Iron Horse Acquisition II (IRHO) risk factors, FY2025 10-K

Risks Relating to Searching for and Consummating a Business Combination

1. 01If we are unable to consummate a business combination, our public shareholders may be forced to wait more than 24 months before receiving distributions from the trust account, and our rights will expire worthless
2. 02The requirement that we complete an initial business combination within 24 months from the closing of the IPO may give potential target businesses leverage over us in negotiating a business combination
3. 03Our public shareholders may not be afforded an opportunity to vote on our proposed business combination
4. 04If we seek shareholder approval of our initial business combination, our initial shareholders will control a substantial interest in us and thus may influence certain actions requiring a shareholder vote
5. 05If we determine to change our acquisition criteria or guidelines, many of the disclosures contained in the IPO would not be applicable and you would be investing in our company without any basis on which to evaluate the potential target business we may acquire
6. 06Since we have not yet selected a particular industry or target business with which to complete a business combination, we are unable to currently ascertain the merits or risks of the industry or business in which we may ultimately operate
7. 07The ability of our shareholders to exercise their redemption rights or sell their shares to us in a tender offer may not allow us to effectuate the most desirable business combination or optimize our capital structure
8. 08In connection with any vote to approve a business combination, we will offer each public shareholder the option to vote in favor of a proposed business combination and still seek redemption of his, her or its shares
9. 09We have no specified percentage threshold for redemption in our amended and restated memorandum and articles of association. As a result, we may be able to consummate a business combination even though a substantial number of our public shareholders do not agree with the transaction and have redeemed their shares
10. 10Because of our structure, other companies may have a competitive advantage and we may not be able to consummate an attractive business combination
11. 11We may issue shares or debt securities to complete a business combination, which would reduce the equity interest of our shareholders and likely cause a change in control of our ownership
12. 12If we incur indebtedness, our lenders will not have a claim on the cash in the trust account and such indebtedness will not decrease the per-share redemption amount in the trust account
13. 13We may be unable to obtain additional financing, if required, to complete a business combination or to fund the operations and growth of the target business, which could compel us to restructure or abandon a particular business combination
14. 14If the net proceeds of the IPO not being held in trust are insufficient to allow us to operate for at least the next 24 months, we may be unable to complete a business combination
15. 15We may not obtain a fairness opinion with respect to the target business that we seek to acquire and therefore you may be relying solely on the judgment of our Board of Directors in approving a proposed business combination
16. 16Resources could be spent researching acquisitions that are not consummated, which could materially adversely affect subsequent attempts to locate and acquire or merge with another business
17. 17We may only be able to complete one business combination with the proceeds of the IPO, which will cause us to be solely dependent on a single business which may have a limited number of products or services
18. 18This lack of diversification may subject us to numerous economic, competitive and regulatory developments, any or all of which may have a substantial adverse impact upon the particular industry in which we may operate subsequent to a business combination
19. 19Changes 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
20. 20Changes in international trade policies, tariffs and treaties affecting imports and exports may have a material adverse effect on our search for an initial business combination target or the performance or business prospects of a post-business combination company
21. 21If we are classified as a passive foreign investment company, United States taxpayers who own our Ordinary Shares may have adverse United States federal income tax consequences
22. 22We may not be able to complete our initial business combination within the completion window, in which case we would redeem our public shares
23. 23We may decide not to extend the term we have to consummate our initial business combination, in which case we would redeem our public shares, and the rights may be worthless

Risks Relating to the Post-Business Combination Company

1. 24Our officers and directors may not have significant experience or knowledge regarding the jurisdiction or industry of the target business we may seek to acquire
2. 25If we effect our initial business combination with a company located outside of the United States, we would be subject to a variety of additional risks that may adversely affect us
3. 26If we acquire a company operating in the M&E industry, our future operations may be subject to risks associated with this sector
4. 27An investment in the IPO involves uncertain U.S. federal income tax consequences
5. 28There may be tax consequences to our business combinations that may adversely affect us
6. 29Changes in laws or regulations, or a failure to comply with any laws and regulations, may adversely affect our business, including our ability to negotiate and complete our initial business combination, and results of operations
7. 30If our initial business combination involves a company organized under the laws of the United States (or any subdivision thereof), a U.S. federal excise tax could be imposed on us in connection with any redemptions of our ordinary shares after or in connection with such initial business combination
8. 31As a Cayman Islands exempted company, the Excise Tax is currently not expected to apply to redemptions of our ordinary shares (absent any regulations or other additional guidance that may be issued in the future)

Risks Relating to Potential Conflicts of Interest of our Management, Directors, and Others

1. 32Our 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 could have a negative impact on our ability to consummate a business combination
2. 33Our officers and directors may have a conflict of interest in determining whether a particular target business is appropriate for a business combination
3. 34Our officers, directors, security holders and their respective affiliates may have competitive pecuniary interests that conflict with our interests

Risks Relating to our Securities

1. 35If third parties bring claims against us, the proceeds held in trust could be reduced and the per-share redemption price received by shareholders may be less than $10.00
2. 36Our shareholders may be held liable for claims by third parties against us to the extent of distributions received by them
3. 37We may not hold an annual general meeting until after the consummation of our initial business combination, which could delay the opportunity for our public shareholders to discuss company affairs with management
4. 38Members of our management team, board of directors and advisors and affiliated companies may have been, and may in the future be, involved in civil disputes or governmental investigations unrelated to our business
5. 39Our directors may decide not to enforce IRHO SPAC Sponsor LLC’s indemnification obligations, resulting in a reduction in the amount of funds in the trust account available for distribution to our public shareholders
6. 40The securities in which we may invest the funds held in the trust account could bear a negative rate of interest, which could reduce the value of the assets held in trust such that the per-share redemption amount received by public shareholders may be less than $10.00 per share
7. 41There is currently no market for our securities and a market for our securities may not develop, which would adversely affect the liquidity and price of our securities
8. 42We may issue our shares to investors in connection with our initial business combination at a price that is less than the prevailing market price of our shares at that time
9. 43NASDAQ may delist our securities from quotation on its exchange which could limit investors’ ability to make transactions in our securities and subject us to additional trading restrictions
10. 44Our initial shareholders paid a nominal price for the Founders Shares and, accordingly, you will experience immediate and substantial dilution from the purchase of our ordinary shares
11. 45If our security holders exercise their registration rights, it may have an adverse effect on the market price of our ordinary shares and the existence of these rights may make it more difficult to effect a business combination
12. 46The determination for the offering price of our units is more arbitrary than the pricing of securities for an operating company in a particular industry
13. 47However, although these factors were considered, the determination of the IPO price is more arbitrary than the pricing of securities for an operating company in a particular industry since we have no historical operations or financial results to compare them to
14. 48Provisions in our amended and restated memorandum and articles of association and Cayman Islands law may inhibit a takeover of us, which could limit the price investors might be willing to pay in the future for our ordinary shares and could entrench management
15. 49However, under Cayman Islands law, our directors may only exercise the rights and powers granted to them under our amended and restated memorandum and articles of association for a proper purpose and for what they believe in good faith to be in the best interests of our company

General Risks

1. 50You will not be entitled to protections normally afforded to investors of blank check companies
2. 51Macro-economic turbulence and instability relating to recent and ongoing global conflicts and other drivers of uncertainty may adversely affect our business, investments and results of operations and our ability to successfully consummate a business combination
3. 52Changes in laws or regulations, or a failure to comply with any laws and regulations, may adversely affect our business, investments and results of operations
4. 53We are an “emerging growth company” and “smaller reporting company” and we cannot be certain if the reduced disclosure requirements applicable to emerging growth companies and smaller reporting companies will make our ordinary shares less attractive to investors
5. 54If we are deemed to be an investment company, we may be required to institute burdensome compliance requirements and our activities may be restricted, which may make it difficult for us to complete a business combination
6. 55Compliance with the Sarbanes-Oxley Act of 2002 will require substantial financial and management resources and may increase the time and costs of completing an acquisition