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Iron Horse Acquisitions(IROH) - 2023 Q4 - Annual Report
IROHIron Horse Acquisitions(IROH)2024-04-01 20:44

Industry Overview - The global M&E industry reached 2.2trillioninrevenuesin2021andisprojectedtogrowto2.2 trillion in revenues in 2021 and is projected to grow to 2.6 trillion by 2025[19]. - The company aims to identify attractive targets within the M&E industry, focusing on content studios, film production, and gaming, among others[18]. Acquisition Strategy - The acquisition strategy includes targeting companies with high growth trajectories and strong earnings potential within the M&E industry[37]. - The management team plans to utilize their extensive networks to identify potential acquisition opportunities outside typical competitive deal sourcing[28]. - The company will conduct thorough due diligence on potential targets, including financial reviews and management interviews[38]. - The company intends to seek target businesses with a fair market value of at least 80% of the trust account balance at the time of the initial business combination[41]. - The company aims to identify targets that can benefit from its team's diversity and relationships in the media and entertainment (M&E) sector[41]. - The company is looking for businesses capitalizing on industry shifts, such as the transition from cable to streaming services and the rise of generative AI technologies[41]. - The company expects ongoing market turbulence, including the 2023 SAG-AFTRA strike and inflation, to create opportunities for acquiring companies at a discount[41]. Management and Team - The management team has a proven track record of successful acquisitions and value creation in the M&E sector, leveraging proprietary connections[21]. - The management team believes that diverse teams outperform non-diverse counterparts, enhancing attractiveness to potential M&E targets[26]. - The management team includes individuals with significant experience in media and entertainment, enhancing the company's ability to execute successful transactions[27]. Financial Overview - The company has available funds for an initial business combination amounting to 66,481,500afterdeducting66,481,500 after deducting 2,518,500 in deferred underwriting fees and other offering costs[81]. - The company completed its IPO on December 29, 2023, selling 6,900,000 units at 10.00perunit,generatinggrossproceedsof10.00 per unit, generating gross proceeds of 69,000,000[104]. - A total of 69,578,955washeldinaTrustAccountforthebenefitofthecompany′spublicstockholdersasofFebruary29,2024[109].−FortheyearendedDecember31,2023,thecompanyreportedanetlossof69,578,955 was held in a Trust Account for the benefit of the company's public stockholders as of February 29, 2024[109]. - For the year ended December 31, 2023, the company reported a net loss of 308,792, with formation and operating costs of 309,018[116].−CashusedinoperatingactivitiesfortheyearendedDecember31,2023,was309,018[116]. - Cash used in operating activities for the year ended December 31, 2023, was 83,200[120]. - The company incurred total offering costs of 4,651,705,including4,651,705, including 586,500 in cash underwriting fees[119]. - As of December 31, 2023, the company had 69,000,000incashheldinthetrustaccount,intendedforabusinesscombination[122].−Thecompanyhasnolong−termdebtorcapitalleaseobligationsasofDecember31,2023[128].CorporateGovernance−Thecompanyhasadiverseboardwithmembershavingextensiveexperienceinfinance,operations,andcorporategovernance[147].−TheBoardofDirectorshasfourstandingcommittees:executive,audit,compensation,andnominatingandcorporategovernance[163].−Theauditcommitteeiscomposedsolelyofindependentdirectorsandisresponsibleforreviewingannualauditedfinancialstatementsanddiscussingsignificantfinancialreportingissues[166].−ThecompensationcommitteeevaluatestheCEO′sperformanceanddeterminesremunerationbasedonestablishedcorporategoals[176].−ThecompanyhasaCodeofEthicsapplicabletodirectors,officers,andemployees,whichisfiledasExhibit14totheAnnualReport[174].−Theauditcommitteeincludesmemberswhoqualifyas"auditcommitteefinancialexperts"underSECregulations[168].−Thecompanyhasagreednottoconsummateaninitialbusinesscombinationwithanentityaffiliatedwithanyofficersordirectorswithoutindependentvaluationopinions[182].StockholderRightsandRedemption−Publicstockholderswillhavetheoptiontoconverttheirsharesintotheirproratashareofthetrustaccountuponapprovaloftheinitialbusinesscombination[56].−Initialstockholdersandofficerswillnothaveredemptionrightsforsharesownedbytheminconnectionwiththeproposedbusinesscombination[57].−Iftheinitialbusinesscombinationisnotcompleted,publicstockholderswhoelectedtoexercisetheirredemptionrightswillnotbeentitledtoconverttheirsharesforaproratashareofthetrustaccount[63].−Theinitialper−shareredemptionpriceisexpectedtobe69,000,000 in cash held in the trust account, intended for a business combination[122]. - The company has no long-term debt or capital lease obligations as of December 31, 2023[128]. Corporate Governance - The company has a diverse board with members having extensive experience in finance, operations, and corporate governance[147]. - The Board of Directors has four standing committees: executive, audit, compensation, and nominating and corporate governance[163]. - The audit committee is composed solely of independent directors and is responsible for reviewing annual audited financial statements and discussing significant financial reporting issues[166]. - The compensation committee evaluates the CEO's performance and determines remuneration based on established corporate goals[176]. - The company has a Code of Ethics applicable to directors, officers, and employees, which is filed as Exhibit 14 to the Annual Report[174]. - The audit committee includes members who qualify as "audit committee financial experts" under SEC regulations[168]. - The company has agreed not to consummate an initial business combination with an entity affiliated with any officers or directors without independent valuation opinions[182]. Stockholder Rights and Redemption - Public stockholders will have the option to convert their shares into their pro rata share of the trust account upon approval of the initial business combination[56]. - Initial stockholders and officers will not have redemption rights for shares owned by them in connection with the proposed business combination[57]. - If the initial business combination is not completed, public stockholders who elected to exercise their redemption rights will not be entitled to convert their shares for a pro rata share of the trust account[63]. - The initial per-share redemption price is expected to be 10.00, but this could be affected by claims from creditors[73]. - Public stockholders will only receive funds from the trust account if the company fails to complete a business combination within the required time period[74]. Operational Matters - The company has not yet selected a specific target for its initial business combination but expects to leverage existing relationships to identify candidates[40]. - The company has not engaged in any operations since the IPO and is solely focused on identifying suitable acquisition candidates[83]. - The company does not own any real estate and pays 12,000permonthforofficespaceandrelatedservicesprovidedbyitssponsor[92].−Thecompanyhasthreeexecutiveofficerswhoarenotobligatedtodevotespecifichourstothecompany′saffairs[88].−ThecompanyhasnotencounteredanysignificantcybersecurityriskssinceitsIPOandhasnotadoptedaformalcybersecurityriskmanagementprogram[91].LegalandCompliance−ThecompanyhassettledalawsuitwithOmniaGlobalwithoutadmissionoffault,andisdeterminingtheallocationofsettlementproceeds[94].−Thecompanymustadoptaplantoprovideforpaymentofallexistingandpendingclaimswithintenyears,butthelikelihoodofclaimsislimitedduetoitsstatusasablankcheckcompany[70][71].−ThecompanywillnotcomplywithcertainDelawareGeneralCorporationLawprocedures,whichmayexposestockholderstopotentialliabilities[70][71].−Thecompanyhasagreedthatinitialstockholders,officers,anddirectorswillnotproposeamendmentsthataffectpublicstockholders′abilitytoconvertorselltheirsharesinconnectionwithabusinesscombination[67].FuturePlans−ThecompanyplanstocompleteabusinesscombinationbeforethemandatoryliquidationdateofDecember29,2024[126].−Thecompanyhasa12−monthperiodfromtheclosingofitsIPOtocompleteaninitialbusinesscombination,whichcanbeextendedupto18monthswithadditionaldepositsof12,000 per month for office space and related services provided by its sponsor[92]. - The company has three executive officers who are not obligated to devote specific hours to the company's affairs[88]. - The company has not encountered any significant cybersecurity risks since its IPO and has not adopted a formal cybersecurity risk management program[91]. Legal and Compliance - The company has settled a lawsuit with Omnia Global without admission of fault, and is determining the allocation of settlement proceeds[94]. - The company must adopt a plan to provide for payment of all existing and pending claims within ten years, but the likelihood of claims is limited due to its status as a blank check company[70][71]. - The company will not comply with certain Delaware General Corporation Law procedures, which may expose stockholders to potential liabilities[70][71]. - The company has agreed that initial stockholders, officers, and directors will not propose amendments that affect public stockholders' ability to convert or sell their shares in connection with a business combination[67]. Future Plans - The company plans to complete a business combination before the mandatory liquidation date of December 29, 2024[126]. - The company has a 12-month period from the closing of its IPO to complete an initial business combination, which can be extended up to 18 months with additional deposits of 229,770 for each three-month extension[64][65]. - The company plans to liquidate assets promptly after the 12-month anniversary (or up to 18 months if extended) and anticipates it will take no more than 10 business days to effectuate such distribution[72].