United States securities and exchange commission logo
September 29, 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. 6 to
Registration Statement on Form S-4
Filed September 19,
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
August 31, 2023 letter.
Amendment No. 6 to Registration Statement on Form F-6 filed September
19, 2023
Risk Factors
"During the period from June 21, 2021 . . . Royalty had no revenue",
page 31
1. We note your disclosure
that indicates that 100% of Royalty s revenue came from
three sources for the
year ended December 31, 2022 and that the revenue is comprised of
the performance of
environmental services and royalty and lease revenue governed by the
underlying contracts.
Please update this risk factor to address significant revenue
concentrations for a
current interim period in 2023 and supplementally tell us if 100% of
the revenues in the
interim period in 2023 came from the same three sources that
represented 100% of
Royalty's 2022 revenues. Finally, supplementally tell us the name of
the underlying
contracts for the three sources.
Mark C. Jensen
FirstName LastNameMark C. Jensen
American Acquisition Opportunity Inc.
Comapany 29,
September NameAmerican
2023 Acquisition Opportunity Inc.
September
Page 2 29, 2023 Page 2
FirstName LastName
Unaudited Pro Forma Condensed Combined Balance Sheet June 30, 2023, page 48
2. Please be advised the purpose of pro forma financial statements is to
provide investors
with sufficient information about the impact of probable transactions
to allow them to
make informed decisions. In this regard, it is not clear how you
determined it is
appropriate to present negative cash balances in the pro forma
financial statements since it
does not reflect outcomes that can occur. Please revise the pro forma
financial statements
to comply with Article 11 of Regulation S-X or explain to us how and
why you believe
the current presentation is meaningful or appropriate.
Certain Royalty Projected Financial Information, page 76
3. We note your response to comment 3. However, it remains unclear
whether the
disinterested board members still believe the Royalty financial
projections have a
reasonable basis, despite the delay in the closing of the business
combination transaction
and Royalty's failure to achieve projected results to date. Please
revise accordingly. Refer
to Item 10(b)(3)(iii) of Regulation S-K.
Additionally, please revise to include in the prospectus your
statement that the
disinterested board continues to recommend approval of the business
combination, as
indicated in your response letter dated September 18, 2023.
4. We note your response to comment 5. However, we are unable to locate
your revised
disclosure. Please revise to remove the disclaimers that readers are
cautioned not to rely
on the projections in making a decision regarding the business
combination transaction.
Certain Royalty Projected Financial Information
Key assumption as outlined are as follows:, page 77
5. We note that you have added new disclosure to address the reason(s)
for variance from
projections on pages 77 to 79 on a contract by contract basis (e.g.,
FUB Mineral
LLC, Pike Carbon Processing, Surface and Mining Rights, etc.). Please
expand
such disclosure to clearly state, where true, that no revenues were
generated to date
through September 30, 2023.
6. We note the descriptions provided on a contract by contract basis on
pages 77 to
79 indicate, for certain of the contracts, that there are anticipated
contracts and anticipated
investments to provide capital or to purchase land. Please tell us
whether there are any
significant changes to these anticipated arrangements as of September
30, 2023 that
should be considered for disclosure because circumstances have changed
and these
arrangements are no longer anticipated or for other reasons that may
currently cast doubt
on revenue generation (e.g., significant changes in negotiations and
terms that will
significantly impact revenues and other such events); or that the
anticipated contracts were
finalized and signed by or before September 30, 2023. Further, please
tell us
Mark C. Jensen
FirstName LastNameMark C. Jensen
American Acquisition Opportunity Inc.
Comapany 29,
September NameAmerican
2023 Acquisition Opportunity Inc.
September
Page 3 29, 2023 Page 3
FirstName LastName
supplementally if there are any minimum requirements for you to
anticipate a contract.
For example, does an anticipated contract require a signed letter of
intent be executed by
Royalty and the other party to the anticipated contract? Finally, your
response should
specifically address the following:
The disclosure made on page F-51 related to Energy
Technologies, Inc. which states
that Royalty entered into an agreement during September 2022 to
purchase a partial
interest in a density gauge analyzer manufactured by Energy
Technologies, Inc. for
$52,700. Please confirm whether or not you have a valid signed
agreement in place
related to the underlying intangible asset in light of the
description on page 78 which
uses the term anticipated contract.
The disclosure on page F-50 related to Mining Permit Package
states that you 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. While
the intangible asset
appears to be recorded for the amount spent on obtaining a
permit, in light of your
disclosure on page 78 that surface and mining rights are subject
to anticipated
investment in property and anticipated contracts, please
specifically address whether
any of these arrangements have been finalized. If not, please
tell us why you feel it is
appropriate to capitalize the cost of the permits as a Mining
Permit Package
intangible asset versus expensing the permit costs. In your
response, please cite any
relevant accounting guidance upon which you have relied.
Key Factors Affecting Our Peformance, page 115
7. We note your response to comment 4. Please also update your disclosure
in "Key Factors
Affecting Our Performance" in your MD&A. Additionally, discuss any
other material
factors that have impacted your actual operating results or that are
reasonably likely to
cause your actual operating results not to be necessarily indicative
of your future operating
results. In this regard, we note that your page 77 disclosure refers
to "a variety of factors,
including the delay in the closing of the transaction" as reasons why
"the actual results
have varied from the projected results significantly."
Liquidity and Capital Resources, page 116
8. We note your response to comment 6. Please revise your disclosure to
provide
updated information about Royalty s financial position and further
risks to its business
operations and liquidity in light of Royalty s failure to achieve
projected results to date.
Condensed Consolidated Statement of Cash Flows, page F-43
9. We note your response to comments 10 and 17 related to your decision
to reclassify a
Texas Tech intangible asset to a note receivable effective January 1,
2023. It continues to
be unclear to us why you have reflected this reclassification
transaction within the
statements of cash flows because your response does not suggest that
you generated or
used cash. Please provide a more fulsome discussion of the
reclassification transaction
Mark C. Jensen
FirstName LastNameMark C. Jensen
American Acquisition Opportunity Inc.
Comapany 29,
September NameAmerican
2023 Acquisition Opportunity Inc.
September
Page 4 29, 2023 Page 4
FirstName LastName
which specifically addresses how cash was provided and/or used and why
it is
appropriate to reflect the captions note receivable and intangible
assets within the net cash
used section of the statement of cash flows for amounts of ($100,000)
and $145,000,
respectively, during the six-months ended June 30, 2023. Additionally,
please confirm
whether or not you have a signed agreement or note to support your
note receivable from
Texas Tech and supplementally tell us if you followed your policy on
page F-64 related to
this note and determined that you do not need to take an allowance for
doubtful accounts
on this note. Finally, please enhance your disclosure in an amended
filing to detail the
key terms of the note.
NOTE 7 INTANGIBLE ASSETS, page F-68
10. We note your response to comment 12 as it relates to the Mining Permit
Package (also
referred to as Surface and Mining Rights) and remind you of our
request that you provide
a fulsome response of your consideration of both Accounting Standards
Codification
(ASC) 350-30-35-3, 3(c) and 35-4. As it relates to paragraph 3(c), it
appears that your
response did not fully address the term of the "anticipated contract"
which is disclosed on
page 78 as the later of 10 years or the exhaustion of mineral. As it
relates to paragraph
35-4, your response indicates that it is not possible to determine
(e.g., it is indeterminate) a
period over which the intangible asset is expected to contribute to
the cash flows of
Royalty because the operator has decision making over the extraction
process (e.g., speed
and volume decisions related to the extraction). In evaluating your
response, it remains
unclear how you concluded that the Mining Permit Package represents an
indefinite-lived
intangible asset under the ASC references noted above. We note that
paragraph 35-4
specifically indicates that the term "indefinite does not mean the
same as infinite or
indeterminate" and that the useful life of an intangible asset is
indefinite if "there is no
foreseeable limit on the period of time over which it is expected to
contribute to the cash
flows of the reporting entity." It appears based on your disclosures
and your response that
your intangible asset has a foreseeable limit under paragraph 3(c)
based on a term of the
later of 10 years or exhaustion of mineral. Please advise and/or
revise your financial
statements accordingly.
11. We note your response to comment 12 as it relates to the Carnegie
Override Royalty (also
referred to as Carnegie 2) and remind you of our request that you
provide a fulsome
response of your consideration of both Accounting Standards
Codification (ASC) 350-30-
35-3, 3(c) and 35-4. As it relates to paragraph 3(c), it appears that
your response did not
fully address the term of the existing contract which is disclosed on
page 78 as being
based on exhaustion of mineral. As it relates to paragraph 35-4, your
response indicates
that it is not possible to determine (e.g., it is indeterminate) a
period over which the
intangible asset is expected to contribute to the cash flows of
Royalty because the operator
has decision making over the extraction process (e.g., speed and
volume decisions related
to the extraction). In evaluating your response, it remains unclear
how you concluded that
the Carnegie Override Royalty represents an indefinite-lived
intangible asset under the
ASC references noted above. We note that paragraph 35-4 specifically
indicates that the
Mark C. Jensen
FirstName LastNameMark C. Jensen
American Acquisition Opportunity Inc.
Comapany 29,
September NameAmerican
2023 Acquisition Opportunity Inc.
September
Page 5 29, 2023 Page 5
FirstName LastName
term "indefinite does not mean the same as infinite or indeterminate"
and that the useful
life of an intangible asset is indefinite if "there is no foreseeable
limit on the period of
time over which it is expected to contribute to the cash flows of the
reporting entity." It
appears based on your disclosures and your response that your
intangible asset has a
foreseeable limit under paragraph 3(c) based on a term for the
exhaustion of mineral.
Please advise and/or revise your financial statements accordingly.
12. We note your response to comment 13 as it relates to MC Mining (also
referred to as Real
Estate) and your conclusion that you have an indefinite-lived
intangible asset because the
initial term of 30 years can be extended by the lessee for as long as
they desire. We
remain unclear how you have determined you have an indefinite-lived
intangible asset
because you have also indicated that under contract Section 3(b) that
[a]t any time during
the Term, Lessee may terminate this Agreement by giving notice in
writing of its intention
to do so, and you have not provided the basis for an accounting
determination to extend
beyond the initial term other than you are willing to let the lessee
extend the term for as
long as they desire. It appears that you have a contractual limitation
for the term under
ASC 350-30-35-3(c) and that you do not have a indefinite-lived asset
under 35-4. Please
advise and/or revise your financial statements accordingly.
Additionally, we note that the
term under key assumptions on page 78 is a term of 10 years and
request that you explain
the inconsistency between the 10-year and 30-year terms.
13. We note your response to comment 14 as it relates to Energy
Technologies Inc. (also
referred to as ETI - Clean Energy) and remind you of our request that
you provide a
fulsome response of your consideration of both ASC 350-30-35-3(e) and
35-4. In your
response, you indicated that you were unable to determine the useful
life of a density
gauge analyzer because it is based on the volume of material which
flows through the
equipment and that you are not the operator of the equipment. In
evaluating your
response, we remain unclear how you determined that the Energy
Technologies Inc.
intangible asset represents an indefinite-lived intangible asset under
ASC 350-30-35-3(c)
and 35-4. We note that 35-4 specifically indicates that the term
"indefinite does not mean
the same as infinite or indeterminate" and that the useful life of an
intangible asset is
indefinite if "there is no foreseeable limit on the period of time
over which it is expected
to contribute to the cash flows of the reporting entity." It appears
based on your
disclosures and your response that your intangible asset has a
foreseeable limit under
paragraph 3(c) based on the life of each density meter as you have
disclosed such a term
on page 78. Please advise and/or revise your financial statements
accordingly.
14. We note your response to comment 16 as it relates to RMC Environmental
Services and
your accounting for an indefinite-lived intangible asset. In
evaluating your response, we
remain unclear how you determined that the RMC Environment Services
asset represents
an indefinite-lived intangible asset under ASC 350-30-35-3, 3(c) and
35-4. It appears
based on your disclosures and your response that your intangible asset
has a foreseeable
limit under paragraph 3(c) based on a contract term which you stated
was "5 years, with
two 5 year extensions; thereafter renewable annually at mutual consent
unless notice is
Mark C. Jensen
American Acquisition Opportunity Inc.
September 29, 2023
Page 6
given at least 30 days prior to an extension." Please advise and/or
revise your financial
statements accordingly.
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
September 29, 2023 Page 6
cc: Joan S. Guilfoyle, Esq.
FirstName LastName