United States securities and exchange commission logo
May 22, 2023
Mark C. Jensen
Chief Executive Officer
American Acquisition Opportunity Inc.
12115 Visionary Way, Suite 174
Fishers, IN 46038
Re: American
Acquisition Opportunity Inc.
Amendment No. 2 to
Registration Statement on Form S-4
Filed May 5, 2023
File No. 333-268817
Dear Mark C. Jensen:
We have reviewed your amended registration statement and have the
following
comments. In some of our comments, we may ask you to provide us with
information so we
may better understand your disclosure.
Please respond to this letter by amending your registration
statement and providing the
requested information. If you do not believe our comments apply to your
facts and
circumstances or do not believe an amendment is appropriate, please tell
us why in your
response.
After reviewing any amendment to your registration statement and
the information you
provide in response to these comments, we may have additional comments.
Unless we note
otherwise, our references to prior comments are to comments in our
February 24, 2023 letter.
Amendment No. 2 to Registration Statement on Form S-4 filed May 5, 2023
Basis of Pro Forma Presentation, page 52
1. Please advise why the
estimated per share redemption price differs between the $10.10 per
share for Intermediate
Redemptions and the $10.26 per share assuming Maximum
Redemptions.
Transaction Accounting Adjustments, page 54
2. Note D discloses cash
proceeds of $632,817 on the issuance of 70,313 shares of Class A
common stock. Please
explain how the cash proceeds disclosed in Note D reconciles to
the adjustments of
$274,000 to cash and additional paid-in capital on the pro forma
balance sheet or
otherwise address this numerical discrepancy. Further, we note that
Mark C. Jensen
American Acquisition Opportunity Inc.
May 22, 2023
Page 2
Note B is intentionally omitted but is referenced within Note D.
Please advise or revise.
Finally, revise your disclosure so that we may better understand the
transactions and the
pro forma adjustments being addressed within both Notes C and D.
Proposal No. 1 - The Business Combination
Background of the Business Combination, page 63
3. We note your response to comment 7. However, it is still unclear how
the terms of the
business combination "are the result of and equivalent to an arm s
length negotiations
between representatives of American Acquisition Opportunity and
Royalty." In this
regard, we note that your disclosure indicates that the terms of the
business combination
are the result of negotiations between Messrs. Jensen and Taylor on
behalf of American
Acquisition Opportunity, and Mr. Sauve on behalf of Royalty, all of
whom have financial
interests in Royalty. Please revise accordingly.
4. We note your response to comment 9. However, your disclosure appears
to attribute to
Blue & Co., LLC the board's valuation range for Royalty, in which case
Blue & Co., LLC
must be named as an expert and provide their consent to be named. For
example, we note
your references to the independent CPA firm engaged to do business
valuation work as
your "valuation expert." We also note your statement on page 70 that
"[t]he American
Acquisition Board believed that it had taken reasonable steps already
by obtaining an
independent third-party valuation firm to confirm its valuation
range." Please revise
accordingly. See Securities Act Rules C&DI 233.02.
5. We note your response to comment 10. However, we did not locate the
expanded
disclosures. Please expand your background discussion to provide more
detailed
disclosure regarding key business combination agreement negotiation
considerations and
how they changed over time. Currently, the background disclosure
references drafts of,
and discussions regarding, the business combination agreement without
providing details
or explaining the significance of material agreement terms or how they
may have changed
before being reflected in the approved business combination agreement.
Please identify
the original terms, clarify discussion points, and explain how and why
any terms were
revised over time.
6. We note your response to comment 11. Please revise to identify the
firm.
American Acquisition Opportunity Board's Reasons for Approval of the Business
Combination,
page 70
FirstName LastNameMark C. Jensen
7. We note your response to comment 13. However, we did not locate the
revised
Comapany NameAmerican
disclosures. Acquisition
Please revise Opportunity
to specify Royalty sInc.
actual/projected
enterprise value to
revenue and
May 22, 2023 Page 2 enterprise value to EBITDA for 2021, 2022, and 2023.
FirstName LastName
Mark C. Jensen
FirstName LastNameMark C. Jensen
American Acquisition Opportunity Inc.
Comapany
May NameAmerican Acquisition Opportunity Inc.
22, 2023
May 22,
Page 3 2023 Page 3
FirstName LastName
Certain Royalty Projected Financial Information, page 73
8. We note your response to comment 16. Please revise to disclose why the
change in trends
is appropriate and assumptions are reasonable.
9. We note your response to comment 17. However, it is unclear how the
key model
assumptions support the volumes / respective units figures in the
financial projections. As
non-exclusive examples only, we note the following:
You state that for the ETI Clean Energy royalty contract
between one and two
density gauge meters are expected to be constructed, deployed, and
rented per month,
which suggests a maximum annual volume of 24 units. However, the
figures in the
projections for Years 2, 3, 4, and 5 are 26, 50, 74, and 98,
respectively.
You state that for the Data Hosting and Services royalty contract
approximately one-
half to one data storage and processing unit is expected to be
built and deployed per
month, which suggests a maximum annual volume of 12 units.
However, the figures
in the projections for Years 2, 3, 4, and 5 are 78, 197, 330, and
474, respectively.
You state that for the eko royalty contract approximately four
homes are expected to
be constructed per month, which suggests a maximum annual volume
of 48 units.
However, the figures in the projections for Years 1, 2, 3, 4, and
5 are 105, 564, 906,
1,050, and 1,194, respectively.
Please revise or advise, as appropriate.
10. Please revise to specify in the key model assumptions the royalty rate
for each royalty
contract included in the the financial projections.
11. Please revise to reconcile the honey royalty rate for the Pollinate
royalty contract. In this
regard, we note your disclosure on page 76 that the royalty rate is
$5.00 per pound of
honey sold. However, in the notes to the financial statements for
Royalty on page F-34
you state that the royalty rate is $1.00 per pound.
12. We note your response to comment 18, including that American
Acquisition Opportunity's
board reviewed audited financial statements of Royalty in lieu of
requesting updated
projections. Please explain what consideration the board gave to
obtaining updated
projections or that the projections cannot be relied upon. In this
regard, we note that the
projections suggest Royalty would earn approximately $4.4 million in
royalty revenue
during the period ending December 31, 2022 (Year 1). However, the
audited financial
statements for the year ended December 31, 2022 show that Royalty
earned only $172,686
in total income. We also note that it appears four of the 11 royalty
contracts included in
the projections have yet to be executed, including the royalty
contract projected to become
Royalty's highest-earning, ETI - Clean Energy.
Liquidity and Capital Resources, page 113
13. We not your response to comment 20. Please revise to describe and
analyze material cash
requirements and sources of cash from known contractual and other
arrangements, such as
investments, convertible notes, or sales of equity. As a non-exclusive
example only, we
Mark C. Jensen
FirstName LastNameMark C. Jensen
American Acquisition Opportunity Inc.
Comapany
May NameAmerican Acquisition Opportunity Inc.
22, 2023
May 22,
Page 4 2023 Page 4
FirstName LastName
note Royalty's issuance of common shares for the purchase of
membership interest.
Please also revise to quantify the total amount outstanding under
Royalty's convertible
notes.
Report of Independent Registered Public Accounting Firm, page F-2
14. We note that the audit report does not cover the balance sheet as of
12-31-21 or the related
financial statements for the period 1-20-21 (inception) to 12-31-21.
In an amended filing,
please include a revised audit report from your auditor which
addresses these financial
statement periods.
Report of Independent Registered Public Accounting Firm, page F-23
15. We note the audit report includes an explanatory paragraph for a going
concern issue and
references discussion about this issue at Note 2 to the financial
statements. We have not
located the referenced disclosure in the notes to your financial
statements. Please advise.
Condensed Consolidated Statement of Cash Flows , page F-27
16. We note your adjustment labeled issuance of commons shares for
purchase of
membership interest of $9.5M. Please tell us what this adjustment
represents and how
you determined the adjustment was appropriate to add back to cash flow
from operations.
Note 3 - Investments In Corporations and LLCs, page F-31
17. We note an investment in your table for Maxpro Investment Holdings of
$9.5 million as
of 12-31-22. Please tell us how you account for the underlying
holdings in 95 million
Class A common stock of Ferrox Holdings Ltd. (Ferrox). Your response
should include a
discussion of your accounting and impairment policies. Additionally,
please tell us your
pecentage of ownership interest in Ferrox as of 12-31-22.
Note 6 - Intangible Assets, page F-33
18. We note your response to comment 25 and that it was determined that
due to lack of
market investment of the token that the entire investment caries a
value of $0 and was
adjusted accordingly. We further note an impairment charge of $2M on
your income
statement for the year ended December 31, 2022. Please clarify where
this impairment
charge has been reflected on your statement of cash flows for the year
ended December
31, 2022.
19. We note your response to comment 27 and reissue the prior comment as
we are looking
for a significantly more fulsome response. For each indefinite-lived
intangible asset listed
in your chart on page 33, help us to better understand the nature of
each intangible asset
and share with us in sufficient detail those factors or considerations
that are a part of your
analysis that led you to conclude that there are no legal, regulatory,
contractual,
competitive or economic factors that limit the useful life of each
asset to Royalty. Further,
we note your prior response appears to indicate that cash flows to be
received in the future
Mark C. Jensen
American Acquisition Opportunity Inc.
May 22, 2023
Page 5
were not a consideration in whether or not the intangible assets were
deemed to be
indefinite-lived. Clarify that point further and refer to Section
350-30-35 of the
Accounting Standards Codification.
Exhibits
20. We note your response to comment 28. Please revise to include an active
link to Exhibit
10.17, as required by Item 601(a)(2) of Regulation S-K.
21. Please revise the consent filed as Exhibit 23.1 to confirm whether BF
Borgers CPA PC
consents to the incorporation of their report dated May 2, 2023, relating
to the financial
statements of Royalty Management Corporation.
You may contact Howard Efron at 202-551-3439 or Shannon Menjivar at
202-551-3856
if you have questions regarding comments on the financial statements and
related matters.
Please contact Benjamin Holt at 202-551-6614 or Jeffrey Gabor at 202-551-2544
with any other
questions.
Sincerely,
FirstName LastNameMark C. Jensen
Division of
Corporation Finance
Comapany NameAmerican Acquisition Opportunity Inc.
Office of Real
Estate & Construction
May 22, 2023 Page 5
cc: Joan S. Guilfoyle, Esq.
FirstName LastName