UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
☒ANNUAL REPORT PURSUANT TO SECTION 13
OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2024
or
☐TRANSITION REPORT UNDER SECTION 13 OR
15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _____________ to
______________
Iron Horse Acquisitions Corp.
(Exact name of registrant as specified in its charter)
(Address of Principal Executive Offices) (Zip Code)
Registrant’s telephone number, including
area code: (310)290-5383
Securities registered pursuant to Section 12(b)
of the Act:
Title of each class Trading Symbol(s) Name of each exchange on which registered
Common Stock IROH The Nasdaq Stock Market LLC
Rights IROHR The Nasdaq Stock Market LLC
Units IROHU The Nasdaq Stock Market LLC
Warrants IROHW The Nasdaq Stock Market LLC
Securities registered pursuant to Section 12(g)
of the Act: None.
Indicate by check mark if the registrant is a
well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐ No ☒
Indicate by check mark if the registrant is not
required to file reports pursuant to Section 13 or Section 15(d) of the Exchange Act. Yes ☐ No ☒
Indicate by check mark whether the registrant
(1) has filed all reports required by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for
such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the
past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant
has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405
of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes
☒ No ☐
Indicate by check mark whether the Registrant
is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company.
See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company”
and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer ☐ Accelerated filer ☐
Non-accelerated filer ☒ Smaller reporting company ☒
Emerging Growth Company ☒
If an emerging growth company, indicate by check
mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting
standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant
has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial
reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or
issued its audit report. ☐
If securities are registered pursuant to Section
12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction
of an error to previously issued financial statements. ☐
Indicate by check mark whether any of those error
corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive
officers during the relevant recovery period pursuant to §240.10D-1(b). ☐
Indicate by check mark whether the registrant
is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☒ No ☐
At June 30, 2024, the aggregate market value of
the voting and non-voting common stock held by non-affiliates of the Registrant was $ 69,414,000.
As of February 21, 2025, the Registrant had 8,867,000
shares of common stock outstanding (inclusive of shares included in our units).
DOCUMENTS INCORPORATED BY REFERENCE
None.
Iron
Horse Acquisitions Corp.
Annual Report on Form 10-K for the Year Ended
December 31, 2024
part I
ITEM 1. BUSINESS 1
ITEM 1A. RISK FACTORS 11
ITEM 1B. UNRESOLVED STAFF COMMENTS 11
ITEM 1C. CYBERSECURITY 11
ITEM 2. PROPERTIES 11
ITEM 3. LEGAL PROCEEDINGS 11
ITEM 4. MINE SAFETY DISCLOSURES 11
part II
ITEM 6. [RESERVED] 13
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK 15
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA 15
ITEM 9A. CONTROLS AND PROCEDURES 16
ITEM 9B. OTHER INFORMATION 16
ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS 16
part III
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE 17
ITEM 11. EXECUTIVE COMPENSATION 23
ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES 28
part IV
ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES 29
i
CERTAIN TERMS
When used throughout this Annual Report on Form 10-K, references to:
● “we,” “us,” “our,” or “the Company” are to Iron Horse Acquisitions Corp.
● the “Board” are to our Board of Directors.
● the “SEC” are to the U.S. Securities and Exchange Commission.
● “NASDAQ” are to the Nasdaq Global Market.
● the “Securities Act” are to the Securities Act of 1933, as amended.
● the “Exchange Act” are to the Securities Exchange Act of 1934, as amended.
● our “sponsor” are to Bengochea SPAC Sponsors I LLC.
● our “management” or our “management team” refer to our officers and directors.
ii
SPECIAL NOTE REGARDING FORWARD LOOKING STATEMENTS
This Annual Report on Form 10-K contains forward-looking
statements within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act. Statements in this Annual Report
that are not purely historical are forward-looking statements. Our forward-looking statements include, but are not limited to, statements
regarding our or our management’s expectations, hopes, beliefs, intentions or strategies regarding the future. In addition, any
statements that refer to projections, forecasts or other characterizations of future events or circumstances, including any underlying
assumptions, are forward-looking statements. The words “anticipates,” “believe,” “continue,” “could,”
“estimate,” “expect,” “intend,” “may,” “might,” “plan,” “possible,”
“potential,” “predicts,” “project,” “should,” “would” and similar expressions
may identify forward-looking statements, but the absence of these words does not mean that a statement is not forward-looking. Forward-looking
statements in this Annual Report may include, for example, statements about:
● our ability to complete our initial business combination;
● our pool of prospective target businesses;
● our public securities’ potential liquidity and trading;
● the lack of a market for our securities;
● our use of proceeds not held in the trust account; or
The forward-looking statements contained in this
Annual Report are based on our current expectations and beliefs concerning future developments and their potential effects on us. There
can be no assurance that future developments affecting us will be those that we have anticipated. These forward-looking statements involve
a number of risks, uncertainties (some of which are beyond our control) or other assumptions that may cause actual results or performance
to be materially different from those expressed or implied by these forward-looking statements. These risks and uncertainties include,
but are not limited to, those factors described under the heading “Risk Factors” in our Prospectus. Should one or more
of these risks or uncertainties materialize, or should any of our assumptions prove incorrect, actual results may vary in material respects
from those projected in these forward-looking statements. We undertake no obligation to update or revise any forward-looking statements,
whether as a result of new information, future events or otherwise, except as may be required under applicable securities laws.
iii
part
I
ITEM 1. BUSINESS
General
We are a blank check company
incorporated as a Delaware corporation whose business purpose is to effect a merger, capital stock exchange, asset acquisition, stock
purchase, reorganization or similar business combination with one or more businesses.
On December 29, 2023, we consummated
our IPO of 6,900,000 Units, which amount includes partial exercise of the underwriters’ over-allotment option for 800,000 Units
and 100,000 Units registered pursuant to a registration statement on Form S-1MEF (File No. 333-276282) pursuant to Rule 462(b) under the
Securities Act of 1933, as amended, filed on December 27, 2023, in addition to the Units registered pursuant to the Company’s registration
statement on Form S-1 (File No. 333-275076) with respect to the IPO. Each Unit consisting of one share of Common Stock, one warrant to
purchase one share of Common Stock at a price of $11.50, and one right entitling the holder to receive one-fifth (1/5) of one share of
Common Stock upon consummation of our initial business combination. The Units were sold at a price of $10.00 per Unit, generating gross
proceeds of $$69,000,000. Simultaneously with the closing of the IPO, we consummated the private placement (the “Private Placement”)
with Bengochea SPAC Sponsors I LLC, our sponsor, of 2,457,000 warrants, generating total proceeds of $2,457,000.
The Private Warrants are identical
to the Warrants (as defined below) sold in the IPO except that the Private Warrants are non-redeemable and may be exercised on a cashless
basis, in each case so long as they continue to be held by the Sponsor, or its permitted transferees. Additionally, our Sponsor agreed
not to transfer, assign, or sell any of the Private Warrants or underlying securities (except in limited circumstances, as described in
the Private Placement Warrants Subscription Statement) until the date we complete our initial business combination. The Sponsor was granted
certain demand and piggyback registration rights in connection with the purchase of the Private Warrants.
A total of $69,000,000 of
the net proceeds from the sale of Units in the IPO and the net proceeds from the Privat e Placement was placed in a trust account established
for the benefit of our public shareholders in a trust account at J.P. Morgan Chase Bank, N.A. maintained by Continental Stock Transfer
& Trust Company, acting as trustee. None of the funds held in trust will be released from the trust account, other than interest income
to pay any tax obligations, until the earlier of (i) the consummation of the initial business combination, (ii) our failure to consummate
a business combination by March 29, 2025 (or, if extended, June 29, 2024, if applicable), (iii) the redemption of any public shares properly
submitted in connection with a stockholder vote to amend our amended and restated certificate of incorporation (a) to modify the substance
or timing of the ability of holders of our public shares to seek redemption in connection with our initial business combination or our
obligation to redeem 100% of the public shares if we do not complete an initial business combination by March 29, 2025 (or, if extended,
June 29, 2024), if applicable, or (b) with respect to any other provision relating to stockholders’ rights or pre-business combination
activity.
Recent Developments
Entry into the Share Exchange Agreement
On September 27, 2024, we entered into a Share
Exchange Agreement, which was subsequently amended and restated effective December 18, 2024, by and among Iron Horse, Rosy Sea Holdings
Limited, a company incorporated and existing under the laws of the British Virgin Islands (“Seller”) and Zhong Guo Liang Tou
Group Limited, a company incorporated and existing under the laws of the British Virgin Islands (“CFI”) and a wholly owned
subsidiary of Seller. Pursuant to the terms of the Business Combination Agreement, Iron Horse will purchase from Seller the ordinary shares
of CFI, in exchange for shares of Common Stock of Iron Horse, as a result of which CFI will become a wholly owned subsidiary of Iron Horse.
In connection with the acquisition, Iron Horse will change its name to “CN Healthy Food Tech Group Corp.” The board of directors
of Iron Horse has unanimously (i) approved and declared advisable the Business Combination Agreement and the transactions contemplated
by the Business Combination Agreement and Additional Agreements, and (ii) resolved to recommend approval of the Business Combination Agreement
and related matters by the stockholders of Iron Horse once the Registration Statement has been declared effective. The Share Exchange
Agreement provides, among other things, that we will purchase from Seller the ordinary shares of CFI in exchange for shares of the Company’s
Common Stock, as a result of which the CFI will become a wholly owned subsidiary of Iron horse. Assuming that public holders of Common
Stock eligible to have the Company redeem all or a portion of their shares of Common Stock in connection with the proposals to be presented
to the Company’s stockholders at a meeting of such stockholders (the “Stockholder Meeting”) approve (the “Stockholders’
Approval”) the Business Combination Agreement and the transactions contemplated thereby and by the related agreements (the “Transactions”)
and certain related proposals (collectively, the “Transaction Proposals”) for a pro rata share of the funds on deposit in
the Trust Account, the Company will issue to Seller 47,888,000 shares of Common Stock (the “Consideration”) pursuant to the
Business Combination Agreement. The number of shares of Common Stock constituting the Consideration will be reduced on a one-for-one basis
by the number of shares of Common Stock that remain in the Trust Account immediately prior to the closing of the Transactions (the “Closing”),
such that if no eligible shares are redeemed, the number of shares of Common Stock constituting the Consideration will be 40,988,000.
1
Acquisition Strategy
Our team leveraged its skills
and expertise to identify attractive target companies and provide guidance on the benefits of being a publicly-traded entity, including
broader access to capital, increased liquidity for potential acquisitions, expanded branding opportunities in the marketplace, and reputational
and consumer confidence gains, and on the process of transitioning from a private company to a public registrant. Consistent with this
strategy, we identified various parameters and criteria that we think are important and relevant in evaluating prospective target businesses.
We applied these parameters in evaluating prospects.
Although we disclosed in the
IPO prospectus that we intended to initially focus on target companies within the media & entertainment industry with a primary focus
on the United States, and in particular on identifying attractive targets among content studios and film production, family entertainment,
animation, music, gaming, e-sports, talent management, and talent-facing brands and businesses, we considered prospective target businesses
that were not limited to that industry or to a specific geographic region although. During this search process, we evaluated approximately
59 business combination opportunities in North America as well as in Asia and in Europe, across a broad range of sectors including media,
entertainment, live events, sports, health & fitness, AI, gaming, music, online gambling, fashion, consumer products, and more before
deciding to move ahead with CFI.
These criteria are not intended
to be exhaustive. Any evaluation relating to the merits of a particular initial business combination may be based, to the extent relevant,
on these general guidelines, as well as other considerations, factors and criteria deemed relevant by our management in effecting our
initial business combination consistent with our business objectives.
As noted above, since CFI
is not in the media and entertainment space, not all of the initial criteria and guidelines above were applicable. However, in evaluating
CFI, we conducted a due diligence review which encompassed, among other things, meetings with incumbent management and employees, document
reviews, interviews of distributors and suppliers, inspections of facilities, as well as reviewing financial and other information that
was will be made available to us.
2
Selection of a Target Business and Structuring of a Business
Combination
Subject to our management
team’s fiduciary obligations and the limitations that a target business have a fair market value of at least 80% of the balance
in the trust account (net of deferred underwriting commissions and taxes payable) at the time of the execution of a definitive agreement
for our initial business combination, and that we must acquire a controlling interest in the target business, our management will have
virtually unrestricted flexibility in identifying and selecting a prospective target business. We have not established any specific attributes
or criteria (financial or otherwise) for prospective target businesses other than the parameters described in the section titled “Acquisition
Strategy” in this Annual Report. In evaluating a prospective target business, our management may consider a variety of factors in
addition to those parameters, including:
● financial condition and results of operation;
● growth potential;
● brand recognition and potential;
● experience and skill of management and availability of additional personnel;
● capital requirements;
● competitive position;
● barriers to entry;
● stage of development of the products, processes or services;
● existing distribution and potential for expansion;
● impact of regulation on the business;
● regulatory environment of the industry;
● costs associated with effecting the business combination;
● macro competitive dynamics in the industry within which the company competes.
These criteria are not intended
to be exhaustive. Any evaluation relating to the merits of a particular business combination will be based, to the extent relevant, on
the above factors as well as other considerations deemed relevant by our management team in effecting a business combination consistent
with our business objective. In evaluating a prospective target business, we will conduct an extensive due diligence review which will
encompass, among other things, meetings with incumbent management and inspection of facilities, as well as review of financial and other
information which is made available to us. This due diligence review will be conducted either by our directors, officers, and/or strategic
advisors, our professional advisors (such as lawyers, accountants, and financial advisors), and by unaffiliated third parties we may engage
or that our sponsor may engage on our behalf pursuant to our administrative services agreement with our sponsor.
The time and costs required
to select and evaluate a target business and to structure and complete our initial business combination cannot presently be ascertained
with any degree of certainty. Any costs incurred with respect to the identification and evaluation of a prospective target business with
which a business combination is not ultimately completed will result in a loss to us and reduce the amount of capital available to otherwise
complete a business combination.
Fair Market Value of Target Business
NASDAQ listing rules require
that the target business or businesses that we acquire must collectively have a fair market value equal to at least 80% of the balance
of the funds in the trust account (net of deferred underwriting commissions and taxes payable) at the time of the execution of a definitive
agreement for our initial business combination. Notwithstanding the foregoing, if we are not then listed on NASDAQ for whatever reason,
we would no longer be required to meet the foregoing 80% fair market value test.
3
We currently anticipate structuring
a business combination to acquire 100% of the equity interests or assets of the target business or businesses. We may, however, structure
our initial business combination where we merge directly with the target business or a newly formed subsidiary or where we acquire less
than 100% of such interests or assets of the target business in order to meet certain objectives of the target management team or stockholders
or for other reasons, but we do not intend to complete such business combination unless the post-transaction company owns or acquires
50% or more of the outstanding voting securities of the target or otherwise acquires a controlling interest in the target sufficient for
it not to be required to register as an investment company under the Investment Company Act of 1940, as amended. Even if the post-transaction
company owns or acquires 50% or more of the voting securities of the target, our stockholders prior to the business combination may collectively
own a minority interest in the post-transaction company, depending on valuations ascribed to the target and us in the business combination
transaction. For example, we could pursue a transaction in which we issue a substantial number of new shares in exchange for all of the
outstanding capital stock of a target. In this case, we could acquire a 100% controlling interest in the target; however, as a result
of the issuance of a substantial number of new shares, our stockholders immediately prior to our initial business combination could own
less than a majority of our outstanding shares subsequent to our initial business combination. If less than 100% of the equity interests
or assets of a target business or businesses are owned or acquired by the post-transaction company, the portion of such business or businesses
that is owned or acquired is what will be valued for purposes of the 80% of trust account balance test.
The fair market value of the
target will be determined by our Board of Directors based upon one or more standards generally accepted by the financial community (such
as actual and potential sales, earnings, cash flow and/or book value). The proxy solicitation materials or tender offer documents used
by us in connection with any proposed transaction will provide public stockholders with our analysis of the fair market value of the target
business, as well as the basis for our determinations. If our Board is not able to independently determine that the target business has
a sufficient fair market value, we will obtain an opinion from an unaffiliated, independent investment banking firm, or another independent
entity that commonly renders valuation opinions, with respect to the satisfaction of such criteria. We will not be required to obtain
an opinion from an investment banking firm as to the fair market value if our Board of Directors independently determines that the target
business complies with the 80% threshold.
Business Combination Agreement
On September 27, 2024, Iron Horse entered into
the Business Combination Agreement which was subsequently amended and restated effective December 18, 2014, by and among Iron Horse, Seller
and CFI. and a wholly owned subsidiary of Seller. Pursuant to the terms of the Business Combination Agreement, Iron Horse will purchase
from Seller the ordinary shares of CFI in exchange for shares of Common Stock of Iron Horse, as a result of which CFI will become a wholly
owned subsidiary of Iron Horse. In connection with the acquisition, Iron Horse will change its name to “CN Healthy Food Tech Group
Corp.” The board of directors of Iron Horse has unanimously (i) approved and declared advisable the Business Combination Agreement
and the transactions contemplated by the Business Combination Agreement and Additional Agreements, and (ii) resolved to recommend approval
of the Business Combination Agreement and related matters by the stockholders of Iron Horse once the Registration Statement has been declared
effective. The following is a summary of the material changes that were included in the amended and restated Business Combination Agreement:
(i) including CFI as a party to the Business Combination, which included CFI making the representations and warranties; (ii) including
compensation to the Sponsor in the amount of $2,000,000 to be paid at the Closing; and (iii) updating Section 11.6 to include the additional
Acquiror expenses that will be paid by CFI at the Closing and to include that the Acquiror Promissory Note will remain outstanding if
the Closing does not occur due to a Terminating Acquiror Breach, that is not cured, or regulatory action.
Assuming that Iron Horse’s public stockholders
elect to redeem all such eligible shares of Common Stock, Iron Horse will issue to Seller 47,888,000 shares of Common Stock (the “Consideration
Shares”) pursuant to the Business Combination Agreement. The number of shares of Common Stock constituting the Consideration Shares
will be reduced on a one-for-one basis by the number of shares of Common Stock that remain in the trust account immediately prior to the
closing of the Business Combination (the “Closing”), such that if no eligible shares are redeemed, the number of shares of
Common Stock constituting the Consideration Shares will be 40,988,000.
Representations and Warranties; Covenants
The parties to the Business Combination Agreement
have agreed to customary representations and warranties for transactions of this type including representations and warranties with respect
to CFI made by Seller. In addition, the parties agreed to be bound by certain customary covenants for transactions of this type, including,
among others, covenants with respect to the conduct of Iron Horse and CFI and its subsidiaries during the period between the execution
of the Business Combination Agreement and the Closing. Each of Seller and Iron Horse also agreed to use reasonable best efforts to obtain
all material consents and approvals of third parties that the parties are required to obtain in order to consummate the Transactions,
and to take or cause such other action as may be reasonably necessary or as the other party may reasonably request to consummate the Transactions
as soon as practicable. Additionally, the parties have agreed not to facilitate, negotiate or enter into competing transactions, as further
provided in the Business Combination Agreement.
Iron Horse and Seller also agreed, among other
things, that during the period between the execution of the Business Combination Agreement and the Closing, to the extent permitted by
applicable law, they will, and will cause their subsidiaries to, allow the other party and its representatives to continue to conduct
due diligence investigations and examinations of CFI and its subsidiaries (on the part of Iron Horse) or Iron Horse (on the part of Seller),
and cooperate with the other party and its representatives regarding all other due diligence matters, including document requests.
4
Iron Horse agreed to take all action within its
power so that immediately following the Closing, Iron Horse’s board of directors will consist of no fewer than five individuals,
two of whom may be designated by Iron Horse’s sponsor, and a majority of whom must qualify as independent directors under applicable
stock exchange regulations, and that shall comply with all diversity requirements under applicable law. Seller agreed to take all action
within its power so that immediately following the Closing, the board of directors of CFI and each subsidiary thereof consist of directors
designated in writing by Iron Horse and that complies with applicable law.
Non-Solicitation Restrictions
Each of Iron Horse and CFI has agreed that from
the date of the Agreement to the earlier of the Closing and the termination of the Agreement, neither CFI, on the one hand, nor Iron Horse,
on the other hand, will (and will cause their respective Representatives not to) directly or indirectly:
Conditions to Closing
Under the Business Combination Agreement, the obligations
of Iron Horse to consummate the Transactions are subject to the satisfaction or waiver of certain closing conditions, including, without
limitation:
● the Stockholders’ Approval having been obtained;
● material compliance by Seller with its pre-closing covenants;
5
Under the Business Combination Agreement, the obligations
of Seller to consummate the Transactions are subject to the satisfaction or waiver of certain closing conditions, including, without limitation:
● material compliance by Iron Horse with its pre-closing covenants; and
Termination
The Business Combination Agreement provides that
it may be terminated, and the Transactions abandoned, under certain customary and limited circumstances, including, without limitation:
● upon the mutual written consent of Seller and Iron Horse;
Neither Seller nor Iron Horse is required to pay a termination fee
or reimburse the other for its expenses as a result of a termination of the Business Combination Agreement. Each of them will, however,
remain liable for willful and material breaches of the Business Combination Agreement prior to termination.
Other Agreements
Shareholder Support Agreement
The Business Combination Agreement provides that,
subsequent to the execution and delivery of the Business Combination Agreement, Seller, Iron Horse and CFI will enter into a voting and
support agreement pursuant to which, among other things, Seller will agree that it will not transfer and will vote its ordinary shares
of CFI in favor of the Business Combination Agreement (including by execution of a written consent) and the Transactions, and that it
will take such other actions as may be necessary to further its performance of the Business Combination Agreement and the consummation
of the Transactions.
Sponsor Support Agreement
The Business Combination Agreement provides that,
subsequent to the execution and delivery of the Business Combination Agreement, Seller, Iron Horse and Iron Horse’s sponsor will
enter into a voting support agreement pursuant to which, among other things, the sponsor will agree that it will not transfer and will
vote its shares of Common Stock and Iron Horse’s preferred stock, or any additional shares of Common Stock or Iron Horse’s
preferred stock that it acquires prior to the Stockholder Meeting, in favor of the Business Combination Agreement and the Transactions
and each of the Transaction Proposals.
Lock-Up Agreement
The Business Combination Agreement provides that,
subsequent to the execution and delivery of the Business Combination Agreement, Seller will enter into lock-up agreements with Iron Horse
pursuant to which, among other things, Seller will agree that it will not sell, for the period set forth therein, the shares of Common
Stock it receives under the Business Combination Agreement.
6
Registration Rights Agreement
The Business Combination Agreement provides that
Iron Horse and Seller will at the Closing enter into a registration rights agreement pursuant to which, among other things, Iron Horse
will agree to provide Seller with certain rights relating to the registration for resale of the shares of Common Stock it receives under
the Business Combination Agreement.
Consulting Agreements
The Business Combination Agreement provides that
New CFI will enter into a Consulting Agreement with each of Mr. Bengochea and Mr. Caragol, which will be effective immediately after Closing.
Mr. Bengochea and Mr. Caragol shall assist New CFI’s management, Board of Directors and Board committees in regard (i) financial
reporting, (ii) SEC filings (iii) coordination with its auditors, (iv) governance issues, (v) investor relations, and (vi) any other activities
that are reasonably requested. In addition, they will attend all New CFI’s Board of Director meetings as an observer. The Consulting
Agreement will be for a six month term post-Closing, unless earlier terminated or extended by the parties. The consulting fee shall be
500,000 restricted shares of New CFI common stock, which shares shall be registered on a registration statement post-Closing. Any additional
compensation to be paid upon extension of the term shall be mutually agreed to by and between New CFI and each of Mr. Bengochea and Mr.
Caragol. New CFI shall reimburse each of Mr. Bengochea and Mr. Caragol for ordinary and customary expenses incurred in performing the
consulting services. Any extraordinary expenses, require consent of New CFI.
Effecting Our Initial Business Combination
We are not presently engaged in, and we will not
engage in, any operations for an indefinite period of time following the IPO. We intend to effectuate our initial business combination
using cash from the proceeds of the IPO and the private placement of the private placement warrants.
In connection with the proposed business combination,
we are seeking stockholder approval at a meeting called for such purpose at which stockholders may seek to convert their shares, regardless
of whether they vote for or against the proposed business combination or don’t vote at all, into their pro rata share of the aggregate
amount then on deposit in the trust account (net of taxes payable), subject to the limitations described herein and in our amended and
restated certificate of incorporation. We will consummate our initial business combination only if a majority of the outstanding shares
of common stock voted are voted in favor of the business combination. We have no specified maximum percentage threshold for redemptions
in our amended and restated certificate of incorporation and even those public stockholders who vote in favor of our initial business
combination have the right to convert their public shares. As a result, this may make it easier for us to consummate our initial business
combination.
Public stockholders may
therefore have to wait up to 18 months, if we extend the time to complete a business combination by another three months, as
described in this Annual Report) from the closing of our IPO in order to be able to receive a pro rata share of the trust
account.
Our initial stockholders,
officers and directors have agreed (1) to vote any shares of common stock owned by them in favor of any proposed business combination,
(2) not to convert any shares of common stock in connection with a stockholder vote to approve a proposed initial business combination
and (3) not sell any shares of common stock in any tender in connection with a proposed initial business combination.
None of our officers, directors,
initial stockholders or their affiliates has indicated any intention to purchase units or shares of common stock from persons in the open
market or in private transactions. However, if we hold a meeting to approve a proposed business combination and a significant number of
stockholders vote, or indicate an intention to vote, against such proposed business combination or that they wish to convert their shares,
our officers, directors, initial stockholders or their affiliates could make such purchases in the open market or in private transactions
in order to reduce the number of redemptions. Notwithstanding the foregoing, our officers, directors, initial stockholders and their affiliates
will not make purchases of shares of common stock if the purchases would violate Section 9(a)(2) or Rule 10b-5 of the Exchange Act, which
are rules designed to stop potential manipulation of a company’s stock.
Redemption Rights (a/k/a Conversion Rights)
At any meeting called to approve
an initial business combination, public stockholders may seek to convert their shares, regardless of whether they vote for or against
the proposed business combination or do not vote at all, into their pro rata share of the aggregate amount then on deposit in the trust
account as of two business days prior to the consummation of the initial business combination, less any taxes then due but not yet paid.
The per-share amount we will distribute to investors who properly convert their shares will not be reduced by the deferred underwriting
commissions we will pay to EF Hutton.
Our initial stockholders and
our officers and directors will not have redemption rights with respect to any shares of common stock owned by them, directly or indirectly,
whether acquired prior to the IPO or purchased by them in the IPO or in the aftermarket. Additionally, the holders of Founder Shares will
not have redemption rights with respect to the 35,000 shares of Common stock we issued to EF Hutton and its designees in the IPO (the
“Representative Shares”).
7
We may require public stockholders,
whether they are a record holder or hold their shares in “street name,” to either (i) tender their certificates to our transfer
agent or (ii) deliver their shares to the transfer agent electronically using Depository Trust Company’s DWAC (Deposit/Withdrawal
At Custodian) System, at the holder’s option, in each case prior to a date set forth in the proxy materials sent in connection with
the proposal to approve the business combination.
There is a nominal cost associated
with the above-referenced delivery process and the act of certificating the shares or delivering them through the DWAC System. The transfer
agent will typically charge the tendering broker a nominal amount and it would be up to the broker whether or not to pass this cost on
to the holder. However, this fee would be incurred regardless of whether or not we require holders seeking to exercise redemption rights.
The need to deliver shares is a requirement of exercising redemption rights regardless of the timing of when such delivery must be effectuated.
However, in the event we require
stockholders seeking to exercise redemption rights prior to the consummation of the proposed business combination and the proposed business
combination is not consummated this may result in an increased cost to stockholders.
Any proxy solicitation materials
we furnish to stockholders in connection with a vote for any proposed business combination will indicate whether we are requiring stockholders
to satisfy such certification and delivery requirements. Accordingly, a stockholder would have from the time the stockholder received
our proxy statement up until the vote on the proposal to approve the business combination to deliver his or her shares if he or she wishes
to seek to exercise his or her redemptions rights. This time period varies depending on the specific facts of each transaction. However,
as the delivery process can be accomplished by the stockholder, whether or not he is a record holder or his shares are held in “street
name,” in a matter of hours by simply contacting the transfer agent or his broker and requesting delivery of his shares through
the DWAC System, we believe this time period is sufficient for an average investor. However, we cannot assure you of this fact. Please
see the risk factor in our Prospectus titled “In connection with any stockholder meeting called to approve a proposed initial
business combination, we may require stockholders who wish to convert their shares in connection with a proposed business combination
to comply with specific requirements for conversion that may make it more difficult for them to exercise their conversion rights prior
to the deadline for exercising their rights.” for further information on the risks of failing to comply with these requirements.
Any request to convert such
shares once made, may be withdrawn at any time up to the vote on the proposed business combination or the expiration of the tender offer.
Furthermore, if a holder of public shares delivered his or her certificate in connection with an election of their redemption and subsequently
decides prior to the applicable date not to elect to exercise such rights, he or she may simply request that the transfer agent return
the certificate (physically or electronically).
If the initial business combination
is not approved or completed for any reason, then our public stockholders who elected to exercise their redemption rights would not be
entitled to convert their shares for the applicable pro rata share of the trust account. In such case, we will promptly return any shares
delivered by public holders.
Liquidation if No Business Combination
Our amended and restated certificate
of incorporation provides that we will have only 12 months from the closing of our IPO to complete an initial business combination. However,
we may extend the period of time to consummate a business combination up to two times, each by an additional three months (for a total
of 18 months to complete a business combination). In order to extend the time available for the Company to consummate a business Combination,
without the need for a separate stockholder vote, our sponsor must, upon five days’ advance notice prior to the application deadline,
deposit into the trust account $229,770 ($0.0333 per unit), or an aggregate of $459,540, for each three-month extension, on or prior to
the date of the application deadline. On December 16, 2024, Iron Horse deposited $229,770 into the trust account to extend the amount
of time it has available to complete a business combination to March 29, 2025. In the event that the stockholders, or affiliates or designees,
elect to extend the time to complete the Company’s initial business combination and deposit the applicable amount of money into
trust, the initial stockholders will receive a non-interest bearing, unsecured promissory note equal to the amount of any such deposit
that will not be repaid in the event that the Company is unable to close a business combination unless there are funds available outside
the trust account to do so. Such note would be paid upon consummation of the Company’s initial business combination.
If we have not completed an
initial business combination by such date and stockholders have not otherwise amended our charter to extend this date, 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 100% of the outstanding public shares, at a per-share price, payable in cash, equal to the aggregate amount then on deposit in
the trust account, including any interest not previously released to us but net of taxes payable and up to $100,000 of interest income
that may be released to us for liquidation 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 liquidation 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 (ii) and (iii) above) to our obligations under
Delaware law to provide for claims of creditors and the requirements of other applicable law.
8
Our initial stockholders,
officers and directors have agreed that they will not propose any amendment to our amended and restated certificate of incorporation that
would affect our public stockholders’ ability to convert or sell their shares to us in connection with a business combination as
described herein or affect the substance or timing of our obligation to redeem 100% of our public shares if we do not complete a business
combination within 12 months (or up to 18 months, if we extend the time to complete a business combination as described in this Annual
Report) from the closing of our IPO unless we provide our public stockholders with the opportunity to convert their shares of common stock
upon such approval at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the trust account, including
interest not previously released to us but net of franchise and income taxes payable, divided by the number of then outstanding public
shares. This redemption right shall apply in the event of the approval of any such amendment, whether proposed by our initial stockholders,
executive officers, directors or any other person.
Under the Delaware General
Corporation Law, stockholders may be held liable for claims by third parties against a corporation to the extent of distributions received
by them in a dissolution. The pro rata portion of our trust account distributed to our public stockholders upon the redemption of 100%
of our outstanding public shares in the event we do not complete our initial business combination within the required time period may
be considered a liquidation distribution under Delaware law. If the corporation complies with certain procedures set forth in Section
280 of the Delaware General Corporation Law intended to ensure that it makes reasonable provision for all claims against it, including
a 60-day notice period during which any third-party claims can be brought against the corporation, a 90-day period during which the corporation
may reject any claims brought, and an additional 150-day waiting period before any liquidating distributions are made to stockholders,
any liability of stockholders with respect to a liquidating distribution is limited to the lesser of such stockholder’s pro rata
share of the claim or the amount distributed to the stockholder, and any liability of the stockholder would be barred after the third
anniversary of the dissolution. It is our intention to redeem our public shares as soon as reasonably possible following our 12-month
anniversary (or up to 18 months, if we extend the time to complete a business combination as described in this Annual Report), and, therefore,
we do not intend to comply with those procedures. As such, our stockholders could potentially be liable for any claims to the extent of
distributions received by them (but no more) and any liability of our stockholders may extend well beyond the third anniversary of such
date.
Furthermore, if the pro rata
portion of our trust account distributed to our public stockholders upon the redemption of 100% of our public shares in the event we do
not complete our initial business combination within the required time period is not considered a liquidation distribution under Delaware
law and such redemption distribution is deemed to be unlawful, then pursuant to Section 174 of the Delaware General Corporation Law, the
statute of limitations for claims of creditors could then be six years after the unlawful redemption distribution, instead of three years,
as in the case of a liquidation distribution.
Because we will not be complying
with Section 280 of the Delaware General Corporation Law, Section 281(b) of the Delaware General Corporation Law requires us to adopt
a plan, based on facts known to us at such time that will provide for our payment of all existing and pending claims or claims that may
be potentially brought against us within the subsequent ten years. However, because we are a blank check company, rather than an operating
company, and our operations will be limited to searching for prospective target businesses to acquire, the only likely claims to arise
would be from our current and former vendors (such as lawyers, auditors investment bankers, etc.) or prospective target businesses.
We are required to seek to
have all third parties (including any vendors or other entities we may engage) and any prospective target businesses enter into agreements
with us waiving any right, title, interest or claim of any kind they may have in or to any monies held in the trust account. As a result,
the claims that could be made against us will be limited, thereby lessening the likelihood that any claim would result in any liability
extending to the trust. We therefore believe that any necessary provision for creditors will be reduced and should not have a significant
impact on our ability to distribute the funds in the trust account to our public stockholders. Nevertheless, MaloneBailey, LLP, our independent
registered public accounting firm, and the underwriters of the offering, will not execute agreements with us waiving such claims to the
monies held in the trust account. Furthermore, there is no guarantee that other vendors, service providers and prospective target businesses
will execute such agreements. Nor is there any guarantee that, even if they execute such agreements with us, they will not seek recourse
against the trust account. Bengochea SPAC Sponsors I LLC, an entity affiliated with Mr. Bengochea, has agreed that it will be liable to
ensure that the proceeds in the trust account are not reduced below $10.00 per share by the claims of target businesses or claims of vendors
or other entities that are owed money by us for services rendered or contracted for or products sold to us, but we cannot assure you that
it will be able to satisfy its indemnification obligations if it is required to do so. We have not independently verified whether Bengochea
SPAC Sponsors I LLC has sufficient funds to satisfy its indemnity obligations, we have not asked it to reserve for such obligations and
we do not believe it has any significant liquid assets. Accordingly, we believe it is unlikely that it will be able to satisfy its indemnification
obligations if it is required to do so. Additionally, the agreement Bengochea SPAC Sponsors I LLC entered into specifically provides for
two exceptions to the indemnity given: it will have no liability (1) as to any claimed amounts owed to a target business or vendor or
other entity who has executed an agreement with us waiving any right, title, interest or claim of any kind they may have in or to any
monies held in the trust account, or (2) as to any claims for indemnification by EF Hutton against certain liabilities, including liabilities
under the Securities Act. As a result, if we liquidate, the per-share distribution from the trust account could be less than $10.00 due
to claims or potential claims of creditors.
9
We anticipate notifying the
trustee of the trust account to begin liquidating such assets promptly after our 12-month anniversary (or up to 18 months, if we extend
the time to complete a business combination as described in this Annual Report) and anticipate it will take no more than 10 business days
to effectuate such distribution. The holders of the Founder Shares have waived their rights to participate in any liquidation distribution
from the trust account with respect to such shares. There will be no distribution from the trust account with respect to our rights or
warrants, which will expire worthless. We will pay the costs of any subsequent liquidation from our remaining assets outside of the trust
account. If such funds are insufficient, we will use the up to $100,000 of interest earned on the funds held in the trust account that
may be released to us for our liquidation expenses.
If we are unable to complete
an initial business combination and expend all of the net proceeds of the IPO, other than the proceeds deposited in the trust account,
and without taking into account interest, if any, earned on the trust account, or any increase as a result of our extending the time to
consummate a business combination as described herein, the initial per-share redemption price would be $10.00. As discussed above, the
proceeds deposited in the trust account could become subject to claims of our creditors that are in preference to the claims of public
stockholders.
Our public stockholders shall be entitled to receive
funds from the trust account only in the event of our failure to complete a business combination within the required time period, if the
stockholders seek to have us convert or purchase their respective shares upon a business combination which is actually completed by us
or upon certain amendments to our amended and restated certificate of incorporation prior to consummating an initial business combination.
In no other circumstances shall a stockholder have any right or interest of any kind to or in the trust account.
If we are forced to file a
bankruptcy case or an involuntary bankruptcy case is filed against us which 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, we cannot assure you we will
be able to return to our public stockholders at least $10.00 per share.
If we are forced to file a
bankruptcy case or an involuntary bankruptcy case is filed against us which 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 all amounts received by our stockholders. Furthermore, because
we intend to distribute the proceeds held in the trust account to our public stockholders promptly after 12 months (or up to 18 months,
if we extend the time to complete a business combination as described in this Annual Report) from the closing of our IPO, this may be
viewed or interpreted as giving preference to our public stockholders over any potential creditors with respect to access to or distributions
from our assets. Furthermore, our Board may be viewed as having breached their fiduciary duties to our creditors and/or may have acted
in bad faith, and thereby exposing itself and our company to claims of punitive damages, by paying public stockholders from the trust
account prior to addressing the claims of creditors. We cannot assure you that claims will not be brought against us for these reasons.
Amended and Restated Certificate of Incorporation
Our amended and restated certificate
of incorporation contains certain requirements and restrictions relating to our operations that will apply to us until the consummation
of our initial business combination. These provisions cannot be amended without the approval of a majority of our stockholders. If we
seek to amend any provisions of our amended and restated certificate of incorporation that would affect our public stockholders’
ability to convert or sell their shares to us as described herein or affect the substance or timing of our obligation to redeem 100% of
our public shares if we do not complete a business combination within 12 months (or up to 18 months, if we extend the time to complete
a business combination as described in this Annual Report) from the closing of our IPO, we will provide public stockholders with the opportunity
to convert their public shares in connection with any such vote. This redemption right shall apply in the event of the approval of any
such amendment, whether proposed by any executive officer, director, initial stockholder, or any other person. Our initial stockholders,
officers and directors have agreed to waive any redemption rights with respect to any Founder Shares and any public shares they may hold
in connection with any vote to amend our amended and restated certificate of incorporation. Specifically, our amended and restated certificate
of incorporation provides, among other things, that:
10
Financial Position
With funds available for an
initial business combination initially in the amount of $66,481,500 assuming no redemptions before non-reimbursable fees and expenses
associated with our initial business combination and after payment of $2,518,500 of deferred underwriting fees and any offering costs,
we offer a target business a variety of options such as creating a liquidity event for its owners, providing capital for the potential
growth and expansion of its operations or strengthening its balance sheet by reducing its debt or leverage ratio. Because we are able
to complete our initial business combination using our cash, debt or equity securities, or a combination of the foregoing, we have the
flexibility to use the most efficient combination that will allow us to tailor the consideration to be paid to the target business to
fit its needs and desires. However, we have not taken any steps to secure third party financing and there can be no assurance it will
be available to us.
Employees
We have two executive officers.
These individuals are not obligated to devote any specific number of hours to our matters and intend to devote only as much time as they
deem necessary to our affairs. Since the selection of CFI as the business target, management has spent more time investigating and negotiating
and processing the business combination (and consequently spend more time on our affairs) than had been spent prior to locating a suitable
target business. We presently expect our executive officers to devote such amount of time as they reasonably believe is necessary to our