Integrated Rail and Resources Acquisition (IRRX) Financial Report Summaries

Risks

• Risks Relating to our Search for, Consummation of, or Inability to Consummate, a Business Combination and Post-Business-Combination Risks
• If we seek stockholder approval of our initial business combination, our initial stockholders have agreed to vote in favor of such initial business combination, regardless of how our public stockholders vote. In addition, the anchor investors have agreed to vote any founder shares in favor of such initial business combination, regardless of how our public stockholders vote.
• Participation by our anchor investors reduced the public float for our shares.
• The stockholders’ only opportunity to affect the investment decision regarding a potential business combination is limited to the exercise of the stockholders’ right to redeem their shares from us for cash, unless we seek stockholder approval of the initial business combination.
• The ability of our public stockholders to redeem their shares for cash may make our financial condition unattractive to potential business combination targets, which may make it difficult for us to enter into an initial business combination with a target.
• 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 most desirable business combination or optimize our capital structure.
• The ability of our public stockholders to exercise redemption rights with respect to a large number of our shares could increase the probability that our initial business combination would be unsuccessful and that our stockholders would have to wait for liquidation in order to redeem their stock.
• The requirement that we complete our initial business combination within the prescribed time frame described in our certificate of incorporation may give potential target businesses leverage over us in negotiating an initial business combination and may decrease our ability to conduct due diligence on potential business combination targets as we approach our dissolution deadline, which could undermine our ability to complete our initial business combination on terms that would produce value for our stockholders.
• If we seek stockholder approval of our initial business combination, our Sponsor, directors, officers, advisors and their affiliates may elect to purchase shares or warrants from public stockholders, which may influence a vote on a proposed initial business combination and reduce the public “float” of our Class A common stock.
• If a stockholder fails to receive notice of our offer to redeem our public shares in connection with our initial business combination, or fails to comply with the procedures for tendering its shares, such shares may not be redeemed.
• Our stockholders will not have any rights or interests in funds from the trust account, except under certain limited circumstances. For the stockholders to liquidate their investment, therefore, they may be forced to sell their public shares or warrants, potentially at a loss.
• Our stockholders are not entitled to protections normally afforded to investors of many other blank check companies.
• Because of our limited resources and the significant competition for business combination opportunities, it may be more difficult for us to complete our initial business combination. If we are unable to complete our initial business combination, our public stockholders may receive only approximately $11.01 per share, as of December 31, 2023, on our redemption of our public shares, or less than such amount in certain circumstances, and our warrants will expire worthless.
• The net proceeds of the IPO and the sale of the Private Placement Warrants not being held in the trust account have been utilized. We depend on loans from our Sponsor or management team to fund our search for an initial business combination and to complete our initial business combination. If we are unable to continue obtaining these loans, we may be unable to complete our initial business combination.
• Our directors may decide not to enforce the indemnification obligations of our Sponsor, resulting in a reduction in the amount of funds in the trust account available for distribution to our public stockholders.
• We may not have sufficient funds to satisfy indemnification claims of our directors and executive officers.
• 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.
• Our stockholders may be held liable for claims by third parties against us to the extent of distributions received by them upon redemption of their shares.
• We may not hold an annual meeting of stockholders until after the consummation of our initial business combination, which could delay the opportunity for our stockholders to elect directors.
• Because we are neither limited to evaluating a target business in a particular industry sector nor have we selected any specific target businesses with which to pursue our initial business combination, our stockholders will be unable to ascertain the merits or risks of any particular target business’s operations.
• We may seek business combination opportunities in industries or sectors which may or may not be outside of our management’s area of expertise.
• Although we have general criteria and guidelines that we believe are important in evaluating prospective target businesses, we may enter into our initial business combination with a target that does not meet such criteria and guidelines, and as a result, the target business with which we enter into our initial business combination may not have attributes entirely consistent with our general criteria and guidelines.
• We may seek business combination opportunities with a financially unstable business or an entity lacking an established record of revenue, cash flow or earnings, which could subject us to volatile revenues, cash flows or earnings or difficulty in retaining key personnel.
• We are not required to obtain a fairness opinion, and consequently, our stockholders may have no assurance from an independent source that the price we are paying for the business is fair to our company from a financial point of view.
• Because we must furnish our stockholders with target business financial statements, we may lose the ability to complete an otherwise advantageous initial business combination with some prospective target businesses.
• Compliance obligations under the Sarbanes-Oxley Act may make it more difficult for us to effectuate our initial business combination, require substantial financial and management resources, and increase the time and costs of completing an initial business combination.
• Concentration of ownership among our Sponsor and the anchor investors may prevent other investors from influencing significant corporate decisions or adversely affect the trading price of our common stock.
• Since our anchor investors own founder shares, a conflict of interest may arise in determining whether a particular target business is appropriate for our initial business combination.
• We do not have a specified maximum redemption threshold. The absence of such a redemption threshold may make it possible for us to complete an initial business combination with which a substantial majority of our stockholders do not agree.
• In order to effectuate an initial business combination, we and other blank check companies have, in the recent past, amended various provisions of their charters and other governing instruments, including their warrant agreements. We cannot assure our stockholders that we will not seek to further amend our certificate of incorporation or governing instruments in a manner that will make it easier for us to complete our initial business combination that our stockholders may not support.
• We may be unable to obtain additional financing to complete our initial business combination or to fund the operations and growth of a target business, which could compel us to restructure or abandon a particular business combination.
• Our initial stockholders and anchor investors control the election of our board of directors until consummation of our initial business combination and will hold a substantial interest in us. As a result, they will elect all of our directors prior to our initial business combination and may exert a substantial influence on actions requiring a stockholder vote, potentially in a manner that our stockholders do not support.
• Resources could be wasted in researching business combinations that are not completed, which could materially adversely affect subsequent attempts to locate and acquire or merge with another business. If we are unable to complete our initial business combination, our public stockholders may receive only the current value per share, or less than such amount in certain circumstances, on the liquidation of our trust account and our warrants will expire worthless.
• We may have a limited ability to assess the management of a prospective target business and, as a result, may affect our initial business combination with a target business whose management may not have the skills, qualifications or abilities to manage a public company, which could, in turn, negatively impact the value of our stockholders’ investment in us.
• As the number of special purpose acquisition companies evaluating targets increases, attractive targets may become scarcer and there may be more competition for attractive targets. This could increase the cost of our initial business combination and could even result in our inability to find a target or to consummate an initial business combination.
• We may issue notes or other debt securities, or otherwise incur substantial debt, to complete an initial business combination, which may adversely affect our leverage and financial condition and thus negatively impact the value of our stockholders’ investment in us.
• We may only be able to complete one business combination with available cash, which will cause us to be solely dependent on a single business which may have a limited number of services and limited operating activities. This lack of diversification may negatively impact our operating results and profitability.
• We may attempt to simultaneously complete business combinations with multiple prospective targets, which may hinder our ability to complete our initial business combination and give rise to increased costs and risks that could negatively impact our operations and profitability.
• We may attempt to complete our initial business combination with a private company about which little information is available, which may result in an initial business combination with a company that is not as profitable as we suspected, if at all.
• If we effect our initial business combination with a company with operations or opportunities outside of the United States, we would be subject to a variety of additional risks that may negatively impact our operations.
• Risks Relating to our Sponsor and Management Team
• 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 common stock after December 31, 2022.
• Unlike some other blank check companies, we may extend the time to complete a business combination by a one month extension each time without a stockholder vote or their ability to redeem their shares.
• We are dependent upon our executive officers and directors and their departure could adversely affect our ability to operate.
• Since our Sponsor, officers and directors, and the anchor investors will lose their entire investment in us if our initial business combination is not completed (other than with respect to any public shares they acquired), and because our Sponsor, officers and directors and the anchor investors who have an interest in founder shares may profit substantially even under circumstances where our public stockholders would experience losses in connection with their investment, a conflict of interest may arise in determining whether a particular business combination target is appropriate for our initial business combination. In addition, since our Sponsor paid only approximately $0.004 per share for the founder shares, certain of our officers and directors and the anchor investors could potentially make a substantial profit even if we acquire a target business that subsequently declines in value.
• Our officers and directors will allocate their time to other businesses thereby causing conflicts of interest in their determination as to how much time to devote to our affairs. This conflict of interest could have a negative impact on our ability to complete our initial business combination.
• Certain of our officers and directors are now, and all of them may in the future become, affiliated with entities engaged in business activities similar to those intended to be conducted by us and, accordingly, may have conflicts of interest in allocating their time and determining to which entity a particular business opportunity should be presented.
• Our officers, directors, security holders and their respective affiliates may have competitive pecuniary interests that conflict with our interests.
• We may engage in an initial business combination with one or more target businesses that have relationships with entities that may be affiliated with our Sponsor, officers, directors or existing holders which may raise potential conflicts of interest.
• Our management may not be able to maintain control of a target business after our initial business combination.
• Changes in the market for directors’ and officers’ liability insurance could make it more difficult and more expensive for us to negotiate and complete an initial business combination.
• Risks Relating to our Securities
• If we are deemed to be an investment company under the Investment Company Act, we may be required to institute burdensome compliance requirements and our activities may be restricted, which may make it difficult for us to complete our initial business combination.
• On March 11, 2024, the NYSE suspended trading of our securities on the NYSE and commenced proceedings to delist our securities from trading on its exchange and on March 26, 2024 our securities were delisted from the NYSE, which could limit investors’ ability to make transactions in our securities and subject us to additional trading restrictions.
• If we seek stockholder approval of our initial business combination and we do not conduct redemptions pursuant to the tender offer rules, and if our stockholders or a “group” of stockholders are deemed to hold in excess of 15% of our Class A common stock, our stockholders will lose the ability to redeem all such shares in excess of 15% of our Class A common stock.
• We have not registered the shares of Class A common stock issuable upon exercise of the warrants under the Securities Act or any state securities laws at this time, and such registration may not be in place when an investor desires to exercise warrants, thus precluding such investor from being able to exercise its warrants except on a cashless basis. If the issuance of the shares upon exercise of warrants is not registered, qualified or exempt from registration or qualification, the holder of such warrant will not be entitled to exercise such warrant and such warrant may have no value and expire worthless.
• If a warrant holder exercises their public warrants on a “cashless basis,” they will receive fewer shares of Class A common stock from such exercise than if they were to exercise such warrants for cash.
• The grant of registration rights to our initial stockholders and the anchor investors may make it more difficult to complete our initial business combination, and the future exercise of such rights may adversely affect the market price of our Class A common stock.
• In March 2021, our Sponsor paid an aggregate of $25,000, or approximately $0.003 per founder share, and, accordingly, investors in our IPO experienced immediate and substantial dilution from the purchase of our Class B common stock. In September 2021, our Sponsor forfeited 2,156,250 founder shares, resulting in our Sponsor holding 5,750,000 founder shares, for which it paid approximately $0.004 per share on a post-forfeiture basis.
• Unlike many other similarly structured blank check companies, holders of our founder shares will receive additional shares of Class A common stock if we issue shares to consummate an initial business combination.
• We may amend the terms of the warrants in a manner that may be adverse to holders of public warrants with the approval by the holders of at least a majority of the then outstanding public warrants. As a result, the exercise price of the stockholders’ warrants could be increased, the exercise period could be shortened and the number of shares of our Class A common stock purchasable upon exercise of a warrant could be decreased, all without their approval.
• Our warrants are accounted for as a warrant liability and have been recorded at fair value upon issuance with changes in fair value each period reported in earnings, which may have an adverse effect on the market price of our Class A common stock or may make it more difficult for us to consummate an initial business combination.
• We may redeem our stockholders’ unexpired warrants prior to their exercise at a time that is disadvantageous to our stockholders, thereby making their warrants worthless.
• Our warrants and founder shares may have an adverse effect on the market price of our Class A common stock and make it more difficult to effectuate our initial business combination.
• A provision of our warrant agreement may make it more difficult for use to consummate an initial business combination.
• An active trading market for our securities may not be sustained, which would adversely affect the liquidity and price of our securities.
• Provisions in our certificate of incorporation and Delaware law may inhibit a takeover of us, which could limit the price investors might be willing to pay in the future for our Class A common stock and could entrench management.
• The nominal purchase price paid by our Sponsor for the founder shares may result in significant dilution to the implied value of our public shares upon the consummation of our initial business combination.
• The value of the founder shares following completion of our initial business combination is likely to be substantially higher than the nominal price paid for them, even if the trading price of our common stock at such time is substantially less than $10.00 per share.
• Our certificate of incorporation requires, to the fullest extent permitted by law, that derivative actions brought in our name, actions against our directors, officers, other employees or stockholders for breach of fiduciary duty and certain other actions may be brought only in the Court of Chancery in the State of Delaware and, if brought outside of Delaware, the stockholder bringing the suit will, subject to certain exceptions, be deemed to have consented to service of process on such stockholder’s counsel, which may have the effect of discouraging lawsuits against our directors, officers, other employees or stockholders.
• An investment in our securities, and certain subsequent transactions with respect to our securities, may result in uncertain or adverse U.S. federal income tax consequences for an investor.
• Our warrant agreement designates the courts of the State of New York located in the in the Borough of Manhattan or the United States District Court for the Southern District of New York as the exclusive forums for certain types of actions and proceedings that may be initiated by holders of our warrants, which could limit the ability of warrant holders to obtain a favorable judicial forum for disputes with our company.
• We are a company with no operating history and no revenues, and our stockholders have no basis on which to evaluate our ability to achieve our business objective.
• Past performance by our management team and its affiliates may not be indicative of future performance of an investment in the Company.
• Changes in laws, regulations or rules, or a failure to comply with any laws, regulations or rules, may adversely affect the Company’s business, including its ability to negotiate and consummate a business combination, investments and results of operations.
• To mitigate the risk that we might be deemed to be an investment company for purposes of the Investment Company Act, we have from time to time assessed, and plan to continue to assess, the relevant risk and it is possible that to mitigate the risk of the Company being deemed to have been operating as an unregistered investment company (including under the subjective test of Section 3(a)(1)(A) of the Investment Company Act), the Company may instruct the trustee with respect to the trust account to liquidate the U.S. government treasury obligations and money market funds held in the trust account and to hold all funds in the trust account in cash until the earlier of consummation of the Company’s initial business combination or liquidation. Following any such liquidation of investments in the trust account, we would likely receive minimal interest, if any, on the funds held in the trust account, which would reduce the dollar amount our public stockholders would receive upon any redemption or liquidation of the Company.
• We are an “emerging growth company” and “smaller reporting company” within the meaning of the Securities Act, and if we take advantage of certain exemptions from disclosure requirements available to emerging growth companies and smaller reporting companies, this could make our securities less attractive to investors and may make it more difficult to compare our performance with other public companies.
• Cyber incidents or attacks directed at us could result in information theft, data corruption, operational disruption and/or financial loss.