Services $ 686,230 $ 202,723 Fee Income 30,859 198,297 Rental Income 90,000 87,500 Total Revenue 807,089 488,519 Interest Income from Interest Bearing Accounts 567 2,381 Notes Receivable Interest Income 151,556 101,833 Income from Investment 5,491 13,147 Other Income - 13,567 157,614 130,928 F-8 Table of Contents NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.) Derivative Financial Instruments The Company evaluates its financial instruments to determine if such instruments are derivatives or contain features that qualify as embedded derivatives in accordance with ASC 815, "Derivatives and Hedging". For derivative financial instruments that are accounted for as liabilities, the derivative instrument is initially recorded at its fair value on the grant date and is then re-valued at each reporting date, with changes in the fair value reported in the statements of operations. The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is evaluated at the end of each reporting period. Derivative liabilities are classified in the balance sheet as current or non-current based on whether or not net-cash settlement or conversion of the instrument could be required within 12 months of the balance sheet date. Warrant Liability The Company accounts for the Warrants in accordance with the guidance contained in ASC 815 under which the Warrants do not meet the criteria for equity treatment and must be recorded as liabilities. Accordingly, the Company classifies the Warrants as liabilities at their fair value and adjust the Warrants to fair value at each reporting period. This liability is subject to re-measurement at each balance sheet date until exercised, and any change in fair value is recognized in our statement of operations. The Private Warrants and the Public Warrants for periods where no observable traded price was available are valued using a Monte Carlo simulation. For periods subsequent to the detachment of the Public Warrants from the Units, the Public Warrant quoted market price was used as the fair value as of each relevant date. Stock-based Compensation Stock-based compensation is measured at the grant date based on the fair value of the award and is recognized as expense over the applicable vesting period of the stock award (generally 0 to 3 years) using the straight-line method. Stock-based compensation to board members is accounted for under ASC 718, “Compensation-Stock Compensation”. Stock-based compensation expense related to stock awards granted to a board member is recognized based on the grant-date estimated fair values of the awards using the Black Scholes option pricing model (“Black Scholes”). The value is recognized as expense ratably over the requisite service period, which is generally the vesting term of the award. We adjust the expense for actual forfeitures as they occur. Stock-based compensation expense is classified in the accompanying consolidated statements of operations based on the function to which the related services are provided. Black-Scholes requires a number of assumptions, of which the most significant are expected volatility, expected option term (the time from the grant date until the options are exercised or expire) and risk-free rate. Expected volatility is determined using the historical volatility for the Company. The risk-free interest rate is based on the yield of US treasury government bonds with a remaining term equal to the expected life of the option. Expected dividend yield is zero because the Company has never paid cash dividends on common shares. F-9 Table of Contents NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.) Income Taxes The Company uses the liability method of accounting for income taxes as set forth in ASC 740, “ Income Taxes” . Under the liability method, deferred taxes are determined based on the temporary differences between the financial statement and tax basis of assets and liabilities using tax rates expected to be in effect during the years in which the basis differences reverse. A valuation allowance is recorded when it is unlikely that the deferred tax assets will not be realized. The Company assesses its income tax positions and record tax benefits for all years subject to examination based upon our evaluation of the facts, circumstances and information available at the reporting date. In accordance with ASC 740-10, for those tax positions where there is a greater than 50% likelihood that a tax benefit will be sustained, the Company’s policy is to record the largest amount of tax benefit that is more likely than not to be realized upon ultimate settlement with a taxing authority that has full knowledge of all relevant information. For those income tax positions where there is less than 50% likelihood that a tax benefit will be sustained, no tax benefit will be recognized in the financial statements . The Company has evaluated its income tax positions and has determined that it does not have any uncertain tax positions. As of the year ended December 31, 2024, the Company will recognize interest and penalties related to any uncertain tax positions through its income tax expense. The Company accounts for income taxes with the recognition of estimated income taxes payable or refundable on income tax returns for the current period and for the estimated future tax effect attributable to temporary differences and carry forwards. Measurement of deferred income items is based on enacted tax laws including tax rates, with the measurement of deferred income tax assets being reduced by available tax benefits not expected to be realized in the immediate future. The Company expects to file U.S. federal and various state income tax returns. The Company was formed in 2021 and has filed all required tax returns. All tax periods since inception remain open to examination by the taxing jurisdictions to which the Company is subject. The provision for income taxes was deemed to be de minimis for the years ending December 31, 2024 and 2023. Recently Issued Accounting Pronouncements The Company is an “emerging growth company,” as defined in Section 2(a) of the Securities Act, as modified by the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”), and it may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in its periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved. F-10 Table of Contents NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.) Further, Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered under the Exchange Act) are required to comply with the new or revised financial accounting standards. The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies but any such election to opt out is irrevocable. The Company has elected not to opt out of such extended transition period which means that when a standard is issued or revised and it has different application dates for public or private companies, the Company, as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard. This may make comparison of the Company’s financial statements with another public company which is neither an emerging growth company nor an emerging growth company which has opted out of using the extended transition period difficult or impossible because of the potential differences in accounting standards used. In November of 2023, the FASB issued ASU 2023-07, “Segment Reporting 280: Improvements to Reportable Segment Disclosures”. ASU 2023-07 increases the disclosures about a public entity’s reportable segments. Under ASU 2023-07, a public entity would be required to disclose significant segment expenses that are regularly provided to the chief operating decision maker (“CODM”), a description of other segment items by reportable segment, annual disclosures about a reportable segment’s profit or loss and assets required by 280 in interim periods, any additional measures of a segment’s profit or loss used by the CODM to allocate resources, and the title and position of the CODM. ASU 2023-07 is effective for annual reporting periods beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. ASU 2023-07 allows for early adoption and requires retrospective adoption. The Company has adopted this guidance for the year ending December 31, 2024. The application of this new guidance is not expected to have a material impact on the Company’s consolidated financial condition, results of operations, or cash flows, as the guidance pertains to disclosure only. In December of 2023, FASB issued ASU No. 2023-09, “Income Taxes (740): Improvements to Income Tax Disclosures” ASU 2023-09. Under ASU 2023-09, a public entity will be required to disclose specific categories in the rate reconciliation and provide additional information for reconciling items that meet a quantitative threshold, such as if the effect of the reconciling item is equal to or greater than five percent of the amount computed by multiplying pretax income/loss by the applicable statutory income tax rate. Entities would also have to disclose the amount of income taxes paid disaggregated by federal, state, and foreign taxes and the amount of income taxes paid disaggregated by individual jurisdictions in which income taxes paid is equal to or greater than five percent of total income taxes paid, along with income/loss from continuing operations before income tax expense disaggregated between domestic and foreign and income tax expense from continuing operations disaggregated by federal, state, and foreign. ASU 2023-09 is effective for annual reporting periods beginning after December 15, 2024. ASU 2023-09 allows for early adoption for annual financial statements that have not yet been issued and allows retrospective and prospective adoption. The Company will adopt this guidance beginning with its fourth quarter ending December 31, 2025. The application of this new guidance is not expected to have a material impact on the Company’s consolidated financial condition, results of operations, or cash flows, as the guidance pertains to disclosure only. Reclassification of Prior Year Presentation Certain prior year amounts have been reclassified for consistency with the current year presentation. These reclassifications had no effect on the reported results of operations. F-11 Table of Contents NOTE 3 – BUSINESS COMBINATION On October 31, 2023, we consummated the business combination, or the Business Combination, contemplated by the Agreement and Plan of Merger, with RMC Sub Inc. (“Merger Sub”), a wholly-owned subsidiary of American Acquisition Opportunity Inc. (“AMAO”), a special purpose acquisition company, which is our predecessor, and Royalty Management Co. (“Legacy Royalty”). Pursuant to the Merger Agreement, Merger Sub was merged with and into Legacy Royalty, with Legacy Royalty surviving the merger as a wholly owned subsidiary of AMAO (the “Business Combination”). Upon the closing of the Business Combination, AMAO changed its name to Royalty Management Holdings Co. with its Class A common stock continuing to be listed on Nasdaq under the ticker symbol “RMCO,” its warrants continuing to be listed on Nasdaq under the symbol “RMCOW. Royalty Management Holding co. became the successor entity to AMAO pursuant to Rule 12g-3(a) promulgated under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). All Round A Convertible Debt notes, accrued interest, and warrants were converted into 539,736 shares of Class A Common Stock of RMCO at the date of Business Combination. At the closing of Business Combination, all shares of Class B Common Stock were automatically converted into 3,076,500 shares of Class A Common Stock. RMCO filed an amended and restated certificate of incorporation that removed the Class B Common Stock from the authorized capitalization of the Company. Legacy Royalty shareholders of stock were exchange those shares for RMCO shares at a rate of 1 private company share for 1.5 shares of public company shares . NOTE 4 – INVESTMENTS IN CORPORATIONS AND LLCS Investments in corporations and limited liability companies as of December 31, 2024 and 2023 consisted of the following: December 31, 2024 December 31, 2023 FUB Mineral LLC $ 612,220 $ 606,729 Ferrox Holdings Ltd. 9,623,705 9,623,705 Total Investments in Corporations and LLCs $ 10,235,925 $ 10,230,434 FUB Mineral LLC On October 1, 2021, the Company made an investment into FUB Mineral LLC (“FUB”) in the amount of $ 250,000 in exchange 38.45 % of the membership interest. As such, the investment in FUB will be accounted for using the equity method of accounting. On February 1, 2022, the Company invested an additional $ 200,000 into FUB through the purchase of debt held in that entity, resulting in the current Company’s ownership of 41.75 % of FUB. The Company recorded passthrough activity of $ 5,491 and $ 13,147 , for the years ended December 31, 2024 and 2023, respectively. Ferrox Holdings Ltd. On December 23, 2022, the Company entered into an agreement with Maxpro Invest Holdings Inc. (“Maxpro”) to purchase from Maxpro the sum of 95,000,000 Class A Common Stock of Ferrox Holdings Ltd. (“Ferrox”) that was owned by Maxpro. RMC has a 9.9 % ownership interest in Ferrox. As such, the investment in Ferrox will be accounted for using the cost method of accounting. The consideration paid to Maxpro for those shares was the sum of 627,806 shares of common stock of the Company. F-12 Table of Contents NOTE 5 – CONVERTIBLE NOTES RECEIVABLE Convertible notes receivable as of December 31, 2024 and 2023 consisted of the following: December 31, 2024 December 31, 2023 Heart Water Inc. $ 750,000 $ 750,000 Ferrox Holdings Ltd. 250,000 250,000 Advanced Magnetic Lab, Inc. 430,000 400,000 Total Convertible Notes Receivable $ 1,430,000 $ 1,400,000 Heart Water Inc. On December 2, 2022, the Company advanced $ 100,000 to Heart Water Inc. (“HW”) in exchange for an Unsecured Convertible Promissory Note issued to the Company. The Unsecured Convertible Promissory Note carries an 8.0 % annual interest rate and is unsecured and has no guarantees. The HW Convertible Promissory Note converts into HW common stock at a price equal to 80% of the price per share paid by the investors in the next round of HW financing. The maturity date of the HW Convertible Promissory Notes is October 6, 2028. Concurrently, the Company and HW entered into an agreement whereby the Company has the ability to invest in certain development projects of HW in exchange for a per-gallon of water payment from the water that is captured and sold from the project. An additional $ 650,000 was advanced in exchange for Convertible Promissory Notes during 2023. Ferrox Holdings Ltd. In March 2022 and September 2022, the Company made a series of investments totaling $ 250,000 into convertible debt of Ferrox. The convertible debt holds a 7.0 % annual interest rate, compounded annually, and is convertible into common stock of Ferrox at $ 0.15 per share. The convertible debt is unsecured and has no guarantees. As part of its investment in the convertible debt of Ferrox, the Company also received an additional 833,335 common shares of Ferrox at the time of investment. Advanced Magnetic Lab, Inc. On December 21, 2022, Advanced Magnetic Lab, Inc. (“AML”) issued a Convertible Promissory Note to the Company in the amount of $ 250,000 . Additional Convertible Promissory Notes were subsequently issued by AML to the Company in the amount of $ 50,000 each on February 21, 2023, March 20, 2023, and May 5, 2023. Additional Convertible Promissory Notes were issued in the amount of $ 15,000 each on March 20, 2024 and June 11, 2024. The Convertible Promissory Notes carry a 10.0 % annual interest rate, compounded monthly, and has the ability to convert into common stock of AML at a rate of $ 1.50 per share, or repaid at maturity, which is twenty-four months after issuance. The Convertible Promissory Notes are unsecured and have no guarantees. Concurrently, the Company and AML entered into a royalty agreement on December 21, 2022, whereby the Company will receive between 0.5% and 1.5% of the sales revenue received from sales of product(s) developed by AML from the use of the proceeds from the Convertible Promissory Notes . F-13 Table of Contents NOTE 6 – NOTES RECEIVABLE Notes receivable as of December 31, 2024 and 2023 consisted of the following: December 31, 2024 December 31, 2023 McCoy Elkhorn Coal LLC $ - $ 135,267 American Resources Corporation 43,422 100,000 T.R. Mining & Equipment Ltd. 50,000 - Total Notes Receivable $ 93,422 $ 235,267 McCoy Elkhorn Coal LLC On May 20, 2022, the Company entered into an agreement to fund the development of a series of coal mines located in Pike County, Kentucky in exchange for a promissory note to repay the Company its capital invested, plus interest, and then an ongoing overriding royalty from coal sold from the mines. $ 117,623 plus interest of $ 17,643 has been funded by the Company under this contract thus far. The operator of the property is a related entity and is described more in Note 13. American Resources Corporation On July 31, 2022, the Company purchased certain payments that are owed to Texas Tech University (“TTU”) from American Resources Corporation for the agreement to participate in sponsored research services performed by TTU and agreed to assume responsibility for those payments. The payments that were due to TTU amounted to $ 100,000 and the Company has since paid $ 56,578 of that amount so far on behalf of American Resources Corporation. A note payable between the Company and ARC was created to reflect the assumption by the Company of these payments and the note pays interest of 7.0 % interest rate, compounded quarterly. The note originally matured on July 31, 2024, but was extended on July 30, 2024 to mature on July 31, 2026 . There are no collateral or guarantees. The operator of the technology is a related entity and is described more in Note 13. T. R. Mining & Equipment Ltd. On February 2, 2024, February 29, 2024, April 4, 2024, May 7, 2024, and June 14, 2024, the Company invested the amount of $ 10,000 each into T.R. Mining & Equipment Ltd. in the form of Promissory Notes and a royalty payable to the Company on all products and materials sold from the permit over the life of the permitted resource. The Promissory Notes hold a 10.0 % annual interest rate, compounded monthly, and matures on December 31, 2025 . The Royalty Agreement provides the Company with a perpetual royalty of 10.0 % of all sales of ores that are mined and sold from the permitted resource. The operator is a related entity and is described more in Note 13. F-14 Table of Contents NOTE 7 – INTANGIBLE ASSETS Intangible assets as of December 31, 2024 and 2023 consisted of the following: December 31, 2024 December 31, 2023 Mining Permit Package $ 68,739 $ 68,739 MC Mining 149,150 149,150 Coking Coal Leasing LLC 1,540,331 1,540,331 RMC Environmental Services LLC 225,000 225,000 Heliponix LLC 100,000 - Reelement Technologies Corporation 25,000 - Less: Accumulated Amortization ( 135,321 ) ( 78,475 ) Total Intangible Assets $ 1,972,899 $ 1,904,745 Amortization expense - Intangible Assets totaled $ 56,846 and $ 67,386 for the years ended December 31, 2024 and 2023, respectively. Land Betterment Exchange (LBX) The Company is the holder of 250,000 LBX Tokens. The Company purchased the LBX Tokens for the consideration of $ 2,000,000 of Round A Convertible Debt and 76,924 Warrant “A-2” issued to an affiliated party. The token issuance process is undertaken by a related party, Land Betterment Corporation, and is predicated on proactive environmental stewardship and regulatory bond releases. As of June 30, 2022, there is no market for the LBX Token and therefore the purchase price of $ 8 per token has been assigned for fair value. The consideration issued for the 250,000 tokens was in the form of a $ 2,000,000 convertible note. Due to the lack of market or independent market level transactions, the value assigned to the LBX Token of $ 0 as of December 31, 2024. The intangible will be treated as an indefinite lived asset. Pursuant to ASC 350-30-35-20, “Intangibles – Goodwill and Other” subsequent re-evaluation of the assigned value is not permitted. However, this does not prohibit the Company from recognizing effects of future transactions of the LBX token should they occur. Mining Permit Package On January 3, 2022, the Company entered into an agreement with a Kentucky licensed engineer to create three coal mining permits for the total payment of $75,000, payable in equal weekly installments over the course of 36 weeks. The permits will be held in the name of American Resources Corporation, a related party, or its subsidiaries, and the Company will receive an overriding royalty in the amount of the greater of $0.10 per ton or 0.20% of the gross sales price of the coal sold from the permit. The intangible will be amortized over its initial 10 year contract period . 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 $ 2,500 per month and the consideration paid by the Company to the seller was a total of $ 149,150 , which represents $ 60,000 in cash to be paid to the seller in the form of 80 % of the monthly rental income until the cash consideration is paid in full, plus the issuance of $ 89,150 worth of shares of the Company that will be valued at the same per common share value at the consummation of a transaction that results in the Company becoming publicly traded. The intangible will be amortized over its initial 30 year contract period. Coking Coal Leasing LLC On April 15, 2022, the Company entered into a purchase agreement with ENCECo, Inc., (“ENCECo”) the sole owner and member of Coking Coal Leasing LLC (“CCL”), whereby the Company issued 236,974 shares of its Class A Common Stock to ENCECo, Inc. for the purchase of the assets and interests in CCL. As part of this transaction, the Company, through CCL, purchased a contract to manage the electrical power account for a coal mining complex located in Perry County, Kentucky. The fee for managing this contract payable to the Company is $ 5,000 per month. The intangible will be treated as an indefinite lived asset as the ongoing monthly fees will continue as long as the permits remain. F-15 Table of Contents NOTE 7 – INTANGIBLE ASSETS (cont.) RMC Environmental Services LLC On August 17, 2022, the Company formed RMC ES as a wholly owned subsidiary of the Company for the purpose of purchasing certain rights to operate a clean fill landfill located in Hamilton County, Indiana that pays RMC ES for each load of clean fill material that is disposed on, or removed from, the landfill. The consideration paid by the Company was $ 225,000 for the rights to operate this business. The intangible will be amortized over its initial 5 year contract period. Heliponix LLC On September 9, 2024, the Company entered into a royalty and unit purchase agreement and assignment agreement with eko Solutions LLC (“eko”) that provided the Company with certain royalty rights originating from a Commercialization Agreement that was previously signed between Heliponix LLC (“ANU”) and eko on June 18, 2024, which granted to eko revenue sharing and royalty rights to seed pod sales produced by ANU. The Company also received assignment of Class B units in ANU resulting from a previously-executed Equity Award Agreement dated June 10, 2024, whereby ANU issued to eko 6,100 Class B Units. The Company paid $100,000 to ANU, which thereby relieved eko from having to pay this amount to ANU. As a result of this consideration paid, eko assigned and set over to RMC 20.0% of the Pod Royalty sales (resulting from the Commercialization Agreement), and 20.0% of the Class B Units (from the Equity Award Agreement, which equates to 1,220 units) . The intangible will be treated as an indefinite lived asset as the ongoing revenue sharing and royalty rights will remain in place as long as these contracts remain in place. The value of ANU’s Class B units received by the Company is considered nominal. Reelement Technologies Corporation On September 12, 2024, the Company into a Technology Development Services Agreement with ReElement Technologies Corporation (“ReElement”) whereby the Company will pay for certain research and development by ReElement to produce technologies related to the purification and separation of platinum group metals, gold, and silver from ore bodies and recycled products (the “PGM Technology”). The maximum total fees to be paid by RMC in connection with each of the deliverables and the services is an agreed-to-amount of up to $200,000. As of December 31, 2024, $ 25,000 has been invoiced and paid. Concurrently, on September 12, 2024, the Company also entered into a Royalty Agreement with ReElement whereby RMC shall receive a royalty from the gross sales resulting from the use or license of the PGM Technology that is developed from the Technology Development Services Agreement. This royalty is equal to 5% of the gross sales from the PGM Technology, occurring until RMC receives royalty payments amounting to the service fee, and then a 1.5% royalty occurring through the remainder of the royalty term. The intangible will be treated as an indefinite lived asset as the ongoing royalty rights will remain in place indefinitely. As of December 31, 2024, future amortization expense are as follows: 2025 56,846 2026 56,846 2027 41,846 2028 11,846 2029 11,846 Thereafter 128,340 307,570 F-16 Table of Contents NOTE 8 – PROPERTY AND EQUIPMENT At December 31, 2024 and 2023, property and equipment were comprised of the following: December 31, 2024 December 31, 2023 Tools, Machinery & Equipment $ 7,928 $ 7,928 Less: Accumulated Depreciation ( 4,096 ) ( 2,511 ) Total Property and Equipment, Net $ 3,832 $ 5,417 Depreciation expense amounted to $ 1,586 for both the years ended December 31, 2024, and 2023, respectively. NOTE 9 – LEASES The operating right-of-use asset (“ROU”) is the Company’s right to use an asset over the life of a lease. The asset is calculated as the initial amount of the lease liability, plus any lease payments made to the lessor before the lease commencement date, plus any initial direct costs incurred, minus any lease incentives received. The Company leases certain land and office space under noncancelable operating leases, typically with initial terms of 5 to 21 years. The Company leases an office from an affiliated entity, Land Resources & Royalties (“LRR”), located in Hazard, Kentucky. We pay $ 250 a month, plus common charges, in rent with an initial lease term of 10 years. The Company subleases an office from an affiliated entity, American Resources Corporation (“ARC”), located in Fishers, Indiana. Historically we have paid $ 2,143 a month in rent, but starting January 2024 that rent was lowered to $ 1,500 per month, with an initial lease term of 10 years. The Company leases 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. The Company leases 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. F-17 Table of Contents NOTE 9 – LEASES (cont.) As of December 31, 2024 and 2023 right of use assets and liabilities were comprised of the following: December 31, 2024 December 31, 2023 Assets: ROU Assets $ 421,550 $ 421,550 Accumulated Amortization ( 65,826 ) ( 34,412 ) ROU Assets, Net 355,724 387,137 Liabilities Current: Operating Lease Liabilities $ 33,490 26,527 Non-Current Operating Lease Liabilities 326,248 $ 359,738 For the Years Ended December 31, Expense Classification 2024 2023 Operating Lease Expenses: Amortization of ROU Assets General and Administrative $ 31,414 $ 30,128 Accretion of Operating Lease Liabilities General and Administrative 38,115 39,401 Total Operating Lease Expenses $ 69,529 $ 69,529 Other information related to leases is as follows: As of As of December 31, December 31, 2024 2023 Weighted-Average Remaining Lease Term: Operating Leases (in Years) 3.02 3.13 Weighted-Average Discount Rate: Operating Leases 10.00 % 10.00 % As of December 31, 2024, remaining maturities of lease liabilities were as follows: 2025 69,492 2026 69,492 2027 69,492 2028 45,492 2029 45,492 Thereafter 365,730 Total Lease Payments 665,190 Less Imputed Interest ( 305,452 ) Present Value of Lease Liabilities 359,738 F-18 Table of Contents NOTE 10 –NOTE PAYABLE - RELATED PARTY As of December 31, 2024 and 2023, the amount outstanding of non-convertible Note Payable to related parties amounted to: December 31, 2024 December 31, 2023 Gross Principal Value of Note Payable – Related Party $ - $ 1,681,755 Unamortized Loan Discounts - - Total Note Payable – Related Party, Net $ - $ 1,681,755 As of first quarter 2024, this note will no longer be required to be classified as related party. At the effective date of our business combination on October 31, 2023, the Manager of Westside Advisors LLC was no longer an officer of the Company. NOTE 11 –NOTES PAYABLE As of December 31, 2024 and 2023, notes payable amounted to: December 31, 2024 December 31, 2023 Notes Payable – Round B $ 250,000 $ 250,000 MC Mining - 20,000 Total Notes Payable $ 250,000 $ 270,000 As of December 31, 2024, remaining maturities of notes payable were as follows: 2025 250,000 2026 - 2027 - 2028 - 2029 and Thereafter - 250,000 Notes Payable – Round B These notes bear a 10 % annual interest rate, compounded calendar quarterly. Accrued interest of $ 32,470 and $ 5,712 was recorded at December 31, 2024 and 2023, respectively. The notes issued under Round B are due two years from the date of issuance. Due dates are in October 2025 . 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 $ 2,500 per month and the consideration paid by the Company to the seller was a total of $ 149,150 , which represents $ 60,000 in cash to be paid to the seller in the form of 80 % of the monthly rental income until the cash consideration is paid in full, plus the issuance of $ 89,150 worth of shares of the Company that will be valued at the same per common share value at the consummation of a transaction that results in the Company becoming publicly traded. Of the $60,000 in cash to be paid to the seller, $ 0 and $ 20,000 is outstanding at December 31, 2024 and 2023, respectively. There is no interest due on the unpaid portion of the monthly rental income. F-19 Table of Contents NOTE 12: STOCKHOLDERS’ EQUITY Preferred Stock - The Company is authorized to issue 10,000,000 shares of “blank check” preferred stock with a par value of $ 0.0001 per share with such designations, voting and other rights and preferences as may be determined from time to time by the Company’s Board of Directors. On August 30, 2024, the Company amended and restated its Certificate of Incorporation to designate 5,000,000 shares of the Preferred Stock as a newly-designed Series A Preferred Stock. Series A Preferred Stock will have a $ 1.00 par value, while the remainder of preferred stock will remain at $0.0001. At December 31, 2024 and 2023, there were 1,607,886 and 0 , respectively, shares of preferred stock issued or outstanding. Class A Common Stock — The Company is authorized to issue 100,000,000 shares of Class A common stock with a par value of $ 0.0001 per share. Holders of the Company’s Class A common stock are entitled to one vote for each share. At December 31, 2024 and 2023, there were 14,958,817 and 14,270,761 , respectively shares of Class A common stock issued and outstanding. On April 13, 2024, the Company’s Board of Directors unanimously voted to approve a discretionary stock repurchase program. Under the program, the Company may purchase up to $ 2,000,000 of its Class A common stock over the next 24 months, as market conditions warrant. The shares may be repurchased in the open market or in privately negotiated transactions, at prices that the Company deems appropriate and subject to market conditions, applicable law and other factors deemed relevant in the Company's sole discretion. Stock-based Compensation - Effective December 17, 2024, the Board of Directors of the Company adopted a board compensation plan. The plan provides for the allocation and issuance of stock warrants to directors of the Company for annual compensation for their services on the Company’s Board of Directors. Total stock-based compensation expense for warrants to directors was $ 6,906 and $ 0 for the years ended December 31, 2024 and 2023, respectively, which was charged to general and administrative expense. As of December 31, 2024 and 2023, the Company has $ 75,971 and $ 0 , respectively, of unrecognized compensation cost related to unvested stock warrants granted and outstanding, net of estimated forfeitures. The cost is expected to be recognized on a weighted average basis over a period of three years. The following table summarizes the activity of our stock warrants for the year ended December 31, 2024: Weighted Weighted Average Aggregate Number of Average Contractual Intrinsic Warrants Exercise Price Life in Years Value Outstanding December 31, 2023 - $ - - - Granted 225,000 $ 1 2.96 $ 82,878 Forfeited or Expired Exercised Outstanding December 31, 2024 225,000 $ 1 2.96 $ 82,878 Exercisable (Vested) - December 31, 2024 225,000 $ 1 2.96 $ 82,878 F-20 Table of Contents NOTE 13: RELATED PARTY TRANSACTIONS Land Resources & Royalties LLC / Wabash Enterprises LLC The Company may at times in the future lease property from Land Resources & Royalties LLC (“LRR”) and enter into various other agreements with LRR and/or its parent company, Wabash Enterprises LLC, an entity managed by Thomas Sauve and which Kirk Taylor is also part beneficial owner. Furthermore, on October 31, 2023, as part of the Business Combination, Wabash Enterprises LLC and LRR became an owner of Class A Common Stock of the Company and several leases and agreements exist between LRR and the Company, for which LRR receives income. Land Betterment Corporation The Company may at times in the future enter into agreements with Land Betterment Corporation, an entity in which Kirk Taylor is a director, President and Chief Financial Officer and Thomas Sauve who is a director and Chief Development Officer. The Company has entered into a contractor services agreement with Land Betterment Corporation for environmental services personnel. The contract called for cost plus 12.5% margin . American Resources Corporation The Company may at times enter into agreements with American Resources Corporation (“ARC”) and its subsidiaries and affiliates, including McCoy Elkhorn Coal LLC and Perry County Resources LLC, an entity in which Thomas Sauve is a director and President, and Kirk Taylor is the Chief Financial Officer. First Frontier Capital LLC The Company may at times enter into financing agreements with First Frontier Capital LLC, an entity managed and beneficially owned by Thomas Sauve, Chief Executive Officer of the Company. On February 1, 2022, First Frontier Capital LLC invested $ 10,000 cash into the Company in the form of the Round A Convertible Note and 385 warrants issued under Warrant “A-7.” On October 31, 2023, as part of the Business Combination, the notes and warrants held by First Frontier Capital LLC were converted into Class A Common Stock of the Company. T.R. Mining & Equipment Ltd. The Company may at times enter into agreements with T. R. Mining & Equipment Ltd., an entity owned 51 % by a subsidiary of American Resources Corporation. Administrative Services Arrangement The Company’s Sponsor agreed, commencing from the date that the Company’s securities are first listed on NASDAQ through the earlier of the Company’s consummation of a Business Combination and its liquidation, to make available to the Company certain general and administrative services, including office space, utilities and administrative services, as the Company may require from time to time. The Company agreed to pay the Sponsor $ 10,000 per month for these services. At the date of business combination, the services agreement terminated. As of both years ended December 31, 2024 and 2023, $ 120,000 , is accrued and owed under this agreement. Promissory Note — Related Party On March 22, 2021, the Sponsor agreed to loan the Company an aggregate of up to $ 800,000 to cover expenses related to Initial Public Offering pursuant to a promissory note (the "Note"). This loan was non-interest bearing and payable in full on or before March 22, 2022 or could be converted into equity on March 22, 2022. From inception to date, $ 485,900 was advanced and repaid. As of both years ended December 31, 2024 and 2023, $ 261,243 is outstanding. F-21 Table of Contents NOTE 14: INCOME TAXES Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. The primary temporary differences that give rise to the deferred tax assets and liabilities are as follows: accrued expenses. Deferred tax assets consisted of $ 23,662 and $ 225,248 at December 31, 2024 and 2023, respectively, which was fully reserved. Deferred tax assets consist of net operating loss carryforwards in the amount of $ 435,983 and $ 412,321 at December 31, 2024 and 2023, respectively, which was fully reserved. The net operating loss carryforwards for year 2022 begin to expire in 2042. The application of net operating loss carryforwards are subject to certain limitations as provided for in the tax code. The Tax Cuts and Jobs Act was signed into law on December 22, 2017, and reduced the corporate income tax rate from 34 % to 21 %. The Company’s deferred tax assets, liabilities, and valuation allowance reflect the impact of the tax law. The Company’s effective income tax rate is lower than what would be expected if the U.S. federal statutory rate ( 21 %) were applied to income before income taxes primarily due to certain expenses being deductible for tax purposes but not for financial reporting purposes. The Company files income tax returns in the U.S. federal jurisdiction and various state jurisdictions. All years are open to examination as of December 31, 2024. NOTE 15: WARRANTS Upon the Company initial capitalization, private warrants were issued to its founding investors. Upon the Company’s initial public offering, public warrants were issued to the participating investors. Details of each are below. Public Warrants may only be exercised for a whole number of shares. No fractional shares will be issued upon exercise of the Public Warrants. The Public Warrants will become exercisable on the later of (a) 30 days after the completion of a Business Combination and (b) one year from the closing of the Initial Public Offering. The Public Warrants will expire five years from the completion of a Business Combination or earlier upon redemption or liquidation. The Company will not be obligated to deliver any Class A common stock pursuant to the exercise of a warrant and will have no obligation to settle such warrant exercise unless a registration statement under the Securities Act with respect to the Class A common stock underlying the warrants is then effective and a prospectus relating thereto is current, subject to the Company satisfying its obligations with respect to registration, or a valid exemption from registration is available. No warrant will be exercisable, and the Company will not be obligated to issue a Class A common stock upon exercise of a warrant unless the Class A common stock issuable upon such warrant exercise has been registered, qualified or deemed to be exempt under the securities laws of the state of residence of the registered holder of the warrants. The Company has agreed that as soon as practicable, but in no event later than 20 business days, after the closing of a Business Combination, it will use its commercially reasonable efforts to file with the SEC a registration statement for the registration, under the Securities Act, of the Class A common stock issuable upon exercise of the warrants. The Company will use its best efforts to cause the same to become effective and to maintain the effectiveness of such registration statement, and a current prospectus relating thereto, until the expiration of the warrants in accordance with the provisions of the warrant agreement. If a registration statement covering the shares of Class A common stock issuable upon exercise of the warrants is not effective by the sixtieth (60th) business day after the closing of a Business Combination, warrant holders may, until such time as there is an effective registration statement and during any period when the Company will have failed to maintain an effective registration statement, exercise warrants on a “cashless basis” in accordance with Section 3(a)(9) of the Securities Act or another exemption. Notwithstanding the above, if shares of Class A common stock are at the time of any exercise of a warrant not listed on a national securities exchange such that they satisfy the definition of a “covered security” under Section 18(b)(1) of the Securities Act, the Company may, at its option, require holders of Public Warrants who exercise their warrants to do so on a “cashless basis” in accordance with Section 3(a)(9) of the Securities Act and, in the event the Company so elect, it will not be required to file or maintain in effect a registration statement, and in the event the Company does not so elect, it will use its best efforts to register or qualify the shares under applicable blue sky laws to the extent an exemption is not available. F-22 Table of Contents NOTE 15: WARRANTS (cont.) Once the warrants become exercisable, the Company may redeem the outstanding warrants: ● in whole and not in part; ● at a price of $ 0.01 per warrant; ● 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, the reported last sale price of the Class A common stock equals or exceeds $18.00 per share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations and the like) for any 20 trading days within a 30-trading day period ending three business days before the Company sends the notice of redemption to the warrant holders . If and when the warrants become redeemable by the Company, the Company may exercise its redemption right even if it is unable to register or qualify the underlying securities for sale under all applicable state securities laws. If the Company calls the Public Warrants for redemption, management will have the option to require any holder that wishes to exercise the Public Warrants to do so on a “cashless basis,” as described in the warrant agreement. The exercise price and number of shares of Class A common stock issuable upon exercise of the Public Warrants may be adjusted in certain circumstances including in the event of a stock dividend, or recapitalization, reorganization, merger or consolidation. However, except as described below, the Public Warrants will not be adjusted for issuances of Class A common stock at a price below its exercise price. Additionally, in no event will the Company be required to net cash settle the Public Warrants. If the Company is unable to complete a Business Combination within the Combination Period and the Company liquidates the funds held in the Trust Account, holders of Public Warrants will not receive any of such funds with respect to their Public Warrants, nor will they receive any distribution from the Company’s assets held outside of the Trust Account with respect to such Public Warrants. Accordingly, the Public Warrants may expire worthless. In addition, if (a) the Company issues additional Class A common stock or equity-linked securities for capital raising purposes in connection with the closing of a Business Combination at an issue price or effective issue price of less than $ 9.20 per Class A common stock (with such issue price or effective issue price to be determined in good faith by the Company’s Board of Directors and, in the case of any such issuance to the Sponsor or its affiliates, without taking into account any Founder Shares held by the Sponsor or its affiliates, as applicable, prior to such issuance) (the “Newly Issued Price”), (b) the aggregate gross proceeds from such issuances represent more than 60 % of the total equity proceeds, and interest thereon, available for the funding of a Business Combination on the date of the consummation of a Business Combination (net of redemptions), and (c) the volume weighted average trading price of its Class A ordinary shares during the 20 trading day period starting on the trading day after the day on which the Company consummates its Business Combination (such price, the “Market Value”) is below $ 9.20 per share, the exercise price of the warrants will be adjusted (to the nearest cent) to be equal to 115 % of the higher of the Market Value and the Newly Issued Price, and the $ 18.00 per share redemption trigger price will be adjusted (to the nearest cent) to be equal to 180 % of the higher of the Market Value and the Newly Issued Price. F-23 Table of Contents NOTE 15: WARRANTS (cont.) The Private Warrants are identical to the Public Warrants underlying the Units sold in the Initial Public Offering, except that the Private Warrants and the Class A common stock issuable upon the exercise of the Private Warrants will not be transferable, assignable or salable until 30 days after the completion of a Business Combination, subject to certain limited exceptions. Additionally, the Private Warrants will be exercisable on a cashless basis and be non-redeemable, except as described above, so long as they are held by the initial purchasers or their permitted transferees. If the Private Warrants are held by someone other than the initial purchasers or their permitted transferees, the Private Warrants will be redeemable by the Company and exercisable by such holders on the same basis as the Public Warrants. The Company uses the black Scholes option pricing model to value its warrants and options. The significant inputs are as follows: 2024 2023 Expected Dividend Yield 0.00 % 0.00 % Expected Volatility 60.00 % 1.55 % Risk-Free Rate 5.15 % 4.27 % Expected Life of Warrants 1.25 1.72 Weighted Weighted Average Aggregate Number of Average Contractual Intrinsic Public Warrants Warrants Exercise Price Life in Years Value Outstanding December 31, 2023 5,252,990 $ - 4.83 $ 157,584 Exercisable (Vested) - December 31, 2023 5,252,990 $ - 4.83 $ 157,584 Outstanding December 31, 2024 5,252,990 $ - 3.83 $ 98,756 Exercisable (Vested) - December 31, 2024 5,252,990 $ - 3.83 $ 98,756 Weighted Weighted Average Aggregate Number of Average Contractual Intrinsic Private Warrants Warrants Exercise Price Life in Years Value Outstanding December 31, 2023 3,901,201 $ 0.03 4.83 $ 117,036 Exercisable (Vested) - December 31, 2023 3,901,201 $ 0.03 4.83 $ 117,036 Outstanding December 31, 2024 3,901,201 $ 0.03 3.83 $ 0 Exercisable (Vested) - December 31, 2024 3,901,201 $ 0.03 3.83 $ 0 F-24 Table of Contents NOTE 16: FAIR VALUE MEASUREMENTS The Company follows the guidance in ASC 820 for its financial assets and liabilities that are re-measured and reported at fair value at each reporting period, and non-financial assets and liabilities that are re-measured and reported at fair value at least annually. The fair value of the Company’s financial assets and liabilities reflects management’s estimate of amounts that the Company would have received in connection with the sale of the assets or paid in connection with the transfer of the liabilities in an orderly transaction between market participants at the measurement date. In connection with measuring the fair value of its assets and liabilities, the Company seeks to maximize the use of observable inputs (market data obtained from independent sources) and to minimize the use of unobservable inputs (internal assumptions about how market participants would price assets and liabilities). The following fair value hierarchy is used to classify assets and liabilities based on the observable inputs and unobservable inputs used in order to value the assets and liabilities: Level 1: Quoted prices in active markets for identical assets or liabilities. An active market for an asset or liability is a market in which transactions for the asset or liability occur with sufficient frequency and volume to provide pricing information on an ongoing basis. Level 2: Observable inputs other than Level 1 inputs. Examples of Level 2 inputs include quoted prices in active markets for similar assets or liabilities and quoted prices for identical assets or liabilities in markets that are not active. Level 3: Unobservable inputs based on our assessment of the assumptions that market participants would use in pricing the asset or liability. On October 18, 2021, the Company acquired 250,000 LBX Tokens which were initially recorded at their purchase price of $ 8 per token. During 2022, the value of the LBX Tokens were written to $ 0 to reflect that there was no market for the tokens. No cash consideration was given but a convertible note in the amount of $ 2,000,000 and 76,924 warrants (Warrant “A-2”) were issued to Westside Advisors LLC. The note and the warrants were converted into shares of the Company as part of the Business Combination on October 31, 2023. The balance is $ 0 and $ 1,681,755 at the years ended December 31 2024, and 2023, respectively. The following table presents information about the Company’s liabilities that are measured at fair value on a recurring basis at December 31, 2024 and 2023 and indicates the fair value hierarchy of the valuation inputs the Company utilized to determine such fair value: Description Level December 31, 2024 December 31, 2023 Liabilities: Warrant Liability – Public Warrants 3 98,756 157,584 Warrant Liability – Private Warrants 3 - 117,036 The Warrants were accounted for as liabilities in accordance with ASC 815-40 and are presented within warrant liabilities on our accompanying December 31, 2024 and 2023 consolidated balance sheets. The warrant liabilities are measured at fair value at inception and on a recurring basis, with changes in fair value presented within change in fair value of warrant liabilities in the consolidated statement of operations. F-25 Table of Contents NOTE 16: FAIR VALUE MEASUREMENTS (cont.) The Private Warrants were initially valued using a Modified Black Scholes Option Pricing Model, which is considered to be a Level 3 fair value measurement. The Modified Black Scholes model’s primary unobservable input utilized in determining the fair value of the Private Warrants is the expected volatility of the common stock. The expected volatility as of the IPO date was derived from observable public warrant pricing on comparable ‘blank-check’ companies without an identified target. The expected volatility as of subsequent valuation dates was implied from the Company’s own Public Warrant pricing. A Monte Carlo simulation methodology was used in estimating the fair value of the Public Warrants for periods where no observable traded price was available, using the same expected volatility as was used in measuring the fair value of the Private Warrants. For periods subsequent to the detachment of the warrants from the Units, the close price of the public warrant price was used as the fair value as of each relevant date. The following tables present the changes in the fair value of warrant liabilities: Private Placement Public Warrant Liabilities Fair Value as of January 1, 2023 $ 101,431 $ 110,182 $ 211,613 Change in Valuation Inputs or Other Assumptions 15,605 47,402 63,007 Fair Value as of December 31, 2023 117,036 157,584 274,620 Private Placement Public Warrant Liabilities Fair Value as of January 1, 2024 $ 117,036 $ 157,584 $ 274,620 Change in Valuation Inputs or Other Assumptions ( 117,036 ) ( 58,828 ) ( 175,864 ) Fair Value as of December 31, 2024 - 98,756 98,756 NOTE 17: COMMITMENTS AND CONTINGENCIES In the course of normal operations, the Company is involved in various claims and litigation that management intends to defend. The range of loss, if any, from potential claims cannot be reasonably estimated. However, management believes the ultimate resolution of matters will not have a material adverse impact on the Company’s business or financial position. Right of First Refusal For a period beginning on March 21, 2021 and ending 24 months from the closing of a business combination, we have granted the Representative a right of first refusal to act as sole book runner, and/or sole placement agent, at the representative’s sole discretion, for each and every future public and private equity and debt offering, including all equity linked financings for us or any of our successors or subsidiaries. In accordance with FINRA Rule 5110(f)(2)(E)(i), such right of first refusal shall not have a duration of more than three years from the effective date of the registration statement of which this prospectus forms a part. NOTE 18: SEGMENT REPORT The Company operates and evaluates its business as a single reportable segment. This segment invests or purchases assets that have near and medium-term income potential to provide the Company with accretive cash flow from which it can reinvest in new assets or expand cash flow from those existing assets. This single segment is identified because it engages in business activities in which it generates revenues and expenses, its performance is reviewed by the Company’s Chief Executive Officer who is the chief operating decision maker (“CODM”), and it has distinct financial information available. The CODM assesses performance of the reportable segment and decides how to allocate resources based on consolidated net income, which is also reported on the consolidated statements of operations. The CODM uses this information to compare actual results against expectations in assessing the performance of the segment. The Company’s long-lived assets and its revenues are located in the United States. The accounting policies of the reportable segment are the same as those described in Note 2. The total segment assets are the same as the consolidated total assets reported on the consolidated balance sheets. Refer to the consolidated statements of operations for the details of this reportable segment. NOTE 19: SUBSEQUENT EVENTS On January 13, 2025, the Company entered into a stock purchase agreement with a shareholder to purchase a total of 161,875 shares of Common Stock at a Purchase Price of $ 121,406 , paid in regular payments of $10,000 per month over the next twelve months with a final payment of $11,406 . On March 1, 2025, the Company and American Resources Corporation negotiated the settlement of the full amount $ 381,243 that is payable by the Company to American Resources Corporation for the issuance of 381,243 shares of Series A Preferred Stock in the Company. F-26 ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE. None.