10-Q: Royalty Management Reports Q3 2025 Loss Amid Revenue Surge

Royalty Management Holding Corporation reported a net loss of $209,095 for Q3 2025 despite a significant increase in total revenue, primarily driven by its environmental services segment.

Summary

• Net loss for the three months ended September 30, 2025, was $(209,095), an increase from $(119,156) for the same period in 2024.
• Net loss for the nine months ended September 30, 2025, was $(317,378), compared to $(83,160) for the nine months ended September 30, 2024.
• Total revenue for the three months ended September 30, 2025, surged to $1,302,814 from $145,633 in the prior year period, primarily due to RMC Environmental Services LLC.
• Total revenue for the nine months ended September 30, 2025, increased to $3,553,219 from $561,956 in the prior year period.
• Cost of revenues significantly increased to $1,156,678 for Q3 2025 (from $5,460 in Q3 2024) and $2,923,888 for the nine months (from $21,532 in 2024), driven by a new environmental services contract.
• Operating expenses decreased for Q3 2025 to $244,506 (from $309,644 in Q3 2024) but increased for the nine months to $887,060 (from $830,996 in 2024).
• Other expenses for Q3 2025 were $110,725, a shift from other income of $50,315 in Q3 2024, mainly due to a loss on warrant fair value adjustment.
• The company changed its state of incorporation from Delaware to Florida on March 20, 2025.
• As of September 30, 2025, the company had positive working capital of $239,111 and a cash balance of $173,174.

Sentiment

Score: 4

Explanation: While the company achieved substantial revenue growth, particularly in environmental services, the significant increase in net loss, driven by higher costs and warrant fair value adjustments, raises concerns about profitability. The identified ineffectiveness of disclosure controls and the stated need for future capital raises indicate underlying operational and financial challenges, warranting a cautious sentiment.

Positives

• Total revenue for the three months ended September 30, 2025, increased significantly to $1,302,814 from $145,633 in Q3 2024, representing a 794% increase.
• Total revenue for the nine months ended September 30, 2025, increased to $3,553,219 from $561,956 in the prior year period, a 532% increase.
• The environmental services segment (RMC Environmental Services LLC) was the primary driver of revenue growth, securing a new contractor services agreement.
• Operating expenses decreased for the three months ended September 30, 2025, to $244,506 from $309,644 in Q3 2024.
• Net cash provided by financing activities for the nine months ended September 30, 2025, was $303,450.
• Net change in cash for the nine months ended September 30, 2025, was positive at $59,036, compared to a negative change of $(40,094) in the prior year period.
• The company maintains positive working capital of $239,111 as of September 30, 2025.
• The Board of Directors approved and declared a dividend of $0.0025 per share for each quarterly period ending June 30, 2025, through June 30, 2026.

Negatives

• Net loss increased to $(209,095) for Q3 2025 from $(119,156) in Q3 2024.
• Net loss for the nine months ended September 30, 2025, increased to $(317,378) from $(83,160) in the prior year period.
• Cost of revenues increased substantially to $1,156,678 for Q3 2025 from $5,460 in Q3 2024, significantly impacting gross profit margins.
• The company experienced a loss on warrant fair value adjustment of $(149,710) in Q3 2025, contributing to a shift from other income to other expenses.
• Disclosure controls and procedures were deemed not effective due to an insufficient number of staff performing accounting and reporting functions.
• The company will likely be required to raise additional proceeds through the issuance of equity or debt securities to execute its investment and growth plans.

Risks

• Expectations regarding Royalty Management Holding Corporation's strategies and future financial performance, including business plans, prospective performance, revenues, products, pricing, operating expenses, market trends, liquidity, cash flows, capital expenditures, and ability to invest in growth initiatives and pursue acquisition opportunities, may not be met.
• Limited liquidity and trading of Royalty's securities.
• Geopolitical risk and changes in applicable laws or regulations could adversely affect the business.
• The company may be adversely affected by other economic, business, and/or competitive factors.
• Operational risks inherent in the company's diverse business model.
• A health crisis and/or pandemic, and local, state, and federal responses to addressing it, may have an adverse effect on business operations, financial condition, and results of operations.
• Cybersecurity risk poses a threat to the company's data and operations.
• Litigation and regulatory enforcement risks, including the diversion of management time and attention and additional costs and demands on resources.
• Disclosure controls and procedures were not effective due to an insufficient number of staff performing accounting and reporting functions, which could lead to errors or fraud.

Future Outlook

Management believes it has sufficient liquidity from current cash flow to fund its primary capital uses, including new investments, existing holdings, stock repurchases, and quarterly dividends. However, the company anticipates needing to raise additional capital through equity or debt securities to fully execute its investment and growth plans. The Board of Directors has authorized a $0.01 per share dividend for the next four calendar quarters, from June 30, 2025, through June 30, 2026, with potential for further authorizations.

Management Comments

• "Management believes it has sufficient liquidity to accomplish its primary uses of capital from cash flow."
• "The Company will likely be required to raise additional proceeds, through the issuance of equity or debt securities."
• "Management believes the ultimate resolution of matters will not have a material adverse impact on the Company's business or financial position." (Regarding legal claims)
• "The Company's management, including its Chief Executive Office and Chief Financial Officer, has concluded that its disclosure controls and procedures were not effective due to the Company's insufficient number of staff performing accounting and reporting functions."
• "Through the review process, management believes that the financial statements and other information presented herewith are materially correct."

Industry Context

Royalty Management Holding Corporation operates a diversified business model focused on investing in assets with near and medium-term income potential, spanning natural resources (real estate, mining permits), intellectual property, and emerging technologies. The significant revenue growth in its environmental services segment suggests a robust market for these offerings, potentially driven by increasing demand for sustainable practices or regulatory compliance. The company's strategy of reinvesting accretive cash flow into new or existing assets positions it to capitalize on opportunities across these varied sectors, though the substantial increase in cost of revenue indicates competitive or operational pressures within its growth areas.

Corporate Governance

Legal Proceedings

• The company is involved in various claims and litigation in the course of normal operations, which management intends to defend. The range of potential loss cannot be reasonably estimated, but management believes the ultimate resolution will not have a material adverse impact on the company's business or financial position.

Related Party Transactions

• The company may lease property from Land Resources & Royalties LLC (LRR) and enter into other agreements with LRR and/or its parent company, Wabash Enterprises LLC, an entity managed by Thomas Sauve (CEO).
• Wabash Enterprises LLC and LRR became an owner of Common Stock of the Company as part of the Business Combination on October 31, 2023, and several leases and agreements exist between LRR and the Company.
• The company has a contractor services agreement with Land Betterment Corporation, an entity in which Thomas Sauve is a director, for environmental services personnel (cost plus 12.5% margin).
• The company may enter into agreements with American Resources Corporation (ARC) and its subsidiaries/affiliates, an entity in which Thomas Sauve is a director and President.
• The company may enter into financing agreements with First Frontier Capital LLC, an entity managed and beneficially owned by Thomas Sauve.
• On March 1, 2025, the company and ARC settled $381,243 (including $120,000 for Administrative Services Arrangement and $261,243 for Promissory Note – Related Party) by issuing ARC 381,243 shares of Series A Preferred Stock.
• Restricted cash of $195,350 is a performance bond for a mining permit held by McCoy Elkhorn Coal LLC, a subsidiary of American Resources Corporation (a related party).
• The operator of the technology related to the American Resources Corporation note receivable is a related entity.
• The operator of T.R. Mining & Equipment Ltd. (notes receivable and royalty agreement) is a related entity.
• The LBX Token issuance process is undertaken by Land Betterment Corporation, a related party.

Stakeholder Impact

• Shareholders: Face increased net losses and potential future dilution from capital raises, but benefit from significant revenue growth and continued dividend payments. The stock repurchase program could provide some price support.
• Employees: The identified 'insufficient number of staff performing accounting and reporting functions' suggests potential understaffing in critical areas, which could impact workload and internal controls.
• Customers: The new contractor services agreement for RMC Environmental Services indicates growing demand and successful customer acquisition in that segment.
• Creditors: Notes Payable Round B were converted to common stock, reducing debt, but the company's stated need for future capital raises indicates ongoing financing requirements.

Next Steps

• Execute on investment and growth plans, potentially requiring additional capital raises through equity or debt securities.
• Address the ineffectiveness of disclosure controls and procedures by increasing accounting and reporting staff.
• Continue to pay quarterly dividends of $0.0025 per share through June 30, 2026.

Key Dates

Recommendation

While Royalty Management Holding Corporation demonstrated impressive revenue growth, particularly in its environmental services segment, the substantial increase in net loss and the identified material weakness in disclosure controls due to insufficient staffing are significant concerns. The company's stated need for future capital raises also introduces potential dilution risk. Given the mixed financial performance and internal control issues, a 'hold' recommendation is appropriate, suggesting investors monitor the company's ability to translate revenue growth into sustained profitability and address its governance weaknesses before making further investment decisions.

Keywords

Royalty Management Holding Corporation, RMHC, Quarterly Report, SEC filing, environmental services, natural resources, mining permits, intellectual property, emerging technologies, financial results, net loss, revenue growth, warrants, convertible notes, related party transactions, stock repurchase, dividends, corporate governance