ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
This Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) describes the matters that we consider to be important to understanding the results of our operations for the one-year period ended December 31, 2025 and our capital resources and liquidity as of December 31, 2025. Use of the terms “RMHC,” the “Company,” “we,” “us” and “our” in this discussion refer to Royalty Management Holding Corporation and its subsidiaries. Our fiscal year begins on January 1 and ends on December 31. We analyze the results of our operations for the last year, including the trends in the overall business followed by a discussion of our cash flows and liquidity, our credit facility, and contractual commitments. We then provide a review of the critical accounting judgments and estimates that we have made that we believe are most important to an understanding of our MD&A and our consolidated financial statements. We conclude our MD&A with information on recent accounting pronouncements which we adopted during the year, as well as those not yet adopted that are expected to have an impact on our financial accounting practices.
The following discussion should be read in conjunction with the “Selected Consolidated Financial Data” and our consolidated financial statements and the notes thereto, all included elsewhere herein. The forward-looking statements in this section and other parts of this document involve risks and uncertainties including statements regarding our plans, objectives, goals, strategies, and financial performance. Our actual results could differ materially from the results anticipated in these forward-looking statements as a result of factors set forth under the caption “Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995” below. The Private Securities Litigation Reform Act of 1995 provides a “safe harbor” for forward-looking statements made by or on behalf of the Company.
Overview
The following discussion and analysis of the company’s financial condition and results of operations should be read in conjunction with our audited financial statements and the notes related thereto which are included in “Item 8. Financial Statements and Supplementary Data” of this Annual Report on Form 10-K. Certain information contained in the discussion and analysis set forth below includes forward-looking statements. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of many factors, including those set forth under “Special Note Regarding Forward-Looking Statements,” “Item 1A. Risk Factors” and elsewhere in this Annual Report on Form 10-K.
We were a blank check company incorporated in Delaware on January 20, 2021, formed for the purpose of effecting a merger, amalgamation, share exchange, asset acquisition, share purchase, reorganization or other similar business combination with one or more businesses. We intend to effectuate our business combination using cash derived from the proceeds of the Initial Public Offering and the sale of the private placement units, our shares, debt or a combination of cash, shares and debt. We effectuated our business combination with Royalty Management Corporation (“RMC”) on October 31, 2023. On March 20, 2025 we changed our state of incorporation from the State of Delaware to State of Florida.
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RESULTS OF OPERATIONS
Year Ended December 31, 2025 compared to Year Ended December 31, 2024.
Revenues.
Revenues for the years ended December 31, 2025 and 2024 were $4,949,916 and $807,089, respectively. The increase is due to increased volume for our environmental services subsidiary. There was a new contract services agreement signed effective February 1, 2025. This new contract significantly increased the revenue for this subsidiary.
Expenses.
Total cost of revenues for the year ended December 31, 2025 and 2024 were $4,145,139 and $22,699, respectively. The increase is due to increased volume for our environmental services subsidiary. The significant increase in expense is also due to the new contract services agreement signed effective February 1, 2025.
Total Operating Expenses for the year ended December 31, 2025 and 2024 were $1,098,394 and $1,096,748, respectively. Operating expenses remained stabled during these two years.
Total Other Income and Expense for the year ended December 31, 2025 were other expense of $433,273. The change was primarily due to a loss on fair value of warrants liabilities, and a decrease in interest expense due to Round B Notes Payable being converted to common stock on September 1, 2025.
Total 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.
Financial Condition.
Total Assets as of December 31, 2025 and 2024 amounted to $16,652,523 and $15,040,664, respectively. The increase in assets was primarily due to an increase in accounts receivable associated with the new contract services agreement.
Total Liabilities as of December 31, 2025 and 2024 amounted to $2,966,716 and $1,414,940, respectively. The increase in liabilities was primarily due to an increase in accounts payable.
LIQUIDITY AND CAPITAL RESOURCES
The Company’s primary use of positive cash flow has been to fund corporate holding and public company costs. As of December 31, 2025, the Company had retained earnings of $504,698. The Company has limited financial resources. As of December 31, 2025, the Company had positive working capital of $264,585, a cash balance of $133,064 and total positive cash flow for the year totaling $18,926. In order to execute on its investment and growth plans, the Company will likely be required to raise additional proceeds, through the issuance of equity or debt securities. While we anticipate generating sufficient cash from operations to meet our obligations and plans, if necessary, we can reduce investment expenditures or seek alternative financing to enhance our liquidity position.
OFF-BALANCE SHEET ARRANGEMENTS
We have no off-balance sheet arrangements as of December 31, 2025 and 2024. We do not participate in transactions that create relationships with unconsolidated entities or financial partnerships, often referred to as variable interest entities, which would have been established for the purpose of facilitating off-balance sheet arrangements. We have not entered into any off-balance sheet financing arrangements, established any special purpose entities, guaranteed any debt or commitments of other entities, or purchased any non-financial assets.
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CONTRACTUAL OBLIGATIONS AND COMMERCIAL COMMITMENTS
Administrative Services Arrangement
The Company’s Sponsor agreed, commencing from the date that the Company’s securities are first listed on NASDAQ through the earlier of the Company’s consummation of a Business Combination and its liquidation, to make available to the Company certain general and administrative services, including office space, utilities and administrative services, as the Company may require from time to time. The Company agreed to pay the Sponsor $10,000 per month for these services. At the date of business combination, the services agreement terminated. As of the year ended December 31, 2024, $120,000, is accrued and owed under this agreement. On March 1, 2025, the Company and American Resources Corporation (“ARC”) negotiated the settlement of $381,243 which includes $120,000 for the Administrative Services Arrangement and $261,243 for the Promissory Note – Related Party. In this settlement, the Company issued ARC 381,243 shares of Series A Preferred Stock in the Company.
CRITICAL ACCOUNTING POLICIES AND ESTIMATES
Our Consolidated Financial Statements are prepared in accordance with United States generally accepted accounting principles (“U.S. GAAP”). The preparation of financial statements in conformity with U.S. GAAP requires us to establish accounting policies and make estimates that affect amounts reported in our Consolidated Financial Statements. Note 2 of the Notes to Consolidated Financial Statements, which is incorporated by reference into this MD&A, describes the significant accounting policies we use in our Consolidated Financial Statements.
An accounting estimate requires assumptions and judgments about uncertain matters that could have a material effect on the Consolidated Financial Statements. Estimates are made under facts and circumstances at a point in time, and changes in those facts and circumstances could produce results substantially different from those estimates. The most significant accounting policies and estimates and their related application are discussed below.
Warrant Liability
The Company accounts for the Warrants in accordance with the guidance contained in ASC 815 under which the Warrants do not meet the criteria for equity treatment and must be recorded as liabilities. Accordingly, the Company classifies the Warrants as liabilities at their fair value and adjust the Warrants to fair value at each reporting period. This liability is subject to re-measurement at each balance sheet date until exercised, and any change in fair value is recognized in our statement of operations. The Private Warrants and the Public Warrants for periods where no observable traded price was available are valued using a Monte Carlo simulation. For periods subsequent to the detachment of the Public Warrants from the Units, the Public Warrant quoted market price was used as the fair value as of each relevant date.
SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995
This report, including Management’s Discussion and Analysis of Financial Conditions and Results of Operations, contains forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, and Section 27A of the Securities Act of 1933, as amended, which are intended to be covered by the safe harbors created thereby. Those statements include, but may not be limited to, all statements regarding our and management’s intent, belief, expectations, such as statements concerning our future profitability and our operating and growth strategy. Words such as “believe,” “anticipate,” “expect,” “will,” “may,” “should,” “intend,” “plan,” “estimate,” “predict,” “potential,” “continue,” “likely,” “would,” “could” and similar expressions are intended to identify forward-looking statements. Investors are cautioned that all forward-looking statements involve risk and uncertainties including, without limitations, dependence on sales forecasts, changes in consumer demand, seasonality, impact of weather, competition, reliance on suppliers, risks inherent to international trade, changing retail trends, the loss or disruption of our manufacturing and distribution operations, cyber security breaches or disruption of our digital systems, fluctuations in foreign currency exchange rates, economic changes, and other factors detailed from time to time in our filings with the Securities and Exchange Commission. Although we believe that the assumptions underlying the forward-looking statements contained herein are reasonable, any of the assumptions could be inaccurate. Therefore, there can be no assurance that the forward-looking statements included herein will prove to be accurate. In light of the significant uncertainties inherent in the forward-looking statements included herein, the inclusion of such information should not be regarded as a representation by us or any other person that our objectives and plans will be achieved. We assume no obligation to update any forward-looking statements.
