AMAO American Acquisition Opportunity Inc

Summary of Risk Factors

In evaluating the Proposals, American Acquisition Opportunity Stockholders should carefully read this proxy statement/prospectus and especially consider the factors discussed in the section entitled “Risk Factors.” Some of the risks related to Royalty’s business and industry, and risks of the Combined Company, are summarized below:

RISK FACTORS

The Combined Company will face a market environment that cannot be predicted and that involves significant risks, many of which will be beyond its control. In addition to the other information contained in this proxy statement/prospectus, you should carefully consider the material risks described below before deciding how to vote your shares of stock. In addition, you should read and consider the risks associated with the business of American Acquisition Opportunity because these risks may also affect the Combined Company. You should also read and consider the other information in this proxy statement/prospectus.

Risks Related to Royalty

Royalty has a relatively short operating history, which makes it difficult to evaluate its business and future prospects.

Royalty has a relatively short operating history, which makes it difficult to evaluate Royalty’s business and future prospects. Royalty has been in existence since 2021 and much of Royalty’s revenue growth has occurred during the first half of 2022. Royalty has encountered, and will continue to encounter, risks and difficulties frequently experienced by growing companies in rapidly changing industries, including those related to:

If Royalty does not manage these risks successfully, its business and financial performance will be adversely affected.

Management has determined that there are factors that raise substantial doubt about our ability to continue as a going concern.

The accompanying consolidated financial statements of Royalty have been prepared in conformity with accounting principles generally accepted in the United States of America, assuming we will continue as a going concern, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business. For the fiscal year December 31, 2021 and the nine-month period ended September 30, 2022, we did not realize a profit. At September 30, 2022, we had an accumulated deficit of approximately $271,851 and positive working capital of approximately $297,571. These factors raise substantial doubt about our ability to continue as a going concern within one year from the date of this proxy statement/prospectus. Our ability to continue as a going concern is dependent on our ability to raise the required additional capital or debt financing to meet short and long-term operating requirements. We may also encounter business endeavors that require significant cash commitments or unanticipated problems or expenses that could result in a requirement for additional cash. As we continue to raise additional funds through the issuance of equity or convertible debt securities, the percentage ownership of our current stockholders could be reduced, and such securities might have rights, preferences, or privileges senior to Royalty Common Stock. Additional financing may not be available upon acceptable terms, or at all. If adequate funds are not available to us or are not available on acceptable terms, we may not be able to take advantage of prospective business endeavors or opportunities, which could significantly and materially restrict our operations. If we are unable to obtain the necessary capital, we may have to cease operations.

Royalty has limited capital resources, and even following the Business Combination, Royalty will need to raise additional capital. Such funding, if obtained, could result in substantial dilution or significant debt service obligations. Royalty may not be able to obtain additional capital on commercially reasonable terms in a timely manner, which could adversely affect its liquidity, financial position, and ability to continue operations.

 As a new company founded during 2021, Royalty will likely need to continue to raise capital in  order to grow. Our ability to raise additional funds will depend on financial, economic and other factors, many of which are beyond our control. We cannot be certain that additional funding will be available on acceptable terms, or at all. We have limited committed sources of additional capital and if we are unable to raise additional capital in sufficient amounts or on terms acceptable to us, we may have to significantly delay, scale back or discontinue our intended growth. We could be required to seek funding sources on terms that are less favorable than might otherwise be available or result in dilution of our stockholders’ interests.

During the period from June 21, 2021 (Inception) through December 31, 2021 Royalty had no revenue. For the nine month period ended September 30, 2022, approximately 100% of Royalty’s revenue came from 3 sources.  In the event of any material decrease in revenue from this customer, or if Royalty is unable to replace the revenue through other customers, its financial condition and results from operations could be materially and adversely affected.

As of December 31, 2021, Royalty had yet to generate revenue. 

For the nine months ended September 30, 2022, Royalty’s revenue is comprised of the performance of environmental services and royalty and lease revenue governed by the underlying contracts. All the revenue generating activity is undertaken in eastern Kentucky, central Indiana and Limpopo, South Africa.  The loss of these revenue streams would have a significant adverse effect on Royalty. 

Royalty’s operations may be impaired if its information technology systems fail to perform adequately or if Royalty is the subject of a data breach or cyber-attack.

Royalty relies on information technology systems in order to conduct business, including communicating with employees and Royalty’s key commercial customers and vendors. While Royalty has taken steps to ensure the security of Royalty’s information technology systems, Royalty’s systems may nevertheless be vulnerable to computer viruses, security breaches and other disruptions from unauthorized users. If Royalty’s information technology systems are damaged or cease to function properly for an extended period of time, whether as a result of a significant cyber incident or otherwise, Royalty’s ability to communicate internally as well as with Royalty’s customers could be significantly impaired, which may adversely impact Royalty’s business.

Additionally, in the normal course of Royalty’s business, Royalty collects, stores and transmits proprietary and confidential information regarding it customers, employees, suppliers and others, including personally identifiable information. An operational failure or breach of security from increasingly sophisticated cyber threats could lead to loss, misuse or unauthorized disclosure of this information about Royalty’s employees or customers, which may result in regulatory or other legal proceedings, and have a material adverse effect on Royalty’s business and reputation. Royalty also may not have the resources or technical sophistication to anticipate or prevent rapidly-evolving types of cyber-attacks. Any such attacks or precautionary measures taken to prevent anticipated attacks may result in increasing costs, including costs for additional technologies, training and third party consultants. The losses incurred from a breach of data security and operational failures as well as the precautionary measures required to address this evolving risk may adversely impact Royalty’s financial condition, results of operations and cash flows.

The growth and success of Royalty’s business depends on the continued contributions of Royalty’s executive management, as well as Royalty’s ability to attract and retain qualified personnel.

Royalty’s growth and success is dependent upon the continued contributions made by executive management team. Royalty relies on its management team when to develop new royalty revenue streams. If Royalty’s management cannot serve Royalty or is no longer willing to do so, Royalty may not be able to find alternatives in a timely manner or at all. This may have a material adverse effect on Royalty’s business. In addition, Royalty’s growth and success will depend to a significant extent on Royalty’s ability to identify, attract, hire, train and retain qualified professional, creative, technical and managerial personnel. Competition for experience and qualified talent in the indoor agriculture marketplace can be intense. Royalty may not be successful in identifying, attracting, hiring, training and retaining such personnel in the future. If Royalty is unable to hire, assimilate and retain qualified personnel in the future, such inability could adversely affect Royalty’s operations.

Protecting and defending against future intellectual property claims may have a material adverse effect on Royalty’s future business plans.

Royalty’s future growth plans include inquiring and sponsoring intellectual property.  

Royalty’s ability to compete depends, in part, upon successful protection of future intellectual property. Royalty seeks to protect its proprietary and intellectual property rights through patent applications and trademark laws, nondisclosure agreements. Enforcement of its intellectual property rights would be costly, and there can be no assurance that Royalty will have the resources to undertake all necessary action to protect its intellectual property rights or that Royalty will be successful. Any infringement of Royalty’s material intellectual property rights could require it to redirect resources to actions necessary to protect same and could distract management from its underlying business operations. An infringement of Royalty’s material intellectual property rights and resulting actions could adversely affect its operations.

Royalty cannot assure investors that Royalty will continue to innovate and file new patent applications, or that this application or any future patent applications will result in granted patents. Further, Royalty cannot predict how long it will take for such patents to issue, if at all. It is possible that, for any of its patents that may issue in the future, its competitors may design their products around its patented technologies. Further, Royalty cannot assure investors that other parties will not challenge any patents granted to Royalty, or that courts or regulatory agencies will hold its patents to be valid, enforceable, and/or infringed. Royalty cannot guarantee investors that Royalty will be successful in defending challenges made against its patents and patent applications. Any successful third-party challenge or challenges to its patents could result in the unenforceability or invalidity of such patents, or such patents being interpreted narrowly and/or in a manner adverse to its interests. Royalty’s ability to establish or maintain a technological or competitive advantage over its competitors and/or market entrants may be diminished because of these uncertainties. For these and other reasons, Royalty’s intellectual property may not provide Royalty with any competitive advantage. For example:

To the extent Royalty’s intellectual property offers inadequate protection, or is found to be invalid or unenforceable, Royalty would be exposed to a greater risk of direct or indirect competition. If Royalty’s intellectual property does not provide adequate coverage over Royalty’s competitors’ products, its competitive position could be adversely affected, as could its business.

Royalty’s success depends in part upon Royalty’s ability to protect its core leases and royalty streams.

Royalty’s success depends in part upon its ability to protect its core leases, royalty and potential future intellectual property. To establish and protect its proprietary rights, Royalty relies on a combination of trademark, copyright, patent, trade secret and unfair competition laws of the United States and other countries, as well as contract provisions, license agreements, confidentiality procedures, non-disclosure agreements with third parties, employee disclosure and invention assignment agreements, and other contractual rights, as well as procedures governing internet/domain name registrations. However, there can be no assurance that these measures will be successful in any given case. Royalty may be unable to prevent the misappropriation, infringement or violation of its intellectual property rights, breach of any contractual obligations to Royalty, or independent development of intellectual property that is similar to Royalty’s any of which could reduce or eliminate any competitive advantage Royalty has developed, adversely affecting Royalty’s revenues or otherwise harming Royalty’s business.

Royalty generally controls access to and use of its proprietary technology and other confidential information through the use of internal and external controls, including contractual protections with employees, contractors, customers, and partners, and Royalty’s software is protected by U.S. copyright laws.

Despite efforts to protect Royalty’s proprietary rights through intellectual property laws, licenses, and confidentiality agreements, unauthorized parties may still copy or otherwise obtain and use Royalty’s technology. Companies in the Internet, technology, and software industries frequently enter into litigation based on allegations of infringement, misappropriation, or violations of intellectual property rights or other laws. From time to time, Royalty may face allegations that Royalty have infringed the trademarks, copyrights, patents, trade secrets and other intellectual property rights of third parties, including competitors. If it became necessary for Royalty to resort to litigation to protect these rights, any proceedings could be burdensome, costly and divert the attention of Royalty’s personnel, and Royalty may not prevail. In addition, any repeal or weakening of laws or enforcement in the United States or internationally intended to protect intellectual property rights could make it more difficult for Royalty to adequately protect Royalty’s intellectual property rights, negatively impacting their value and increasing the cost of enforcing Royalty’s rights.

Royalty has obtained and applied for U.S. trademark and service mark registrations and will continue to evaluate the registration of additional trademarks and service marks or, as appropriate. Royalty cannot guarantee that any of its pending trademark applications will be approved by the applicable governmental authorities. Moreover, even if the trademark applications are approved, third parties may seek to oppose or otherwise challenge these registrations. A failure to obtain registrations for Royalty’s trademarks could limit and impede Royalty’s marketing efforts.

Royalty may need to enter into intellectual property license agreements in the future, and if Royalty is unable to obtain these licenses, its business could be harmed.

Royalty may need or may choose to obtain licenses and/or acquire intellectual property rights from third parties to advance its research or commercialization of Royalty’s current or future products. Royalty also cannot provide any assurances that third-party patents do not exist that might be enforced against Royalty’s current or future products in the absence of such a license or acquisition. Royalty may fail to obtain any of these licenses or intellectual property rights on commercially reasonable terms. Even if Royalty is able to obtain a license, it may be non-exclusive, thereby giving its competitors access to the same technologies licensed to Royalty. In that event, Royalty may be required to expend significant time and resources to develop or license replacement technology. If Royalty is unable to do so, it may be unable to develop or commercialize the affected products, which could materially harm its business and the third parties owning such intellectual property rights could seek either an injunction prohibiting its sales, or, with respect to its sales, an obligation on its part to pay royalties and/or other forms of compensation.

Others may assert intellectual property infringement claims against Royalty

Companies in the software and technology industries can own patents, copyrights, trademarks, and trade secrets, and frequently enter into litigation based on allegations of infringement, misappropriation, or other violations of intellectual property or other rights. In addition, various “non-practicing entities” that own patents (colloquially known as “patent trolls”) often attempt to aggressively assert their rights to extract value from technology companies. It is possible that, from time to time, third parties may claim that Royalty’s products misappropriate or infringe their intellectual property rights. Irrespective of the validity or the successful assertion of any such claims, Royalty could incur significant costs and diversion of resources in defending against these claims, which could adversely affect Royalty’s operations. Royalty may receive unfavorable preliminary or interim rulings in the course of litigation, and there can be no assurances that favorable final outcomes will be obtained in all cases. Royalty may decide to settle such lawsuits and disputes on terms that are unfavorable to it. As a result, Royalty may also be required to develop alternative non-infringing technology or practices or discontinue the practices. The development of alternative non-infringing technology or practices could require significant effort and expense or may not be feasible. In addition, to the extent claims against Royalty is successful, Royalty may have to pay substantial money damages or discontinue, modify, or rename certain products or services that are found to be in violation of another party’s rights. Royalty may have to seek a license (if available on acceptable terms, or at all) to continue offering products and services, which may significantly increase its operating expenses.

Risks Related to the Combined Company

Unless the context otherwise requires, all references to “we,” “us,” or “our” in this subsection titled “Risks Related to the Combined Company” refer to the Combined Company.

Concentration of ownership among the Combined Company’s executive officers, directors and their affiliates may prevent new investors from influencing significant corporate decisions.

Upon completion of the Business Combination, the initial stockholders of Royalty will beneficially own, directly or indirectly:

As a result, these stockholders will be able to exercise a significant level of control over all matters requiring stockholder approval, including the election of directors, appointment and removal of officers, any amendment of the amended and restated certificate of incorporation and approval of mergers and other business combination transactions requiring stockholder approval, including proposed transactions that would result in the Combined Company stockholders receiving a premium price for their shares and other significant corporate transactions. This control could have the effect of delaying or preventing a change of control or changes in management and will make the approval of certain transactions difficult or impossible without the support of these stockholders.

There can be no assurance that the Combined Company Common Stock will be approved for listing on Nasdaq or that the Combined Company will be able to comply with the continued listing standards of Nasdaq.

In connection with the Closing, American Acquisition Opportunity’s existing registration rights agreement will be amended and restated to: (i) provide that American Acquisition Opportunity will file a registration statement within 30 days following the Closing to register for resale (A) the Founder Shares and shares of American Acquisition Opportunity Common Stock issuable upon exercise of the Private Warrants held by the Founders and (B) the shares of the Combined Company Common Stock to be issued to Royalty’s stockholders in the Business Combination; (ii) provide Royalty’s stockholders with three demand registration rights; (iii) provide Royalty’s stockholders and the Founders customary underwritten takedown rights (subject to customary priorities, minimums, frequency, and quantity limits, cutbacks, deferrals and other terms); and (iv) afford each of Royalty’s stockholders and the Founders, on a pari passu basis, “piggy back” registration rights with respect to any underwritten offerings by the other stockholders and by the Combined Company. The sale or possibility of sale of these additional securities trading in the public market may negatively impact the market price of the Combined Company’s securities.

If the Business Combination’s benefits do not meet the expectations of investors or securities analysts, the market price of American Acquisition Opportunity’s securities or, following the Closing, the Combined Company’s securities, may decline.

If the perceived benefits of the Business Combination do not meet the expectations of investors or securities analysts, the market price of American Acquisition Opportunity’s securities prior to the Closing may decline. The market values of the Combined Company’s securities at the time of the Business Combination may vary significantly from their prices on the date the Business Combination Agreement was executed, the date of this proxy statement/prospectus, or the date on which American Acquisition Opportunity’s stockholders vote on the Business Combination.

In addition, following the Business Combination, fluctuations in the price of the Combined Company’s securities could contribute to the loss of all or part of your investment. Prior to the Business Combination, there has not been a public market for Royalty’s securities. Accordingly, the valuation ascribed to Royalty may not be indicative of the price that will prevail in the trading market following the Business Combination. If an active market for the Combined Company’s securities develops and continues, the trading price of the Combined Company’s securities following the Business Combination could be volatile and subject to wide fluctuations in response to various factors, some of which are beyond the Combined Company’s control. Any of the factors listed below could have a negative impact on your investment in the Combined Company’s securities and the Combined Company’s securities may trade at prices significantly below the price you paid for them. In such circumstances, the trading price of the Combined Company’s securities may not recover and may experience a further decline.

Factors affecting the trading price of the Combined Company’s securities may include:

Broad market and industry factors may materially harm the market price of the Combined Company’s securities irrespective of the Combined Company’s operating performance. The stock market in general, and Nasdaq in particular, have experienced price and volume fluctuations that have often been unrelated or disproportionate to the operating performance of the particular companies affected. The trading prices and valuations of these stocks, and of the Combined Company’s securities, may not be predictable. A loss of investor confidence in the market for retail stocks or the stocks of other companies which investors perceive to be similar to the Combined Company could depress the Combined Company’s share price regardless of the Combined Company’s business, prospects, financial conditions or results of operations. A decline in the market price of the Combined Company’s securities also could adversely affect the Combined Company’s ability to issue additional securities and the Combined Company’s ability to obtain additional financing in the future.

Following the consummation of the Business Combination, the Combined Company will incur significant increased expenses and administrative burdens as a public company, which could negatively impact its business, financial condition and results of operations.

Following the consummation of the Business Combination, the Combined Company will face increased legal, accounting, administrative and other costs and expenses as a public company that Royalty does not incur as a private company. The Sarbanes-Oxley Act, including the requirements of Section 404, as well as rules and regulations subsequently implemented by the SEC, the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 and the rules and regulations promulgated and to be promulgated thereunder, the PCAOB and the securities exchanges, impose additional reporting and other obligations on public companies. Compliance with public company requirements will increase costs and make certain activities more time-consuming. A number of those requirements will require the Combined Company to carry out activities Royalty has not done previously. For example, the Combined Company will create new board committees and adopt new internal controls and disclosure controls and procedures. In addition, expenses associated with SEC reporting requirements will be incurred. Furthermore, if any issues in complying with those requirements are identified (for example, if the auditors identify a material weakness or significant deficiency in the internal control over financial reporting), the Combined Company could incur additional costs to rectify those issues, and the existence of those issues could adversely affect the Combined Company’s reputation or investor perceptions of it. It may also be more expensive to obtain director and officer liability insurance. Risks associated with the Combined Company’s status as a public company may make it more difficult to attract and retain qualified persons to serve on the Combined Company’s board of directors or as executive officers. The additional reporting and other obligations imposed by these rules and regulations will increase legal and financial compliance costs and the costs of related legal, accounting and administrative activities. These increased costs will require the Combined Company to divert a significant amount of money that could otherwise be used to expand the business and achieve strategic objectives. Advocacy efforts by stockholders and third parties may also prompt additional changes in governance and reporting requirements, which could further increase costs.

The Combined Company’s failure to timely and effectively implement controls and procedures required by Section 404(a) of the Sarbanes-Oxley Act that will be applicable to it after the Business Combination is consummated could negatively impact its business.

Royalty is currently not subject to Section 404 of the Sarbanes-Oxley Act. However, following the consummation of the Business Combination, the Combined Company will be required to provide management’s attestation on internal controls. The standards required for a public company under Section 404(a) of the Sarbanes-Oxley Act are significantly more stringent than those required of Royalty as a privately held company. Management may not be able to effectively and timely implement controls and procedures that adequately respond to the increased regulatory compliance and reporting requirements that will be applicable after the Business Combination. If the Combined Company is not able to implement the additional requirements of Section 404(a) in a timely manner or with adequate compliance, it may not be able to assess whether its internal controls over financial reporting are effective, which may subject it to adverse regulatory consequences and could harm investor confidence and the market price of its securities.

The Combined Company will qualify as an “emerging growth company” within the meaning of the Securities Act, and if it takes advantage of certain exemptions from disclosure requirements available to emerging growth companies, it could make the Combined Company’s securities less attractive to investors and may make it more difficult to compare the Combined Company’s performance to the performance of other public companies.

The Combined Company will qualify as an “emerging growth company” as defined in Section 2(a)(19) of the Securities Act, as modified by the JOBS Act. As such, the Combined Company will be eligible for and intends to take advantage of certain exemptions from various reporting requirements applicable to other public companies that are not emerging growth companies for as long as it continues to be an emerging growth company, including (a) the exemption from the auditor attestation requirements with respect to internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act, (b) the exemptions from say-on-pay, say-on-frequency and say-on-golden parachute voting requirements and (c) reduced disclosure obligations regarding executive compensation in its periodic reports and proxy statements. The Combined Company will remain an emerging growth company until the earliest of (i) the last day of the fiscal year in which the market value of American Acquisition Opportunity Common Stock that is held by non-affiliates equals or exceeds $700 million as of June 30 of that fiscal year, (ii) the last day of the fiscal year in which it has total annual gross revenue of $1.235 billion or more during such fiscal year (as indexed for inflation), (iii) the date on which it has issued more than $1 billion in non-convertible debt in the prior three-year period or (iv) the last day of the fiscal year following the fifth anniversary of the date of the first sale of American Acquisition Opportunity Common Stock in the IPO. In addition, Section 107 of the JOBS Act also provides that an emerging growth company can take advantage of the exemption from complying with new or revised accounting standards provided in Section 7(a)(2)(B) of the Securities Act as long as the Combined Company is an emerging growth company. An emerging growth company can therefore delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We have elected not to opt out of such extended transition period and, therefore, the Combined Company may not be subject to the same new or revised accounting standards as other public companies that are not emerging growth companies. Investors may find the Combined Company Common Stock less attractive because the Combined Company will rely on these exemptions, which may result in a less active trading market for the Combined Company Common Stock and its price may be more volatile.

Royalty’s management has limited experience in operating a public company.

Royalty’s executive officers have limited experience in the management of a publicly traded company. Royalty’s management team may not successfully or effectively manage its transition to a public company that will be subject to significant regulatory oversight and reporting obligations under federal securities laws. Their limited experience in dealing with the increasingly complex laws pertaining to public companies could be a significant disadvantage in that it is likely that an increasing amount of their time may be devoted to these activities which will result in less time being devoted to the management and growth of the Combined Company. Royalty may not have adequate personnel with the appropriate level of knowledge, experience, and training in the accounting policies, practices or internal controls over financial reporting required of public companies in the United States. The development and implementation of the standards and controls necessary for the Combined Company to achieve the level of accounting standards required of a public company in the United States may require costs greater than expected. It is possible that the Combined Company will be required to expand its employee base and hire additional employees to support its operations as a public company which will increase its operating costs in future periods.

If, following the Business Combination, securities or industry analysts do not publish or cease publishing research or reports about the Combined Company, its business, or its market, or if they change their recommendations regarding the Combined Company’s securities adversely, the price and trading volume of the Combined Company’s securities could decline.

The trading market for the Combined Company’s securities will be influenced by the research and reports that industry or securities analysts may publish about the Combined Company, its business, market or competitors. Securities and industry analysts do not currently, and may never, publish research on the Combined Company. If no securities or industry analysts commence coverage of the Combined Company, the Combined Company’s share price and trading volume would likely be negatively impacted. If any of the analysts who may cover the Combined Company change their recommendation regarding the Combined Company’s shares of common stock adversely, or provide more favorable relative recommendations about its competitors, the price of the Combined Company’s shares of common stock would likely decline. If any analyst who may cover the Combined Company were to cease coverage of the Combined Company or fail to regularly publish reports on it, the Combined Company could lose visibility in the financial markets, which in turn could cause its share price or trading volume to decline.

If the Combined Company’s security holders exercise their registration rights, it may negatively impact the market price of the Combined Company’s shares of common stock and the existence of these rights may make it more difficult to effect a business combination.

In connection with the Closing, American Acquisition Opportunity’s existing registration rights agreement will be amended and restated to: (i) provide that American Acquisition Opportunity will file a registration statement within 30 days following the Closing to register for resale (A) the Founder Shares and shares of American Acquisition Opportunity Common Stock issuable upon exercise of the Private Warrants held by the Founders and (B) the shares of the Combined Company Common Stock to be issued to Royalty’s stockholders in the Business Combination; (ii) provide Royalty’s stockholders with three demand registration rights; (iii) provide Royalty’s stockholders and the Founders customary underwritten takedown rights (subject to customary priorities, minimums, frequency, and quantity limits, cutbacks, deferrals and other terms); and (iv) afford each of Royalty’s stockholders and the Founders, on a pari passu basis, “piggy back” registration rights with respect to any underwritten offerings by the other stockholders and by the Combined Company. The sale or possibility of sale of these additional securities trading in the public market may negatively impact the market price of the Combined Company’s securities.

Because we have no current plans to pay cash dividends on the Combined Company Common Stock for the foreseeable future, you may not receive any return on investment unless you sell the Combined Company Common Stock for a price greater than that which you paid for it.

The Combined Company may retain future earnings, if any, for future operations, expansion and debt repayment and has no current plans to pay any cash dividends for the foreseeable future. Any decision to declare and pay dividends as a public company in the future will be made at the discretion of the Combined Company’s board of directors and will depend on, among other things, the Combined Company’s results of operations, financial condition, cash requirements, contractual restrictions and other factors that the Combined Company’s board of directors may deem relevant. In addition, the Combined Company’s ability to pay dividends may be limited by covenants of any existing and future outstanding indebtedness it or its subsidiaries incur. As a result, you may not receive any return on an investment in the Combined Company Common Stock unless you sell your shares of common stock for a price greater than that which you paid for it.

The Combined Company may issue additional shares of common stock or other equity securities without your approval, which would dilute your ownership interests and may depress the market price of the Combined Company Common Stock.

Upon consummation of the Business Combination, the Combined Company will have warrants outstanding to purchase an aggregate of 9,163,394 shares of Combined Company Common Stock. The Combined Company may also issue additional shares of common stock or other equity securities of equal or senior rank in the future in connection with, among other things, future acquisitions or repayment of outstanding indebtedness, without stockholder approval, in a number of circumstances.

The issuance of additional shares or other equity securities of equal or senior rank would have the following effects:

Anti-takeover provisions in the Proposed Certificate of Incorporation and under Delaware law could make an acquisition of the Combined Company, which may be beneficial to its stockholders, more difficult and may prevent attempts by its stockholders to replace or remove the Combined Company’s then current management.

The Proposed Certificate of Incorporation contains provisions that may delay or prevent an acquisition of the Combined Company or a change in its management. These provisions may make it more difficult for stockholders to replace or remove members of its board of directors. Because the board of directors is responsible for appointing the members of the management team, these provisions could in turn frustrate or prevent any attempt by its stockholders to replace or remove its current management. In addition, these provisions could limit the price that investors might be willing to pay in the future for shares of Combined Company Common Stock. Among other things, these provisions include:

Moreover, because the Combined Company is incorporated in Delaware, it is governed by the provisions of Section 203 of the DGCL, which prohibits a person who owns 15% or more of its outstanding voting stock from merging or combining with the Combined Company for a period of three years after the date of the transaction in which the person acquired 15% or more of the Combined Company’s outstanding voting stock, unless the merger or combination is approved in a prescribed manner. This could discourage, delay or prevent a third party from acquiring or merging with the Combined Company, whether or not it is desired by, or beneficial to, its stockholders. This could also have the effect of discouraging others from making tender offers for the Combined Company Common Stock, including transactions that may be in its stockholders’ best interests. Finally, these provisions establish advance notice requirements for nominations for election to the board of directors or for proposing matters that can be acted upon at stockholder meetings. These provisions would apply even if the offer may be considered beneficial by some stockholders. For more information, see the section titled “Description of American Acquisition Opportunity’s Securities — Certain Anti-Takeover Provisions of Delaware Law.”

Risks Related to American Acquisition Opportunity

Unless the context otherwise requires, all references to “we,” “us,” or “our” in this subsection titled “Risks Related to American Acquisition Opportunity” refer to American Acquisition Opportunity.

Our Founders have agreed to vote in favor of the Business Combination, regardless of how our public stockholders vote.

Pursuant to the Sponsor Support Agreement, our sponsor, officers and directors have agreed to vote any Founder Shares held by them in favor of the Business Combination. As these shares represent in excess of a majority of the outstanding shares of American Acquisition Opportunity Common Stock, we can proceed with the Business Combination even if no holder of Public Shares votes in favor of it.

The ability of our Public Stockholders to exercise redemption rights with respect to a large number of our shares may not allow us to complete the Business Combination and that you would have to wait for liquidation in order to redeem your stock.

We will not know how many stockholders may exercise their redemption rights until the deadline for redemptions, and therefore we have structured the transaction based on our expectations as to the number of shares that will be submitted for redemption. If the Business Combination is unsuccessful, you would not receive your pro rata portion of the trust account until we liquidate the trust account. If you are in need of immediate liquidity, you could attempt to sell your stock in the open market; however, at such time our stock may trade at a discount to the pro rata amount per share in the trust account. In either situation, you may suffer a material loss on your investment or lose the benefit of funds expected in connection with our redemption until we liquidate or you are able to sell your stock in the open market.

We cannot be certain as to the number of Public Shares that will be redeemed and the potential impact to Public Stockholders who do not elect to redeem their Public Shares.

There is no guarantee that a Public Stockholder’s decision whether to redeem its Public Shares for a pro rata portion of the Trust Account will put the Public Stockholder in a better future economic position. We can give no assurance as to the price at which a Public Stockholder may be able to sell its Combined Company Common Stock in the future following the Closing. Certain events following the consummation of any initial business combination, including the Business Combination, and including redemptions of Public Shares may cause an increase or decrease in the share price of American Acquisition Opportunity, and may result in a lower value realized now than a Public Stockholder might realize in the future had the Public Stockholder not redeemed its Public Shares. Similarly, if a Public Stockholder does not redeem its Public Shares, the Public Stockholder will bear the risk of ownership of the Combined Company Common Stock after the consummation of the Business Combination, and there can be no assurance that a Public Stockholder can sell its shares in the future for a greater amount than the redemption price for Public Shares. A Public Stockholder should consult its own tax and/or financial advisor for assistance on how this may affect its individual situation.

We may not be able to complete our initial business combination within the prescribed time frame, in which case we would cease all operations except for the purpose of winding up and we would redeem our public shares and liquidate, in which case our public stockholders may only receive $10.10 per share, or less than such amount in certain circumstances, and our warrants will expire worthless.

Our amended and restated certificate of incorporation provides that we must complete our initial business combination by March 22, 2023, unless our stockholders approve an additional Extension Proposal.  American Acquisition Opportunity is not obligated to seek stockholder approval of an Extension Proposal and can abandon the Business Combination if the Business Combination is not consummated by March 22, 2023. 

If we have not completed the Business Combination within such time period an no approval of an Extension Proposal has been obtained, we will: (i) cease all operations except for the purpose of winding up, (ii) as promptly as reasonably possible but not more than ten business days thereafter, redeem the public shares, at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the trust account including interest earned on the funds held in the trust account and not previously released to us to pay our taxes (less up to $100,000 of interest to pay dissolution expenses), divided by the number of then outstanding public shares, which redemption will completely extinguish public stockholders’ rights as stockholders (including the right to receive further liquidating distributions, if any), subject to applicable law, and (iii) as promptly as reasonably possible following such redemption, subject to the approval of our remaining stockholders and our board of directors, dissolve and liquidate, subject in the case of clauses (ii) and (iii) above to our obligations under Delaware law to provide for claims of creditors and the requirements of other applicable law.

For illustrative purposes only, based on funds in the Trust Account of approximately $7.5 million at September 30, 2022, the estimated per share redemption price would have been approximately $10.17.

If a stockholder fails to receive notice of our offer to redeem our Public Shares in connection with the Business Combination, or fails to comply with the procedures for tendering its shares, such shares may not be redeemed.

This proxy statement/prospectus describes the various procedures that must be complied with in order for a Public Stockholder to validly redeem its Public Shares. In the event that a stockholder fails to comply with these procedures, its shares may not be redeemed.

Subsequent to the completion of the Business Combination, the Combined Company may be required to take write-downs or write-offs, restructuring and impairment or other charges that could have a significant negative effect on the Combined Company’s financial condition, results of operations and our stock price, which could cause you to lose some or all of your investment.

Even though we have conducted extensive due diligence on Royalty, we cannot assure you that this diligence will surface all material issues that may be present, that it would be possible to uncover all material issues through a customary amount of due diligence, or that factors outside of Royalty’s and outside of our control will not later arise. As a result of these factors, the Combined Company may be forced to later write-down or write-off assets, restructure its  operations, or incur impairment or other charges that could result in the Combined Company reporting losses. Even if our due diligence successfully identifies certain risks, unexpected risks may arise and previously known risks may materialize in a manner not consistent with our preliminary risk analysis. Even though these charges may be non-cash items and not have an immediate impact on our liquidity, the fact that we report charges of this nature could contribute to negative market perceptions about us or our securities. In addition, charges of this nature may cause us to violate net worth or other covenants to which we may be subject as a result of assuming pre-existing debt held by Royalty. Accordingly, any stockholders who choose to remain stockholders following the Business Combination could suffer a reduction in the value of their shares. Such stockholders are unlikely to have a remedy for such reduction in value.

If, after we distribute the proceeds in the trust account to our public stockholders, we file a bankruptcy petition or an involuntary bankruptcy petition is filed against us that is not dismissed, a bankruptcy court may seek to recover such proceeds, and we and our board may be exposed to claims of punitive damages.

If, after we distribute the proceeds in the trust account to our public stockholders, we file a bankruptcy petition or an involuntary bankruptcy petition is filed against us that is not dismissed, any distributions received by stockholders could be viewed under applicable debtor/creditor and/or bankruptcy laws as either a “preferential transfer” or a “fraudulent conveyance.” As a result, a bankruptcy court could seek to recover some or all amounts received by our stockholders. In addition, our board of directors may be viewed as having breached its fiduciary duty to our creditors and/or having acted in bad faith, thereby exposing itself and us to claims of punitive damages, by paying public stockholders from the trust account prior to addressing the claims of creditors.

If, before distributing the proceeds in the trust account to our public stockholders, we file a bankruptcy petition or an involuntary bankruptcy petition is filed against us that is not dismissed, the claims of creditors in such proceeding may have priority over the claims of our stockholders and the per-share amount that would otherwise be received by our stockholders in connection with our liquidation may be reduced.

If, before distributing the proceeds in the trust account to our public stockholders, we file a bankruptcy petition or an involuntary bankruptcy petition is filed against us that is not dismissed, the proceeds held in the trust account could be subject to applicable bankruptcy law, and may be included in our bankruptcy estate and subject to the claims of third parties with priority over the claims of our stockholders. To the extent any bankruptcy claims deplete the trust account, the per-share amount that would otherwise be received by our stockholders in connection with our liquidation may be reduced.

The grant of registration rights to our initial stockholders may adversely affect the market price of the Combined Company Common Stock.

Pursuant to an agreement to be entered into concurrently with the closing of the Business Combination, certain holders of the  shares of Combined Company Common Stock issuable upon exercise of the placement warrants, the shares of Class A common stock issuable upon conversion of the founder shares may demand that we register the resale of such shares of Combined Company Common Stock, warrants or the Combined Company Common Stock issuable upon exercise of such warrants. We will bear the cost of registering these securities. The registration and availability of such a significant number of securities for trading in the public market may have an adverse effect on the market price of the Combined Company Common stock.

We may be subject to the Excise Tax included in the Inflation Reduction Act of 2022 in the event of a liquidation or in connection with redemptions of our American Acquisition Opportunity Common Stock after December 31, 2022.

On August 16, 2022, President Biden signed into law the Inflation Reduction Act of 2022, which, among other things, imposes a 1% excise tax on any publicly traded domestic corporation that repurchases its stock after December 31, 2022 (the “Excise Tax”). The Excise Tax is imposed on the fair market value of the repurchased stock, with certain exceptions. Because we are a Delaware corporation and because our securities trade on Nasdaq, we are a “covered corporation” within the meaning of the Inflation Reduction Act. While not free from doubt, absent any further guidance from the U.S. Department of the Treasury (the “Treasury”), who has been given authority to provide regulations and other guidance to carry out and prevent the abuse or avoidance of the Excise Tax, the Excise Tax may apply to any redemptions of our American Acquisition Opportunity Common Stock after December 31, 2022, including redemptions in connection with the Business Combination, unless an exemption is available. Generally, issuances of securities in connection with an initial business combination transaction (including any PIPE transaction at the time of an initial business combination) would be our the Business Combination are expected to reduce the amount of the Excise Tax in connection with redemptions occurring in the same calendar year, but the number of securities redeemed may exceed the number of securities issued. In addition, because the Excise Tax would be payable by us, and not by the redeeming holder, the mechanics of any required payment of the Excise Tax have not been determined. Further, the application of the Excise Tax in the event of a liquidation is uncertain.

We may be deemed a “foreign person” under the regulations relating to CFIUS and our failure to obtain any required approvals within the requisite time period may require us to liquidate.

We do not believe that either we or our sponsor constitute a “foreign person” under CFIUS rules and regulations. However, if CFIUS considers us to be a “foreign person” and believes that the business of an initial business combination target may affect national security, we could be subject to foreign ownership restrictions and/or CFIUS review. If a potential business combination falls within the scope of applicable foreign ownership restrictions, we may be unable to consummate an initial business combination. In addition, if a potential initial business combination falls within CFIUS’s jurisdiction, we may be required to make a mandatory filing or determine to submit a voluntary notice to CFIUS, or to proceed with an initial business combination without notifying CFIUS and risk CFIUS intervention, before or after closing the initial business combination.

Although we do not believe we or the sponsor are a “foreign person”, CFIUS may take a different view and decide to block or delay a potential initial business combination, impose conditions to mitigate national security concerns with respect to a potential initial business combination, order us to divest all or a portion of a U.S. business of the potential combined company if we had proceeded without first obtaining CFIUS clearance, or impose penalties if CFIUS believes that the mandatory notification requirement applied. Additionally, the laws and regulations of other U.S. government entities may impose review or approval procedures on account of any potential foreign ownership by the sponsor. As a result, the pool of potential targets with which we could complete an initial business combination may be limited due to such regulatory restrictions. Moreover, the process of any government review, whether by CFIUS or otherwise, could be lengthy. Because we have only a limited time to complete an initial business combination, our failure to obtain any required approvals within the requisite time period may require us to liquidate. If we liquidate, our public stockholders may only receive $10.10 per share, and our warrants will expire worthless. This will also cause you to lose any potential investment opportunity in a potential initial business combination and the chance of realizing future gains on your investment through any price appreciation in the combined company.

We do not have a specified maximum redemption threshold. The absence of such a redemption threshold may make it possible for us to complete the Business Combination with which a substantial majority of our stockholders do not agree.

Our amended and restated certificate of incorporation does not provide a specified maximum redemption threshold. As a result, we may be able to complete the Business Combination even though a substantial majority of our public stockholders do not agree with the transaction and have redeemed their shares.

UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION

The following unaudited pro forma condensed combined balance sheet as of September 30, 2022 and the unaudited pro forma condensed combined statements of operations for the nine months ended September 30, 2022 and the year ended December 31, 2021 present the combined financial information of American Acquisition Opportunity and Royalty after giving effect to the Business Combination and related adjustments described in the accompanying notes.

American Acquisition Opportunity and Royalty are collectively referred to herein as the “Companies,” and the Companies, subsequent to the Business Combination, are referred to herein as the “Combined Company”

The unaudited pro forma condensed combined financial information has been prepared in accordance with Article 11 of Regulation S-X, Pro Forma Financial Information, as amended by the final rule, Release No. 33-10786. The following unaudited pro forma condensed combined statements of operations for the nine months ended September 30, 2022 and the year ended December 31, 2021 give pro forma effect to the Business Combination as if it had occurred on January 1, 2021. The unaudited pro forma condensed combined balance sheet as of September 30, 2022 gives pro forma effect to the Business Combination as if it was completed on September 30, 2022.

The unaudited pro forma condensed combined financial information is based on, and should be read in conjunction with:

The unaudited pro forma condensed combined financial statements have been presented for illustrative purposes only and do not necessarily reflect what the combined financial condition or results of operations would have been had the Business Combination occurred on the dates indicated. Further, the unaudited pro forma condensed combined financial information also may not be useful in predicting the future financial condition and results of operations of the combined companies. The actual financial position and results of operations may differ significantly from the pro forma amounts reflected herein due to a variety of factors. The unaudited pro forma adjustments represent management’s estimates based on information available as of the date of these unaudited pro forma condensed combined financial statements and are subject to change as additional information becomes available and analyses are performed.

The unaudited pro forma condensed combined information assumes that American Acquisition Opportunity’s public stockholders approve  the  proposed  Business Combination. American Acquisition Opportunity’s public stockholders may elect to redeem their American Acquisition Opportunity Public Shares for cash even if they approve the proposed Business Combination. American Acquisition Opportunity cannot predict how many of its public stockholders will exercise their right to have their public shares redeemed for cash. As a result, American Acquisition Opportunity has elected to provide the unaudited pro forma condensed combined financial information under three different redemption scenarios as described below.

The actual results are expected to be within the parameters described by the three scenarios. However, there can be no assurance regarding which scenario will be closest to the actual results. Under each scenario, Royalty’s equityholders maintain a controlling financial interest over the Combined Company.

The Business Combination will be accounted for as a reverse recapitalization, in accordance with GAAP. Under the guidance in ASC 805, American Acquisition Opportunity is expected to be treated as the “acquired” company for financial reporting purposes. Accordingly, the Business Combination will be treated as the equivalent of Royalty issuing stock for the net assets of American Acquisition Opportunity, accompanied by a recapitalization whereby the net assets of American Acquisition Opportunity will be stated at historical cost and no goodwill or other intangible assets are recorded. Operations prior to the Business Combination will be those of Royalty.

Royalty expects to be the accounting acquirer based on evaluation of the following facts and circumstances under the illustrative no, interim and maximum redemption scenarios: