Royalty Management Holding (RMCO) risk factors, FY2024 10-K

Other

1. 01” and elsewhere in this Annual Report on Form 10-K
2. 02Total Other Income and Expense for the year ended December 31, 2024 were other income of $198,097, mostly from interest income, income from investment in FUB Mineral which is accounted for on the equity method of accounting, the fair value adjustments of warrant liabilities, and interest expense
3. 03Total Assets as of December 31, 2024 and 2023 amounted to $15,040,664 and $15,040,123, respectively. The increase in assets was due to an increase in accounts and interest receivables
4. 04LIQUIDITY AND CAPITAL RESOURCES
5. 05OFF-BALANCE SHEET ARRANGEMENTS
6. 06Administrative Services Arrangement
7. 07CRITICAL ACCOUNTING POLICIES AND ESTIMATES
8. 08SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995
9. 09Opinion on the Consolidated Financial Statements
10. 10NOTE 1 - NATURE OF OPERATIONS
11. 11Basis of Presentation and Consolidation
12. 12Cash Equivalents and Concentration of Cash Balance
13. 13At 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
14. 14Allowance for Credit Losses
15. 15The 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
16. 16Beneficial Conversion Features of Convertible Securities
17. 17All 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
18. 18Derivative Financial Instruments
19. 19Stock-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
20. 20The 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
21. 21Recently Issued Accounting Pronouncements
22. 22NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.)
23. 23NOTE 3 – BUSINESS COMBINATION
24. 24All 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
25. 25NOTE 4 – INVESTMENTS IN CORPORATIONS AND LLCS
26. 26NOTE 5 – CONVERTIBLE NOTES RECEIVABLE
27. 27Advanced Magnetic Lab, Inc
28. 28NOTE 6 – NOTES RECEIVABLE
29. 29American Resources Corporation
30. 30NOTE 7 – INTANGIBLE ASSETS
31. 31Land Betterment Exchange (LBX)
32. 32RMC Environmental Services LLC
33. 33Reelement Technologies Corporation
34. 34NOTE 8 – PROPERTY AND EQUIPMENT
35. 35The 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
36. 36The 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
37. 37NOTE 10 –NOTE PAYABLE - RELATED PARTY
38. 38NOTE 12: STOCKHOLDERS’ EQUITY
39. 39As 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
40. 40Land Resources & Royalties LLC / Wabash Enterprises LLC
41. 41Land Betterment Corporation
42. 42First Frontier Capital LLC
43. 43Promissory Note — Related Party
44. 44NOTE 15: WARRANTS (cont.)
45. 45upon not less than 30 days’ prior written notice of redemption, or the 30-day redemption period, to each warrant holder; and
46. 46If 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
47. 47The 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
48. 48Unobservable inputs based on our assessment of the assumptions that market participants would use in pricing the asset or liability
49. 49NOTE 16: FAIR VALUE MEASUREMENTS (cont.)
50. 50NOTE 17: COMMITMENTS AND CONTINGENCIES
51. 51On 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
52. 52Evaluation of Disclosure Controls and Procedures
53. 53Management’s Annual Report on Internal Control over Financial Reporting
54. 54The Company did not maintain a fully integrated financial consolidation and reporting system throughout the period and as a result, manual analysis, reconciliation and adjustments were required in order to produce financial statements for external reporting purposes
55. 55Changes in Internal Control over Financial Reporting
56. 56Directors and Executive Officers
57. 57Executive officers of the Company are appointed by our Board of Directors and serve at the pleasure of the Board of directors
58. 58Committees of the Board of Directors
59. 59Each member of the audit committee is financially literate, and our Board of Directors has determined that Julie Griffith qualifies as an “audit committee financial expert” as defined in applicable SEC rules
60. 60reviewing, evaluating and recommending changes, if appropriate, to the remuneration for directors
61. 61None of our officers or directors is required to commit his or her full time to our affairs and, accordingly, may have conflicts of interest in allocating his or her time among various business activities
62. 62Our officers and directors may have a conflict of interest with respect to evaluating a particular business combination if the retention or resignation of any such officers and directors was included by a target business as a condition to any agreement with respect to our initial business combination
63. 63The conflicts described above may not be resolved in our favor
64. 64it would not be fair to our company and its stockholders for the opportunity not to be brought to the attention of the corporation
65. 65Delinquent Section 16(a) Reports
66. 66As an “emerging growth company” as defined in the JOBS Act, we are not required to include a Compensation Discussion and Analysis section and have opted to comply with the scaled disclosure requirements applicable to emerging growth companies
67. 67Executive and Director Compensation
68. 68Summary Compensation Table
69. 69Josh Hawes was appointed as a director on November 25, 2024
70. 70Daniel Hasler was appointed as a director at the Company’s inception on January 10, 2021. His board service ended on February 7, 2024
71. 71ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED SHAREHOLDER MATTERS
72. 72all named executive officers and directors as a group
73. 73Manager of entity is Thomas Sauve. Entity is owned by trust which certain members of the Jensen family are beneficiaries
74. 74ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
75. 75Schedules not listed above are omitted because of the absence of the conditions under which they are required or because the required information is included in the Consolidated Financial Statements or the notes thereto
76. 76The cover page for the Company’s annual report on Form 10-K for the period ended December 31, 2024, formatted in Inline XBRL (included in Exhibit 101 attachments)