Iron Horse II proposes merger with up to 15M earnout shares
The merger agreement lists shareholder approval, exchange-listing approval and at least $30 million in Parent Closing Cash among its closing conditions.
Sentiment and the balance of points
Rhea-AI Sentiment reads the wording of the document, how positive or negative its language is on a 1 to 5 scale. The balance of points shown with the takes weighs what the document actually discloses, so the two can disagree, for example when a trial that missed its main goal is described in upbeat language.
Rhea-AI Filing Summary
Iron Horse Acquisition II Corp. (IRHO) proposes to acquire all equity interests in Electra Vehicles, Inc. for a base purchase price of $250,000,000 plus the Aggregate Exercise Price, subject to adjustments under the merger agreement. Consideration would be Parent Common Shares, with the share count calculated by dividing the Base Purchase Price by $10.00. The Base Purchase Price increases in $10.00 increments until the specified consideration, excluding shares for convertible notes and Converted Stock Options, is at least 50.1% of Aggregate Parent Fully Diluted Shares.
If shareholders approve and closing conditions are met, IRHO would domesticate from the Cayman Islands to Delaware and become ELECTRA AI, Inc.; its subsidiary would then merge into Electra, which would survive as a wholly owned subsidiary. Electra securityholders may earn up to 15,000,000 additional shares. Closing conditions include at least $30,000,000 in Parent Closing Cash and approval to list the common stock on Nasdaq or another national securities exchange.
In the illustrative maximum-redemptions scenario, Electra shareholders are projected to hold 25,051,931 shares (66.5%), while public shareholders are projected to hold 5,982,780 shares (15.9%). The table excludes shares issuable upon conversion of Working Capital Notes.
Filing Explained
No PIPE is committed toward the proposed deal’s thirty-million-dollar minimum closing-cash condition.
The S-4/A remains preliminary and not effective, and the combination has not closed; the filing says securities cannot be issued under it until effectiveness and transaction conditions are met. Electra reports about
The contemplated warrants would be exercisable for 60 months at
The
Key Figures
Key Terms
Aggregate Merger Consideration financial
Aggregate Exercise Price financial
Parent Closing Cash financial
FAQ
AI-generated questions and answers. How Rhea-AI works. Not financial advice.
What is IRHO's proposed purchase price for Electra?
AI-generated analysis. How Rhea-AI works. Not financial advice.
As filed with the U.S. Securities and Exchange Commission on November 10, 2026.
Registration No. 333-295913
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
–––––––––––––––––––––––––––––––––––––––––
FORM
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
–––––––––––––––––––––––––––––––––––––––––
(Exact name of registrant as specified in its charter)
–––––––––––––––––––––––––––––––––––––––––
| | 6770 | N/A | ||
| (State or other jurisdiction of |
(Primary Standard Industrial |
(I.R.S. Employer |
851 Broken Sound Parkway NW, Suite 230
Boca Raton, FL 33487
(310) 290-5383
(Address, including zip code, and telephone number, including area code, of registrant’s principal executive offices)
–––––––––––––––––––––––––––––––––––––––––
Jose Bengochea
Chief Executive Officer
851 Broken Sound Parkway NW, Suite 230
Boca Raton, FL 33487
(310) 290-5383
(Name, address, including zip code and telephone number, including area code, of agent for service)
–––––––––––––––––––––––––––––––––––––––––
Copies to:
| Mitchell Nussbaum, Esq. Tahra Wright, Esq. Julia Aryeh, Esq. Loeb & Loeb LLP 345 Park Avenue New York, New York 10154 |
Michael Lockwood, Esq. Maples and Calder (Cayman) LLP PO Box 309 Ugland House, Grand Cayman, KY1-1104 Cayman Islands |
Steven Stokdyk, Esq. Brian Duff, Esq. Latham & Watkins LLP 10250 Constellation Blvd. Suite 1100 Los Angeles, California 90067 |
–––––––––––––––––––––––––––––––––––––––––
Approximate date of commencement of proposed sale to the public: As soon as practicable after this registration statement becomes effective and all other conditions to the transactions contemplated by the Merger Agreement described in the included proxy statement/prospectus have been satisfied or waived.
If the securities being registered on this Form are being offered in connection with the formation of a holding company and there is compliance with General Instruction G, check the following box. ☐
If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐
If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or 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 |
☐ |
|||||
| | ☒ | 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 7(a)(2)(B) of the Securities Act.
If applicable, place an X in the box to designate the appropriate rule provision relied upon in conducting this transaction:
| Exchange Act Rule 13e-4(i) (Cross-Border Issuer Tender Offer) ☐ |
Exchange Act Rule 14d-1(d) (Cross-Border Third-Party Tender Offer) ☐ |
____________
* Prior to the consummation of the Business Combination described herein, Iron Horse Acquisition II Corp. (“IRHO”), by way of continuation out of the Cayman Islands and into the State of Delaware so as to migrate to and domesticate as a Delaware corporation, whereby the jurisdiction of incorporation will be changed from the Cayman Islands to the State of Delaware; and after the merger of Merger Sub, a wholly owned subsidiary of IRHO, with and into Electra Vehicles, Inc. (the “Company”), pursuant to which, at the closing of the transactions contemplated by the Merger Agreement, the Company will be the surviving corporation and a wholly owned subsidiary of IRHO. All securities being registered will be issued by IRHO (after its domestication in Delaware, and being the parent of the Company).
The registrant and co-registrant hereby amend this Registration Statement on such date or dates as may be necessary to delay its effective date until the registrant and co-registrants shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act, or until the Registration Statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to Section 8(a), may determine.
Table of Contents
TABLE OF CO-REGISTRANTS
| Exact Name of Co-Registrant as Specified in its Charter(1)(2) | State or Other | Primary | I.R.S. Employer | |||
| ELECTRA VEHICLES, INC. | Delaware | TBD | 47-5660210 |
____________
(1) The Co-Registrant has the following principal executive office:110 K Street, Suite 330, Boston, Massachusetts 02127.
(2) The agent for service for the Co-Registrant is: Fabrizio Martini, Attn: Chief Executive Officer.
Table of Contents
The information in this proxy statement/prospectus is not complete and may be changed. Iron Horse Acquisition II Corp. may not issue the securities offered by this proxy statement/prospectus until the registration statement filed with the Securities and Exchange Commission, of which this proxy statement/prospectus is a part, is declared effective. This proxy statement/prospectus does not constitute an offer to sell these securities and it is not soliciting an offer to buy these securities in any jurisdiction where the offer or sale of these securities is not permitted.
PRELIMINARY — SUBJECT TO COMPLETION, DATED NOVEMBER 10, 2026
PROXY STATEMENT FOR EXTRAORDINARY GENERAL MEETING OF
IRON HORSE ACQUISITION II CORP.
(a Cayman Islands exempted company)
PROSPECTUS
FOR UP TO _________________ SHARES OF COMMON STOCK
OF
IRON HORSE ACQUISITION II CORP.
(following Domestication into the State of Delaware and in connection with the Business Combination described herein)
On April 19, 2026, the board of directors of Iron Horse Acquisition II Corp., a Cayman Islands exempted company (“IRHO” or after the Domestication, “Parent”), unanimously approved the Merger Agreement, dated as of April 21, 2026, by and among IRHO, IRHO Merger Sub, Inc., a Delaware corporation and a direct, wholly-owned subsidiary of IRHO (“Merger Sub”) and Electra Vehicles, Inc., a Delaware corporation (“Electra” or the “Company”) (as amended and as may be further amended and/or restated from time to time, the “Merger Agreement”). A copy of the Merger Agreement and the Amendment to Merger Agreement, dated as of May 14, 2026, are attached to this proxy statement/prospectus as Annex A-1 and Annex A-2. Pursuant to the terms of the Merger Agreement and in accordance with the DGCL, as more fully described elsewhere in this proxy statement/prospectus, if the Merger Agreement is approved by IRHO’s shareholders and the transactions contemplated by the Merger Agreement are consummated, the following will occur: (1) the domestication of IRHO as a Delaware corporation in accordance with the Delaware General Corporation Law (“DGCL”), the Companies Act (As Revised) of the Cayman Islands (the “Companies Act”) and the amended and restated memorandum and articles of association of IRHO (as may be amended from time to time, the “Cayman Constitutional Documents”), in which IRHO will de-register from the Register of Companies in the Cayman Islands and transfer by way of continuation out of the Cayman Islands and into the State of Delaware so as to migrate to and domesticate as a Delaware corporation in accordance with the Cayman Constitutional Documents, Section 388 of the DGCL and Part XII of the Companies Act (the “Domestication”); (2) at least one business day following the Domestication, at the closing of the transactions contemplated by the Merger Agreement (the “Closing”), Merger Sub will merge with and into Electra (the “Merger”), pursuant to which, the separate corporate existence of Merger Sub will cease and Electra will be the surviving corporation and a wholly-owned subsidiary of IRHO (the “Surviving Corporation”), and change its name to a name to be mutually agreed by the parties; and (3) the other transactions contemplated by the Merger Agreement and documents related thereto (such transactions, together with the Domestication and the Merger, the “Proposed Transaction” or “Business Combination”). In connection with the Proposed Transaction, IRHO will be renamed “ELECTRA AI, Inc.” (“Electra Pubco”).
In connection with the Domestication, IRHO will (i) file a certificate of incorporation with the Secretary of State of the State of Delaware, whereby Parent shall have a dual class common stock consisting of Class A common stock, par value $0.0001 per share (the “Parent Class A Common Shares” or Electra Pubco Class A Common Stock) and Class B common stock, par value $0.0001 per share (the “Parent Class B Common Shares” or Electra Pubco Class B Common Stock and together referred to as “Parent Common Shares” or Electra Pubco Common Stock”); and (ii) adopt bylaws as more fully described herein.
In connection with the Domestication, (i) each then issued and outstanding ordinary share of IRHO, par value $0.0001 per share (each, an “IRHO Ordinary Share”), will convert automatically, on a one-for-one basis, into one Parent Class A Common Share; (ii) each then issued and outstanding right entitling the holder thereof to 1/10 of one IRHO Ordinary Share (each, an “IRHO Right”) shall convert automatically into a right to receive 1/10 of one Parent Class A Common Share at the Closing, pursuant to the Parent Rights Agreement dated as of December 16, 2025, by and between IRHO and Continental Stock Transfer & Trust Company, as Rights agent; and (iii) each then issued and outstanding unit of IRHO (each, an “IRHO Unit”) shall separate and convert automatically into one Parent Class A Common Share and an IRHO Right to receive 1/10 of one Parent Class A Common Share at the Closing.
The Merger Agreement also provides that, among other things, following the Domestication, Merger Sub will merge with and into Electra after which Electra will be the Surviving Corporation and a wholly-owned subsidiary of Parent. Electra’s Bylaws as in effect immediately prior to the Effective Time shall be the bylaws of the Surviving
Table of Contents
Corporation. The Merger will become effective upon the filing of the articles of merger with the Secretary of State of the State of Delaware or at such later time as is agreed to by the parties to the Merger Agreement and specified in the articles of merger (the “Effective Time”). The Domestication, the Merger, and other transactions contemplated by the Merger Agreement are collectively referred to herein as the “Business Combination,” the consummation of the Merger is referred to as the “Closing” and the date of the Closing is referred to as the “Closing Date.”
Pursuant to the Merger Agreement, IRHO has agreed to acquire all of the equity interests of Electra for the sum of $250,000,000, plus the Aggregate Exercise Price, as adjusted pursuant to the terms of the Merger Agreement (the “Base Purchase Price”), for the issuance of shares comprising the Aggregate Merger Consideration. The term “Aggregate Merger Consideration” means a number of Parent Common Shares equal to the quotient obtained by dividing (a) the Base Purchase Price, by (b) US$10.00, which Parent Common Shares shall include no more than a number of Parent Class B Common Shares equal to the conversion rate multiplied by 3,994,802. The term “Aggregate Exercise Price” means the aggregate dollar amount payable to the Company upon the exercise or conversion of all vested in-the-money Company Options that are outstanding immediately prior to the Effective Time. The Base Purchase Price shall be automatically adjusted upwards in increments of $10.00 until the Aggregate Merger Consideration (excluding shares of Parent Common Stock issuable in respect of convertible notes and upon the exercise of Converted Stock Options) represents at least 50.1% of the Aggregate Parent Fully Diluted Shares. The term “Aggregate Parent Fully Diluted Shares” means, as of immediately after the Effective Time, the sum, without duplication, of (a) all Parent Common Shares issued and outstanding (after giving effect to the Domestication, the Merger, the conversion of all “Parent Rights”, any PIPE Financing, and any forfeiture or surrender of Sponsor Shares); plus (b) the aggregate number of Parent Common Shares issuable upon exercise of all outstanding Converted Stock Options.
As additional consideration in the Merger, the holders of Company Common Stock, Company Preferred Stock and Company Options (whether vested or unvested) (the “Earnout Holders”) shall be entitled to earn additional Parent Common Shares (the “Earnout Shares”) in an amount not to exceed 15,000,000 Parent Common Shares in the aggregate (the “Earnout Cap”), which shall be issued as Parent Class A Common Shares to Earnout Holders who hold exclusively Company Class A Common Stock, Company Preferred Stock or Company Options and as Parent Class B Common Shares to Earnout Holders who hold any shares of Company Class B Common Stock, as more fully described in this proxy statement/prospectus. “Company Capital Stock” means “Company Common Stock,” consisting of the Class A common stock of the Company, $0.00001 par value per share, the Class B common stock of the Company, $0.00001 par value per share, and “Company Preferred Stock,” consisting of the Company Series Seed Preferred Stock, the Company Series A Preferred Stock and the Company Series B Preferred Stock.
Immediately following the Closing, Parent’s board of directors will consist of seven (7) directors, of which Electra has the right to designate five (5) directors and the remaining two directors shall be jointly designated by Electra and IRHO SPAC Sponsor LLC. At least a majority of the board of directors shall qualify as independent directors under Nasdaq or Alternate Exchange rules, as applicable.
At the Closing, all of the officers of Parent shall resign and the following individuals are expected to be appointed as officers of Parent: Fabrizio Martini, as Chief Executive Officer and Nicholas Chakalos, President & Chief Financial Officer.
Additionally, in connection with the execution of the Merger Agreement, (i) IRHO entered into a support agreement (the “Parent Support Agreement”) with the Sponsor and Electra, pursuant to which the Sponsor agreed, among other things, to vote in favor of the adoption and approval of the Merger Agreement and the transactions contemplated thereby; and (ii) IRHO entered into a support agreement (the “Company Support Agreement”) with the Company and certain shareholders of the Company (the “Company Supporting Shareholders”) pursuant to which the Company Supporting Shareholders agreed to, among other things, vote to adopt and approve, the Merger Agreement and the transactions contemplated thereby. At the time of this filing, although the parties intend to enter into a private placement on terms mutually agreeable to Parent and Electra, acting reasonably (any such purchase by investors, a “PIPE Financing”), there is no commitment for any PIPE Financing and there can be no assurance that IRHO and Electra will enter into agreements for any PIPE Financing.
In May 2026, IRHO loaned $150,000 and $105,000 non-secured promissory notes to the Company. As of August 31, 2026, there was $255,000 of notes receivable that were past due. On October 2, 2026, the Company paid back the $150,000 of such notes receivable, with the remaining $105,000 outstanding. The Company expects to repay the remaining outstanding notes at or prior to Closing.
Table of Contents
During March through June 30, 2026, in connection with the contemplated Business Combination described below, the Company received aggregate proceeds of approximately $500,010 from accredited investors as bridge financing (the “Bridge Financing”) in anticipation of the issuance of senior unsecured convertible notes (the “Company Convertible Notes”). The proceeds of the Bridge Financing will be to fund working capital requirements.
Pursuant to the non-binding executed term sheets, the Company Convertible Notes are expected to bear interest at rates ranging from 15% to 25% per annum and to mature upon the earlier of (i) 24 months from the closing date of each Company Convertible Note or (ii) the closing of the Business Combination. Upon the closing of the Business Combination, the principal and accrued interest on the Company Convertible Notes are expected to convert into shares of common stock of the publicly listed entity at a conversion price of $6.00 per share. Investors will also receive warrants to purchase shares of common stock of the publicly listed entity at exercise price of $11.50 per share, and certain investors will receive warrants exercisable at $12.50 per share, in each case exercisable for 60 months following the closing of the Business Combination. If the Business Combination is not consummated within 24 months from the closing of any Company Convertible Note, the principal and accrued interest will convert into ordinary shares of the Company at a $150 million or $75 million pre-money valuation.
Following the Business Combination (assuming maximum redemptions), Fabrizio Martini, Electra’s co-founder and Chief Executive Officer, will beneficially own (including shares underlying Converted Stock Options as defined in the Merger Agreement) approximately ____% of the combined voting power for the election of directors to the Electra Pubco Board, and, as a result, Electra Pubco will be considered a “controlled company” for the purposes of Nasdaq listing rules. For so long as Electra Pubco remains a controlled company under that definition, it is permitted to elect to rely on certain exemptions from corporate governance rules. As a result, investors may not have the same protection afforded to shareholders of companies that are subject to these corporate governance requirements. Electra Pubco’s status as a controlled company could cause its securities to be less attractive to certain investors or otherwise adversely affect the trading price. See “Risk Factors — Electra Pubco will be a “controlled company” within the meaning of Nasdaq listing standards and, as a result, will qualify for exemptions from certain corporate governance requirements. You may not have the same protections afforded to shareholders of companies that are subject to such requirements.”
The IRHO Board has determined that the Business Combination and the transactions contemplated thereby are fair to and in the best interests of IRHO and its shareholders because they believe that Electa is a company with strong revenue growth potential, due to Electra’s impressive intellectual property portfolio solution which clients describe as best-in-class, in addition to having a competent management team. In reaching its decision with respect to the Business Combination and the transactions contemplated thereby, the IRHO Board reviewed various industry and financial data and the due diligence and evaluation materials provided by Electra, demonstrating that Electra has a business plan dedicated to both near term cash flow as well as long term growth. See “The Business Combination Proposal — IRHO Board of Directors’ Reasons for the Approval of the Business Combination”.
For information on the percentage of the issued and outstanding shares of Electra Pubco Common Stock immediately following the Closing that are expected to be held by the Electra Securityholders (as defined below), the Sponsor and IRHO’s current public security holders, in various redemption scenarios, based on Electra’s balance of capital stock as of ______, 2026, see “Questions and Answers for Shareholders of IRHO — What equity stake will current IRHO shareholders and Electra Securityholders hold in Electra Pubco immediately after the consummation of the Proposed Transaction?”
The IRHO Units, IRHO Ordinary Shares and IRHO Rights are currently listed on Nasdaq under the symbols “IRHOU,” “IRHO” and “IRHOR,” respectively. IRHO has applied to obtain the listing of the Electra Pubco Common Stock on Nasdaq under the symbol “_____” upon the Closing. Electra Pubco will not have publicly traded units or rights following the Closing. Pursuant to the terms of the Merger Agreement, as a closing condition, IRHO is required to cause the Electra Pubco Common Stock to be issued in connection with the Business Combination to be approved for listing on Nasdaq or another national securities exchange, but there can be no assurance that such listing condition will be met. If such listing condition is not met, the Business Combination will not be consummated unless the listing condition is waived by the parties to the Merger Agreement. It is important for you to know that, at the time of the extraordinary general meeting, IRHO may not have received from Nasdaq either confirmation of the listing of the Electra Pubco Common Stock or that approval will be obtained prior to the consummation of the Business Combination. As a result, you may be asked to vote to approve the Business Combination and the other proposals included in the accompanying proxy statement/prospectus without such confirmation, and, further, it is possible that
Table of Contents
such confirmation may never be received, and the Business Combination could still be consummated if such condition is waived and therefore the Electra Pubco Common Stock would not be listed on any nationally recognized securities exchange.
The following summarizes the pro forma ownership of Pubco Common Stock immediately following the Business Combination under several redemption scenarios: no redemptions, 25%, 50%, 75% redemptions, and maximum redemptions.
| No | 25% | 50% | 75% | Maximum | |||||||||||||||||||||
| Shares | Percentage | Shares | Percentage | Shares | Percentage | Shares | Percentage | Shares | Percentage | ||||||||||||||||
| Public Shareholders(1) | 25,300,000 | 31.5 | % | 19,550,000 | 30.2 | % | 13,800,000 | 28.0 | % | 8,050,000 | 19.8 | % | 5,982,780 | 15.9 | % | ||||||||||
| Sponsor(2) | 6,157,000 | 7.7 | % | 6,157,000 | 9.5 | % | 6,157,000 | 12.5 | % | 5,695,874 | 14.0 | % | 5,357,000 | 14.2 | % | ||||||||||
| Cantor | 220,000 | 0.3 | % | 220,000 | 0.3 | % | 220,000 | 0.4 | % | 220,000 | 0.5 | % | 220,000 | 0.6 | % | ||||||||||
| Electra Shareholders(3) | 41,995,572 | 52.3 | % | 33,882,560 | 52.3 | % | 25,769,546 | 52.3 | % | 25,051,931 | 61.6 | % | 25,051,931 | 66.5 | % | ||||||||||
| Others(4) | 6,625,333 | 8.2 | % | 4,975,812 | 7.7 | % | 3,326,292 | 6.8 | % | 1,676,771 | 4.1 | % | 1,083,741 | 2.8 | % | ||||||||||
| Total | 80,297,905 | 100.0 | % | 64,785,372 | 100.0 | % | 49,272,838 | 100.0 | % | 40,694,576 | 100.0 | % | 37,695,452 | 100.0 | % | ||||||||||
____________
(1) Includes 2,300,000 shares of Pubco Common Stock issued to all public shareholders upon exchange of the rights issued in the IPO, and in the case of the maximum redemptions scenario, such number reflects the maximum number of shares that could be redeemed to ensure a minimum of $30,000,000 in Parent Closing Cash at the time of the Closing.
(2) Reflects the number of Shares that will be held by the Sponsor after the forfeiture of up to 800,000 Risk Shares as contemplated by the Merger Agreement.
(3) Includes all Shares to be issued to the stockholders of Electra as adjusted to ensure the minimum ownership threshold of 50.1% at the Closing.
(4) Includes Shares issued to vendors and financial advisors to Electra and IRHO other than Cantor.
Stockholders will experience additional dilution to the extent Electra Pubco issues additional shares of Common Stock after the closing of the Business Combination. The table above excludes any shares that will be issuable upon the conversion of the Working Capital Notes.
For more information, please see the sections entitled “Unaudited Pro Forma Condensed Combined Financial Information” and “Proposal 1 — The Business Combination Proposal — Ownership After the Closing.”
All of the relative percentages above are for illustrative purposes only and are based upon certain assumptions as described in the section entitled “Unaudited Condensed Combined Pro Forma Financial Information.” For more information, including the ownership percentages in the no redemptions scenario and the effect of certain dilutive securities, see the section entitled “The Business Combination Proposal — Ownership of Electra Pubco after the Closing.”
Following consummation of the Business Combination, as a result of its ownership of more than ___% of the outstanding shares of Electra Pubco Common Stock, Mr. Martini is expected to control all matters to be voted upon by the combined company’s stockholders. As a result, the combined company will be a “controlled company” as defined in the corporate governance rules of The Nasdaq Stock Market LLC (“Nasdaq”).
Parent, the Sponsor, the Company and certain former shareholders, officers and directors of the Company will enter into a Lock-Up Agreement (the “Lock-Up Agreement”) pursuant to which the Parent Common Shares and any other equity securities convertible into or exchangeable for or representing the rights to receive Parent Common Shares, if any, held immediately following the Closing shall be subject to a lock-up for the Lock-Up Period. The “Lock-Up Period” means the period beginning on the Closing Date and ending in four consecutive equal quarterly installments following the Closing Date, where one-fourth (1/4) of the securities subject to the Lock-Up shall be released from the Lock-Up upon the Company issuing each of its first four quarterly earnings release that occurs at least 120 days after the Closing Date.
Compensation Received by the Sponsor
Within five (5) business days following the consummation of the business combination, the Sponsor of IRHO may convert its working capital notes (our “Working Capital Notes” or “Working Capital Loans”) into IRHO Ordinary Shares, at a price of $10.00 per Share, which will be exchanged for Parent Common Shares. If IRHO completes a
Table of Contents
business combination, IRHO will repay the Working Capital Notes out of the proceeds of the Trust Account released to IRHO. Otherwise, the Working Capital Notes would be repaid only out of funds held outside the Trust Account. In the event that a business combination does not close, IRHO may use a portion of proceeds held outside the Trust Account to repay the $__________ in Working Capital Notes but no proceeds held in the Trust Account would be used to repay the Working Capital Notes.
Set forth below is a summary of the terms and amount of the compensation received or to be received by the Sponsor and its affiliates in connection with the Business Combination or any related financing transaction, the amount of securities issued or to be issued by IRHO to the Sponsor and its affiliates and the price paid or to be paid for such securities or any related financing transaction.
| Interest in Securities | Other Compensation | |||
| Sponsor | IRHO SPAC Sponsor LLC, the Sponsor, and its affiliates paid $32,000, or approximately $0.0056 per share, for its 5,750,000 Founder Shares purchased in connection with IRHO’s incorporation, which will be exchanged for 5,750,000 shares of Electra Pubco Common Stock, of which the Sponsor shall retain 3,285,000 Founder Shares. | At Closing, pursuant to the Merger Agreement, Electra Pubco will use cash from the Trust Account to pay any merger transaction expenses and to reimburse or pay the Sponsor or its affiliates for any outstanding Working Capital Loans or other obligations of IRHO to the Sponsor or its affiliates. IRHO currently estimates that the total amount payable for transaction expenses and any outstanding Working Capital Loans or other obligations of IRHO to Sponsor is approximately $_____. | ||
| In addition, the Sponsor will have 370,000 shares of Electra Pubco Class A Common Stock after the exchange of the 37,000 IRHO ordinary shares purchased in the private placement at the time of the closing of the IPO. |
The retention of shares by the Sponsor and the reimbursements payable to the Sponsor at Closing will not result in a material dilution of the equity interests of non-redeeming IRHO stockholders. See “The Business Combination Proposal — Ownership of Pubco after the Closing.”
Conflicts of Interest
Since the Sponsor, its affiliates, representatives and certain initial shareholders of IRHO (the “Initial Shareholders”), have interests that are different, or in addition to (and which may conflict with), the interests of the other holders of IRHO Ordinary Shares, a conflict of interest may exist in determining whether the Business Combination with Electra is appropriate. Such interests include that the Initial Shareholders will lose their entire investment in IRHO if IRHO does not complete a business combination. When you consider the recommendation of the IRHO Board in favor of approval of the Business Combination, you should keep in mind that the Initial Shareholders have interests in such proposal that are different from, or in addition to (which may conflict with), those of the IRHO shareholders generally.
These conflicts of interest include, among other things, the interests listed below:
• The beneficial ownership of the Sponsor and certain Initial Shareholders of 6,320,000 IRHO Ordinary Shares consisting of 5,750,000 Founder Shares which were acquired prior to the IPO for an aggregate of $32,000 and 570,000 Private Placement Shares purchased at the time of the IPO (200,000 of which were purchased by Cantor) will be worthless if the Business Combination is not consummated because the Initial Shareholders and the Sponsor have agreed to waive their Rights to any liquidation distributions.
• If the Business Combination is consummated, the Sponsor and the Initial Shareholders would own up to an aggregate of 6,320,000 Parent Common Shares with an aggregate market value of approximately $ , based on the closing price of the Public Shares of $ on Nasdaq as of , 2026.
Table of Contents
• The Sponsor or an affiliate of the Sponsor may, but is not obligated to, make Working Capital Loans to IRHO. As of the date of this proxy statement/prospectus, there are $_______ Working Capital Loans outstanding. In the event that the Business Combination does not close, IRHO may use a portion of proceeds held outside the Trust Account to repay any such loans, but no proceeds held in the Trust Account would be used to repay the Working Capital Notes. All unpaid amounts would be forfeited.
• The continued indemnification of current directors and officers of IRHO and the continuation of directors’ and officers’ liability insurance after the Business Combination.
• The fact that our Sponsor, officers and directors will be reimbursed for out-of-pocket expenses incurred in connection with activities on our behalf, such as identifying potential target businesses and performing due diligence on suitable business combinations.
• The fact that our Sponsor and current and former officers and directors will lose their entire investment in us if an initial business combination is not completed.
• The fact that certain officers and directors of IRHO have an economic interest in the 3,285,000 out of 5,750,000 Founder Shares currently owned by the Sponsor and purchased by the Sponsor in connection with the IRHO IPO, as a result of their direct or indirect membership interests in the Sponsor. The 5,750,000 Founder Shares were purchased by the Sponsor for approximately $0.0056 per share ($32,000 in the aggregate). Additionally there are 370,000 IRHO ordinary shares that were purchased by the Sponsor in the private placement that closed at the time of the IPO, for $10.00 per share ($3,700,000 in the aggregate). Mr. Bengochea and Mr. Caragol are the managing members] of the Sponsor. The economic interest (or deemed economic interest) of this entity in the Founder Shares and ordinary shares retained by the Sponsor is shown below:
| Name and Title of Person | Number of | |
| Sponsor(1) | 6,120,000 |
____________
(1) The Sponsor has an economic interest in 5,750,000 Founder Shares and 370,000 IRHO Ordinary Shares, which is owned 50% by each of Mr. Bengochea and Mr. Caragol our Chief Executive Officer and Chief Financial Officer, respectively.
In light of the foregoing, the Sponsor and its affiliates will receive material benefits from the completion of the Business Combination and may be incentivized to complete the Business Combination with Electra rather than liquidate even if (i) Electra is a less favorable target company or (ii) the terms of the Business Combination are less favorable to shareholders. As a result, our Sponsor and directors and officers may have interests in the completion of the Business Combination that are materially different than, and may conflict with, the interests of other shareholders. Further, the Sponsor may receive a positive return on the Founder Shares even if IRHO’s public shareholders experience a negative return on their investment after consummation of the Business Combination. See “Interests of IRHO Directors, Officers and Others in the Proposed Transaction”, and “The Business Combination Proposal — Ownership of Pubco after the Closing.”
These interests may influence IRHO’s directors in making their recommendation that you vote in favor of the Business Combination Proposal, and the transactions contemplated thereby. These interests were considered by the IRHO Board when it approved the Business Combination.
For more information, please see Section — “Directors, Officers, Executive Compensation And Corporate Governance Of Irho Prior To The Business Combination — Conflicts of interest.”
The IRHO Board did not obtain a third-party valuation or fairness opinion in connection with their determination to approve the Business Combination with Electra. The directors and officers of IRHO have substantial experience in evaluating the operating and financial merits of companies from a wide range of industries and concluded that their experience and backgrounds enabled them to make the necessary analyses and determinations regarding the Business Combination with Electra. In addition, IRHO’s directors and officers have substantial experience with mergers and acquisitions. Accordingly, investors will be relying solely on the judgment of the IRHO Board in valuing Electra’s business.
Table of Contents
IRHO will hold an extraordinary general meeting (the “extraordinary general meeting”) to consider matters relating to the Business Combination at [•], Eastern Time, on [•]. The extraordinary general meeting will be a virtual meeting conducted via live webcast. For the purposes of Cayman Islands law and the Cayman Constitutional Documents, the physical location of the meeting will be at the offices of Loeb & Loeb LLP, 345 Park Avenue, New York, NY 10154. You or your proxyholder will also be able to attend and vote at the extraordinary general meeting online by visiting [•] and using a control number assigned by Continental Stock Transfer & Trust Company (the “Transfer Agent”). To register and receive access to the extraordinary general meeting, registered shareholders and beneficial shareholders (those holding shares through a stock brokerage account or by a bank or other holder of record) will need to follow the instructions applicable to them provided in the accompanying proxy statement/prospectus.
If you have any questions or need assistance voting your shares in IRHO, please contact ___________, our proxy solicitor, by email at _____________. Individuals may also call _____________; banks and brokers can call __________________. The notice of the extraordinary general meeting and the proxy statement/prospectus relating to the Business Combination will be available at [•].
This document is (i) a prospectus related to the issuance by Electra Pubco of Electra Pubco Common Stock in the Business Combination, and (ii) a proxy statement for IRHO to use in soliciting proxies for the extraordinary general meeting.
This proxy statement/prospectus provides shareholders of IRHO with detailed information about the Business Combination and other matters to be considered at the extraordinary general meeting of IRHO. We encourage you to read this entire document, including the Annexes and other documents referred to herein, carefully and in their entirety. You should also carefully consider the risk factors described under the heading “Risk Factors” beginning on page 23 of this proxy statement/prospectus.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES REGULATORY AGENCY HAS APPROVED OR DISAPPROVED THE TRANSACTIONS DESCRIBED IN THIS PROXY STATEMENT/PROSPECTUS, PASSED UPON THE MERITS OR FAIRNESS OF THE PROPOSED TRANSACTION OR PASSED UPON THE ADEQUACY OR ACCURACY OF THE DISCLOSURE IN THIS PROXY STATEMENT/PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY CONSTITUTES A CRIMINAL OFFENSE.
Table of Contents
IRON HORSE ACQUISITION II CORP.
Cayman Islands Exempted Company
(Company Number 425713)
851 Broken Sound Parkway Nw
Boca Raton, FL 33487
(310) 290-5383
NOTICE OF EXTRAORDINARY GENERAL MEETING TO BE HELD ON [•]
To the Shareholders of Iron Horse Acquisition II Corp.:
NOTICE IS HEREBY GIVEN that an extraordinary general meeting (the “extraordinary general meeting”) of Iron Horse Acquisition II Corp., a Cayman Islands exempted company (“IRHO”), will be held virtually at [•], Eastern Time, on [•], 2026. The extraordinary general meeting will be a virtual meeting conducted via live webcast at [•]. For the purposes of Cayman Islands law and the amended and restated memorandum and articles of association of IRHO (as may be amended from time to time, the “Cayman Constitutional Documents”), the physical location of the extraordinary general meeting will be at the offices of Loeb & Loeb LLP at 345 Park Ave, New York, New York 10154. You are cordially invited to attend the extraordinary general meeting, which will be held for the following purposes:
(1) Proposal No. 1 — The Business Combination Proposal — To consider and vote upon a proposal to approve by way of ordinary resolution and adopt the Merger Agreement, dated as of April 21, 2026 (as may be further amended and/or restated from time to time, the “Merger Agreement”), by and among IRHO, IRHO Merger Sub, Inc., a Delaware corporation and a direct, wholly-owned subsidiary of IRHO (“Merger Sub”), and Electra Vehicles, Inc., a Delaware corporation (“Electra” or the “Company”), and the transactions contemplated by the Merger Agreement, including the issuance of the merger consideration thereunder (collectively, the “Proposed Transaction” or “Business Combination”). Pursuant to the Merger Agreement, and in accordance with the Delaware General Corporation Law, as amended (“DGCL”), Merger Sub will merge with and into Electra (the “Merger”), with Electra continuing as the surviving entity of the Merger and becoming a wholly-owned subsidiary of Electra Pubco (as defined below), as described in more detail in the attached proxy statement/prospectus. We refer to this proposal as the “Business Combination Proposal.” A copy of the Merger Agreement and the Amendment to Merger Agreement, dated as of May 14, 2026, are attached to the accompanying proxy statement/prospectus as Annex A-1 and Annex A-2. The full text of the resolution to be considered and if thought fit, passed and approved is as follows:
“RESOLVED, as an ordinary resolution, that Iron Horse Acquisition II Corp.’s (“IRHO”) entry into the Merger Agreement, dated as of April 21, 2026 (as amended and as may be further amended and/or restated from time to time, the “Merger Agreement”), by and among IRHO, Merger Sub, Inc., a Delaware corporation and a direct, wholly-owned subsidiary of IRHO (“Merger Sub”), and Electra Vehicles, Inc., a Delaware corporation (“Electra”), (a copy of the Merger Agreement and the Amendment to Merger Agreement, dated as of May 14, 2026, are attached to the proxy statement/prospectus as Annex A-1 and Annex A-2), pursuant to which, among other things, following the domestication and transfer by way of continuation of IRHO to the State of Delaware as described below, the merger of Merger Sub with and into Electra (the “Merger”), with Electra surviving the Merger, in accordance with the terms and subject to the conditions of the Merger Agreement, and in accordance with the Delaware General Corporation Law, as amended (the “DGCL”), to be approved, ratified and confirmed in all respects.”
(2) Proposal No. 2 — The Domestication Proposal — To consider and vote upon a proposal to approve by way of special resolution, to de-register IRHO from the Register of Companies in the Cayman Islands (the “Cayman Registrar”) and transfer by way of continuation out of the Cayman Islands and into the State of Delaware so as to migrate to and domesticate as a Delaware corporation in accordance with the Cayman Constitutional Documents, Section 388 of the DGCL, and Part XII of the Companies Act (As Revised) of the Cayman Islands (the “Companies Act”) (the “Domestication”). The Domestication will be effected at least one business day prior to the effective time of the Merger in accordance with Section 388 of the DGCL and Part XII of the Companies Act, including the filing with the Secretary of State of the State of Delaware a certificate of domestication with respect to the Domestication, together with the proposed new certificate of incorporation of Electra Pubco (as defined below) (the “Proposed Charter”).
Table of Contents
Upon the effectiveness of the Domestication, IRHO will become a Delaware corporation and will change its corporate name to “ELECTRA AI, Inc.” (IRHO following the Domestication and then following the Business Combination, “Electra Pubco”). In connection with the Domestication, all outstanding securities of IRHO will convert into securities of Electra Pubco, as described in more detail in the accompanying proxy statement/prospectus. We refer to this proposal as the “Domestication Proposal.” The full text of the resolution to be considered and if thought fit, passed and approved is as follows:
“RESOLVED, as a special resolution, that Iron Horse Acquisition II Corp (“IRHO”) be de-registered from the Register of Companies in the Cayman Islands pursuant to Article 46 of the articles of association of the IRHO and transfer by way of continuation out of the Cayman Islands and into the State of Delaware so as to migrate to and domesticate as a Delaware corporation in accordance with Section 388 of the Delaware General Corporation Law, as amended, and Part XII of the Companies Act (As Revised) of the Cayman Islands (the “Domestication”) and conditional upon, and with effect from, the effective time of the Domestication, and the name of IRHO be changed to “ELECTRA AI, Inc.” and the registered office of IRHO be changed to [•]. In connection with the Domestication, IRHO will file a certificate of incorporation with the Secretary of State of the State of Delaware whereby IRHO shall have a dual class common stock consisting of Class A common stock, par value $0.0001 per share (the “Parent Class A Common Shares”) and Class B common stock, par value $0.0001 per share (the “Parent Class B Common Shares” and together with the Parent Class A Common Shares, the “Parent Common Shares”).”
(3) Proposal No. 3 — The Stock Issuance Proposal — To consider and vote upon a proposal to approve by way of ordinary resolution for purposes of complying with the applicable provisions of Nasdaq Listing Rules 5635(a), (b) and (d), the issuance of shares of Electra Pubco Common Stock and securities convertible into shares of Electra Pubco Common Stock to (i) the Electra equityholders pursuant to the Merger Agreement, and (ii) to any other persons pursuant to subscription, purchase, or similar agreements IRHO may enter into prior to Closing. We refer to this proposal as the “Stock Issuance Proposal”. The full text of the resolution to be considered and if thought fit, passed and approved is as follows:
“RESOLVED, as an ordinary resolution, that, for the purposes of complying with the applicable provisions of Nasdaq Listing Rules 5635(a), (b) and (d), the issuance of shares of Electra Pubco Common Stock to Electra equityholders pursuant to the Merger Agreement, and any other persons pursuant to subscription, purchase or similar agreements IRHO may enter into prior to Closing be approved in all respects.”
(4) Proposal No. 4 — Organizational Documents Proposal — To consider and vote upon a proposal to approve by way of special resolution the Proposed Charter and the proposed new bylaws (“Proposed Bylaws” and, together with the Proposed Charter, the “Proposed Organizational Documents”) of Electra Pubco (a corporation incorporated in the State of Delaware), (the “Organizational Documents Proposal”). The Proposed Charter shall provide a dual class common stock consisting of Class A common stock, par value $0.0001 per share (the “Parent Class A Common Shares”) and Class B common stock, par value $0.0001 per share (the “Parent Class B Common Shares” and together with the Parent Class A Common Shares, the “Parent Common Shares”). The forms of each of the Proposed Charter and the Proposed Bylaws are attached to the accompanying proxy statement/prospectus as Annex B-1 and Annex B-2, respectively. The full text of the resolution to be considered and if thought fit, passed and approved is as follows:
“RESOLVED, as a special resolution, that the Cayman Constitutional Documents currently in effect be amended and restated by the deletion in their entirety and the substitution in their place of the Proposed Charter and Proposed Bylaws (copies of which are attached to the proxy statement/prospectus as Annex B-1 and Annex B-2, respectively), with such principal changes as described in the Advisory Organizational Documents Proposals 5A through 5F. The Proposed Charter shall provide a dual class common stock consisting of Class A common stock, par value $0.0001 per share (the “Parent Class A Common Shares”) and Class B common stock, par value $0.0001 per share (the “Parent Class B Common Shares” and together with the Parent Class A Common Shares, the “Parent Common Shares”).”
Table of Contents
(5) Proposal No. 5 — The Advisory Organizational Documents Proposals — To consider and vote upon the following six (6) separate proposals (collectively, the “Advisory Organizational Documents Proposals”) to approve on an advisory non-binding basis by way of ordinary resolution the following material differences between the Cayman Constitutional Documents and the Proposed Organizational Documents:
(A) Advisory Organizational Documents Proposal 5A (Authorized Shares) — authorize the change in the authorized capital stock of IRHO from (a) 50,000,000 IRHO Ordinary Shares, par value $0.0001 per share, and 1,000,000 preference shares, par value $0.0001 per share, of IRHO to (b) [*] Class A shares of Electra Pubco Common Stock, par value $0.0001 per share, [*] Class B shares of Electra Pubco Common Stock, par value $0.0001 per share, and [*] shares of preferred stock (“Advisory Organizational Documents Proposal 5A”). The full text of the resolution to be considered and if thought fit, passed and approved is as follows:
“RESOLVED, as an ordinary resolution, on an advisory non-binding basis, that the authorized capital stock of IRHO be changed from 50,000,000 IRHO Ordinary Shares, par value $0.0001 per share, and 1,000,000 preference shares, par value $0.0001 per share, to [*] shares of Class A Electra Pubco Common Stock, par value $0.0001 per share, [*] Class B shares of Electra Pubco Common Stock, par value $0.0001 per share, and [*] shares of preferred stock, par value $0.0001 per share, as described in Advisory Organizational Documents Proposal 5A.”
(B) Advisory Organizational Documents Proposal 5B (Exclusive Forum Provision) — to authorize adopting Delaware as the exclusive forum for certain stockholder litigation and adopting the federal district courts of the United States as the exclusive forum for resolving complaints asserting a cause of action under the Securities Act of 1933, as amended (the “Securities Act”) (“Advisory Organizational Documents Proposal 5B”). The full text of the resolution to be considered and if thought fit, passed and approved is as follows:
“RESOLVED, as an ordinary resolution, on an advisory non-binding basis, that (a) Delaware be adopted as the exclusive forum for certain stockholder litigation and (b) the federal district courts of the United States be adopted as the exclusive forum for asserting a cause under the Securities Act, as described in Advisory Organizational Documents Proposal 5B.”
(C) Advisory Organizational Documents Proposal 5C (Required Vote to Amend Charter) — to approve provisions providing that the affirmative vote of at least 66 and 2/3% of the voting power of all the then outstanding shares of capital stock of Electra Pubco entitled to vote thereon, voting together as a single class, will be required to amend, alter, repeal or rescind any provision of Part B of Article V, Article VI, Article VII, Article IX, Article X and Article XI of the Proposed Charter (“Advisory Organizational Documents Proposal 5C”). The full text of the resolution to be considered and if thought fit, passed and approved is as follows:
“RESOLVED, as an ordinary resolution, on an advisory non-binding basis, that the provisions providing that the affirmative vote of at least 66 and 2/3% of the voting power of all the then outstanding shares of capital stock of Electra Pubco entitled to vote thereon, voting together as a single class, will be required to amend, alter, repeal or rescind any provision of Part B of Article V, Article VI, Article VII, Article IX, Article X and Article XI of the Proposed Charter;
(D) Advisory Organizational Documents Proposal 5D (Removal of Directors) — to approve provisions permitting the removal of a director, with or without cause, by the affirmative vote of at least 66 and 2/3% of the outstanding shares entitled to vote generally in the election of directors, voting together as a single class (“Advisory Organizational Documents Proposal 5D”). The full text of the resolution to be considered and if thought fit, passed and approved is as follows:
“RESOLVED, as an ordinary resolution, on an advisory non-binding basis, that the provisions permitting the removal of a director, with or without cause, by the affirmative vote of at least 66 and 2/3% of the outstanding shares entitled to vote generally in the election of directors, voting together as a single class, as described in Advisory Organizational Documents Proposal 5D, be approved.”
Table of Contents
(E) Advisory Organizational Documents Proposal 5E (Stockholder Action by Written Consent) — to approve provisions that require or permit stockholders to take action at an annual or special meeting and prohibit stockholder action by written consent in lieu of a meeting (“Advisory Organizational Documents Proposal 5E”). The full text of the resolution to be considered and if thought fit, passed and approved is as follows:
“RESOLVED, as an ordinary resolution, on an advisory non-binding basis, that the provisions requiring or permitting stockholders to take action at an annual or special meeting and prohibit stockholder action by written consent in lieu of a meeting, as described in Advisory Organizational Documents Proposal 5E, be approved.”
(F) Advisory Organizational Documents Proposal 5F (Additional Changes) — to approve and adopt an amendment to the Cayman Constitutional Documents to authorize certain additional changes, including, among other things, (a) making Electra Pubco’s corporate existence perpetual, and (b) removing certain provisions related to IRHO’s status as a blank check company that will no longer be applicable upon Closing, all of which the IRHO Board believes is necessary to adequately address the needs of Electra Pubco after the Business Combination (“Advisory Organizational Documents Proposal 5F”). The full text of the resolution to be considered and if thought fit, passed and approved is as follows:
“RESOLVED, as an ordinary resolution, on an advisory non-binding basis, that certain additional changes, including, among other things, (i) making Electra Pubco’s corporate existence perpetual and (ii) removing certain provisions related to IRHO’s status as a blank check company that will no longer be applicable upon consummation of the Business Combination, all of which the IRHO Board believes is necessary to adequately address the needs of Electra Pubco after the Business Combination, as described in Advisory Organizational Documents Proposal 5F, be approved.”
(6) Proposal No. 6 — The Electra Pubco Equity Incentive Plan Proposal — To consider and vote upon a proposal to approve by ordinary resolution the Electra Pubco Equity Incentive Plan (the “Electra Pubco Equity Incentive Plan Proposal”). The full text of the resolution to be considered and if thought fit, passed and approved is as follows:
“RESOLVED, as an ordinary resolution, that the ELECTRA AI, Inc. 2026 Incentive Plan (a copy of which is attached to this proxy statement/prospectus as Annex C) and any form award agreements thereunder, be approved and adopted in all respects.”
(7) Proposal No. 7 — The Adjournment Proposal — To consider and vote upon a proposal to approve by way of ordinary resolution the adjournment of the extraordinary general meeting to a later date or dates, if necessary, to permit further solicitation and vote of proxies in the event that there are insufficient votes for the approval of one or more proposals at the extraordinary general meeting (the “Adjournment Proposal”). The full text of the resolution to be considered and if thought fit, passed and approved is as follows:
“RESOLVED, as an ordinary resolution, that the adjournment of the extraordinary general meeting to a later date or dates, if necessary, to permit further solicitation and vote of proxies in the event that there are insufficient votes for the approval of one or more proposals at the extraordinary general meeting be approved.”
Each of Proposal Nos. 1, 2, 3, 4 and 6 is cross-conditioned on the approval of each other (the “Condition Precedent Proposals”). The Advisory Organizational Documents Proposal and the Adjournment Proposal are not cross-conditioned upon the approval of any other proposal set forth in this proxy statement/prospectus.
Only holders of record of IRHO Ordinary Shares at the close of business on [•], 2026 (the “Record Date”) are entitled to notice of and to vote at and to have their votes counted at the extraordinary general meeting and any adjournment of the extraordinary general meeting.
This proxy statement/prospectus and accompanying proxy card is being provided to IRHO’s shareholders in connection with the solicitation of proxies to be voted at the extraordinary general meeting and at any adjournment of the extraordinary general meeting. Whether or not you plan to attend the extraordinary general meeting,
Table of Contents
all of IRHO’s shareholders are urged to read this proxy statement/prospectus, including the Annexes and the documents referred to herein, carefully and in their entirety. You should also carefully consider the risk factors described under the heading “Risk Factors” beginning on page 23 of this proxy statement/prospectus.
After careful consideration, the board of directors of IRHO (the “IRHO Board”) has unanimously approved the Proposed Transaction and unanimously recommends that shareholders vote “FOR” the adoption of the Merger Agreement, and approval of the transactions contemplated thereby, including the Proposed Transaction, and “FOR” all other proposals presented to IRHO’s shareholders in this proxy statement/prospectus. When you consider the recommendation of these proposals by the IRHO Board, you should keep in mind that IRHO’s directors and officers have interests in the Proposed Transaction that may conflict with your interests as a shareholder. Additionally, the Sponsor (as defined below) has the right to vote an aggregate of 6,120,000 shares, or approximately 21% of the issued and outstanding IRHO Ordinary Shares. Accordingly, assuming all issued and outstanding IRHO Ordinary Shares are voted, in addition to the shares held by the Sponsor, the affirmative vote of holders of 8,540,001 public Ordinary Shares (or approximately 29%) would be required to approve each proposal requiring an ordinary resolution, including the Business Combination Proposal, the Stock Issuance Proposal, the Electra Pubco Equity Incentive Plan Proposal and, if presented, the Adjournment Proposal, and the affirmative vote of holders of 13,426,667 public Ordinary Shares (or approximately 46%) would be required to approve each proposal requiring a special resolution. See “The Business Combination Proposal — Certain Interests of IRHO’s Directors and Officers and Others in the Business Combination” for a further discussion of these considerations.
Pursuant to the Cayman Constitutional Documents, a holder of Public Shares (as defined herein) (a “Public Shareholder”) may request that IRHO redeem all or a portion of its Public Shares for cash if the Proposed Transaction is consummated. As a holder of Public Shares, you will be entitled to receive cash for any Public Shares to be redeemed only if you:
(i) (a) hold Public Shares or (b) hold Public Shares through IRHO Units and elect to separate your IRHO Units into the underlying Public Shares and Public Rights prior to exercising your redemption Rights with respect to the Public Shares;
(ii) submit a written request to Continental Stock Transfer & Trust Company (“Continental”), IRHO’s transfer agent, including the legal name, phone number and address of the beneficial owner of the Public Shares for which redemption is requested, that IRHO redeem all or a portion of your Public Shares for cash; and
(iii) tender or deliver your share certificates for Public Shares (if any) along with the redemption forms to Continental, physically or electronically through The Depository Trust Company (“DTC”).
Holders must complete the procedures for electing to redeem their Public Shares in the manner described above prior to [•], Eastern Time, on [•] (two business days before the scheduled date of the extraordinary general meeting) in order for their Public Shares to be redeemed.
Holders of IRHO Units must elect to separate Units held by them into the underlying Public Shares and Public Rights prior to exercising their Redemption Rights with respect to the Public Shares. Public Shareholders may elect to redeem Public Shares regardless of if or how they vote in respect of the Business Combination Proposal and regardless of whether they hold Public Shares on the Record Date. If the Proposed Transaction is not consummated, the Public Shares will be returned to the respective holder, broker or bank.
If the Proposed Transaction is consummated, and if a Public Shareholder properly exercises its right to redeem all or a portion of the Public Shares that it holds and timely tenders or delivers its share certificates (if any) and other redemption forms (as applicable) to Continental, IRHO will redeem such Public Shares for a per-share price, payable in cash, equal to the pro rata portion of the funds held the trust account established at the consummation of IRHO’s IPO (the “Trust Account”) that are available for distribution to Public Shareholders, calculated as of two business days prior to the consummation of the Proposed Transaction. For illustrative purposes, as of the Record Date, this would have amounted to approximately $[•] per issued and outstanding Public Share. If a Public Shareholder exercises its Redemption Rights in full, then it will be electing to exchange its Public Shares for cash and will no longer own Public Shares. See “Extraordinary General Meeting of IRHO — Redemption Rights” for a detailed description of the procedures to be followed if you wish to redeem your Public Shares for cash.
Table of Contents
Notwithstanding the foregoing, a Public Shareholder, together with any affiliate of such Public Shareholder or any other person with whom such Public Shareholder is acting in concert or as a “group” (as defined in Section 13(d)(3) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)), will be restricted from redeeming its Public Shares with respect to more than an aggregate of 15% of the Public Shares without IRHO’s prior consent. Accordingly, if a Public Shareholder, alone or acting in concert or as a group, seeks to redeem more than 15% of the Public Shares, then any such shares in excess of that 15% limit would not be redeemed for cash without IRHO’s prior consent.
The Merger Agreement is subject to the satisfaction or waiver of customary closing conditions, including, among others: (a) approval of the Business Combination and related agreements and transactions by the respective shareholders of IRHO and Electra; (b) the effectiveness of the registration statement on Form S-4 filed by IRHO of which the accompanying proxy statement/prospectus forms a part; (c) the Electra Pubco Common Stock being approved for listing on Nasdaq or another national securities exchange; (d) the amount of Parent Closing Cash at the Closing shall equal or exceed $30,000,000.
The approval of each of the Business Combination Proposal, the Stock Issuance Proposal, the Advisory Organizational Documents Proposals, the Electra Pubco Equity Incentive Plan Proposal, and the Adjournment Proposal requires an ordinary resolution under Cayman Islands law, being the affirmative vote of a majority of the IRHO Ordinary Shares who, being entitled to do so, attend in person or by proxy and vote thereon at the extraordinary general meeting. The approval of the Domestication Proposal and the Organizational Documents Proposal requires a special resolution under Cayman Islands law, being the affirmative vote of the holders of at least two-thirds of the IRHO Ordinary Shares who, being entitled to do so, attend in person or by proxy and vote thereon at the extraordinary general meeting. The approval of the Domestication Proposal requires a special resolution of the holder of Ordinary Shares issued and outstanding.
The Sponsor and each director and officer of IRHO (collectively, the “Insiders”) and Cantor (together with the Insiders, “Initial Shareholders”) have agreed to, among other things, vote in favor of the Proposed Transaction, and to waive their Redemption Rights in connection with the consummation of the Proposed Transaction with respect to any IRHO Ordinary Shares held by them. Such Redemption Rights waiver was provided in connection with IRHO’s IPO and without any separate consideration paid in connection with providing such waiver. The Sponsor, which includes among its members each of the directors and officers of IRHO, owns 5,750,000 Founder Shares, 370,000 Private Placement Units, and will receive 37,000 Ordinary Shares upon exchange of 370,000 Private Placement Rights, and Cantor owns 200,000 Private Placement Units. As a result, as of the date of the accompanying proxy statement/prospectus, the Insiders own approximately 21% of the issued and outstanding IRHO Ordinary Shares and have the right to vote approximately 21% of the issued and outstanding IRHO Ordinary Shares. Accordingly, assuming all issued and outstanding IRHO Ordinary Shares are voted, in addition to the shares held by the Insiders, the affirmative vote of holders of 8,540,001 public Ordinary Shares (or approximately 29%) would be required to approve each proposal requiring an ordinary resolution, including the Business Combination Proposal, the Stock Issuance Proposal, the Electra Pubco Equity Incentive Plan Proposal and, if presented, the Adjournment Proposal, and the affirmative vote of holders of 13,426,667 public Ordinary Shares (or approximately 46%) would be required to approve each proposal requiring a special resolution.
Following the Business Combination (assuming maximum redemptions), Fabrizio Martini will beneficially own (including shares underlying Converted Stock Options) approximately __________% of the combined voting power for the election of directors to the Electra Pubco Board, and, as a result, Electra Pubco will be considered a “controlled company” for the purposes of Nasdaq listing rules. For so long as Electra Pubco remains a controlled company under that definition, it is permitted to elect to rely on certain exemptions from corporate governance rules. As a result, investors may not have the same protection afforded to shareholders of companies that are subject to these corporate governance requirements. Electra Pubco’s status as a controlled company could cause its securities to be less attractive to certain investors or otherwise adversely affect the trading price. See “Risk Factors — Electra Pubco will be a “controlled company” within the meaning of Nasdaq listing standards and, as a result, will qualify for exemptions from certain corporate governance requirements. You may not have the same protections afforded to shareholders of companies that are subject to such requirements.”
Your vote is very important. Whether or not you plan to attend the extraordinary general meeting, please vote as soon as possible by following the instructions in the accompanying proxy statement/prospectus to make sure that your shares are represented at the extraordinary general meeting. If you hold your shares in “street name” through a bank, broker or other nominee, you will need to follow the instructions provided to you by
Table of Contents
your bank, broker or other nominee to ensure that your shares are represented and voted at the extraordinary general meeting. The transactions contemplated by the Merger Agreement will be consummated only if the Condition Precedent Proposals are approved at the extraordinary general meeting.
If you sign, date and return your proxy card without indicating how you wish to vote, your proxy will be voted “FOR” each of the proposals presented at the extraordinary general meeting. If you fail to return your proxy card or fail to instruct your bank, broker or other nominee how to vote, and do not attend the extraordinary general meeting in person, the effect will be, among other things, that your shares will not be counted for purposes of determining whether a quorum is present at the extraordinary general meeting and will not be voted. An abstention or broker non-vote will be counted towards the quorum requirement but will not count as a vote cast at the extraordinary general meeting and otherwise will have no effect on a particular proposal because each proposal requires the affirmative vote of a particular number of votes cast and an abstention is not a vote cast. If you are a shareholder of record and you attend the extraordinary general meeting and wish to vote in person, you may withdraw your proxy and vote in person.
Your attention is directed to the remainder of the proxy statement/prospectus following this notice (including the Annexes and other documents referred to herein) for a more complete description of the Proposed Transaction and related transactions and each of the proposals. You are encouraged to read this proxy statement/prospectus carefully and in its entirety, including the Annexes and other documents referred to herein. If you have any questions or need assistance voting your IRHO Ordinary Shares, please contact _______________, our proxy solicitor, by email at _______________. Individuals may also call _________________ toll free at _______________; banks and brokers can call _____________. This notice of extraordinary general meeting and the proxy statement/prospectus are available at [•].
Thank you for your participation. We look forward to your continued support.
| By Order of the Board of Directors of Iron Horse Acquisition II Corp. | ||
|
| ||
| Jose Bengochea | ||
| Chairman of the Board of Directors |
TO EXERCISE YOUR REDEMPTION RIGHTS, AT LEAST TWO BUSINESS DAYS PRIOR TO THE SCHEDULED VOTE AT THE EXTRAORDINARY GENERAL MEETING YOU MUST (1) IF YOU HOLD ORDINARY SHARES AS PART OF UNITS, ELECT TO SEPARATE YOUR UNITS INTO THE UNDERLYING PUBLIC SHARES AND PUBLIC RIGHTS PRIOR TO EXERCISING YOUR REDEMPTION RIGHTS WITH RESPECT TO THE PUBLIC SHARES, (2) SUBMIT A WRITTEN REQUEST, INCLUDING THE NAME, PHONE NUMBER, AND ADDRESS OF THE BENEFICIAL OWNER OF THE SHARES FOR WHICH REDEMPTION IS REQUESTED, TO THE TRANSFER AGENT AT LEAST TWO BUSINESS DAYS PRIOR TO THE VOTE AT THE EXTRAORDINARY GENERAL MEETING THAT YOUR PUBLIC SHARES BE REDEEMED FOR CASH AND (3) TENDER OR DELIVER YOUR PUBLIC SHARES AND SHARE CERTIFICATES (IF ANY) ALONG WITH ANY REDEMPTION FORMS TO THE TRANSFER AGENT, PHYSICALLY OR ELECTRONICALLY USING THE DEPOSITORY TRUST COMPANY’S DWAC (DEPOSIT WITHDRAWAL AT CUSTODIAN) SYSTEM, IN EACH CASE IN ACCORDANCE WITH THE PROCEDURES AND DEADLINES DESCRIBED IN THE ACCOMPANYING PROXY STATEMENT/PROSPECTUS. IF YOU HOLD THE SHARES IN STREET NAME, YOU WILL NEED TO INSTRUCT THE ACCOUNT EXECUTIVE AT YOUR BANK OR BROKER TO WITHDRAW THE SHARES FROM YOUR ACCOUNT IN ORDER TO EXERCISE YOUR REDEMPTION RIGHTS. IF THE BUSINESS COMBINATION IS NOT CONSUMMATED, THEN THESE SHARES WILL BE RETURNED TO YOU OR YOUR ACCOUNT.
The accompanying proxy statement/prospectus is dated [•], 2026 and is first being mailed to shareholders on or about [•], 2026.
Table of Contents
TABLE OF CONTENTS
| Page | ||
| ABOUT THIS PROXY STATEMENT/PROSPECTUS | ii | |
| FREQUENTLY USED TERMS | iii | |
| MARKET AND INDUSTRY DATA | ix | |
| CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS | x | |
| QUESTIONS AND ANSWERS FOR SHAREHOLDERS OF IRHO | xii | |
| SUMMARY OF THE PROXY STATEMENT/PROSPECTUS | 1 | |
| MARKET PRICE AND DIVIDENDS OF SECURITIES | 22 | |
| RISK FACTORS | 23 | |
| EXTRAORDINARY GENERAL MEETING OF IRHO | 56 | |
| THE BUSINESS COMBINATION PROPOSAL | 63 | |
| THE DOMESTICATION PROPOSAL | 85 | |
| THE STOCK ISSUANCE PROPOSAL | 88 | |
| THE ORGANIZATIONAL DOCUMENTS PROPOSAL | 90 | |
| THE ADVISORY ORGANIZATIONAL DOCUMENTS PROPOSALS | 92 | |
| THE ELECTRA PUBCO EQUITY INCENTIVE PLAN PROPOSAL | 100 | |
| THE ADJOURNMENT PROPOSAL | 106 | |
| MATERIAL U.S. FEDERAL INCOME TAX CONSIDERATIONS | 107 | |
| UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION | 118 | |
| INFORMATION ABOUT IRHO | 135 | |
| DIRECTORS, OFFICERS, EXECUTIVE COMPENSATION AND CORPORATE GOVERNANCE OF IRHO PRIOR TO THE BUSINESS COMBINATION | 141 | |
| MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS OF IRHO | 148 | |
| INFORMATION ABOUT ELECTRA | 153 | |
| MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS OF ELECTRA | 159 | |
| MANAGEMENT OF ELECTRA PUBCO FOLLOWING THE BUSINESS COMBINATION | 176 | |
| EXECUTIVE COMPENSATION OF ELECTRA | 177 | |
| BENEFICIAL OWNERSHIP OF SECURITIES | 184 | |
| CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS | 186 | |
| COMPARISON OF CORPORATE GOVERNANCE AND SHAREHOLDER RIGHTS | 189 | |
| DESCRIPTION OF ELECTRA PUBCO SECURITIES | 192 | |
| SECURITIES ACT RESTRICTIONS ON RESALE OF ELECTRA PUBCO SECURITIES | 199 | |
| STOCKHOLDER PROPOSALS AND DIRECTOR NOMINATIONS | 200 | |
| SHAREHOLDER COMMUNICATIONS | 201 | |
| LEGAL MATTERS | 201 | |
| OTHER MATTERS | 201 | |
| EXPERTS | 201 | |
| DELIVERY OF DOCUMENTS TO SHAREHOLDERS | 202 | |
| ENFORCEABILITY OF CIVIL LIABILITY | 202 | |
| WHERE YOU CAN FIND MORE INFORMATION | 203 | |
| INDEX TO FINANCIAL STATEMENTS | F-1 | |
| ANNEXES | ||
| ANNEX A-1 — MERGER AGREEMENT | A-1-1 | |
| PART II INFORMATION NOT REQUIRED IN PROSPECTUS | II-1 |
i
Table of Contents
ABOUT THIS PROXY STATEMENT/PROSPECTUS
This proxy statement/prospectus, which forms part of a registration statement on Form S-4 filed with the SEC by IRHO, constitutes a prospectus of Electra Pubco under Section 5 of the U.S. Securities Act of 1933, as amended (the “Securities Act”), with respect to the Electra Pubco Common Stock and to be issued to IRHO shareholders and rights holders and Electra equityholders if the Business Combination described herein is consummated. This document also constitutes a proxy statement of IRHO under Section 14(a) of the U.S. Securities Exchange Act of 1934, as amended (the “Exchange Act”), and a notice of meeting with respect to the extraordinary general meeting of IRHO.
You should rely only on the information contained in this proxy statement/prospectus. IRHO and Electra have not authorized anyone to provide you with information that is different from that contained in this proxy statement/prospectus. This proxy statement/prospectus is dated [•], and you should not assume that the information contained in this proxy statement/prospectus is accurate as of any date other than such date unless otherwise specifically provided herein.
This proxy statement/prospectus does not constitute an offer to sell, or a solicitation of an offer to buy, any securities, or the solicitation of a proxy, in any jurisdiction to or from any person to whom it is unlawful to make any such offer or solicitation in such jurisdiction.
You may request copies of this proxy statement/prospectus, without charge, by written request to IRHO’s Chief Executive Officer at ________________________; or to ______________, our proxy solicitor, by email at ____________. Individuals may also call __________ toll free at ___________; banks and brokers can call _______________, or from the SEC through the SEC website at the address provided above.
In order for you to receive timely delivery of the documents in advance of the extraordinary general meeting of IRHO to be held virtually on [•], you must request the information no later than five business days prior to the date of the extraordinary general meeting, by [•].
ii
Table of Contents
Frequently Used Terms
Unless otherwise stated or unless the context otherwise requires, the terms “we,” “us,” “our,” and “IRHO” refer to Iron Horse Acquisition II Corp. (which prior to the Domestication is an exempted company incorporated under the laws of the Cayman Islands and thereafter a corporation incorporated under the laws of the State of Delaware). Following the Domestication, IRHO will be renamed “ELECTRA AI, Inc.” and referred to in this document as Electra Pubco.
In this document:
“A&R Registration Rights Agreement” means the Amended and Restated Registration Rights Agreement to be entered into by and among Electra Pubco, the Sponsor, certain Electra shareholders and certain other parties thereto upon the completion of the Proposed Transaction. A form of the A&R Registration Rights Agreement in substantially the form it will be executed in connection with the Closing is attached to this proxy statement/prospectus as Annex D.
“Adjournment Proposal” means the proposal to be considered at the extraordinary general meeting to adjourn the extraordinary general meeting to a later date or dates, if necessary to permit further solicitation and vote of proxies if it is determined by IRHO that more time is necessary or appropriate to approve one or more proposal at the extraordinary general meeting.
“Advisory Organizational Documents Proposals” means the proposals to be considered at the extraordinary general meeting to approve, on a non-binding advisory basis and as required by applicable SEC guidance, certain material differences between the Cayman Constitutional Documents and the Proposed Organizational Documents.
“Aggregate Fully Diluted Electra Common Stock” means the sum, without duplication, of (a) all shares of Company Common Stock that are issued and outstanding immediately prior to the Effective Time; plus (b) the aggregate number of shares of Company Common Stock issuable upon full conversion of all Company Preferred Stock outstanding as of immediately prior to the Effective Time; plus (c) the aggregate number of shares of Company Common Stock issuable upon exercise of all Company Options that are vested as of immediately prior to the Effective Time; plus (d) the aggregate number of shares of Company Common Stock issuable upon full conversion, exercise or exchange of any other securities of the Company (other than Company Options and the Company Convertible Notes) outstanding immediately prior to the Effective Time directly or indirectly convertible into or exchangeable or exercisable for shares of Company Common Stock.
“Aggregate Merger Consideration” means the sum of $250,000,000 plus the Aggregate Exercise Price, as adjusted pursuant to the terms of the Merger Agreement (the “Base Purchase Price”), comprising of a number of Parent Common Shares equal to the quotient obtained by dividing (a) the Base Purchase Price, by (b) US$10.00.
“Aggregate Exercise Price” means the aggregate dollar amount payable to the Company upon the exercise or conversion of all vested in-the-money Company Options that are outstanding immediately prior to the Effective Time.
“Ancillary Agreements” means each of the agreements and instruments contemplated by the Merger Agreement or otherwise related to the transactions contemplated by the Merger Agreement and such other agreements or instruments contemplated by the Merger Agreement, in each case that was executed and delivered on the date of the Merger Agreement or on or prior to the date of Closing by IRHO, Merger Sub, the Sponsor, Electra, an Electra Securityholder and/or any of their respective affiliates, including, the A&R Registration Rights Agreement, the Proposed Charter, the Proposed Bylaws, the Parent Support Agreement and the Company Support Agreement.
“At-Risk Shares” means up to 800,000 Parent Ordinary Shares held by the Sponsor together with all Parent Common Shares issued upon conversion thereof in connection with the Domestication shall be subject to forfeiture as follows: For each $1,000,000 by which the Closing Cash is less than $80,000,000, the Sponsor shall forfeit 16,000 At-Risk Shares, up to the maximum of 800,000 Parent Common Shares. For illustrative purposes only: (i) if the Parent Closing Cash equals or exceeds $80,000,000, no At-Risk Shares shall be forfeited; (ii) if the Parent Closing Cash is $60,000,000, the Sponsor shall forfeit 320,000 At-Risk Shares; and (iii) if the Parent Closing Cash is $30,000,000 or less, the Sponsor shall forfeit all 800,000 At-Risk Shares.
“Base Purchase Price” means $250,000,000 plus the Aggregate Exercise Price, as adjusted pursuant to the terms of the Merger Agreement.
“Business Combination Proposal” means the proposal to be considered at the extraordinary general meeting to approve the Proposed Transaction.
iii
Table of Contents
“Cantor” means Cantor Fitzgerald & Co.
“Cayman Constitutional Documents” means IRHO’s Amended and Restated Memorandum and Articles of Association, as amended from time to time.
“Cayman Registrar” means the Registrar of Companies in the Cayman Islands.
“Closing” means the closing of the Proposed Transaction.
“Closing Date” means the date of the Closing.
“Code” means the U.S. Internal Revenue Code of 1986, as amended.
“Companies Act” refers to the Companies Act (As Revised) of the Cayman Islands.
“Company Revenue” means for the applicable earnout period, the revenues of Electra on a consolidated basis, calculated in accordance with U.S. GAAP and determined on a basis consistent with past practices.
“Company Support Agreement” means the support agreement, dated as of April 21, 2026, entered by and among IRHO, Electra and certain shareholders of Electra, as it may be amended and supplemented from time to time, pursuant to which such Electra shareholders have agreed, among other things, to vote in favor of the adoption and approval of the Business Combination. A copy of the Company Support Agreement is attached to this proxy statement/prospectus as Annex E.
“Condition Precedent Proposals” mean the Business Combination Proposal, the Domestication Proposal, the Stock Issuance Proposal, the Organizational Documents Proposal and the Electra Pubco Equity Incentive Plan Proposal.
“Continental” or “Transfer Agent” means Continental Stock Transfer & Trust Company.
“Conversion Ratio” means the quotient obtained by dividing (a) the number of shares constituting the Aggregate Merger Consideration, by (b) the number of shares constituting the Aggregate Fully Diluted Electra Common Stock (without regard to the shares described in clause (c) of the definition thereof).
“DGCL” means the Delaware General Corporation Law, as amended.
“Domestication” means the domestication of IRHO as a Delaware corporation in accordance with the DGCL, the Companies Act and the Cayman Constitutional Documents, in which IRHO will de-register from the Register of Companies in the Cayman Islands and transfer by way of continuation out of the Cayman Islands and into the State of Delaware so as to migrate to and domesticate as a Delaware corporation in accordance with the Cayman Constitutional Documents, Section 388 of the DGCL and Part XII of the Companies Act; the term includes all matters and necessary or ancillary changes in order to effect such Domestication, including the adoption of the Proposed Charter (as attached hereto at Annex B-1) consistent with the DGCL and changing the name and registered office of IRHO.
“Domestication Proposal” means the proposal to be considered at the extraordinary general meeting to approve the Domestication.
“DWAC” means The Depository Trust Company’s deposit/withdrawal at custodian system.
“Effective Time” means the effective time of the Business Combination.
“Electra” means Electra Vehicles, Inc., a Delaware corporation.
“Electra Board” means the board of directors of Electra prior to the Closing.
“Electra Common Stock” means the Electra Class A Common Stock and the Electra Class B Common Stock (sometimes referred to as the “Company Common Stock”).
“Electra Class A Common Stock” means the Class A common stock, par value $0.00001 per share of Electra (sometimes referred to as the “Company Class A Common Stock”).
“Electra Class B Common Stock” means the Class B common stock, par value $0.00001 per share of Electra (sometimes referred to as the “Company Class B Common Stock”).
iv
Table of Contents
“Electra Earnout Holders” means the Electra equityholders that hold shares of Electra Common Stock, Electra Options, or Electra Preferred Stock who have the contingent right to receive up to 15.0 million Earnout Shares pursuant to the Merger Agreement.
“Electra Earnout Shares” means up to 15,000,000 shares of Electra Pubco Common Stock.
“Electra Option” means each option (whether vested or unvested) to purchase shares of Electra Common Stock outstanding immediately prior to the Effective Time (sometimes referred to as the “Company Option”).
“Electra Pubco” means IRHO following the Closing (which after the Domestication will be a corporation incorporated under the laws of the State of Delaware and which will be renamed “ELECTRA AI, Inc.”).
“Electra Pubco Board” means the board of directors of Electra Pubco subsequent to the Closing.
“Electra Pubco Class A Common Shares” means the Class A common stock, par value $0.0001 per share of Electra Pubco after the Merger;
“Electra Pubco Class B Common Shares” means the Class B common stock, par value $0.0001 per share of Electra Pubco after the Merger;
“Electra Pubco Common Stock” means the Electra Pubco Class A Common Shares and the Electra Pubco Class B Common Shares (sometimes referred to as the “Parent Common Shares”);
“Electra Pubco Equity Incentive Plan” means the Electra AI, Inc. 2026 Incentive Award Plan, which will become effective upon the Closing. A copy of the Electra Pubco Equity Incentive Plan is attached to this proxy statement/prospectus as Annex C.
“Electra Pubco Equity Incentive Plan Proposal” means the proposal to be considered at the extraordinary general meeting to approve the Electra Pubco Equity Incentive Plan.
“Electra Pubco Security” means a share of Electra Pubco Common Stock.
“Electra Preferred Stock,” means the Series Seed Preferred Stock of Electra, the Series A Preferred Stock of Electra and the Series B Preferred Stock of Electra (sometimes referred to as the “Company Preferred Stock”).
“Electra Shareholder” means a holder of shares of Electra Common Stock prior to the Closing.
“Electra Securityholder” means a holder of shares of Electra Common Stock, Electra Options, or Electra Preferred Stock prior to the Closing.
“Exchange Act” means the U.S. Securities Exchange Act of 1934, as amended.
“Extraordinary General Meeting” means the extraordinary general meeting of IRHO’s shareholders, to be held virtually at [•], Eastern Time on [•], via live webcast at [•], and any adjournments or postponements thereof.
“Founder Shares” means the 5,750,000 currently outstanding IRHO Ordinary Shares of IRHO owned by the Sponsor.
“GAAP” means U.S. generally accepted accounting principles.
“Initial Shareholders” means the Insiders and Cantor Fitzgerald & Co.
“Insiders” means the Sponsor and each director and officer of IRHO.
“Insider Letter” means IRHO’s letter agreements with the Insiders, dated December 16, 2025, containing provisions relating to transfer restrictions of the Founder Shares and Private Placement Units, indemnification of the Trust Account, waiver of Redemption Rights and participation in liquidation distributions from the Trust Account. No separate consideration was paid to the Insiders in connection with the waiver of Redemption Rights.
“IPO” or “Initial Public Offering” means IRHO’s initial public offering of the IRHO Units, IRHO Ordinary Shares and IRHO Rights pursuant to registration statements on Form S-1 declared effective by the SEC on December 16, 2025 (SEC File No. 333-284331). On December 18, 2025, IRHO completed its initial public offering.
v
Table of Contents
“IRHO” means Iron Horse Acquisition II Corp. (which prior to the Domestication is an exempted company incorporated under the laws of the Cayman Islands and after the Domestication will be a corporation incorporated under the laws of the State of Delaware).
“IRHO Board” means the board of directors of IRHO prior to the Closing.
“IRHO Ordinary Shares” means, prior to the Domestication, the ordinary shares of IRHO, par value $0.0001 per share.
“IRHO Units” means the units sold in the IPO (including pursuant to the overallotment option) consisting of one IRHO Ordinary Share and one IRHO Right.
“IRHO Right” right entitles the holder thereof to receive one-tenth (1/10) of an ordinary share upon the consummation of an initial business combination.
“IRS” means the U.S. Internal Revenue Service.
“Maximum Redemptions Scenario” means a redemptions scenario that assumes that the maximum amount of Public Shares are redeemed in connection with the Business Combination (which number of redemptions contemplates a minimum of $30 million in Parent Closing Cash at Closing), for an aggregate payment of approximately $___ million from the Trust Account at a redemption price of approximately $____ per share.
“Merger” means the statutory merger of Merger Sub with and into Electra pursuant to the terms of the Merger Agreement, and in accordance with the applicable provisions of the DGCL, with Electra continuing as the surviving entity and a wholly-owned subsidiary of Electra Pubco and changing its name to a name to be mutually agreed by the parties.
“Merger Agreement” means the Merger Agreement, dated as of April 21, 2026, by and among IRHO, Merger Sub and Electra, as amended and as may be further amended and/or restated from time to time. A copy of the Merger Agreement and the Amendment to Merger Agreement, dated as of May 14, 2026, are attached to the proxy statement/prospectus as Annex A-1 and Annex A-2.
“Merger Sub” means IRHO Merger Sub, Inc., a Delaware corporation and a wholly-owned subsidiary of IRHO.
“Minimum Cash Condition” means the condition that, as of the Closing Date, (a) all amounts in the Trust Account, following payment of all amounts payable to IRHO Ordinary Shares held by the Public Shareholders; plus (b) the amount of any PIPE Financing (as such amounts are finally delivered to Parent at or prior to the Closing by investors in the PIPE Financing) will equal or exceed $30,000,000. No provision of the Merger Agreement can be waived, except by a writing signed by the party against whom such waiver is to be enforced, and any such waiver shall apply only in the particular instance in which such waiver shall have been given.
“*” means, proxy solicitor to IRHO.
“Nasdaq” means The Nasdaq Stock Market LLC.
“No Redemptions Scenario” means a redemptions scenario that assumes that no Public Shares are redeemed in connection with the Business Combination.
“Organizational Documents Proposal” means the proposal to be considered at the extraordinary general meeting to approve by special resolution the Proposed Charter and the Proposed Bylaws. A copy of each of the Proposed Charter and the Proposed Bylaws is attached to this proxy statement/prospectus as Annex B-1 and Annex B-2, respectively.
“Parent” means IRHO after the Domestication.
“Parent Class A Common Share” means a share of Parent Class A common stock, par value $0.0001 per share.
“Parent Closing Cash” means the amount of cash available in the Trust Account immediately prior to the Effective Time after deducting the amount required to satisfy any redemptions; plus (b) the amount of any PIPE Financing (as such amounts are finally delivered to Parent at or prior to the Closing by investors in the PIPE Financing); plus (c) the proceeds of any other equity investments or any debt financing facilities that are or will be received by IRHO (or the Company) prior to or substantially concurrently with the Closing; minus (d) the accrued but unpaid transaction expenses of IRHO as of the Closing Date.
vi
Table of Contents
“Parent Rights” means a right to 1/10 of a share of Parent Class A Common Share.
“Parent Support Agreement” means the support agreement, dated as of April 21, 2026, entered by and among IRHO, Merger Sub and the Sponsor, as it may be amended and supplemented from time to time, pursuant to which the Sponsor has agreed, among other things, to vote in favor of the adoption and approval of the Business Combination, forfeit certain Sponsor Shares and make the Share Contribution. A copy of the Parent Support Agreement is attached to this proxy statement/prospectus as Annex F.
“Person” means any individual, firm, corporation, partnership, limited liability company, association, trust, joint venture, joint stock company, governmental authority or instrumentality or other entity or organization of any other kind.
“PIPE Financing” means any purchase by investors of IRHO shares in connection with a private placement at or prior to the Closing on terms mutually agreeable to IRHO and Electra, acting reasonably. At the time of this filing, there is no commitment for any PIPE Financing and there can be no assurance that IRHO and Electra will enter into agreements for any PIPE Financing.
“Private Placement Shares” means the 570,000 IRHO Ordinary Shares underlying the Private Placement Units sold in a private placement that closed simultaneously with the IPO.
“Private Placement Units” means the 570,000 private placement units, each consisting of one IRHO Ordinary Share and one-Right, purchased by the Sponsor and Cantor for a purchase price of $5,700,000, or $10.00 per unit, simultaneously with the closing of the IPO (Cantor purchased 200,000 Private Placement Units).
“Private Placement Rights” means the 570,000 IRHO Rights comprising part of the Private Placement Units, which will become 57,000 Electra Pubco shares of Common Stock in connection with the Closing.
“Proposed Bylaws” mean the proposed bylaws of Electra Pubco to be in effect following the Domestication and Business Combination, a form of which is attached to this proxy statement/prospectus as Annex B-2.
“Proposed Charter” means the proposed certificate of incorporation of Electra Pubco to be in effect following the Domestication and the Business Combination, a form of which is attached to this proxy statement/prospectus as Annex B-1.
“Proposed Organizational Documents” means the Proposed Charter and the Proposed Bylaws.
“Proposed Transaction” or “Business Combination” means the transactions contemplated by the Merger Agreement and the other agreements contemplated therein.
“Public Shareholders” means the holders of IRHO Ordinary Shares that were sold in the IPO (whether they were purchased in the IPO or thereafter in the open market).
“Public Shares” means the IRHO Ordinary Shares sold in the IPO (whether they were purchased in the IPO as part of the IRHO Units or thereafter in the open market) and, following the Domestication, the shares of Electra Pubco Common Stock received in connection with the Domestication upon conversion of such IRHO Ordinary Shares.
“Public Rights Holders” means the holders of the Public Rights of IRHO.
“Public Rights” means the IRHO Rights sold in the IPO (whether they were purchased in the IPO as part of the IRHO Units or thereafter in the open market).
“Record Date” means [•].
“Redemption” means the redemption of Public Shares for the Redemption Price.
“Redemption Price” means an amount equal to a pro rata portion of the aggregate amount then on deposit in the Trust Account that are available for distribution to Public Shareholders in accordance with the Cayman Constitutional Documents (as equitably adjusted for stock splits, share subdivisions, stock dividends, share capitalizations, combinations, consolidations, recapitalizations and the like after the Closing). The Redemption Price will be calculated two business days prior to the completion of the Proposed Transaction in accordance with the Cayman Constitutional Documents.
vii
Table of Contents
“Redemption Rights” means the Rights of the Public Shareholders to demand Redemption of their Public Shares into cash in accordance with the procedures set forth in the Cayman Constitutional Documents and this proxy statement/prospectus.
“Rights Agreement” means the Rights Agreement, dated as of December 16, 2025, between IRHO and the Transfer Agent, as rights agent, which governs IRHO’s outstanding rights.
“Sarbanes-Oxley Act” means the Sarbanes-Oxley Act of 2002.
“SEC” means the U.S. Securities and Exchange Commission.
“Securities Act” means the U.S. Securities Act of 1933, as amended.
“Shareholder Proposals” means, collectively, (a) the Business Combination Proposal, (b) the Domestication Proposal, (c) the Stock Issuance Proposal, (d) the Organizational Documents Proposal, (e) the Advisory Organizational Documents Proposals, (f) the Electra Pubco Equity Incentive Plan Proposal and (g) the Adjournment Proposal, if presented.
“Sponsor” means IRHO SPAC Sponsor LLC, a Cayman Islands limited partnership.
“Sponsor Shares” means 5,750,000 of the Founder Shares held by the Sponsor.
“Stock Issuance Proposal” means the proposal to be considered at the extraordinary general meeting to approve for purposes of complying with the applicable provisions of Nasdaq Listing Rules 5635(a), (b) and (d), the issuance of shares of Electra Pubco Common Stock and securities convertible into shares of Electra Pubco Common Stock to (i) the Electra equityholders pursuant to the Merger Agreement, and (ii) to any other persons pursuant to subscription, purchase, or similar agreements IRHO may enter into prior to Closing.
“Transfer Agent” means Continental Stock Transfer & Trust Company.
“Trust Account” means the trust account of IRHO, which holds the net proceeds from the IPO and the sale of the Private Placement Units, together with interest earned thereon, less amounts released to pay taxes.
“Trust Agreement” means the Investment Management Trust Agreement, dated as of December 16, 2025, by and between IRHO and the Transfer Agent, as trustee.
“25% Redemptions Scenario” means a redemptions scenario that assumes that 5,750,000 Public Shares are redeemed for an aggregate payment of approximately $___ million at an assumed redemption price of approximately $____ per share, which represents approximately 25% of the Public Shares that are not subject to Non-Redemption Agreements.
“50% Redemptions Scenario” means a redemptions scenario that assumes that 11,500,000 Public Shares are redeemed for an aggregate payment of approximately $___ million at an assumed redemption price of approximately $___ per share, which represents approximately 50% of the Public Shares that are not subject to Non-Redemption Agreements.
“75% Redemptions Scenario” means a redemptions scenario that assumes that 17,250,000 Public Shares are redeemed for an aggregate payment of approximately $___ million at an assumed redemption price of approximately $_____ per share, which represents approximately 75% of the Public Shares that are not subject to Non-Redemption Agreements.
viii
Table of Contents
Market and Industry Data
We are responsible for the disclosure contained in this proxy statement/prospectus. However, information contained in this proxy statement/prospectus concerning the market and the industry in which Electra competes, including its market position, general expectations of market opportunity, size and growth rates, is based on information from various third-party sources, on assumptions made by Electra based on such sources and Electra’s knowledge of the markets for its services and solutions. This information and any estimates provided herein involve numerous assumptions and limitations, and third-party sources generally state that the information contained in such source has been obtained from sources believed to be reliable. The industry in which Electra operates is subject to a high degree of uncertainty and risk. As a result, the estimates and market and industry information provided in this proxy statement/prospectus are subject to change based on various factors, including those described in “Cautionary Note Regarding Forward-Looking Statements” and “Risk Factors — Risks Related to Electra’s Business” and elsewhere in this proxy statement/prospectus.
ix
Table of Contents
Cautionary Note Regarding Forward-Looking Statements
This proxy statement/prospectus contains forward-looking statements. These forward-looking statements include, without limitation, statements relating to expectations for future financial performance, business strategies or expectations for our business, and the timing and ability for IRHO and Electra to complete the Proposed Transaction. These statements constitute projections, forecasts and forward-looking statements, and are not guarantees of performance. Such statements can be identified by the fact that they do not relate strictly to historical or current facts. When used in this proxy statement/prospectus, words such as “anticipate”, “believe”, “can”, “continue”, “could”, “estimate”, “expect”, “forecast”, “intend”, “may”, “might”, “plan”, “possible”, “potential”, “predict”, “project”, “seek”, “should”, “strive”, “target”, “will”, “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 proxy statement/prospectus and in any document incorporated by reference in this proxy statement/prospectus may include, for example, statements about:
• the benefits of the Proposed Transaction;
• the ability to consummate the Business Combination;
• the future financial performance of Electra Pubco following the Proposed Transaction;
• changes in the market for Electra’s products and services; and
• expansion plans and opportunities.
These forward-looking statements are based on information available as of the date of this proxy statement/prospectus and IRHO and Electra managements’ current expectations, forecasts and assumptions, and involve a number of judgments, known and unknown risks and uncertainties and other factors, many of which are outside the control of IRHO, Electra and their respective directors, officers and affiliates. Accordingly, forward-looking statements should not be relied upon as representing IRHO’s or Electra’s views as of any subsequent date. Neither IRHO nor Electra undertakes any obligation to update, add or to otherwise correct any forward-looking statements contained herein to reflect events or circumstances after the date they were made, whether as a result of new information, future events, inaccuracies that become apparent after the date hereof or otherwise, except as may be required under applicable securities laws.
You should not place undue reliance on these forward-looking statements in deciding how your vote should be cast or in voting your shares on the proposals set out in this proxy statement/prospectus. Should one or more of a number of known and unknown risks and uncertainties materialize, or should any of our assumptions prove incorrect, our actual results or performance may be materially different from those expressed or implied by these forward-looking statements. Some factors that could cause actual results to differ include, but are not limited to:
• the occurrence of any event, change or other circumstances that could delay the Proposed Transaction or give rise to the termination of the Merger Agreement;
• estimates and forecasts of financial and performance metrics and expectations and timing related to potential benefits, terms and timing of the Proposed Transaction;
• risks relating to the uncertainty of the projected financial information with respect to Electra Pubco;
• the outcome of any legal proceedings that may be instituted against Electra or IRHO following announcement of the Proposed Transaction and transactions contemplated thereby;
• the inability to complete the Proposed Transaction due to the failure to obtain approval of the IRHO shareholders or the failure of IRHO to meet the conditions to closing in the Merger Agreement;
• the inability to maintain the listing of the Electra Pubco Common Stock on Nasdaq following the Proposed Transaction;
• Electra Pubco’s public securities’ liquidity and trading;
• the risk that the Proposed Transaction disrupts current plans and operations;
x
Table of Contents
• the ability to recognize the anticipated benefits of the Proposed Transaction, which may be affected by, among other things, competition, and the ability of Electra Pubco to grow and manage growth profitably;
• costs related to the Proposed Transaction;
• Electra’s ability to obtain sufficient additional financing, on acceptable terms or at all, and ability to continue as a going concern;
• the impact of Electra’s remaining indebtedness outstanding following the Proposed Transaction;
• changes in the market in which Electra competes, including with respect to its competitive landscape, technology evolution or changes in applicable laws or regulations;
• the impact of macroeconomic events, such as inflation, recessions or depressions, war or fears of war, and the coronavirus (“COVID-19”) pandemic;
• changes in the vertical markets that Electra targets;
• the impact of current or future government regulation and oversight, including the U.S. federal, state and local authorities;
• the ability to launch new Electra services and products or to profitably expand into new markets;
• the ability to execute Electra’s growth strategies, including identifying and executing acquisitions;
• the ability to develop and maintain effective internal controls and procedures or correct the previously identified material weakness;
• the exposure to any liability, protracted and costly litigation or reputational damage relating to Electra’s data security;
• the possibility that Electra or IRHO may be adversely affected by other economic, business, and/or competitive factors; and
• other risks and uncertainties indicated in this proxy statement/prospectus, including those set forth under “Risk Factors” of this proxy statement/prospectus.
xi
Table of Contents
Questions and Answers for Shareholders of IRHO
The questions and answers below highlight only selected information from this document and only briefly address some commonly asked questions about the proposals to be presented at the extraordinary general meeting, including with respect to the Proposed Transaction. The following questions and answers do not include all the information that is important to IRHO’s shareholders. IRHO urges shareholders to read this proxy statement/prospectus, including the Annexes and the other documents referred to herein, carefully and in their entirety to fully understand the Proposed Transaction and the voting procedures for the extraordinary general meeting, which will be held at [•], Eastern Time, on [•], virtually via live webcast. For the purposes of Cayman Islands law and the Cayman Constitutional Documents, the physical location of the extraordinary general meeting will be at the offices of Loeb & Loeb LLP located at 345 Park Avenue, New York, NY 10154. To participate in the extraordinary general meeting online, visit [•] and enter the 12-digit control number included on your proxy card. You may register for the extraordinary general meeting as early as [•], Eastern Time, on [•]. If you hold your shares through a bank, broker or other nominee, you will need to take additional steps to participate in the extraordinary general meeting, as described in this proxy statement/prospectus.
Q. Why am I receiving this proxy statement/prospectus?
A. You are receiving this proxy statement/prospectus because you are a shareholder of IRHO and you are entitled to vote at the extraordinary general meeting to approve the matters set forth herein. This document serves as:
• a proxy statement of IRHO to solicit proxies for the extraordinary general meeting on the matters set forth herein;
• a prospectus of Electra Pubco to offer Electra Pubco Class A Common Stock to the IRHO shareholders and rights holders in the Domestication and to the Electra equityholders in the Merger; and
• a prospectus of Electra Pubco for the sale by the selling stockholders of the Electra Pubco Common Stock received in the Business Combination.
IRHO shareholders are being asked to consider and vote upon, among other proposals, a proposal to approve and adopt the Merger Agreement and approve the Proposed Transaction. The Merger Agreement provides for, among other things, (i) the Domestication of IRHO and (ii) the Merger of Merger Sub with and into Electra, with Electra surviving the Merger, in accordance with the terms and subject to the conditions of the Merger Agreement and the applicable provisions of the DGCL, as more fully described elsewhere in this proxy statement/prospectus. See “The Domestication Proposal” and “The Business Combination Proposal” for more detail.
A copy of the Merger Agreement and the Amendment to Merger Agreement, dated as of May 14, 2026, are attached to this proxy statement/prospectus as Annex A-1 and Annex A-2 and you are encouraged to read them in their entirety.
THE VOTE OF PUBLIC SHAREHOLDERS IS IMPORTANT. PUBLIC SHAREHOLDERS ARE ENCOURAGED TO VOTE AS SOON AS POSSIBLE AFTER CAREFULLY REVIEWING THIS PROXY STATEMENT/PROSPECTUS, INCLUDING THE ANNEXES AND THE ACCOMPANYING FINANCIAL STATEMENTS OF IRHO AND ELECTRA.
Q. What proposals are shareholders of IRHO being asked to vote upon?
A. At the extraordinary general meeting, IRHO is asking holders of IRHO Ordinary Shares to consider and vote upon:
• The Business Combination Proposal;
• The Domestication Proposal;
• The Stock Issuance Proposal;
• The Organizational Documents Proposal;
• The Advisory Organizational Documents Proposals;
xii
Table of Contents
• The Electra Pubco Equity Incentive Plan Proposal; and
• The Adjournment Proposal, if presented.
If IRHO’s shareholders do not approve each of the Condition Precedent Proposals, then unless certain conditions in the Merger Agreement are waived by the applicable parties to the Merger Agreement, the Merger Agreement could be terminated and the Proposed Transaction may not be consummated. See “The Business Combination Proposal,” “The Domestication Proposal,” “The Stock Issuance Proposal,” “The Organizational Documents Proposal,” and “The Electra Pubco Equity Incentive Plan Proposal,” of this proxy statement/prospectus, respectively.
IRHO will hold the extraordinary general meeting to consider and vote upon these proposals. This proxy statement/prospectus contains important information about the Proposed Transaction and the other matters to be acted upon at the extraordinary general meeting. Shareholders of IRHO should read it carefully.
After careful consideration, the IRHO Board has determined that each of (a) the Business Combination Proposal, (b) the Domestication Proposal, (c) the Stock Issuance Proposal, (d) the Organizational Documents Proposal, (e) the Advisory Organizational Documents Proposals, (f) the Electra Pubco Equity Incentive Plan Proposal, and (g) the Adjournment Proposal, if presented, are in the best interests of IRHO and its shareholders and unanimously recommends that you vote or give instruction to vote “FOR” each of those proposals.
The existence of financial and personal interests of one or more of IRHO’s directors may result in a conflict of interest on the part of such director(s) between what he, she or they may believe is in the best interests of IRHO and its shareholders and what he, she or they may believe is best for himself, herself or themselves in determining to recommend that shareholders vote for the proposals. In addition, IRHO’s officers have interests in the Proposed Transaction that may conflict with your interests as a shareholder. See “The Business Combination Proposal — Certain Interests of IRHO’s Directors and Officers and Others in the Business Combination” for a further discussion of these considerations.
Q. Are the proposals conditioned on one another?
A. Yes. The Proposed Transaction is conditioned on the approval of each of the Condition Precedent Proposals at the extraordinary general meeting. Each of the Condition Precedent Proposals is cross-conditioned on the approval of each other. The Advisory Organizational Documents Proposals and the Adjournment Proposal are not conditioned upon the approval of any other proposal.
Q. Why is IRHO proposing the Proposed Transaction?
A. IRHO was incorporated to effect a merger, share exchange, asset acquisition, share purchase, reorganization or similar business combination, with one or more businesses or entities.
Electra is a U.S. owned and operated technology company headquartered in Boston Massachusetts. Electra is dedicated to enhancing battery performance through AI-powered battery intelligence, providing solutions for electric vehicles, battery energy storage systems (BESS), and fleet operators.
Based on its due diligence investigations of Electra and the industry in which it operates, including the financial and other information provided by Electra in the course of IRHO’s due diligence investigations, the IRHO Board believes that the Proposed Transaction with Electra is in the best interests of IRHO and its shareholders and presents an opportunity to increase shareholder value. However, there is no assurance of this. See “The Business Combination Proposal — IRHO Board of Director’s Reasons for the Approval of the Business Combination” for additional information.
Although the IRHO Board believes that the Proposed Transaction with Electra presents an attractive business combination opportunity and is in the best interests of IRHO and its shareholders, the IRHO Board did consider certain potentially material negative factors in arriving at that conclusion. These factors are discussed in greater detail in “The Business Combination Proposal — IRHO Board of Director’s Reasons for the Approval of the Business Combination,” as well as in “Risk Factors — Risks Related to Electra’s Business”.
xiii
Table of Contents
Q. What equity stake will current IRHO shareholders and Company Equity Interest Holders hold in Pubco immediately after the consummation of the Proposed Transaction?
A. It is anticipated that, following the Business Combination, an aggregate of 37,695,452 shares of Electra Pubco Common Stock will be outstanding, assuming maximum redemptions (which number of redemptions contemplates a minimum of $30 million in Parent Closing Cash at Closing). If the actual facts are different from these assumptions, the percentage ownership retained by IRHO’s existing shareholders in the combined company will be different.
The following summarizes the pro forma ownership of Pubco Common Stock immediately following the Business Combination under several redemption scenarios: no redemptions, 25%, 50%, 75% redemptions, and maximum redemptions.
| No | 25% | 50% | 75% | Maximum | |||||||||||||||||||||
| Shares | Percentage | Shares | Percentage | Shares | Percentage | Shares | Percentage | Shares | Percentage | ||||||||||||||||
| Public Shareholders(1) | 25,300,000 | 31.5 | % | 19,550,000 | 30.2 | % | 13,800,000 | 28.0 | % | 8,050,000 | 19.8 | % | 5,982,780 | 15.9 | % | ||||||||||
| Sponsor(2) | 6,157,000 | 7.7 | % | 6,157,000 | 9.5 | % | 6,157,000 | 12.5 | % | 5,695,874 | 14.0 | % | 5,357,000 | 14.2 | % | ||||||||||
| Cantor | 220,000 | 0.3 | % | 220,000 | 0.3 | % | 220,000 | 0.4 | % | 220,000 | 0.5 | % | 220,000 | 0.6 | % | ||||||||||
| Electra Shareholders(3) | 41,995,572 | 52.3 | % | 33,882,560 | 52.3 | % | 25,769,546 | 52.3 | % | 25,051,931 | 61.6 | % | 25,051,931 | 66.5 | % | ||||||||||
| Others(4) | 6,625,333 | 8.2 | % | 4,975,812 | 7.7 | % | 3,326,292 | 6.8 | % | 1,676,771 | 4.1 | % | 1,083,741 | 2.8 | % | ||||||||||
| Total | 80,297,905 | 100.0 | % | 64,785,372 | 100.0 | % | 49,272,838 | 100.0 | % | 40,694,576 | 100.0 | % | 37,695,452 | 100.0 | % | ||||||||||
____________
(1) Includes 2,300,000 shares of Pubco Common Stock issued to all public shareholders upon exchange of the rights issued in the IPO, and in the case of the maximum redemptions scenario, such number reflects the maximum number of shares that could be redeemed to ensure a minimum of $30,000,000 in Parent Closing Cash at the time of the Closing.
(2) Reflects the number of Shares that will be held by the Sponsor after the forfeiture of up to 800,000 Risk Shares as contemplated by the Merger Agreement.
(3) Includes all Shares to be issued to the stockholders of Electra as adjusted to ensure the minimum ownership threshold of 50.1% at the Closing.
(4) Includes Shares issued to vendors and financial advisors to Electra and IRHO other than Cantor.
Stockholders will experience additional dilution to the extent Electra Pubco issues additional shares of Electra Pubco Common Stock after the closing of the Business Combination. The table above excludes any conversion into equity of any of Working Capital Loans.
For more information, please see the sections entitled “Unaudited Pro Forma Condensed Combined Financial Information” and “Proposal 1 — The Business Combination Proposal — Ownership After the Closing.”
All of the relative percentages above are for illustrative purposes only and are based upon certain assumptions as described in the section entitled “Unaudited Condensed Combined Pro Forma Financial Information.” For more information, including the ownership percentages in the no redemptions scenario and the effect of certain dilutive securities, see the section entitled “The Business Combination Proposal — Ownership of Electra Pubco after the Closing.”
Q. Will the Sponsor receive compensation in connection with the Business Combination?
A. Yes. Following the execution of the Merger Agreement, the Sponsor provided loans in an aggregate amount of $_______ in the form of convertible promissory notes (the “Working Capital Loans”). The Working Capital Loans would either be repaid upon consummation of a business combination, without interest, or, at the lender’s discretion, of such Working Capital Loans may be convertible into Pubco Common Stock, at a price of $10.00 per share, of the post business combination entity. If IRHO completes a business combination, IRHO will repay the Working Capital Loans out of the proceeds of the Trust Account released to IRHO. Otherwise, the Working Capital Loans would be repaid only out of funds held outside the Trust Account. In the event that a business combination does not close, IRHO may use a portion of proceeds held outside the Trust Account to repay the Working Capital Loans but no proceeds held in the Trust Account would be used to repay the Working Capital Loans.
xiv
Table of Contents
Q. Does the Sponsor, any of its affiliates or promoters have any prior experience in organizing special purpose acquisition companies?
A. Yes. Iron Horse Acquisition Corp. (Nasdaq: “IRHO” and referred to herein as “Iron Horse I”) Mr. Bengochea, our CEO, founded Iron Horse Acquisitions Corp., a SPAC formed for substantially similar purposes as our Company. Several members of our management team and advisors served as an officer or director of Iron Horse I, a special purpose acquisition company. Mr. Bengochea, our CEO served as the CEO of and a director of Iron Horse I, and Mr. Caragol, our CFO, and, alongside Mr. Bengochea, the co-founder of Iron Horse II, served as both CFO and COO of Iron Horse I. Mr. Hertz, Mr. Turner and Mr. Morris, our financial advisors, all serve as the independent directors on the board of directors of Iron Horse I. Iron Horse I closed its IPO on December 29, 2023 after its registration statement was declared effective on December 27, 2023. In September 2024, Iron Horse I entered into a business combination agreement (the “Business Combination Agreement”), dated as of September 27, 2024, with Rosey Sea Holdings Limited, a company incorporated and existing under the laws of the British Virgin Islands (“Seller”) and the owner of 100% of the issued and outstanding capital stock of Zhong Guo Liang Tou Group Limited, a company incorporated and existing under the laws of the British Virgin Islands (the “Target”). At a special meeting of stockholders held on June 25, 2025, the stockholders approved a resolution to allow the Company to extend the date by which the Company must consummate a business combination up to twelve (12) times, each such extension for an additional one (1) month period, until June 29, 2026 (the “Extension Special Meeting”). On June 20, 2025, at another special meeting, the stockholders approved the business combination (“Business Combination Special Meeting”). As of June 30, 2025, an aggregate of 6,477,975 shares of Common Stock were redeemed at a redemption price of $10.60 per share, for an aggregate redemption amount of $68.65 million. In connection with the stockholders’ vote at the Business Combination Special Meeting, an additional 223,374 shares were tendered for redemption at a price of $10.80 per share for a total redemption of 97% of public shares. On September 30, 2025, the company announced the completion of the business combination with Rosey Sea Holdings Limited. The combined company now operates under the name CN Healthy Food Tech Group Corp. and began trading on Nasdaq under the ticker symbol “UCFI” and “UCFIW” on October 1, 2025 for the ordinary shares and warrants respectively. The price of the shares on October 3, 2025 was $5.51. The trading has been indefinitely suspended pending China Securities Regulatory Commission review.
Q. Do any conflicts of interest exist relating to the Business Combination?
A. Yes. Since the Sponsor, its affiliates, representatives and certain of the initial shareholders of IRHO (the “Initial Shareholders”), have interests that are different, or in addition to (and which may conflict with), the interests of the other holders of Ordinary Shares, a conflict of interest may exist in determining whether the Business Combination with Electra is appropriate. Such interests include that the Initial Shareholders will lose their entire investment in IRHO if IRHO does not complete a business combination. When you consider the recommendation of the IRHO Board in favor of approval of the Business Combination, you should keep in mind that the Initial Shareholders have interests in such proposals that are different from, or in addition to (which may conflict with), those of the IRHO shareholders generally.
These conflicts of interest include, among other things, the interests listed below:
• The beneficial ownership of the Sponsor and certain Initial Shareholders of 6,320,000 IRHO Ordinary Shares consisting of 5,750,000 Founder Shares which were acquired prior to the IPO for an aggregate of $32,000 and 570,000 Private Placement Shares purchased at the time of the IPO (200,000 of which were purchased by Cantor) will be worthless if the Business Combination is not consummated because the Initial Shareholders and the Sponsor have agreed to waive their rights to any liquidation distributions.
• If the Business Combination is consummated, the Sponsor would own up to an aggregate of 5,357,000 shares of Electra Pubco Common Stock (assuming Maximum Redemptions) with an aggregate market value of approximately $ , based on the closing price of the Public Shares of $ on Nasdaq as of , 2026.
• The Sponsor or an affiliate of the Sponsor may, but is not obligated to, make Working Capital Loans to IRHO. As of the date of this proxy statement/prospectus, there are $_______ Working Capital Loans outstanding. In the event that the Business Combination does not close, IRHO may use a portion of proceeds held outside the Trust Account to repay any such loans, but no proceeds held in the Trust Account would be used to repay the Working Capital Loans. All unpaid amounts would be forfeited.
xv
Table of Contents
• the continued indemnification of current directors and officers of IRHO and the continuation of directors’ and officers’ liability insurance after the Business Combination;
• the fact that our Sponsor, officers and directors will be reimbursed for out-of-pocket expenses incurred in connection with activities on our behalf, such as identifying potential target businesses and performing due diligence on suitable business combinations; and
• the fact that our Sponsor, and current and former officers and directors will lose their entire investment in us if an initial business combination is not completed.
• The Sponsor also agreed that, effective as of and conditioned upon the Closing, up to 800,000 Parent Ordinary Shares held by the Sponsor together with all Parent Common Shares issued upon conversion thereof in connection with the Domestication (the “At-Risk Shares”) shall be subject to forfeiture as follows: For each $1,000,000 by which the Parent Closing Cash is less than $80,000,000, the Sponsor shall forfeit 16,000 At-Risk Shares, up to the maximum of 800,000 Parent Common Shares. For illustrative purposes only: (i) if the Parent Closing Cash equals or exceeds $80,000,000, no At-Risk Shares shall be forfeited; (ii) if the Parent Closing Cash is $60,000,000, the Sponsor shall forfeit 320,000 At-Risk Shares; and (iii) if the Parent Closing Cash is $30,000,000 or less, the Sponsor shall forfeit all 800,000 At-Risk Shares.
These interests may influence IRHO’s directors in making their recommendation that you vote in favor of the Business Combination Proposal, and the transactions contemplated thereby. These interests were considered by the IRHO Board when it approved the Business Combination. For more information, please see Section — “DIRECTORS, OFFICERS, EXECUTIVE COMPENSATION AND CORPORATE GOVERNANCE OF IRHO PRIOR TO THE BUSINESS COMBINATION — Conflicts of interest.”
Q. What will Electra Securityholders receive in connection with the Business Combination?
A. Under the Merger Agreement, the holders of shares of Electra Common Stock, Electra Options, and Electra Preferred Stock immediately prior to the Closing will receive aggregate consideration of $250.0 million plus the aggregate dollar amount payable to the Company upon the exercise or conversion of all vested in-the-money Company Options in the form of shares of Electra Pubco Common Stock (at a deemed value of $10.00 per share) in exchange for their outstanding equity interests, as set forth in more detail below.
The Merger Agreement also provides, among other things, that the Electra Earnout Holders have the contingent right to receive up to 15.0 million Earnout Shares, subject to the following contingencies:
(A) one-third of the Earnout Shares if the First Earnout Milestone is achieved;
(B) one-third of the Earnout Shares if the Second Earnout Milestone is achieved; and
(C) one-third of the Earnout Shares if the Third Earnout Milestone is achieved.
Pursuant to the Merger Agreement, at the Effective Time, (i) each Electra Option that is outstanding as of immediately prior to the Effective Time will be converted into a Converted Stock Option and the right to receive a number of Earnout Shares in accordance with, and subject to, the contingencies set forth in the Merger Agreement, (ii) with respect to the Electra Earnout Holders only, the right to receive a number of Earnout Shares in accordance with, and subject to, the contingencies set forth in the Merger Agreement, and (iii) each Electra Option that is outstanding immediately prior to the Effective Time will automatically be assumed by Electra Pubco and converted into a Converted Option. At the Effective Time, Electra Pubco will assume all obligations of Electra with respect to each Converted Stock Option.
Parent and the Company will enter into a Lock-Up Agreement (the “Lock-Up Agreement”) with certain stockholders of the Company and the Sponsor, pursuant to which the Parent Common Shares and any other equity securities convertible into or exchangeable for or representing the rights to receive Parent Common Shares, if any, held by such holders immediately following the Closing shall be subject to a lock-up for the Lock-Up Period. The “Lock-Up Period” means the period beginning on the Closing Date and ending in four consecutive equal quarterly installments following the Closing Date where one-fourth of the securities subject to the Lock-Up shall be released from the Lock-Up upon the Company issuing each of its first-four quarterly earnings release that occurs at least 120 days after the Closing Date. For information on the percentage of the
xvi
Table of Contents
issued and outstanding shares of Electra Pubco Common Stock immediately following the Closing that are expected to be held by the Electra Securityholders, the Sponsor and IRHO’s current public security holders, in various redemption scenarios, based on Electra’s balance of capital stock as of ______, 2026, see “— What equity stake will current IRHO shareholders and Electra Securityholders hold in Electra Pubco immediately after the consummation of the Proposed Transaction?”.
Q. What equity stake will current IRHO shareholders and Electra Securityholders hold in Electra Pubco immediately after the consummation of the Proposed Transaction?
A. It is anticipated that, following the Business Combination, an aggregate of 37,695,452 shares of Electra Pubco Common Stock will be outstanding, assuming Maximum Redemptions (which number of redemptions contemplates a minimum of $30 million in Parent Closing Cash at Closing). This assumes there are no other issuances of equity securities of Electra Pubco prior to or in connection with the Closing, including any equity awards that may be issued under the Electra Pubco Equity Incentive Plan following the Business Combination. If the actual facts are different from these assumptions, the percentage ownership retained by IRHO’s existing shareholders in the combined company will be different.
All of the relative percentages above are for illustrative purposes only and are based upon certain assumptions as described in the section entitled “Unaudited Condensed Combined Pro Forma Financial Information”. For more information, including the ownership percentages in the no redemptions scenario and the effect of certain dilutive securities, see the section entitled “The Business Combination Proposal — Ownership of Electra Pubco after the Closing”.
Q. Will Electra Pubco be a controlled company?
A. Yes. Following the Business Combination (assuming maximum redemptions), Fabrizio Martini, Electra’s co-founder and Chief Executive Officer, will beneficially own (including shares underlying Converted Stock Options) approximately 23% of the outstanding shares of Electra Pubco Common Stock and, because he will be the sole holder of Electra Pubco Class B Common Stock, which carries ten votes per share, approximately [•]% of the combined voting power for the election of directors to the Electra Pubco Board. As a result, Electra Pubco will be considered a “controlled company” for the purposes of Nasdaq listing rules, which apply to a company of which more than 50% of the voting power for the election of directors is held by an individual, a group or another company. For so long as Electra Pubco remains a controlled company under that definition, it is permitted to elect to rely on certain exemptions from corporate governance rules. As a result, investors may not have the same protection afforded to shareholders of companies that are subject to these corporate governance requirements. Electra Pubco’s status as a controlled company could cause its securities to be less attractive to certain investors or otherwise adversely affect the trading price. See “Risk Factors — Electra Pubco will be a “controlled company” within the meaning of Nasdaq listing standards and, as a result, will qualify for exemptions from certain corporate governance requirements. You may not have the same protections afforded to shareholders of companies that are subject to such requirements.”
Q. How has the announcement of the Proposed Transaction affected the trading price of the IRHO Ordinary Shares?
A. On ____________, 2026, the last trading date prior to the public announcement of the Proposed Transaction, IRHO Units, IRHO Ordinary Shares and Public Rights closed at $________________, respectively. As of ___, 2026, the last trading day immediately prior to the filing date of this proxy statement/prospectus, the closing price for each IRHO Units, IRHO Ordinary Shares and Public Rights was $_________________, respectively.
Q. Why is IRHO proposing the Domestication?
A. The IRHO Board believes that there are significant advantages to Electra Pubco that will arise as a result of a change of IRHO’s domicile to the State of Delaware. Further, the IRHO Board believes that any direct benefit that the DGCL provides to a corporation also indirectly benefits its stockholders, who are the owners of the corporation. The IRHO Board believes that there are several reasons why a reincorporation in the State of Delaware is in the best interests of IRHO and its shareholders, including (a) the prominence, predictability and flexibility of the DGCL, (b) Delaware’s well-established principles of corporate governance and (c) the increased ability for Delaware corporations to attract and retain qualified directors. Each of the foregoing are discussed in greater detail in “The Domestication Proposal — Reasons for the Domestication”.
xvii
Table of Contents
To effect the Domestication, IRHO will (a) file with the Secretary of State of the State of Delaware a certificate of domestication with respect to the Domestication, together with the Proposed Charter, in each case, in accordance with the provisions thereof and Section 388 of the DGCL, (b) complete and make and procure all those filings required to be made with the Cayman Registrar under the Companies Act in connection with the Domestication, and (c) obtain a certificate of de-registration from the Cayman Registrar, as a result of which IRHO will de-register from the Register of Companies in the Cayman Islands and transfer by way of continuation out of the Cayman Islands and into the State of Delaware so as to migrate to and domesticate as a Delaware corporation.
The approval of the Domestication Proposal is a condition to the Closing under the Merger Agreement. The approval of the Domestication Proposal requires a special resolution under Cayman Islands law of holders of IRHO Ordinary Shares, who, being entitled to do so, attend in person or by proxy and vote thereon at the extraordinary general meeting. Abstentions and broker non-votes, while considered present for the purposes of establishing a quorum, will not count as votes cast at the extraordinary general meeting and otherwise will have no effect on a particular proposal under Cayman Islands law.
Q. What amendments will be made to the Cayman Constitutional Documents?
A. The consummation of the Proposed Transaction is conditioned, among other things, on the Domestication. Accordingly, in addition to voting on the Proposed Transaction, IRHO’s shareholders are also being asked to consider and vote upon a proposal to approve the Domestication and replace the Cayman Constitutional Documents, in each case, under the Companies Act, with the Proposed Charter and the Proposed Bylaws, in each case, under the DGCL, which differ materially from the Cayman Constitutional Documents. These differences are discussed in greater detail in “The Domestication Proposal” of this proxy statement/prospectus.
Q. How will the Domestication affect my IRHO Ordinary Shares, IRHO Rights and IRHO Units?
A. In connection with the Domestication, at the effective time of the Domestication, (i) each then issued and outstanding IRHO Ordinary Share, will convert automatically, on a one-for-one basis, into one Parent Class A Common Share; (ii) each then issued and outstanding right entitling the holder thereof to 1/10 of one IRHO Ordinary Share shall convert automatically into a right to receive 1/10 of one Parent Class A Common Share at the Closing, pursuant to the Parent Rights Agreement dated as of December 16, 2025, by and between IRHO and Continental Stock Transfer & Trust Company, as Rights agent; and (iii) each then issued and outstanding unit of IRHO shall separate and convert automatically into one Parent Class A Common Share and a right to receive 1/10 of one Parent Class A Common Share at the Closing.
Q. What are the U.S. federal income tax considerations of the Domestication?
A. As discussed more fully under “Material U.S. Federal Income Tax Considerations,” the parties intend for the Domestication to qualify as a reorganization within the meaning of Section 368(a)(1)(F) of the Code (a “Reorganization”). However, the provisions of the Code that govern reorganizations are complex, and due to the absence of direct guidance on the application of Section 368 to a domestication of a corporation holding only investment-type assets such as IRHO, the qualification of the Domestication as a “reorganization” within the meaning of Section 368 of the Code is not entirely clear. If the Domestication so qualifies, subject to the “passive foreign investment company” (“PFIC”) rules discussed below and under “Material U.S. Federal Income Tax Considerations — U.S. Holders — Tax Effects of the Domestication to U.S. Holders — PFIC Considerations,” U.S. Holders (as defined in “Material U.S. Federal Income Tax Considerations — U.S. Holders”) generally will be subject to Section 367(b) of the Code and, as a result:
• A U.S. holder who beneficially owns (directly, indirectly or constructively) 10% or more of the total combined voting power of all classes of IRHO stock entitled to vote or 10% or more of the total value of all classes of IRHO stock (a “10% U.S. Shareholder”) on the date of the Domestication must include in income as a dividend deemed paid by IRHO the “all earnings and profits amount” attributable to the IRHO Ordinary Shares it directly owns within the meaning of Treasury Regulations under Section 367 of the Code;
• A U.S. holder whose IRHO Ordinary Shares have a fair market value of $50,000 or more and who, on the date of the Domestication, is not a 10% U.S. Shareholder will recognize gain (but not loss) with respect to its IRHO Ordinary Shares in the Domestication or, in the alternative, may elect to recognize the “all earnings and profits” amount attributable to such U.S. holder’s IRHO Ordinary Shares; and
xviii
Table of Contents
• A U.S. holder whose IRHO Ordinary Shares have a fair market value of less than $50,000 on the date of the Domestication and who, on the date of the Domestication, is not a 10% U.S. Shareholder, should not be required to recognize any gain or loss or include any part of the “all earnings and profits amount” in income under Section 367 of the Code in connection with the Domestication.
Furthermore, even if the Domestication qualifies as a “reorganization” within the meaning of Section 368(a) of the Code, a U.S. holder of IRHO Ordinary Shares or IRHO Rights may, in certain circumstances, still recognize gain (but not loss) upon the exchange of its IRHO Ordinary Shares or IRHO Rights for Parent Class A Common Share or Parent Rights, as applicable, pursuant to the Domestication under the PFIC rules of the Code equal to the excess, if any, of the fair market value of Parent Class A Common Share or Parent Rights received in the Domestication and the U.S. holder’s adjusted tax basis in the corresponding IRHO Ordinary Shares or IRHO Rights surrendered in exchange therefor, as applicable. The tax on any such gain so recognized would be imposed at the rate applicable to ordinary income and an interest charge would apply, absent certain elections. For a more complete discussion of the potential application of the PFIC rules to U.S. holders as a result of the Domestication, see the discussion in the section titled “Material U.S. Federal Income Tax Considerations — U.S. Holders — Tax Effects of the Domestication to U.S. Holders — PFIC Considerations.”
Each U.S. holder of IRHO Ordinary Shares or IRHO Rights is urged to consult its own tax advisor concerning the application of the PFIC rules, including the proposed Treasury Regulations, to the exchange of IRHO Ordinary Shares and IRHO Rights for Parent Class A Common Shares and Parent Rights, as applicable pursuant to the Domestication.
Additionally, the Domestication may cause non-U.S. holders (as defined in “Material U.S. Federal Income Tax Considerations — Non-U.S. Holders”) to become subject to U.S. federal income withholding taxes on any amounts treated as dividends paid in respect of such non-U.S. holder’s Parent Class A Common Shares after the Domestication.
Because the Domestication will occur immediately prior to the redemptions of holders that exercise Redemption Rights with respect to Public Shares, holders exercising Redemption Rights would still be subject to the potential tax consequences of the Domestication, and for U.S. holders, the determination of whether a U.S. holder is a 10% U.S. Shareholder or is otherwise subject to Section 367 of the Code would be determined as if the redemptions had not yet occurred at the time of the Domestication. Holders should consult their tax advisors with respect to the potential tax consequences to them of the Domestication and exercise of Redemption Rights.
The tax consequences of the Domestication are complex and will depend on a holder’s particular circumstances. All holders are urged to consult their tax advisor regarding the tax consequences to them of the Domestication, including the applicability and effect of U.S. federal, state, local and non-U.S. tax laws. For a more complete discussion of the U.S. federal income tax considerations of the Domestication, see “Material U.S. Federal Income Tax Considerations”.
Q. Do I have Redemption Rights?
A. If you are a holder of Public Shares, you have the right to request that we redeem all or a portion of your Public Shares for cash provided that you follow the procedures and deadlines described elsewhere in this proxy statement/prospectus. Public Shareholders may elect to redeem all or a portion of the Public Shares held by them regardless of if or how they vote in respect of the Business Combination Proposal and regardless of whether they hold Public Shares on the Record Date. If you wish to exercise your Redemption Rights, please see the answer to the next question: “How do I exercise my Redemption Rights?”
Notwithstanding the foregoing, a Public Shareholder, together with any affiliate of such Public Shareholder or any other person with whom such Public Shareholder is acting in concert or as a “group” (as defined in Section 13(d)(3) of the Exchange Act), will be restricted from redeeming its Public Shares with respect to more than an aggregate of 15% of the Public Shares without IRHO’s prior consent. Accordingly, if a Public Shareholder, alone or acting in concert or as a group, seeks to redeem more than 15% of the Public Shares, then any such shares in excess of that 15% limit would not be redeemed for cash without IRHO’s prior consent.
xix
Table of Contents
As part of the Letter Agreement entered into at the time of IRHO’s IPO, the Insiders agreed to waive their Redemption Rights with respect to all of the Founder Shares in connection with the completion of the Business Combination. The Insiders did not receive any separate consideration paid in connection with providing such waiver. The Founder Shares will be excluded from the pro rata calculation used to determine the per share Redemption Price. For illustrative purposes, based on the fair value of marketable securities held in the Trust Account as of the Record Date of approximately $[•], the estimated per share redemption price would have been approximately $[•].
Holders of IRHO Rights do not have Redemption Rights with respect to their IRHO Rights.
Q. How do I exercise my Redemption Rights?
A. If you are a Public Shareholder and wish to exercise your right to redeem the Public Shares, you must:
(a) (i) hold Public Shares or (ii) hold Public Shares through IRHO Units and elect to separate your IRHO Units into the underlying Public Shares and Public Rights prior to exercising your Redemption Rights with respect to the Public Shares;
(b) submit a written request to the Transfer Agent, including the legal name, phone number and address of the beneficial owner of the Public Shares for which redemption is requested, that IRHO redeem all or a portion of your Public Shares for cash; and
(c) tender or deliver your share certificates for Public Shares (if any) along with the redemption forms to the Transfer Agent, physically or electronically through DTC.
Holders must complete the procedures for electing to redeem their Public Shares in the manner described above prior to [•], Eastern Time, on [•] (two business days before the scheduled date of the extraordinary general meeting) in order for their Public Shares to be redeemed.
The address of the Transfer Agent is listed under the question “Who can help answer my questions?” beginning on page xxix of this proxy statement/prospectus.
Holders of IRHO Units must elect to separate the IRHO Units into the underlying Public Shares and Public Rights prior to exercising Redemption Rights with respect to the Public Shares. If holders hold their IRHO Units in an account at a brokerage firm or bank, holders must notify their broker or bank that they elect to separate the IRHO Units into the underlying Public Shares and Public Rights, or if a holder holds IRHO Units registered in its own name, the holder must contact the Transfer Agent directly and instruct them to do so.
Public Shareholders will be entitled to request that their Public Shares be redeemed for the Redemption Price. For illustrative purposes, as of the Record Date, this would have amounted to approximately $[•] per issued and outstanding Public Share. However, the proceeds deposited in the Trust Account could become subject to the claims of IRHO’s creditors, if any, which could have priority over the claims of the Public Shareholders. Therefore, the per share distribution from the Trust Account in such a situation may be less than originally expected due to such claims. Whether you vote, and if you do vote irrespective of how you vote, on any proposal, including the Business Combination Proposal, will have no impact on the amount you will receive upon exercise of your Redemption Rights. It is expected that the funds to be distributed to Public Shareholders electing to redeem their Public Shares will be distributed promptly after the consummation of the Proposed Transaction.
An IRHO shareholder may withdraw a request for Redemption until the redemption deadline and, following this deadline, with IRHO’s consent up until the Closing. Furthermore, if a holder of a Public Share tenders or delivers its share certificates (if any) along with the redemption forms in connection with an election of its Redemption and subsequently decides prior to the applicable date not to elect to exercise such rights, it may simply request that IRHO permit the withdrawal of the request for Redemption and instruct the Transfer Agent to return the share certificates (physically or electronically). The holder can make such request by contacting the Transfer Agent, at the address or email address listed in this proxy statement/prospectus.
xx
Table of Contents
Any corrected or changed written exercise of Redemption Rights must be received by the Transfer Agent, prior to the vote taken on the Business Combination Proposal at the extraordinary general meeting. No request for Redemption will be honored unless the holder’s certificates for Public Shares (if any) along with the redemption forms have been tendered or delivered (either physically or electronically) to the Transfer Agent, at least two business days prior to the scheduled vote at the extraordinary general meeting.
If a holder of Public Shares properly makes a request for Redemption and the certificates for Public Shares (if any) along with the redemption forms are tendered or delivered as described above, then, if the Proposed Transaction is consummated, Electra Pubco will redeem the Public Shares for a pro rata portion of funds held in the Trust Account that are available for distribution to Public Shareholders, calculated as of two business days prior to the consummation of the Proposed Transaction.
If the Proposed Transaction is not consummated, the Public Shares will be returned to the respective holder, broker or bank.
If you are a holder of Public Shares and you exercise your Redemption Rights, such exercise will not result in the loss of any Public Rights that you may hold.
Q. If I am a holder of IRHO Units, can I exercise Redemption Rights with respect to my IRHO Units?
A. No. Holders of issued and outstanding IRHO Units must elect to separate the IRHO Units into the underlying Public Shares and Public Rights prior to exercising Redemption Rights with respect to the Public Shares. If you hold your IRHO Units in an account at a brokerage firm or bank, you must notify your broker or bank that you elect to separate the IRHO Units into the underlying Public Shares and Public Rights, or if you hold IRHO Units registered in your own name, you must contact the Transfer Agent, directly and instruct them to do so. You are requested to cause your Public Shares to be separated and tendered or delivered to the Transfer Agent, along with the redemption forms by [•], Eastern Time, on [•] (two business days before the scheduled date of the extraordinary general meeting) in order to exercise your Redemption Rights with respect to your Public Shares.
Q. What are the U.S. federal income tax consequences of exercising my Redemption Rights?
A. The U.S. federal income tax consequences of exercising your Redemption Rights depends on your particular facts and circumstances. For a more complete discussion of the U.S. federal income tax considerations of an exercise of Redemption Rights, see “Material U.S. Federal Income Tax Considerations — U.S. Holders — Tax Effects to U.S. Holders of Exercising Redemption Rights”.
All Public Shareholders considering exercising Redemption Rights are urged to consult their tax advisor on the tax consequences to them of an exercise of Redemption Rights, including the applicability and effect of U.S. federal, state, local and non-U.S. tax laws.
Q. What happens to the funds deposited in the Trust Account after consummation of the Proposed Transaction?
A. Following the closing of the IPO (including the exercise of the over-allotment option by the underwriters of the IPO), an amount equal to $230,000,000 of the net proceeds from the IPO and the sale of the Private Placement Units was placed in the Trust Account. IRHO has until December 18, 2027 to consummate an initial business combination.
As of the Record Date, funds in the Trust Account totaled $[•] and were held in an interest-bearing bank deposit account. These funds will remain in the Trust Account, except for the withdrawal of interest to pay taxes, if any, until the earliest of (a) the completion of a business combination (including the Closing), (b) the redemption of any Public Shares properly tendered in connection with a shareholder vote to amend the Cayman Constitutional Documents to modify the substance or timing of IRHO’s obligation to redeem 100% of the Public Shares if it does not complete a business combination by December 18, 2027 and (c) the Redemption of all of the Public Shares if IRHO is unable to complete a business combination by December 18, 2027 (or if such date is further extended at a duly called extraordinary general meeting, such later date), subject to applicable law.
xxi
Table of Contents
Upon consummation of the Proposed Transaction, the funds deposited in the Trust Account will be released to pay holders of Public Shares who properly exercise their Redemption Rights, to pay transaction fees and expenses associated with the Proposed Transaction, and for working capital and general corporate purposes of Electra Pubco following the Proposed Transaction.
Q. What underwriting fees are payable in connection with the Business Combination?
A. Pursuant to that certain Underwriting Agreement, dated December 16, 2025, by and between Cantor Fitzgerald & Co. (“Cantor”), acting individually and as representative of the several underwriters listed on Schedule I thereto (the “Underwriting Agreement”), at the time of the IPO, IRHO provided an upfront discount to the underwriters of its IPO of $[4,000,000]. In addition, pursuant to the Underwriting Agreement, Cantor was entitled to a deferred underwriting discount of $0.35 per IRHO Unit totaling $10,950,000 upon the consummation of the Business Combination, which would be payable from the amounts held in the Trust Account.
See “Risk Factors — The underwriters of the IPO are to be compensated on a deferred basis for already-rendered services in connection with IRHO’s IPO.
Q. Did the IRHO Board obtain a third-party valuation or fairness opinion in determining whether or not to proceed with the Proposed Transaction?
A. No. The IRHO Board did not obtain a third-party valuation or fairness opinion in connection with their determination to approve the Business Combination with Electra. The directors and officers of IRHO and IRHO’s advisors have substantial experience in evaluating the operating and financial merits of companies from a wide range of industries and concluded that their experience and backgrounds, together with the experience and sector expertise of IRHO’s financial advisors and consultants, enabled them to make the necessary analyses and determinations regarding the Business Combination with Electra. In addition, IRHO’s directors and officers and IRHO’s advisors have substantial experience with mergers and acquisitions. Accordingly, investors will be relying solely on the judgment of the IRHO Board and IRHO’s advisors in valuing Electra’s business.
Q. What happens if a substantial number of the Public Shareholders vote in favor of the Business Combination Proposal and exercise their Redemption Rights?
A. Our Public Shareholders are not required to vote in respect of the Proposed Transaction in order to exercise their Redemption Rights. Accordingly, the Proposed Transaction may be consummated even though the funds available from the Trust Account and the number of Public Shareholders are reduced as a result of Redemptions by Public Shareholders.
Q. What conditions must be satisfied to complete the Proposed Transaction?
A. The Merger Agreement is subject to the satisfaction or waiver of customary closing conditions, including, among others: (i) approval of the Business Combination and related agreements and transactions by the respective shareholders of IRHO and the Company; (ii) effectiveness of the Registration Statement; (iii) Parent’s initial listing application shall have been conditionally approved for listing on Nasdaq or another national stock exchange; (iv) there shall not have occurred a respective Material Adverse Effect (as defined in the Merger Agreement) in respect of the Company and Parent that is continuing; (v) that the respective Fundamental Representations shall be true and correct in all respects; (vi) Parent Certificate of Incorporation shall have been filed with, and declared effective by, the Secretary of State of the State of Delaware; (vii) that all respective officer certificates of the Company and Parent are delivered; (viii) all Parties shall have executed and delivered to each other a copy of each Ancillary Agreement to which they are a party; (ix) accrued but unpaid fees, costs and expenses, including fees of outside legal counsel (but excluding the Deferred Underwriting Commission), of the Parent Parties as of immediately prior to the Closing shall collectively not exceed $2,000,000 without the prior written consent of the Company; it being agreed that any such excess fees incurred without the Company’s prior written consent will reduce the share consideration remaining for the Sponsor such that only the Sponsor bears such excess fees, costs and expenses assuming $10 price per Parent Common Share; and (x) the amount of Parent Closing Cash at the Closing shall equal or exceed $30,000,000.
xxii
Table of Contents
For more information about conditions to the consummation of the Proposed Transaction, see “The Business Combination Proposal — Merger Agreement”.
Q. When is the Proposed Transaction expected to be completed?
A. It is currently expected that the Proposed Transaction will be consummated in the fourth quarter of 2026. This date depends, among other things, on the approval of the proposals to be put to IRHO shareholders at the extraordinary general meeting. However, such meeting could be adjourned if the Adjournment Proposal is adopted by IRHO’s shareholders at the extraordinary general meeting and IRHO elects to adjourn the extraordinary general meeting to a later date or dates, if necessary, to permit further solicitation and vote of proxies in the event that there are insufficient votes for the approval of one or more proposals at the extraordinary general meeting. For a description of the conditions for the completion of the Proposed Transaction, see “The Business Combination Proposal — Merger Agreement”.
Q. What happens if the Proposed Transaction is not consummated?
A. IRHO will not complete the Domestication to the State of Delaware unless all other conditions to the consummation of the Proposed Transaction have been satisfied or waived by the parties in accordance with the terms of the Merger Agreement. If IRHO is not able to complete the Proposed Transaction with Electra by December 18, 2027 and is not able to complete another business combination by such date, in each case, as such date may be extended by a shareholder-approved amendment to the Cayman Constitutional Documents, pursuant to the Cayman Constitutional Documents, IRHO will: (a) cease all operations except for the purpose of winding up; (b) as promptly as reasonably possible, but not more than 10 business days thereafter, redeem the Public Shares, at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the Trust Account, including interest (less up to $100,000 of interest to pay dissolution expenses and which interest will be net of taxes payable), divided by the number of then issued and outstanding Public Shares, which redemption will completely extinguish Public Shareholders’ rights as shareholders (including the right to receive further liquidating distributions, if any), subject to applicable law; and (c) as promptly as reasonably possible following such redemption, subject to the approval of our remaining shareholders and the IRHO Board, dissolve and liquidate, subject in each case to our obligations under Cayman Islands law to provide for claims of creditors and the requirements of other applicable law.
Q. What interests do the Sponsor and IRHO’s current officers and directors have in the Business Combination?
A. The Sponsor and IRHO’s directors and officers have interests in the Business Combination that are different from or in addition to (and which may conflict with) your interests. You should take these interests into account in deciding whether to approve the Business Combination. See “The Business Combination Proposal — Certain Interests of IRHO’s Directors and Officers and Others in the Business Combination.”
Q. Following the Proposed Transaction, will IRHO’s securities continue to trade on a stock exchange?
A. Yes. IRHO has applied to list the Electra Pubco Common Stock on Nasdaq under the proposed symbol “AIBR”, upon the Closing.
Pursuant to the terms of the Merger Agreement, as a closing condition, IRHO is required to cause the Electra Pubco Common Stock to be issued in connection with the Business Combination to be approved for listing on Nasdaq or another national securities exchange, but there can be no assurance that such listing condition will be met. If such listing condition is not met, the Business Combination will not be consummated unless the listing condition is waived by the parties to the Merger Agreement. It is important for you to know that, at the time of the extraordinary general meeting, IRHO may not have received from Nasdaq either confirmation of the listing of the Electra Pubco Common Stock or that approval will be obtained prior to the consummation of the Business Combination. As a result, you may be asked to vote to approve the Business Combination and the other proposals included in this proxy statement/prospectus without such confirmation, and, further, it is possible that such confirmation may never be received and the Business Combination could still be consummated if such condition is waived and therefore the Electra Pubco Common Stock would not be listed on any nationally recognized securities exchange.
xxiii
Table of Contents
Q. Do I have appraisal rights or dissenters’ rights in connection with the Proposed Transaction?
A. Neither IRHO’s shareholders nor IRHO’s rights holders have appraisal rights in connection with the Proposed Transaction or the Domestication under Cayman Islands law or the DGCL. IRHO’s shareholders do not have dissenters’ rights in connection with the Proposed Transaction or the Domestication under Cayman Islands law.
Q. What do I need to do now?
A. IRHO urges you to read this proxy statement/prospectus, including the Annexes and the documents referred to herein, carefully and in their entirety and to consider how the Proposed Transaction will affect you as a shareholder or warrant holder. IRHO’s shareholders should then vote as soon as possible in accordance with the instructions provided in this proxy statement/prospectus and on the enclosed proxy card.
Q. How do I vote?
A. If you are a holder of record of IRHO Ordinary Shares on the Record Date for the extraordinary general meeting, you may vote in person at the extraordinary general meeting or by submitting a proxy for the extraordinary general meeting. You may submit your proxy by completing, signing, dating and returning the enclosed proxy card in the accompanying pre-addressed postage-paid envelope. If you hold your shares in “street name,” which means your shares are held of record by a broker, bank or nominee, you should contact your broker, bank or nominee to ensure that votes related to the shares you beneficially own are properly counted. In this regard, you must provide the broker, bank or nominee with instructions on how to vote your shares or, if you wish to attend the extraordinary general meeting and vote in person, obtain a valid proxy from your broker, bank or nominee.
Q. If my shares are held in “street name,” will my broker, bank or nominee automatically vote my shares for me?
A. No. If your shares are held in a stock brokerage account or by a bank or other nominee, you are considered the “beneficial holder” of the shares held for you in what is known as “street name.” If this is the case, this proxy statement/prospectus may have been forwarded to you by your brokerage firm, bank or other nominee, or its agent, and you may need to obtain a proxy form from the institution that holds your shares and follow the instructions included on that form regarding how to instruct your broker, bank or nominee as to how to vote your shares. Under the rules of various national and regional securities exchanges, your broker, bank, or nominee cannot vote your shares with respect to non-discretionary matters unless you provide instructions on how to vote in accordance with the information and procedures provided to you by your broker, bank, or nominee. We believe all the proposals presented to the shareholders will be considered non-discretionary and therefore your broker, bank, or nominee cannot vote your shares without your instruction. Your bank, broker, or other nominee can vote your shares only if you provide instructions on how to vote. As the beneficial holder, you have the right to direct your broker, bank or other nominee as to how to vote your shares and you should instruct your broker to vote your shares in accordance with directions you provide. If you do not provide voting instructions to your broker on a particular proposal on which your broker does not have discretionary authority to vote, your shares will not be voted on that proposal. This is called a “broker non-vote.” Abstentions and broker non-votes, while considered present for the purposes of establishing a quorum, will not count as votes cast at the extraordinary general meeting, and otherwise will have no effect on a particular proposal under Cayman Islands law.
Q. When and where will the extraordinary general meeting be held?
A. The extraordinary general meeting will be held virtually at [•], Eastern Time, on [•]. The extraordinary general meeting will be a virtual meeting conducted via live webcast at [•]. For the purposes of Cayman Islands law and the Cayman Constitutional Documents, the physical location of the extraordinary general meeting will be at the offices of Loeb & Loeb LLP at 345 Park Avenue, New York, New York 10154.
Q. Who is entitled to vote at the extraordinary general meeting?
A. IRHO has fixed [•] as the Record Date for the extraordinary general meeting. If you were a shareholder of IRHO at the close of business on the Record Date, you are entitled to vote on matters that come before the extraordinary general meeting. However, a shareholder may only vote his, her or its shares if he, she or it is present in person or is represented by proxy at the extraordinary general meeting.
xxiv
Table of Contents
Q. How many votes do I have?
A. IRHO shareholders are entitled to one vote at the extraordinary general meeting for each IRHO Ordinary Share held of record as of the Record Date. As of the close of business on the Record Date for the extraordinary general meeting, there were 29,320,000 IRHO Ordinary Shares issued and outstanding, of which 23,000,000 were Public Shares not held by Insiders.
Q. What constitutes a quorum?
A. A quorum of IRHO shareholders is necessary to hold a valid meeting. A quorum will be present at the extraordinary general meeting if the holders of a majority of the issued and outstanding IRHO Ordinary Shares entitled to vote at the extraordinary general meeting are represented in person or by proxy. As of the Record Date for the extraordinary general meeting, 14,660,001 IRHO Ordinary Shares would be required to achieve a quorum. Because the Sponsor has the right to vote 6,120,000 IRHO Ordinary Shares, the presence of holders of 8,540,001 IRHO Ordinary Shares would be needed at the extraordinary general meeting to establish a quorum.
Q. What vote is required to approve each proposal at the extraordinary general meeting?
A. The following votes are required to approve each proposal being presented at the extraordinary general meeting:
Business Combination Proposal — The approval of the Business Combination Proposal requires an ordinary resolution under Cayman Islands law, being the affirmative vote of a majority of the IRHO Ordinary Shares, who, being entitled to do so, attend in person or by proxy and vote thereon at the extraordinary general meeting.
Domestication Proposal — The approval of the Domestication Proposal requires a special resolution under Cayman Islands law, being the affirmative vote of at least two-thirds of IRHO Ordinary Shares, who, being entitled to do so, attend in person or by proxy and vote thereon at the extraordinary general meeting.
Organizational Documents Proposal — The approval of the Organizational Documents Proposal requires a special resolution under Cayman Islands law, being the affirmative vote of the holders of at least two-thirds of the IRHO Ordinary Shares who, being entitled to do so, attend in person or by proxy and vote thereon at the extraordinary general meeting.
Stock Issuance Proposal — The approval of the Stock Issuance Proposal requires an ordinary resolution under Cayman Islands law, being the affirmative vote of a majority of the IRHO Ordinary Shares who, being entitled to do so, attend in person or by proxy and vote thereon at the extraordinary general meeting.
Advisory Organizational Documents Proposals — The separate approval of each of the Advisory Organizational Documents Proposals, each of which is a non-binding vote, requires an ordinary resolution under Cayman Islands law, being the affirmative vote of a majority of the IRHO Ordinary Shares, who, being entitled to do so, attend in person or by proxy and vote thereon at the extraordinary general meeting.
Electra Pubco Equity Incentive Plan Proposal — The approval of the Electra Pubco Equity Incentive Plan Proposal requires an ordinary resolution under Cayman Islands law, being the affirmative vote of a majority of the IRHO Ordinary Shares who, being entitled to do so, attend in person or by proxy and vote thereon at the extraordinary general meeting.
Adjournment Proposal — The approval of the Adjournment Proposal requires an ordinary resolution under Cayman Islands law, being the affirmative vote of a majority of the IRHO Ordinary Shares who, being entitled to do so, attend in person or by proxy and vote thereon at the extraordinary general meeting.
The Sponsor, which includes among its members each of the directors and officers of IRHO, owns 5,750,000 Founder Shares and 370,000 Private Placement Units, and Cantor owns 200,000 Private Placement Units. As a result, as of the date of this proxy statement/prospectus, the Insiders own approximately 21% of the issued and outstanding IRHO Ordinary Shares and have the right to vote approximately 21% of the issued and outstanding IRHO Ordinary Shares. Accordingly, we would only need 8,540,001 IRHO Ordinary Shares (or approximately 29%) to approve the Business Combination Proposal, the Domestication Proposal, the Stock Issuance Proposal, the Organizational Documents Proposal, the Advisory Organizational Documents Proposals, the Electra Pubco Equity Incentive Plan Proposal, and, if presented, the Adjournment Proposal even if all other outstanding shares are voted against such proposals.
xxv
Table of Contents
Q. What are the recommendations of the IRHO Board?
A. The IRHO Board believes that the Business Combination Proposal and the other proposals to be presented at the extraordinary general meeting are in the best interests of IRHO’s shareholders and unanimously recommends that its shareholders vote “FOR” the approval of the Business Combination Proposal, “FOR” the approval of the Domestication Proposal, “FOR” the approval of the Stock Issuance Proposal, “FOR” the approval of the Organizational Documents Proposal, “FOR” the approval, on an advisory basis, of each of the separate Advisory Organizational Documents Proposals, “FOR” the approval of the Electra Pubco Equity Incentive Plan Proposal and “FOR” the approval of the Adjournment Proposal, if presented, to the extraordinary general meeting.
The existence of financial and personal interests of one or more of IRHO’s directors may result in a conflict of interest on the part of such director(s) between what he, she or they may believe is in the best interests of IRHO and its shareholders and what he, she or they may believe is best for himself, herself or themselves in determining to recommend that shareholders vote for the proposals. In addition, IRHO’s officers have interests in the Proposed Transaction that may conflict with your interests as a shareholder. See “The Business Combination Proposal — Certain Interests of IRHO’s Directors and Officers and Others in the Business Combination”.
Q. How do the Insiders intend to vote their IRHO Ordinary Shares?
A. The Sponsor and the officers and directors of IRHO, who we collectively refer to as the Insiders, have agreed to vote in favor of all the proposals being presented at the extraordinary general meeting. The Sponsor, which includes among its members each of the directors and officers of IRHO, owns 5,750,000 Founder Shares, and 370,000 Private Placement Units (Cantor owns 200,000 Private Placement Units). As a result, as of the date of this proxy statement/prospectus, the Initial Shareholders own approximately 21% of the issued and outstanding IRHO Ordinary Shares and have the right to vote approximately 21% of the issued and outstanding IRHO Ordinary Shares. Accordingly, assuming all issued and outstanding IRHO Ordinary Shares are voted, in addition to the shares held by the Initial Shareholders, we would need the affirmative vote of holders of 8,340,001 IRHO Ordinary Shares (or approximately 28%) to approve each proposal requiring an ordinary resolution, including the Business Combination Proposal, the Stock Issuance Proposal, the Electra Pubco Equity Incentive Plan Proposal and, if presented, the Adjournment Proposal, and the affirmative vote of holders of 13,226,667 IRHO Ordinary Shares (or approximately 45%) to approve each proposal requiring a special resolution.
The existence of financial and personal interests of one or more of IRHO’s directors may result in a conflict of interest on the part of such director(s) between what he, she or they may believe is in the best interests of IRHO and its shareholders and what he, she or they may believe is best for himself, herself or themselves in determining to recommend that shareholders vote for the proposals. In addition, IRHO’s officers have interests in the Proposed Transaction that may conflict with your interests as a shareholder. See “The Business Combination Proposal — Certain Interests of IRHO’s Directors and Officers and Others in the Business Combination”.
Q. Do the Insiders expect to purchase Public Shares from Public Shareholders?
A. No. Neither the Sponsor, our executive officers, directors, director nominees nor their affiliates have indicated any intention to purchase IRHO Units, IRHO Ordinary Shares or IRHO Rights from persons in the open market or in private transactions. In the event we seek shareholder approval of our initial business combination and we do not conduct redemptions in connection with our initial business combination pursuant to the tender offer rules, our Sponsor, directors, officers, advisors or any of their affiliates may (i) purchase Public Shares or Public Rights in privately negotiated transactions or in the open market either prior to or following the completion of our initial business combination, (ii) enter into transactions with investors and others to provide them with incentives to not redeem any of their IRHO securities, including their IRHO Ordinary Shares and IRHO Rights, or (iii) execute agreements to purchase such IRHO Ordinary Shares or IRHO Rights from such investors or enter into non-redemption agreements in the future.
There is no limit on the number of securities such persons may purchase, subject to compliance with applicable law, including Rule 14e-5 under the Exchange Act, and the rules of Nasdaq. Additionally, at any time at or prior to our initial business combination, subject to applicable securities laws (including with respect to material nonpublic information), our Sponsor, directors, officers, advisors or any of their affiliates may enter into transactions with investors and others to provide them with incentives to acquire Public Shares, vote their Public Shares in favor of our initial business combination or not redeem their Public Shares. However, they have no
xxvi
Table of Contents
current commitments, plans or intentions to engage in such transactions and have not formulated any terms or conditions for any such transactions. In the event our Sponsor, directors, officers, advisors or any of their affiliates determine to undertake any such transactions, such transactions could have the effect of influencing the vote necessary to approve such transaction.
Any purchases by the Sponsor, our executive officers, directors, director nominees or their affiliates will be subject to limitations regarding possession of any material nonpublic information not disclosed to the seller of such shares and they will not make any such purchases if such purchases are prohibited by Regulation M or the tender offer rules under the Exchange Act or on any terms prohibited by the tender offer rules, to the extent applicable. Any such purchases may be effected at purchase prices that are no greater than the per share pro rata IRHO Units, IRHO Ordinary Shares or IRHO Rights portion of the Trust Account. IRHO hereby represents that any shares purchased by the Sponsor or IRHO’s directors, officers or advisors or their affiliates in situations in which the tender offer rules restrictions on purchases would apply would not be voted in favor of approving the Shareholder Proposals. For avoidance of doubt, none of the Sponsor nor any of its affiliates will purchase IRHO securities at a price higher than the price offered through the IRHO redemption process and further, the Sponsor and its affiliates waive all Redemption Rights with respect to all IRHO securities. None of the funds held in the trust account will be used to purchase Public Shares or Public Rights in such transactions. Such a purchase may include a contractual acknowledgement that such shareholder, although still the record holder of our shares, is no longer the beneficial owner thereof and therefore agrees not to exercise its Redemption Rights.
In the event that the Sponsor, directors, officers, director nominees, or any of their respective affiliates purchase Public Shares or Public Rights in privately negotiated transactions from shareholders who have already elected to exercise their Redemption Rights, such selling shareholders would be required to revoke their prior elections to redeem their shares. The purpose of such share purchases would be to decrease the number of redemptions to provide additional financing to the combined company following the closing of the Business Combination; however, pursuant to SEC guidance, if the Sponsor, directors, officers, director nominees, or any of their respective affiliates purchase Public Shares in privately negotiated transactions or in the open market prior to the completion of the Business Combination, such Public Shares would not be voted in favor of the proposals. Any such purchases will be reported pursuant to Section 13 and Section 16 of the Exchange Act to the extent the purchasers are subject to such reporting requirements. In addition, if such purchases are made, the public “float” of Common Stock may be reduced and the number of beneficial holders of securities may be reduced, which may make it difficult to maintain or obtain the quotation, listing or trading of IRHO securities on a national securities exchange. To the extent any such purchases are made in situations in which the tender offer rules restrictions on purchases apply, IRHO will disclose in an 8-K prior to the shareholder meeting to approve the Business Combination the following: (i) the number of shares purchased outside of the redemption offer, along with the purchase price(s) for such shares; (ii) the purpose of any such purchases; (iii) the impact, if any, of the purchases on the likelihood that the shareholder proposals will be approved; (iv) the identities of the equityholders who sold to the Sponsor, IRHO’s directors, officers or advisors or their affiliates (if not purchased on the open market) or the nature of the equityholders (e.g., 5% security holders) who sold such shares; and (v) the number of shares for which IRHO has received redemption requests pursuant to its redemption offer.
Q. What happens if I sell my IRHO Ordinary Shares before the extraordinary general meeting?
A. The Record Date for the extraordinary general meeting is earlier than the date of the extraordinary general meeting and earlier than the date that the Proposed Transaction is expected to be completed. If you transfer your Public Shares after the applicable Record Date, but before the extraordinary general meeting, unless you grant a proxy to the transferee, you will retain your right to vote at the extraordinary general meeting but the transferee, and not you, will have the ability to redeem such shares, so long as such transferee takes the required steps to elect to redeem such shares at least two business days prior to the scheduled date of the extraordinary general meeting.
Q. How can I vote my shares without attending the extraordinary general meeting?
A. If you are a shareholder of record of our IRHO Ordinary Shares as of the close of business on the Record Date, you can vote by proxy by mail by following the instructions provided in the enclosed proxy card or at the extraordinary general meeting. Please note that if you are a beneficial owner of IRHO Ordinary Shares, you may
xxvii
Table of Contents
vote by submitting voting instructions to your broker, bank or nominee, or otherwise by following instructions provided by your broker, bank or nominee. Telephone and internet voting will be available to beneficial owners. Please refer to the vote instruction form provided by your broker, bank or nominee.
Q. May I change my vote after I have mailed my signed proxy card?
A. Yes. Shareholders may send a later-dated, signed proxy card to IRHO at the address set forth below so that it is received by IRHO prior to the vote at the extraordinary general meeting (which is scheduled to take place on [•]) or attend the extraordinary general meeting in person and vote. Shareholders also may revoke their proxy by sending a notice of revocation to IRHO, which must be received by IRHO prior to the vote at the extraordinary general meeting. However, if your shares are held in “street name” by your broker, bank or another nominee, you must contact your broker, bank or other nominee to change your vote.
Q. What happens if I fail to take any action with respect to the extraordinary general meeting?
A. If you fail to take any action with respect to the extraordinary general meeting and the Proposed Transaction is approved by shareholders and the Proposed Transaction is consummated, you will become a stockholder or warrant holder of Electra Pubco. If you fail to take any action with respect to the extraordinary general meeting and the Proposed Transaction is not approved, you will remain a shareholder or warrant holder of IRHO. However, if you fail to vote with respect to the extraordinary general meeting, you will nonetheless be able to elect to redeem your Public Shares in connection with the Proposed Transaction, so long as you take the required steps to elect to redeem your shares at least two business days prior to the scheduled date of the extraordinary general meeting.
Q. What happens if I vote against the Business Combination Proposal?
A. If you vote against the Business Combination Proposal, but the Business Combination Proposal still obtains the requisite shareholder approval described in this proxy statement/prospectus, then the Business Combination Proposal will be approved and, assuming the approval of the Domestication Proposal, the Stock Issuance Proposal, the Organizational Documents Proposal, the Electra Pubco Equity Incentive Plan Proposal, and the satisfaction or waiver of the other conditions to the Closing, the Business Combination will be consummated in accordance with the terms of the Merger Agreement.
Because the Initial Shareholders own approximately 21% of the issued and outstanding IRHO Ordinary Shares and have the right to vote approximately 21% of the issued and outstanding IRHO Ordinary Shares, assuming all issued and outstanding IRHO Ordinary Shares are voted, we would only need 8,340,001 additional IRHO Ordinary Shares (or approximately 28%) to approve the Business Combination.
Q. What should I do with my share certificates, rights certificates or unit certificates?
A. Our shareholders who exercise their Redemption Rights must tender or deliver (either physically or electronically) their share certificates (if any) along with the redemption forms to the Transfer Agent, prior to the extraordinary general meeting.
Holders must complete the procedures for electing to redeem their Public Shares in the manner described above prior to [•], Eastern Time, on [•] (two business days before the scheduled date of the extraordinary general meeting) in order for their Public Shares to be redeemed.
Our rights holders should not submit the certificates relating to their rights. Public Shareholders will receive one share of Electra Pubco Common Stock for every ten rights.
Upon the Domestication, holders of IRHO Units, IRHO Ordinary Shares and IRHO Rights will receive shares of Electra Pubco Common Stock without needing to take any action and, accordingly, such holders should not submit any certificates relating to their IRHO Units, IRHO Ordinary Shares (unless such holder elects to redeem the Public Shares in accordance with the procedures set forth above), or IRHO Rights.
Q. What should I do if I receive more than one set of voting materials?
A. Shareholders may receive more than one set of voting materials, including multiple copies of this proxy statement/prospectus and multiple proxy cards or voting instruction cards. For example, if you hold your shares in more than one brokerage account, you will receive a separate voting instruction card for each
xxviii
Table of Contents
brokerage account in which you hold shares. If you are a holder of record and your shares are registered in more than one name, you will receive more than one proxy card. Please complete, sign, date and return each proxy card and voting instruction card that you receive in order to cast a vote with respect to all of your IRHO Ordinary Shares.
Q. Who will solicit and pay the cost of soliciting proxies for the extraordinary general meeting?
A. IRHO will pay the cost of soliciting proxies for the extraordinary general meeting. IRHO has engaged _______________ to assist in the solicitation of proxies for the extraordinary general meeting. IRHO has agreed to pay _________ a fee of $________, plus disbursements. IRHO will also reimburse banks, brokers and other custodians, nominees and fiduciaries representing beneficial owners of IRHO Ordinary Shares for their expenses in forwarding soliciting materials to beneficial owners of IRHO Ordinary Shares and in obtaining voting instructions from those owners. IRHO’s directors and officers may also solicit proxies by telephone, by facsimile, by mail, on the Internet or in person. They will not be paid any additional amounts for soliciting proxies.
Q. Where can I find the voting results of the extraordinary general meeting?
A. The preliminary voting results will be expected to be announced at the extraordinary general meeting. IRHO will publish final voting results of the extraordinary general meeting in a Current Report on Form 8-K within four business days after the extraordinary general meeting.
Q. Who can help answer my questions?
A. If you have questions about the Business Combination or if you need additional copies of the proxy statement/prospectus or the enclosed proxy card, you should contact:
PROXY SOLICITOR INFO
You also may obtain additional information about IRHO from documents filed with the SEC by following the instructions in “Where You Can Find More Information”. If you are a holder of Public Shares and you intend to seek Redemption, you will need to tender or deliver the certificates for your Public Shares (if any) along with the redemption forms (either physically or electronically) to the Transfer Agent, at the address below prior to the extraordinary general meeting. Holders must complete the procedures for electing to redeem their Public Shares in the manner described above prior to [•], Eastern Time, on [•] (two business days before the scheduled date of the extraordinary general meeting) in order for their Public Shares to be redeemed. If you have questions regarding the certification of your position or tendering or delivery of your share certificates (if any) along with the redemption forms, please contact:
Proxy information
Continental Stock Transfer & Trust Company
1 State Street, 30th Floor
New York, New York 10004
Attention: SPAC Redemption Team
Email: spacredemptions@continentalstock.com
xxix
Table of Contents
Summary of the Proxy Statement/Prospectus
This summary highlights selected information from this proxy statement/prospectus, but does not contain all of the information that may be important to you. To better understand the Proposals to be considered at the extraordinary general meeting, including the Business Combination Proposal, whether or not you plan to attend such meetings, we urge you to read this proxy statement/prospectus (including the Annexes) carefully, including “Risk Factors”. See also “Where You Can Find More Information”.
Parties to the Business Combination
IRHO
IRHO is a blank check company incorporated on September 12, 2025 as a Cayman Islands exempted company formed for the purpose of effecting a merger, share exchange, asset acquisition, share purchase, reorganization or similar business combination with one or more businesses. On November 26, 2024, IRHO initially incorporated in Delaware as Iron Horse Acquisitions Corp. II. On July 25, 2025, Iron Horse Acquisitions Corp. II migrated, by way of continuation, to the Cayman Islands and became a Cayman Islands exempted company, and as of the date of this prospectus will have elected to liquidate for U.S. federal income tax purposes via the making of an entity classification election effective as of July 25, 2025. On September 12, 2025, Iron Horse Acquisition II Corp. was incorporated in the Cayman Islands. On September 30, 2025, Iron Horse Acquisitions Corp. II was merged with and into Iron Horse Acquisition II Corp, which is the surviving entity and our continuing company.
IRHO Units, IRHO Ordinary Shares and Public Rights are currently traded on Nasdaq under the ticker symbols “IRHOU,” “IRHO,” and “IRHOR,” respectively.
IRHO executive offices are located at 851 Broken Sound Parkway Nw Boca Raton, FL 33487 and the telephone number is (310) 290-5383. IRHO’s corporate website address is _________________/. IRHO’s website and the information contained on, or that can be accessed through, the website is not deemed to be incorporated by reference in, and is not considered part of, this proxy statement/prospectus.
Merger Sub
Merger Sub is a wholly-owned subsidiary of IRHO formed solely for the purpose of effecting the Business Combination. Pursuant to the Merger, and in accordance with the DGCL, Merger Sub will merge with and into Electra with Electra being the surviving entity and becoming a wholly-owned subsidiary of IRHO. Merger Sub was incorporated in the State of Delaware on ________________, 2026. Merger Sub owns no material assets and does not operate any business. Merger Sub’s principal executive office is located at 851 Broken Sound Parkway Nw Boca Raton, FL 33487 and the telephone number is (310) 290-5383.
Electra
Electra is dedicated to enhancing battery performance through AI-powered battery intelligence, providing solutions for electric vehicles, battery energy storage systems (BESS). Electra’s principal executive office is located at 110 K Street, Suite 330, Boston Massachusetts 02127 and its telephone number is (617) 313-7842. Electra’s corporate website address is https://www.electrabrain.ai. Electra’s website and the information contained on, or that can be accessed through, the website is not deemed to be incorporated by reference in, and is not considered part of, this proxy statement/prospectus.
Electra has not achieved significant commercial adoption of its platform, and its software products are currently in pilot phase. Electra has a limited operating history at scale and has not yet achieved significant commercial adoption of its platform. Electra has incurred net losses in each period since its inception, including net losses of $5,289,922 and $5,603,039 for the years ended December 31, 2025, and 2024, respectively. Electra expects to incur net losses for the foreseeable future as it invests in the development of the software platform and builds out infrastructure required to operate following the Business Combination.
The IRHO Board did not obtain a third-party valuation or fairness opinion in connection with their determination to approve the Business Combination with Electra. The directors and officers of IRHO have substantial experience in evaluating the operating and financial merits of companies from a wide range of industries and concluded that their
1
Table of Contents
experience and backgrounds, enabled them to make the necessary analyses and determinations regarding the Business Combination with Electra. In addition, IRHO’s directors and officers have substantial experience with mergers and acquisitions. Accordingly, investors will be relying solely on the judgment of the IRHO Board in valuing Electra’s business.
Compensation Received by the Sponsor
Within five (5) business days following the consummation of the business combination, the Sponsor of IRHO may convert its working capital notes (our “Working Capital Notes” or “Working Capital Loans”) into IRHO Ordinary Shares, at a price of $10.00 per Share, which will be exchanged for Parent Common Shares. Otherwise, the Working Capital Notes would be repaid only out of funds held outside the Trust Account. In the event that a business combination does not close, IRHO may use a portion of proceeds held outside the Trust Account to repay the $__________ in Working Capital Notes but no proceeds held in the Trust Account would be used to repay the Working Capital Notes.
Set forth below is a summary of the terms and amount of the compensation received or to be received by the Sponsor and its affiliates in connection with the Business Combination or any related financing transaction, the amount of securities issued or to be issued by IRHO to the Sponsor and its affiliates and the price paid or to be paid for such securities or any related financing transaction.
| Interest in Securities | Interest in Securities | |||
| Sponsor | IRHO SPAC Sponsor LLC, the Sponsor, and its affiliates paid $32,000, or approximately $0.0056 per share, for its 5,750,000 Founder Shares purchased in connection with IRHO’s incorporation, which will be exchanged for 5,750,000 shares of Electra Pubco Common Stock, of which the Sponsor shall retain 3,285,000 Founder. In addition, the Sponsor will have 370,000 shares of Electra Pubco Class A Common Stock after the exchange of the 370,000 IRHO ordinary shares purchased in the private placement at the time of the closing of the IPO. | At Closing, pursuant to the Merger Agreement, Electra Pubco will use cash from the Trust Account to pay any merger transaction expenses and to reimburse or pay the Sponsor or its affiliates for any outstanding Working Capital Loans or other obligations of IRHO to the Sponsor or its affiliates. IRHO currently estimates that the total amount payable for transaction expenses and any outstanding Working Capital Loans or other obligations of IRHO to Sponsor is approximately $_____. |
The retention of shares by the Sponsor and the reimbursements payable to the Sponsor at Closing will not result in a material dilution of the equity interests of non-redeeming IRHO stockholders. See “The Business Combination Proposal — Ownership of Pubco after the Closing.
Bridge Loan Financing
During March through June 30, 2026, in connection with the contemplated Business Combination described below, the Company received aggregate proceeds of approximately $500,010 from accredited investors as bridge financing (“Bridge Financing”) in anticipation of the issuance of senior unsecured convertible notes (the “Company Convertible Notes”). The proceeds of the Bridge Financing will be to fund working capital requirements.
Pursuant to the non-binding executed term sheets, the Company Convertible Notes are expected to bear interest at rates ranging from 15% to 25% per annum and to mature upon the earlier of (i) 24 months from the closing date of each Company Convertible Note or (ii) the closing of the Business Combination.
Upon the closing of the Business Combination, the principal and accrued interest on the Company Convertible Notes are expected to convert into shares of common stock of the publicly listed entity at a conversion price of $6.00 per share. Investors will also receive warrants to purchase shares of common stock of the publicly listed entity at exercise price of $11.50 per share, and certain investors will receive warrants exercisable at $12.50 per share, in each case exercisable for 60 months following the closing of the Business Combination.
2
Table of Contents
If the Business Combination is not consummated within 24 months from the closing of any Company Convertible Note, the principal and accrued interest will convert into ordinary shares of the Company at a $150 million or $75 million pre-money valuation.
Senior Secured Convertible Notes. On September 29, 2026, Electra entered into a Bridge Notes Purchase Agreement with certain accredited investors, pursuant to which Electra issued senior secured convertible notes in an aggregate principal amount of $4,375,000 (the “Senior Secured Convertible Notes”), together with warrants to purchase an aggregate of 700,000 shares of common stock at an exercise price of $12.50 per share, for aggregate cash proceeds of $3,500,000 ($3,350,000 net of the lead investor’s legal fees), in a private placement exempt from registration under Section 4(a)(2) of the Securities Act and Rule 506(b) of Regulation D. Upon the Closing, the Senior Secured Convertible Notes are repayable in cash at 115% of principal, or $5,031,250, and the warrants will be amended and restated as warrants of Electra Pubco. If the Business Combination does not close before maturity, the holders may convert the Senior Secured Convertible Notes into Electra common stock based on a $150 million or $75 million pre-money valuation. The proceeds are being used for general corporate purposes. See “Unaudited Pro Forma Condensed Combined Financial Information — Senior Secured Convertible Notes.”
Dilutive Impact of the Senior Secured Convertible Notes. Because the Senior Secured Convertible Notes are repayable in cash at 115% of principal upon the Closing, Electra does not expect the Senior Secured Convertible Notes to convert into equity in connection with the Business Combination. However, the Senior Secured Convertible Notes financing will result in dilution to non-redeeming IRHO shareholders through (i) the issuance at the Closing of [ ] shares of Electra Pubco Class A Common Stock to [ ] of the investors for no additional cash consideration (the “Commitment Shares”), and (ii) the potential exercise of warrants to purchase [ ] shares of Electra Pubco Class A Common Stock at an exercise price of $12.50 per share, which exercise price and number of shares are subject to down-round and price-reset adjustments that may increase the number of shares issuable upon exercise.
The following table illustrates the dilutive effect of the Commitment Shares and the shares underlying the warrants issued in connection with the Senior Secured Convertible Notes or Company Convertible Notes on the ownership of Electra Pubco Common Stock upon the consummation of the Business Combination under each of the redemption scenarios presented in this proxy statement/prospectus, assuming full exercise of the warrants at the current exercise price and no adjustment to the number of warrant shares.
| No | 25% | 50% | 75% | Maximum | |||||||||||
| Total shares outstanding before Note securities |
| 80,297,905 |
| 64,785,372 |
| 49,272,838 |
| 40,694,576 |
| 37,695,452 | |||||
| Commitment Shares |
|
|
|
|
| ||||||||||
| Warrant shares |
|
|
|
|
| ||||||||||
| Total shares outstanding after Note securities |
|
|
|
|
|
|
|
|
|
| |||||
| Dilution from Note securities |
|
|
|
|
| ||||||||||
| Public Shareholders’ ownership – before |
|
|
|
|
| ||||||||||
| Public Shareholders’ ownership – after |
|
|
|
|
| ||||||||||
| Pro forma net tangible book value per share | $ | $ | $ | $ | $ | ||||||||||
Comparison to Public Shareholder Price and Merger Consideration Valuation. Public Shareholders purchased IRHO Units in the IPO at $10.00 per unit, and the Aggregate Merger Consideration payable to Electra’s equityholders is valued at $10.00 per share, based on a Base Purchase Price of $250,000,000. By comparison, (i) investors in the Senior Secured Convertible Notes paid aggregate cash proceeds of $3,500,000 for $4,375,000 in principal amount of notes, representing an original issue discount of 20%, and will receive $5,031,250, or 115% of principal, in cash at the Closing; (ii) the Commitment Shares will be issued for no additional cash consideration, representing an effective price per share of $0.00 compared to $10.00 per share paid by Public Shareholders; (iii) the warrants are exercisable at $12.50 per share, a premium to the $10.00 per share price; and (iv) if the Business Combination does not close before
3
Table of Contents
maturity, the Senior Secured Convertible Notes are convertible into Electra common stock based on a pre-money valuation of $150 million, compared to the $250 million valuation of Electra used to determine the Aggregate Merger Consideration.
The Proposals to be Submitted at the Extraordinary General Meeting
Proposal No. 1 — The Business Combination Proposal
As discussed in this proxy statement/prospectus, IRHO is asking its shareholders to approve by ordinary resolution and adopt the Merger Agreement. A copy of the Merger Agreement and the Amendment to Merger Agreement, dated as of May 14, 2026, are attached to this proxy statement/prospectus as Annex A-1 and Annex A-2. The Merger Agreement provides for, among other things, (1) the Domestication of IRHO to the State of Delaware and (2) following the Domestication, the merger of Merger Sub with and into Electra, with Electra surviving the Merger in accordance with the terms and subject to the conditions of the Merger Agreement and the applicable provisions of the DGCL, as more fully described elsewhere in this proxy statement/prospectus. After consideration of the factors identified and discussed in “The Business Combination Proposal — IRHO Board of Director’s Reasons for the Approval of the Business Combination”, the IRHO Board concluded that the Business Combination met the requirements disclosed in the prospectus for the IPO. For more information about the transactions contemplated by the Merger Agreement, see “The Business Combination Proposal”.
Organizational Structure
On April 21, 2026, IRHO entered into the Merger Agreement with Merger Sub and Electra, pursuant to which, among other things, following the Domestication, Merger Sub will merge with and into Electra, the separate corporate existence of Merger Sub will cease, and Electra will be the surviving entity as a wholly-owned subsidiary of IRHO, and IRHO will be renamed “ELECTRA AI, Inc.”
At least one business day prior to the Closing Date and as a condition of the Merger, pursuant to the Domestication, IRHO will change its jurisdiction of incorporation by de-registering from the Register of Companies in the Cayman Islands and transfer by way of continuation out of the Cayman Islands and into the State of Delaware so as to migrate to and domesticate as a Delaware corporation in accordance with the Cayman Constitutional Documents, Section 388 of DGCL, and Part XII of the Companies Act. For more information, see “The Domestication Proposal”.
Simplified Pre-Combination Structure
4
Table of Contents
Simplified Post-Combination Structure(1)
____________
(1) Assumes that all Public Shares are redeemed representing the Maximum Redemptions Scenario.
Sponsor and Initial Shareholders of 5,357,000 Ordinary Shares in the Maximum Redemption Scenario.
Merger Consideration
Pursuant to the Merger Agreement, IRHO has agreed to acquire all of the equity interests of Electra for the sum of $250,000,000, plus the Aggregate Exercise Price, as adjusted pursuant to the terms of the Merger Agreement. (the “Base Purchase Price”), for the issuance of shares comprising the Aggregate Merger Consideration. The term “Aggregate Merger Consideration” means a number of Parent Common Shares equal to the quotient obtained by dividing (a) the Base Purchase Price, by (b) US$10.00; provided that the Parent Common Shares shall include no more than a number of Parent Class B Common Shares equal to the Conversion Ratio multiplied by 3,994,802. The Base Purchase Price shall be automatically adjusted upwards in increments of $10.00 until the Aggregate Merger Consideration represents at least 50.1% of the Aggregate Parent Fully Diluted Shares.
In connection with the Domestication, IRHO will (i) file a certificate of incorporation with the Secretary of State of the State of Delaware, whereby Parent shall have a dual class common stock consisting of Class A common stock, par value $0.0001 per share (the “Parent Class A Common Shares” or Electra Pubco Class A Common Stock) and Class B common stock, par value $0.0001 per share (the “Parent Class B Common Shares” or Electra Pubco Class B Common Stock and together referred to as “Parent Common Shares” or Electra Pubco Common Stock”); and (ii) adopt bylaws as more fully described herein.
In connection with the Domestication, (i) each then issued and outstanding ordinary share of IRHO, par value $0.0001 per share (each, an “IRHO Ordinary Share”), will convert automatically, on a one-for-one basis, into one Parent Class A Common Share; (ii) each then issued and outstanding right entitling the holder thereof to 1/10 of one IRHO Ordinary Share (each, an “IRHO Right”) shall convert automatically into a right to receive 1/10 of one Parent Class A Common Share at the Closing, pursuant to the Parent Rights Agreement dated as of December 16, 2025, by and between IRHO and Continental Stock Transfer & Trust Company, as Rights agent; and (iii) each then issued and outstanding unit of IRHO (each, an “IRHO Unit”) shall separate and convert automatically into one Parent Class A Common Share and an IRHO Right to receive 1/10 of one Parent Class A Common Share at the Closing.
5
Table of Contents
The Merger Agreement also provides that, among other things, following the Domestication, Merger Sub will merge with and into Electra after which Electra will be the Surviving Corporation and a wholly-owned subsidiary of Parent. Electra’s Bylaws as in effect immediately prior to the Effective Time shall be the bylaws of the Surviving Corporation. The Merger will become effective upon the filing of the articles of merger with the Secretary of State of the State of Delaware or at such later time as is agreed to by the parties to the Merger Agreement and specified in the articles of merger (the “Effective Time”). The Domestication, the Merger, and other transactions contemplated by the Merger Agreement are collectively referred to herein as the “Business Combination,” the consummation of the Merger is referred to as the “Closing” and the date of the Closing is referred to as the “Closing Date.”
Pursuant to the Merger Agreement, IRHO has agreed to acquire all of the equity interests of Electra for the sum of $250,000,000, plus the Aggregate Exercise Price, as adjusted pursuant to the terms of the Merger Agreement. (the “Base Purchase Price”), for the issuance of shares comprising the Aggregate Merger Consideration. The term “Aggregate Merger Consideration” means a number of Parent Common Shares equal to the quotient obtained by dividing (a) the Base Purchase Price, by (b) US$10.00, which Parent Common Shares shall include no more than a number of Parent Class B Common Shares equal to the Conversion Ratio multiplied by 3,994,802.
The term “Aggregate Exercise Price” means the aggregate dollar amount payable to the Company upon the exercise or conversion of all vested in-the-money Company Options that are outstanding immediately prior to the Effective Time. The Base Purchase Price shall be automatically adjusted upwards in increments of $10.00 until the Aggregate Merger Consideration (excluding shares of Parent Common Stock issuable in respect of convertible notes and upon the exercise of Converted Stock Options) represents at least 50.1% of the Aggregate Parent Fully Diluted Shares.
The term “Aggregate Parent Fully Diluted Shares” means, as of immediately after the Effective Time, the sum, without duplication, of (a) all Parent Common Shares issued and outstanding (after giving effect to the Domestication, the Merger, the conversion of all Parent Rights, any PIPE Financing, and any forfeiture or surrender of Sponsor Shares); plus (b) the aggregate number of Parent Common Shares issuable upon exercise of all outstanding Converted Stock Options.
At the Effective Time (i) each share of Company Capital Stock (as defined below), if any, that is owned by Parent or Merger Sub or Electra (as treasury stock or otherwise), will automatically be cancelled; (ii) each share of Electra Preferred Stock issued and outstanding immediately prior to the Effective Time will be converted into the right to receive a number of Parent Common Shares equal to: (a) the Conversion Ratio multiplied by (b) the number of shares of Electra Common Stock issuable upon conversion of such share of Electra Preferred Stock as of immediately prior to the Effective Time plus (c) a number of Earnout Shares equal to the Earnout Pro Rata Share (in accordance with, and subject to the contingencies set forth in the Merger Agreement; (iii) each share of Electra Class A Common Stock issued and outstanding immediately prior to the Effective Time (other than any such shares of Electra Class A Common Stock which will be cancelled and any Dissenting Shares) will be converted into the right to receive: (x) a number of Parent Class A Common Shares equal to the Conversion Ratio plus (y) a number of Earnout Shares equal to the Earnout Pro Rata Share in accordance with, and subject to the contingencies set forth in the Merger Agreement; (iv) each share of Electra Class B Common Stock issued and outstanding immediately prior to the Effective Time (other than any such shares of Electra Class B Common Stock which will be cancelled and any Dissenting Shares) will be converted into the right to receive: (x) a number of Parent Class B Common Shares equal to the Conversion Ratio plus (y) a number of Earnout Shares equal to the Earnout Pro Rata Share in accordance with, and subject to the contingencies set forth in the Merger Agreement; (v) at the Effective Time, all Class A and Class B shares of Common Stock of Company shall no longer be outstanding and shall automatically be canceled and shall cease to exist, and each holder of Company Capital Stock shall thereafter cease to have any rights with respect to such securities, except the right to receive a portion of the Aggregate Merger Consideration plus the contingent right to receive their applicable portion of Earnout Shares in accordance with their Earnout Pro Rata Share; and (vi) each Company Option shall be converted into such number of Parent Common Shares determined by multiplying the number of shares of Company Common Stock subject to such Company Option by the Conversion Ratio, at an exercise price per Parent Common Share (rounded up to the nearest whole cent) equal to (A) the exercise price per share of Company Common Stock of such Company Option divided by (B) the Conversion Ratio.
6
Table of Contents
“Company Capital Stock” means “Company Common Stock”, which includes the Class A common stock of the Company, $0.00001 par value per share, the Class B common stock of the Company, $0.00001 par value per share, and Company Preferred Stock which includes the Company Series Seed Preferred Stock, the Company Series A Preferred Stock and the Company Series B Preferred Stock.
Conversion of Merger Sub Capital Stock. Each share of common stock, par value $0.0001 per share, of Merger Sub issued and outstanding immediately prior to the Effective Time shall be converted into and become one newly issued, fully paid and nonassessable share of common stock of the Surviving Corporation.
Treatment of Convertible Notes. Prior to the Closing, the Company’s Board of Directors shall adopt such resolutions or take such other actions as may be required to adjust the terms of all Company Convertible Notes as necessary to provide that, at the Effective Time, each Company Convertible Note shall be converted into the right to receive a number of Parent Common Shares equal to (i) the Conversion Ratio multiplied by (ii) the number of shares of Company Common Stock issuable upon conversion of such Company Convertible Note as of immediately prior to the Effective Time.
At the Effective Time, all Company Convertible Notes converted as set forth above, shall no longer be outstanding and shall automatically be canceled and shall cease to exist, and each holder of Company Convertible Notes shall thereafter cease to have any rights with respect to such securities, except the right to receive a portion of the Aggregate Merger Consideration into which such Company Convertible Note shall have been converted in the Merger.
The “Conversion Ratio” means the quotient obtained by dividing (a) the number of Parent Common Shares constituting the Aggregate Merger Consideration, by (b) the number of shares constituting the Aggregate Fully Diluted Company Common Stock.
The term “Aggregate Fully Diluted Company Common Stock” means the sum, without duplication, of (a) all shares of Company Common Stock that are issued and outstanding immediately prior to the Effective Time; plus (b) the aggregate number of shares of Company Common Stock issuable upon full conversion of all Company Preferred Stock outstanding as of immediately prior to the Effective Time; plus (c) the aggregate number of shares of Company Common Stock issuable upon exercise of all Company Options that are vested as of immediately prior to the Effective Time; plus (d) the aggregate number of shares of Company Common Stock issuable upon full conversion, exercise or exchange of any other securities of the Company (other than Company options and convertible notes) outstanding immediately prior to the Effective Time directly or indirectly convertible into or exchangeable or exercisable for shares of Company Common Stock.
The Earnout Shares
From the period commencing on the Closing Date and until such date which is the five-year anniversary of the Closing Date (the “Earnout Period”), as additional consideration in the Merger, the holders of Electra Common Stock, Electra Options and Electra Preferred Stock (the “Earnout Holders”) shall be entitled to earn, in accordance with their respective Earnout Pro Rata Share, additional Parent Common Shares (the “Earnout Shares”) in an amount not to exceed 15,000,000 Parent Common Shares in the aggregate (the “Earnout Cap”) subject to the following contingencies:
A. Subject to the Earnout Cap, one-third (1/3) of the Earnout Shares if, at any time during the Earnout Period, (1) over any ten (10) Trading Days within any twenty (20) consecutive Trading Day period the VWAP of the Parent Common Shares is greater than or equal to $14.00 per share or (2) as reported in Parent’s Form 10-Q or Form 10-K the Annual Run Rate (“ARR”), which is defined in the Merger Agreement as (i) the net revenues of Parent following the Closing calculated in accordance with U.S. GAAP for a fiscal quarter multiplied by (ii) 4.0, is greater than or equal to $45 million (the “First Earnout Milestone”), whichever occurs earlier;
B. Subject to the Earnout Cap, one-third (1/3) of the Earnout Shares if, at any time during the Earnout Period, (1) over any ten (10) Trading Days within any twenty (20) consecutive Trading Day period the VWAP of the Parent Common Shares is greater than or equal to $16.00 per share or (2) as reported in Parent’s Form 10-Q or Form 10-K the ARR is greater than or equal to $55 million (the “Second Earnout Milestone”), whichever occurs earlier; and
7
Table of Contents
C. Subject to the Earnout Cap, one-third (1/3) of the Earnout Shares if, at any time during the Earnout Period, (1) over any ten (10) Trading Days within any twenty (20) consecutive Trading Day period the VWAP of the Parent Common Shares is greater than or equal to $18.00 per share or (2) as reported in Parent’s Form 10-Q or Form 10-K the ARR is greater than or equal to $65 million (the “Third Earnout Milestone”), whichever occurs earlier.
“Earnout Milestone” means, as applicable, the First Earnout Milestone, the Second Earnout Milestone and/or the Third Earnout Milestone. The applicable Earnout Shares will be delivered to the Earnout Holders promptly (within 10 Business Days) following the date in which any such Earnout Milestone is achieved. Each Earnout Milestone shall only occur once, if at all.
By way of example, based on Electra’s net revenues of $15,000 for the fiscal quarter ended June 30, 2026, ARR for that quarter would be calculated as $60,000, or approximately 0.13% of the $45 million ARR required to achieve the First Earnout Milestone. To achieve the First Earnout Milestone, the Second Earnout Milestone and the Third Earnout Milestone on the basis of ARR, Parent would be required to generate net revenues for a single fiscal quarter of at least $11.25 million, $13.75 million and $16.25 million, respectively.
Parent and Electra Post-Closing Board of Directors and Executive Officers
Immediately following the Closing, Parent’s board of directors will consist of seven (7) directors, of which Electra has the right to designate five (5) directors and the remaining two directors shall be jointly designated by Electra and IRHO SPAC Sponsor LLC (the “Sponsor”). At least a majority of the board of directors shall qualify as independent directors under Nasdaq or Alternate Exchange rules, as applicable.
At the Closing, all of the officers of Parent shall resign and the following individuals are expected to be appointed as officers of Parent: Fabrizio Martini, as Chief Executive Officer and Nicholas Chakalos, President & Chief Financial Officer.
Immediately following the Closing, Electra’s board of directors will consist of the same individuals serving as directors of Parent.
Representations, Warranties and Covenants
The parties to the Merger Agreement have made customary representations, warranties and covenants in the Merger Agreement, including, among others things, covenants with respect to the conduct of the Company and IRHO and their respective subsidiaries prior to the Closing, including the Company’s covenant to provide to Parent no later than May 14, 2026, its audited financial statements for the years ended December 31, 2025 and 2024 for inclusion in the registration statement on Form S-4 to be filed by IRHO and the Company in connection with the Business Combination (the “Registration Statement”), and Parent and the Company shall jointly prepare and file with the SEC, mutually acceptable proxy materials which shall be included in the Registration Statement.
During the period commencing on date of execution of the Merger Agreement and until the earlier of the Closing Date and the termination of the Merger Agreement, IRHO and Electra will use commercially reasonable best efforts to enter into and consummate subscription agreements with investors to purchase securities of IRHO in connection with a private placement on terms mutually agreeable to the parties (any such purchase by investors, a “PIPE Financing”).
Conditions to Closing
The Closing of the Business Combination is subject to certain customary conditions of the respective parties, including, among other things: (i) approval of the Business Combination and related agreements and transactions by the respective shareholders of IRHO and the Company; (ii) effectiveness of the Registration Statement; (iii) Parent’s initial listing application shall have been conditionally approved for listing on The Nasdaq Stock Market (“Nasdaq”) or another national stock exchange; (iv) there shall not have occurred a respective Material Adverse Effect in respect of the Company and Parent that is continuing; (v) that the respective Fundamental Representations shall be true and correct in all respects; (vi) Parent Certificate of Incorporation shall have been filed with, and declared effective by, the Secretary of State of the State of Delaware; (vii) that all respective officer certificates of the Company and Parent shall have been delivered; (viii) all Parties shall have executed and delivered to each other a copy of each Ancillary Agreement to which they are a party; (ix) accrued but unpaid fees, costs and expenses, including fees of outside legal
8
Table of Contents
counsel (but excluding the Deferred Underwriting Commission), of the Parent Parties as of immediately prior to the Closing shall collectively not exceed $2,000,000 without the prior written consent of the Company; it being agreed that any such excess fees incurred without the Company’s prior written consent will reduce the share consideration remaining for the Sponsor such that only the Sponsor bears such excess fees, costs and expenses assuming $10 price per Parent Common Share; and (x) the amount of Parent Closing Cash at the Closing shall equal or exceed $30,000,000.
Termination
The Merger Agreement may be terminated by Parent and the Company under certain circumstances, including:
(i) by mutual written agreement of Parent and Electra;
(ii) by either Parent or the Company if (a) the Closing has not occurred on or before January 21, 2027 (the “Outside Closing Date”) and (b) the material breach or violation of any representation, warranty, covenant or obligation under the Merger Agreement by the party seeking to terminate the Merger Agreement was not the cause of, or resulted in, the failure of the Closing to occur on or before such date;
(iii) by either Parent or Electra if the Business Combination is prohibited or made illegal by a final, non-appealable governmental order or law and the failure to comply with any provision of the Merger Agreement by the party seeking to terminate the Merger Agreement is not a substantial cause of, or has not substantially resulted in, such order or law;
(iv) by Parent, if Electra, (a) at any time prior to the Closing, has breached any of its covenants, agreements, representations and warranties contained in the Merger Agreement except that, if such breach is curable by the Company through the exercise of its reasonable best efforts, then, for a period of up to 30 days after receipt of a notice from IRHO, of such breach, but only as long as the Company continues to use its reasonable best efforts to cure such breach, such termination shall not be effective, and such termination shall become effective only if it is not cured within such 30 day period or (b) at any time after the Company Stockholder Written Consent Deadline if the Company has not delivered the Company Stockholder Approval to Parent (provided, that upon the Company delivering the Company Stockholder Approval to Parent, Parent shall no longer have any right to terminate the Merger Agreement); or
(v) by Electra, if Parent, at any time prior to the Closing, has breached any of its covenants, agreements, representations and warranties contained in the Merger Agreement except that, if such breach is curable by Parent through the exercise of its reasonable best efforts, then, for a period of up to 30 days after receipt of a notice from Electra, of such breach, but only as long as Parent continues to use its reasonable best efforts to cure such breach, such termination shall not be effective, and such termination shall become effective only if it is not cured within such 30 day period.
Related Agreements
In connection with the Business Combination, IRHO and Electra have entered into, or intend to enter into on the Closing Date, several agreements, including the Parent Support Agreement, Company Support Agreement, A&R Registration Rights Agreement and Lock-Up Agreements. For additional information about each of these agreements, see “The Business Combination Proposal — Related Agreements”.
Proposal No. 2 — The Domestication Proposal
If the Business Combination Proposal is approved, then IRHO will ask the holder of IRHO Ordinary Shares to approve by a special resolution the Domestication Proposal. As a condition to closing the Business Combination pursuant to the terms of the Merger Agreement, the IRHO Board has unanimously approved the Domestication Proposal. The Domestication Proposal, if approved, will authorize a change of IRHO’s jurisdiction of incorporation from the Cayman Islands to the State of Delaware. Accordingly, while IRHO is currently governed by the Companies Act, upon Domestication, Electra Pubco will be governed by the DGCL. There are differences between Cayman Islands corporate law and Delaware corporate law as well as between the Cayman Constitutional Documents and the Proposed Organizational Documents. Accordingly, IRHO encourages shareholders to carefully review the information in “Comparison of Corporate Governance and Shareholder Rights”.
9
Table of Contents
In connection with the Domestication, (i) each then issued and outstanding IRHO Ordinary Share, will convert automatically, on a one-for-one basis, into one Parent Class A Common Share; (ii) each then issued and outstanding IRHO Right entitling the holder thereof to 1/10 of one IRHO Ordinary Share shall convert automatically into a right to receive 1/10 of one Parent Class A Common Share at the Closing, pursuant to the Parent Rights Agreement dated as of December 16, 2025, by and between IRHO and Continental Stock Transfer & Trust Company, as Rights agent; and (iii) each then issued and outstanding IRHO Unit shall separate and convert automatically into one Parent Class A Common Share and an IRHO Right to receive 1/10 of one Parent Class A Common Share at the Closing.
For additional information, see “The Domestication Proposal”.
Proposal No. 3 — The Stock Issuance Proposal
If each of the Business Combination Proposal and the Domestication Proposal are approved, IRHO’s shareholders are also being asked to approve by ordinary resolution the Stock Issuance Proposal for purposes of complying with the applicable provisions of Nasdaq Listing Rules.
Under Nasdaq Listing Rule 5635(a), shareholder approval is required prior to the issuance of securities in connection with the acquisition of another company if, due to the present or potential issuance of common stock, including shares issued pursuant to an earn-out provision or similar type of provision, or securities convertible into or exercisable for common stock, such securities are not issued in a public offering for cash and (A) have, or will have upon issuance, voting power equal to or in excess of 20% of the voting power outstanding before the issuance of common stock (or securities convertible into or exercisable for common stock); or (B) the number of shares of common stock to be issued is or will be equal to or in excess of 20% of the number of shares of common stock outstanding before the issuance of the stock or securities.
Under Nasdaq Listing Rule 5635(b), shareholder approval is required prior to an issuance of securities when the issuance or potential issuance will result in a change of control of the issuer.
Under Nasdaq Listing Rule 5635(d), shareholder approval is required for a transaction other than a public offering involving the sale, issuance or potential issuance by an issuer of common stock (or securities convertible into or exercisable for common stock) at a price that is less than the lower of (i) the closing price immediately preceding the signing of the binding agreement or (ii) the average closing price of the common stock for the five trading days immediately preceding the signing of the binding agreement, if the number of shares of common stock (or securities convertible into or exercisable for common stock) to be issued equals to 20% or more of the shares of common stock, or 20% or more of the voting power, outstanding before the issuance.
The aggregate shares of Electra Pubco Common Stock that Electra Pubco will and potentially will issue in connection with the Proposed Transaction will exceed 20% of both the voting power and the shares of Electra Pubco Common Stock outstanding before such issuance and may result in a change of control under the applicable Nasdaq Listing Rules. Accordingly, IRHO is seeking the approval of IRHO shareholders for the issuance of shares of Electra Pubco Common Stock in connection with the Proposed Transaction.
For additional information, see “The Stock Issuance Proposal”.
Proposal No. 4 — The Organizational Documents Proposal
If each of the Business Combination Proposal, the Domestication Proposal and the Stock Issuance Proposal are approved, IRHO will ask its shareholders to approve by special resolution the Organizational Documents Proposal in connection with the replacement of the Cayman Constitutional Documents, under the Companies Act, with the Proposed Organizational Documents, under the DGCL. The IRHO Board has unanimously approved the Organizational Documents Proposal and believes such proposal is necessary to adequately address the needs of Electra Pubco following the Closing. Approval of the Organizational Documents Proposal is a condition to the consummation of the Business Combination.
For additional information, see “The Organizational Documents Proposal”.
10
Table of Contents
Proposal No. 5 — The Advisory Organizational Documents Proposals
IRHO will ask its shareholders to approve by ordinary resolution on a non-binding advisory basis six (6) separate Advisory Organizational Documents Proposals in connection with the replacement of the Cayman Constitutional Documents, under the Companies Act, with the Proposed Organizational Documents, under the DGCL. The IRHO Board has unanimously approved the Advisory Organizational Documents Proposals and believes such proposals are necessary to adequately address the needs of Electra Pubco after the Business Combination. Approval of the Advisory Organizational Documents Proposals is not a condition to the consummation of the Business Combination.
A brief summary of each of the Advisory Organizational Documents Proposals is set forth below. These summaries are qualified in their entirety by reference to the complete text of the Proposed Organizational Documents.
(A) Advisory Organizational Documents Proposal 5A (Authorized Shares) — to authorize the change in the authorized capital stock of IRHO from (a) 50,000,000 IRHO Ordinary Shares, and 1,000,000 preference shares, par value $0.0001 per share, of IRHO to (b) [*] Class A shares of Electra Pubco Common Stock, par value $0.0001 per share, [*] Class B shares of Electra Pubco Common Stock, par value $0.0001 per share, and [*] shares of Electra Pubco preferred stock, par value $0.0001 per share;
(B) Advisory Organizational Documents Proposal 5B (Exclusive Forum Provision) — to authorize adopting Delaware as the exclusive forum for certain stockholder litigation and adopting the federal district courts of the United States as the exclusive forum for resolving complaints asserting a cause of action under the Securities Act;
(C) Advisory Organizational Documents Proposal 5C (Required Vote to Amend Charter) — to approve provisions providing that the affirmative vote of at least 66 and 2/3% of the voting power of all the then outstanding shares of capital stock of Electra Pubco entitled to vote thereon, voting together as a single class, will be required to amend, alter, repeal or rescind any provision of Article V(B), Article V, Article VI, Article VII, Article VIII, Article IX, Article X, and Article XI of the Proposed Charter;
(D) Advisory Organizational Documents Proposal 5D (Removal of Directors) — to approve provisions permitting the removal of a director, with or without cause, by the affirmative vote of at least 66 and 2/3% of the outstanding shares entitled to vote generally in the election of directors, voting together as a single class;
(E) Advisory Organizational Documents Proposal 5E (Stockholder Action by Written Consent) — to approve provisions that require or permit stockholders to take action at an annual or special meeting and prohibit stockholder action by written consent in lieu of a meeting; and
(F) Advisory Organizational Documents Proposal 5F (Additional Changes) - to approve and adopt an amendment to the Cayman Constitutional Documents to authorize certain additional changes, including, among other things, (a) making Electra Pubco’s corporate existence perpetual, and (b) removing certain provisions related to IRHO’s status as a blank check company that will no longer be applicable upon Closing, all of which the IRHO Board believes is necessary to adequately address the needs of Electra Pubco after the Business Combination.
For additional information, see “The Advisory Organizational Documents Proposals”.
Proposal No. 6 — The Electra Pubco Equity Incentive Plan Proposal
If each of the Business Combination Proposal, the Domestication Proposal, the Stock Issuance Proposal and the Organizational Documents Proposal is approved, IRHO is proposing that its shareholders approve by ordinary resolution the Electra Pubco Equity Incentive Plan, which will become effective upon the Closing and will be used by Electra Pubco on a going-forward basis following the Closing.
For additional information, see “The Electra Pubco Equity Incentive Plan Proposal”.
11
Table of Contents
Proposal No. 7 — The Adjournment Proposal
If, based on the tabulated vote, there are not sufficient votes at the time of the extraordinary general meeting to authorize IRHO to consummate the Business Combination (because any of the Condition Precedent Proposals has not been approved (including as a result of the failure of any other cross-conditioned Condition Precedent Proposals to be approved)), the IRHO Board may submit a proposal to the shareholders to approve by way of an ordinary resolution the adjournment of the extraordinary general meeting to a later date or dates, if necessary, to permit further solicitation and vote of proxies.
For additional information, see “The Adjournment Proposal”.
Date, Time and Place of the Extraordinary General Meeting
The extraordinary general meeting will be held virtually at [•], Eastern Time, on [•] 2026 and will be a virtual meeting conducted via live webcast at [•]. For the purposes of Cayman Islands law and the Cayman Constitutional Documents, the physical location of the extraordinary general meeting will be at the offices of Loeb & Loeb LLP at 345 Park Avenue, New York, New York 10154.
Registering for the Extraordinary General Meeting
Any shareholder wishing to attend the extraordinary general meeting virtually should register for the extraordinary general meeting by [•], at [•]. To register for the extraordinary general meeting, please follow these instructions as applicable to the nature of your ownership of IRHO Ordinary Shares:
• If your shares are registered in your name with the Transfer Agent and you wish to attend the virtual meeting, go to [•], enter the 12-digit control number included on your proxy card or notice of the extraordinary general meeting and click on the “Click here to preregister for the online meeting” link at the top of the page. Just prior to the start of the extraordinary general meeting you will need to log back into the extraordinary general meeting site using your control number. Pre-registration is recommended, but is not required in order to attend.
• Beneficial shareholders (those holding shares through a stock brokerage account or by a bank or other holder of record) who wish to attend the extraordinary general meeting must obtain a legal proxy by contacting their account representative at the bank, broker, or other nominee that holds their Public Shares and e-mail a copy (a legible photograph is sufficient) of their legal proxy to proxy@continentalstock.com. Beneficial shareholders who e-mail a valid legal proxy will be issued a 12-digit meeting control number that will allow them to register to attend and participate in the virtual extraordinary general meeting. After contacting the Transfer Agent, a beneficial holder will receive an e-mail prior to the extraordinary general meeting with a link and instructions for attending the virtual extraordinary general meeting. Beneficial shareholders should contact the Transfer Agent at least five business days prior to the extraordinary general meeting date in order to ensure access.
Voting Power; Record Date
IRHO shareholders will be entitled to vote or direct votes to be cast at the extraordinary general meeting if they owned IRHO Ordinary Shares at the close of business on [•], which is the Record Date for the extraordinary general meeting. Shareholders will have one vote for each IRHO Ordinary Share owned at the close of business on the Record Date. If your shares are held in “street name” or are in a margin or similar account, you should contact your broker to ensure that votes related to the shares you beneficially own are properly counted. IRHO Rights do not have voting Rights. As of the close of business on the Record Date, there were 29,320,000 IRHO Ordinary Shares outstanding, of which 6,320,000 are held by the Insiders and Initial Shareholders.
Quorum and Vote of IRHO Shareholders
A quorum of IRHO shareholders is necessary to hold a valid meeting. A quorum will be present at the IRHO extraordinary general meeting if the holders of a majority of the issued and outstanding shares entitled to vote at the extraordinary general meeting are represented in person or by proxy (which would include presence at the extraordinary
12
Table of Contents
general meeting). Abstentions and broker non-votes, while considered present for the purposes of establishing a quorum, will not count as a vote cast at the extraordinary general meeting and otherwise will have no effect on a particular proposal under Cayman Islands law.
As of the Record Date for the extraordinary general meeting, 14,660,001 IRHO Ordinary Shares would be required to achieve a quorum. Because the Sponsor has the right to vote 6,120,000 IRHO Ordinary Shares, the presence of holders of 8,540,001 Ordinary Shares would be needed at the extraordinary general meeting to establish a quorum.
The proposals presented at the extraordinary general meeting require the following votes:
• Business Combination Proposal — The approval of the Business Combination Proposal requires an ordinary resolution under Cayman Islands law, being the affirmative vote of a majority of the IRHO Ordinary Shares, who, being entitled to do so, attend in person or by proxy and vote thereon at the extraordinary general meeting.
• Domestication Proposal — The approval of the Domestication Proposal requires a special resolution under Cayman Islands law, being the affirmative vote of at least two-thirds of IRHO Ordinary Shares, who, being entitled to do so, attend in person or by proxy and vote thereon at the extraordinary general meeting.
• Stock Issuance Proposal — The approval of the Stock Issuance Proposal requires an ordinary resolution under Cayman Islands law, being the affirmative vote of a majority of the IRHO Ordinary Shares who, being entitled to do so, attend in person or by proxy and vote thereon at the extraordinary general meeting.
• Organizational Documents Proposal — The approval of the Organizational Documents Proposal requires a special resolution under Cayman Islands law, being the affirmative vote of the holders of at least two-thirds of the IRHO Ordinary Shares who, being entitled to do so, attend in person or by proxy and vote thereon at the extraordinary general meeting.
• Advisory Organizational Documents Proposals — The separate approval of each of the Advisory Organizational Documents Proposals, each of which is a non-binding vote, requires an ordinary resolution under Cayman Islands law, being the affirmative vote of a majority of the IRHO Ordinary Shares, who, being entitled to do so, attend in person or by proxy and vote thereon at the extraordinary general meeting.
• Electra Pubco Equity Incentive Plan Proposal — The approval of the Electra Pubco Equity Incentive Plan Proposal requires an ordinary resolution under Cayman Islands law, being the affirmative vote of a majority of the IRHO Ordinary Shares, who, being entitled to do so, attend in person or by proxy and vote thereon at the extraordinary general meeting.
• Adjournment Proposal — The approval of the Adjournment Proposal requires an ordinary resolution under Cayman Islands law, being the affirmative vote of a majority of the IRHO Ordinary Shares, who, being entitled to do so, attend in person or by proxy and vote thereon at the extraordinary general meeting.
Abstentions and broker non-votes, while considered present for the purposes of establishing a quorum, will not count as a vote cast at the extraordinary general meeting and otherwise will have no effect on a particular proposal under Cayman Islands law.
The Insiders and Initial Shareholders have agreed to vote all of their IRHO Ordinary Shares in favor of the proposals being presented at the extraordinary general meeting. The Sponsor, which includes among its members each of the directors and officers of IRHO, owns economic interest in 5,750,000 Founder Shares, and 370,000 Private Placement Units out of the 5,750,000 Founder Shares and the 570,000 Private Placement Units, and Cantor owns 200,000 Private Placement Units. As a result, as of the date of this proxy statement/prospectus, the Initial Shareholders own approximately 21% of the issued and outstanding IRHO Ordinary Shares and have the right to vote approximately 21% of the issued and outstanding IRHO Ordinary Shares. Accordingly, assuming all issued and outstanding IRHO Ordinary Shares are voted, in addition to the IRHO Ordinary Shares held by the Initial Shareholders, the affirmative vote of holders of 8,340,001 IRHO Ordinary Shares (or approximately 28%) would be required to approve each proposal requiring an ordinary resolution, including the Business Combination Proposal, the Stock Issuance Proposal, the Electra Pubco Equity Incentive Plan Proposal and, if presented, the Adjournment Proposal, and the affirmative vote of holders of 13,226,667 IRHO Ordinary Shares (or approximately 45%) would be required to approve each proposal requiring a special resolution.
13
Table of Contents
Redemption Rights
Pursuant to the Cayman Constitutional Documents,
• (a) hold Public Shares or (b) hold Public Shares through IRHO Units and elect to separate your IRHO Units into the underlying Public Shares and Public Rights prior to exercising your Redemption Rights with respect to the Public Shares;
• submit a written request to the Transfer Agent, including the legal name, phone number and address of the beneficial owner of the Public Shares for which redemption is requested, that IRHO redeem all or a portion of your Public Shares for cash; and
• tender or deliver the certificates for your Public Shares (if any) along with the redemption forms to the Transfer Agent physically or electronically through DTC.
Holders must complete the procedures for electing to redeem their Public Shares in the manner described above prior to [•], Eastern Time, on [•] (two business days before the scheduled date of the extraordinary general meeting) in order for their Public Shares to be redeemed.
Public Shareholders may elect to redeem all or a portion of the Public Shares held by them regardless of if or how they vote in respect of the Business Combination Proposal and regardless of whether they hold Public Shares on the Record Date. Holders of IRHO Units must elect to separate Units held by them into the underlying Public Shares and Public Rights prior to exercising their Redemption Rights with respect to the Public Shares. If the Proposed Transaction is not consummated, the Public Shares will be returned to the respective holder, broker or bank. If the Proposed Transaction is consummated, and if a Public Shareholder properly exercises its right to redeem all or a portion of the Public Shares that it holds and timely tenders or delivers the certificates for its shares (if any) along with the redemption forms to the Transfer Agent, IRHO will redeem such Public Shares for a per-share price, payable in cash, equal to the pro rata portion of the funds held the Trust Account that are available for distribution to Public Shareholders, calculated as of two business days prior to the consummation of the Proposed Transaction. For illustrative purposes, as of [•], this would have amounted to approximately $[•] per issued and outstanding Public Share. If a Public Shareholder exercises its Redemption Rights in full, then it will be electing to exchange its Public Shares for cash and will no longer own Public Shares. See “Extraordinary General Meeting of IRHO — Redemption Rights” for a detailed description of the procedures to be followed if you wish to redeem your Public Shares for cash.
Notwithstanding the foregoing, a Public Shareholder, together with any affiliate of such Public Shareholder or any other person with whom such Public Shareholder is acting in concert or as a “group” (as defined in Section 13(d)(3) of the Exchange Act), will be restricted from redeeming its Public Shares with respect to more than an aggregate of 15% of the Public Shares without IRHO’s prior consent. Accordingly, if a Public Shareholder, alone or acting in concert or as a group, seeks to redeem more than 15% of the Public Shares, then any such shares in excess of that 15% limit would not be redeemed for cash without IRHO’s prior consent.
Holders of the Public Rights will not have Redemption Rights with respect to the Public Rights.
Summary of Redemption and Dilution Impact
Public Shareholders may elect to redeem their Public Shares for cash while retaining their Public Rights, which convert into shares of the post-combination company upon closing. This structure creates a potential divergence of interests between redeeming and non-redeeming shareholders. Redeeming shareholders recover their investment and still receive post-closing shares, while non-redeeming shareholders remain fully invested and bear the risk of dilution from the issuance of shares underlying all outstanding Public Rights — including those held by redeeming shareholders.
High levels of redemptions may increase dilution for non-redeeming shareholders, reduce the post-closing public float, and limit the cash available to the Combined Company. These factors may adversely affect the ownership, voting power, and investment value of non-redeeming shareholders.
14
Table of Contents
Ownership of Electra Pubco after the Closing
The following table illustrates estimated ownership levels in Electra Pubco, immediately following the consummation of the Business Combination, based on varying levels of redemptions by Public Shareholders, including the shares issuable upon conversion of the Public Rights and the Private Placement Rights, but excluding the dilutive effect of Electra Options that will be assumed by IRHO in the Proposed Transaction. For avoidance of doubt, the table below assumes a minimum of $30,000,000 in Parent Closing Cash at the time of the Closing, which is a closing condition.
| No | 25% | 50% | 75% | Maximum | |||||||||||||||||||||
| Shares | Percentage | Shares | Percentage | Shares | Percentage | Shares | Percentage | Shares | Percentage | ||||||||||||||||
| Public Shareholders(1) | 25,300,000 | 31.5 | % | 19,550,000 | 30.2 | % | 13,800,000 | 28.0 | % | 8,050,000 | 19.8 | % | 5,982,780 | 15.9 | % | ||||||||||
| Sponsor(2) | 6,157,000 | 7.7 | % | 6,157,000 | 9.5 | % | 6,157,000 | 12.5 | % | 5,695,874 | 14.0 | % | 5,357,000 | 14.2 | % | ||||||||||
| Cantor | 220,000 | 0.3 | % | 220,000 | 0.3 | % | 220,000 | 0.4 | % | 220,000 | 0.5 | % | 220,000 | 0.6 | % | ||||||||||
| Electra Shareholders(3) | 41,995,572 | 52.3 | % | 33,882,560 | 52.3 | % | 25,769,546 | 52.3 | % | 25,051,931 | 61.6 | % | 25,051,931 | 66.5 | % | ||||||||||
| Others(4) | 6,625,333 | 8.2 | % | 4,975,812 | 7.7 | % | 3,326,292 | 6.8 | % | 1,676,771 | 4.1 | % | 1,083,741 | 2.8 | % | ||||||||||
| Total | 80,297,905 | 100.0 | % | 64,785,372 | 100.0 | % | 49,272,838 | 100.0 | % | 40,694,576 | 100.0 | % | 37,695,452 | 100.0 | % | ||||||||||
____________
(1) Includes 2,300,000 shares of Pubco Common Stock issued to all public shareholders upon exchange of the rights issued in the IPO, and in the case of the maximum redemptions scenario, such number reflects the maximum number of shares that could be redeemed to ensure a minimum of $30,000,000 in Parent Closing Cash at the time of the Closing.
(2) Reflects the number of Shares that will be held by the Sponsor after the forfeiture of up to 800,000 Risk Shares as contemplated by the Merger Agreement.
(3) Includes all Shares to be issued to the stockholders of Electra as adjusted to ensure the minimum ownership threshold of 50.1% at the Closing.
(4) Includes Shares issued to vendors and financial advisors to Electra and IRHO other than Cantor.
There is no way of knowing how many public shareholders will redeem their shares, and the actual amount may differ from the several scenarios outlined above.
Dilution
Dilution per share to Public Shareholders is determined by IRHO’s net tangible book value (“NTBV”) per share, as adjusted, while excluding the Business Combination, while giving effect to material probable or consummated transactions and other material effects on NTBV per share, from the Public Shareholders as set forth as follows under five redemption scenarios.
The following table illustrates NTBV per share and the change in NTBV per share, as adjusted, following the Closing, but excluding the other effects of the Business Combination, while giving effect to probable or consummated transactions that are material and other material effects on NTBV per share. These are presented in relation to the offering price per Public Share in the IRHO IPO as set forth as follows under the five redemption scenarios:
| Assuming | Assuming | Assuming | Assuming | Assuming | ||||||||||||||||
| Public Shareholders |
| 23,000,000 |
|
| 17,250,000 |
|
| 11,500,000 |
|
| 5,750,000 |
|
| 3,682,780 |
| |||||
| Sponsor |
| 6,120,000 |
|
| 6,120,000 |
|
| 6,120,000 |
|
| 5,658,874 |
|
| 5,320,000 |
| |||||
| Cantor |
| 200,000 |
|
| 200,000 |
|
| 200,000 |
|
| 200,000 |
|
| 200,000 |
| |||||
| Total IRHO Ordinary Shares outstanding as of August 31, 2026 |
| 29,320,000 |
|
| 23,570,000 |
|
| 17,820,000 |
|
| 11,608,874 |
|
| 9,202,780 |
| |||||
| Ordinary Shares issuable on conversion of all IRHO Rights |
| 2,357,000 |
|
| 2,357,000 |
|
| 2,357,000 |
|
| 2,357,000 |
|
| 2,357,000 |
| |||||
| Total IRHO Ordinary Shares outstanding as of August 31, 2026, as adjusted |
| 31,677,000 |
|
| 25,927,000 |
|
| 20,177,000 |
|
| 13,965,874 |
|
| 11,559,780 |
| |||||
| NTBV as of August 31, | $ | (11,173,616 | ) | $ | (11,173,616 | ) | $ | (11,173,616 | ) | $ | (11,173,616 | ) | $ | (11,173,616 | ) | |||||
15
Table of Contents
| Assuming | Assuming | Assuming | Assuming | Assuming | ||||||||||||||||
| Adjusted for(2): |
|
|
|
|
|
|
|
|
|
| ||||||||||
| Reclassification of IRHO Ordinary Shares subject to redemption to equity |
| 235,645,815 |
|
| 176,734,361 |
|
| 117,822,908 |
|
| 58,911,454 |
|
| 37,731,813 |
| |||||
| Transaction expenses to be paid by IRHO |
| (1,286,607 | ) |
| (1,286,607 | ) |
| (1,286,607 | ) |
| (1,286,607 | ) |
| (1,286,607 | ) | |||||
| NTBV as of August 31, 2026, as adjusted | $ | 223,185,592 |
| $ | 164,274,138 |
| $ | 105,362,685 |
| $ | 46,451,231 |
| $ | 25,271,590 |
| |||||
| NTBV per share as of August 31, 2026, as adjusted | $ | 7.05 |
| $ | 6.34 |
| $ | 5.22 |
| $ | 3.33 |
| $ | 2.19 |
| |||||
| Dilution(3) | $ | 2.95 |
| $ | 3.66 |
| $ | 4.78 |
| $ | 6.67 |
| $ | 7.81 |
| |||||
____________
(1) NTBV is calculated as total assets minus total liabilities and IRHO Ordinary Shares subject to possible redemption as of August 31, 2026.
(2) NTBV is adjusted for (i) payments from the Trust Account at different levels of redemptions to Public Shareholders at the $10.25 per share redemption price as of August 31, 2026, and (ii) transaction costs that have not been recorded in IRHO’s financial statements as of August 31, 2026, which will have an impact on the calculation of NTBV upon the Closing.
(3) Dilution is calculated by subtracting the NTBV per share as of August 31, 2026, as adjusted, from the $10.00 IRHO IPO per share price for the Public Shares.
For purposes of Item 1604(c)(1) of Regulation S-K, Electra Pubco would have 80,297,905 total Pubco Class A and Class B Ordinary Shares outstanding immediately after giving effect to the Business Combination under the “No Redemptions” scenario based on the assumptions set forth in the preceding paragraph and as further described above. Where there are no redemptions of Public Shares prior to the Closing, the valuation is based on the $10.00 issuance price per Public Share in the IRHO IPO and is therefore calculated as: $10.00 (IRHO per share IPO price) multiplied by 80,297,905 shares, or $802,979,050. The following table illustrates the valuation at the $10.00 issuance price per share in the IRHO IPO for each redemption scenario:
| No | 25% | 50% | 75% | Maximum | |||||||||||
| Shares | Shares | Shares | Shares | Shares | |||||||||||
| Public Shareholders |
| 25,300,000 |
| 19,550,000 |
| 13,800,000 |
| 8,050,000 |
| 5,982,780 | |||||
| Sponsor |
| 6,157,000 |
| 6,157,000 |
| 6,157,000 |
| 5,695,874 |
| 5,357,000 | |||||
| Cantor |
| 220,000 |
| 220,000 |
| 220,000 |
| 220,000 |
| 220,000 | |||||
| Electra Shareholders |
| 41,995,572 |
| 33,882,560 |
| 25,769,546 |
| 25,051,931 |
| 25,051,931 | |||||
| Others |
| 6,625,333 |
| 4,975,812 |
| 3,326,292 |
| 1,676,771 |
| 1,083,741 | |||||
| Total shares outstanding post Business Combination |
| 80,297,905 |
| 64,785,372 |
| 49,272,838 |
| 40,694,576 |
| 37,695,452 | |||||
| Total valuation based on $10.00 issuance price per share in the IRHO IPO | $ | 802,979,050 | $ | 647,853,720 | $ | 492,728,380 | $ | 406,945,760 | $ | 376,954,520 | |||||
The foregoing required disclosure is not a guarantee that the trading price of Electra Pubco Class A Ordinary Shares will not be below the offering price in the IRHO IPO, nor is the required disclosure a guarantee that Electra Pubco will attain any of the levels of valuation presented.
Controlled Company
Following the Business Combination (assuming maximum redemptions), Fabrizio Martini, Electra’s co-founder and Chief Executive Officer, will beneficially own (including shares underlying Converted Stock Options) approximately 23% of the outstanding shares of Electra Pubco Common Stock, but approximately [•]% of the combined voting power for the election of directors to the Electra Pubco Board. On April 20, 2026, Electra reclassified its common stock into Electra Class A Common Stock, with one vote per share, and Electra Class B Common Stock, with ten votes per share, and all shares of common stock beneficially owned by or affiliated with Mr. Martini were reclassified into Electra Class B Common Stock. In the Merger, each share of Electra Class B Common Stock will
16
Table of Contents
be converted into Electra Pubco Class B Common Stock, which will likewise be entitled to ten votes per share, and Mr. Martini will be the sole holder of Electra Pubco Class B Common Stock. Because Mr. Martini will hold more than 50% of the voting power for the election of directors under each redemption scenario presented in this proxy statement/prospectus, Electra Pubco will be a “controlled company” for the purposes of Nasdaq listing rules. For so long as Electra Pubco remains a controlled company under that definition, it is permitted to elect to rely on certain exemptions from corporate governance rules. As a result, investors may not have the same protection afforded to shareholders of companies that are subject to these corporate governance requirements. Electra Pubco’s status as a controlled company could cause its securities to be less attractive to certain investors or otherwise adversely affect the trading price. See “Risk Factors — Electra Pubco will be a “controlled company” within the meaning of Nasdaq listing standards and, as a result, will qualify for exemptions from certain corporate governance requirements. You may not have the same protections afforded to shareholders of companies that are subject to such requirements” and “Beneficial Ownership of Securities.”
The following table sets forth information required by Item 403 of Regulation S-K regarding the expected beneficial ownership of Electra Pubco Common Stock immediately following the Business Combination and the related financing transactions, including the conversion of the Company Convertible Notes and the repayment of the Senior Secured Convertible Notes, assuming maximum redemptions by Public Shareholders, by (i) each person known to be the beneficial owner of more than 5% of the outstanding Electra Pubco Common Stock, (ii) each person expected to be an executive officer or director of Electra Pubco and (iii) all such executive officers and directors as a group. Beneficial ownership is determined according to the rules of the SEC, which generally provide that a person has beneficial ownership of a security if he, she, or it possesses sole or shared voting or investment power over that security as well as shares that such person has the right to acquire within 60 days. For additional information, including ownership under the no redemptions scenario, see “Beneficial Ownership of Securities.”
| Name of Beneficial Owner | Number | Percentage of | |||
| Fabrizio Martini | 23.0 | % | |||
Percentage of total voting power represents voting power with respect to all shares of Electra Pubco Class A Common Stock and Electra Pubco Class B Common Stock, voting together as a single class. Each share of Electra Pubco Class A Common Stock entitles the holder to one vote per share and each share of Electra Pubco Class B Common Stock entitles the holder to ten votes per share. Mr. Martini’s beneficial ownership consists of [•] shares of Electra Pubco Class B Common Stock and [•] shares of Electra Pubco Class A Common Stock issuable upon the exercise of Converted Stock Options exercisable within 60 days of the Closing.
Appraisal Rights and Dissenters’ Rights
Neither IRHO’s shareholders nor IRHO’s rights holders have appraisal or dissenters’ rights in connection with the Proposed Transaction or the Domestication under Cayman Islands law or the DGCL. IRHO’s shareholders do not have dissenters’ rights in connection with the Proposed Transaction or the Domestication under Cayman Islands law.
Proxy Solicitation
Proxies may be solicited by mail, telephone or in person. IRHO has engaged _________________ to assist in the solicitation of proxies.
If a shareholder grants a proxy, it may still vote its shares in person if it revokes its proxy before the extraordinary general meeting. A shareholder also may change its vote by submitting a later-dated proxy as described in “Extraordinary General Meeting of IRHO — Revoking Your Proxy”.
Interests of IRHO Directors, Officers and Others in the Proposed Transaction
When you consider the recommendation of the IRHO Board in favor of approval of the Business Combination Proposal, you should keep in mind that the Sponsor, IRHO’s directors and executive officers and others have interests in such proposal that are different from, or in addition to, those of IRHO shareholders and holders of Public Rights generally. See “The Business Combination Proposal — Certain Interests of IRHO’s Directors and Officers and Others in the Business Combination.”
17
Table of Contents
The existence of financial and personal interests of one or more of IRHO’s directors may result in a conflict of interest on the part of such director(s) between what he, she or they may believe is in the best interests of IRHO and its shareholders and what he, she or they may believe is best for himself, herself or themselves in determining to recommend that shareholders vote for the proposals. In addition, IRHO’s officers have interests in the Proposed Transaction that may conflict with your interests as a shareholder.
Conflicts of Interest
These conflicts of interest include, among other things, the interests listed below:
• The beneficial ownership of the Sponsor and certain Initial Shareholders of 6,320,000 IRHO Ordinary Shares consisting of 5,750,000 Founder Shares which were acquired prior to the IPO for an aggregate of $32,000 and 570,000 Private Placement Shares purchased at the time of the IPO (200,000 of which were purchased by Cantor) will be worthless if the Business Combination is not consummated because the Initial Shareholders and the Sponsor have agreed to waive their Rights to any liquidation distributions.
• If the Business Combination is consummated, the Sponsor and the Initial Shareholders would own up to an aggregate of 6,320,000 Parent Common Shares with an aggregate market value of approximately $ , based on the closing price of the Public Shares of $ on Nasdaq as of , 2026.
• The Sponsor or an affiliate of the Sponsor may, but is not obligated to, make Working Capital Loans to IRHO. As of the date of this proxy statement/prospectus, there are $_______ Working Capital Loans outstanding. In the event that the Business Combination does not close, IRHO may use a portion of proceeds held outside the Trust Account to repay any such loans, but no proceeds held in the Trust Account would be used to repay the Working Capital Notes. All unpaid amounts would be forfeited.
• The continued indemnification of current directors and officers of IRHO and the continuation of directors’ and officers’ liability insurance after the Business Combination.
• The fact that our Sponsor, officers and directors will be reimbursed for out-of-pocket expenses incurred in connection with activities on our behalf, such as identifying potential target businesses and performing due diligence on suitable business combinations.
• The fact that our Sponsor, and current and former officers and directors will lose their entire investment in us if an initial business combination is not completed.
• The fact that certain officers and directors of IRHO have an economic interest in the 3,285,000 out of 5,750,000 Founder Shares currently owned by the Sponsor and purchased by the Sponsor in connection with the IRHO IPO, as a result of their direct or indirect membership interests in the Sponsor. The 5,750,000 Founder Shares were purchased by the Sponsor for approximately $0.0056 per share ($32,000 in the aggregate). Additionally there are 370,000 IRHO ordinary shares that were purchased by the Sponsor in the private placement that closed at the time of the IPO, for $10.00 per share ($3,700,000 in the aggregate). Mr. Bengochea and Mr. Caragol are the managing members] of the Sponsor. The economic interest (or deemed economic interest) of this entity in the Founder Shares and ordinary shares retained by the Sponsor is shown below:
| Name and Title of Person |
Number of |
|
| Sponsor(1) |
6,120,000 |
____________
(1) The Sponsor has an economic interest in 5,750,000 Founder Shares and 370,000 IRHO Ordinary Shares, which is owned 50% by each of Mr. Bengochea and Mr. Caragol our Chief Executive Officer and Chief Financial Officer, respectively.
18
Table of Contents
In light of the foregoing, the Sponsor and its affiliates will receive material benefits from the completion of the Business Combination and may be incentivized to complete the Business Combination with Electra rather than liquidate even if (i) Electra is a less favorable target company or (ii) the terms of the Business Combination are less favorable to shareholders. As a result, our Sponsor and directors and officers may have interests in the completion of the Business Combination that are materially different than, and may conflict with, the interests of other shareholders. Further, the Sponsor may receive a positive return on the Founder Shares even if IRHO’s public shareholders experience a negative return on their investment after consummation of the Business Combination. See “The Business Combination Proposal — Ownership of Pubco after the Closing.”
The personal and financial interests of the Sponsor as well as IRHO’s directors and officers may have influenced their motivation in identifying and selecting Electra as a business combination target, completing an initial business combination with Electra and influencing the operation of the business following the Closing. In considering the recommendations of the IRHO Board to vote for the proposals, its shareholders should consider these interests.
Potential Purchases of Public Shares and Public Rights
At any time at or prior to the Proposed Transaction, subject to applicable securities laws (including with respect to material non-public information), the Sponsor, the existing equity holders of Electra or IRHO or our or their respective directors, officers, advisors or respective affiliates may (a) purchase Public Shares from institutional and other investors who elect to redeem, or indicate an intention to redeem, Public Shares, (b) execute agreements to purchase such shares from such investors in the future, or (c) enter into transactions with such investors and others to provide them with incentives to acquire Public Shares or not redeem their Public Shares. Such a purchase may include a contractual acknowledgement that such shareholder, although still the record holder of IRHO Ordinary Shares, is no longer the beneficial owner thereof and therefore agrees not to exercise its Redemption Rights. In the event that the Sponsor, the existing equity holders of Electra or IRHO or our or their respective directors, officers, advisors or respective affiliates purchase shares in privately negotiated transactions from Public Shareholders, such shares that are purchased by the Sponsor, the Electra Shareholders or our or their respective directors, officers, advisors or respective affiliates would not be voted in favor of the Business Combination Proposal, and the Sponsor, the existing equity holders of Electra or IRHO or our or their respective directors, officers, advisors or respective affiliates would waive their Redemption Rights. In the event that the Sponsor, the existing equity holders of Electra or IRHO or our or their respective directors, officers, advisors, or respective affiliates purchase shares in privately negotiated transactions from Public Shareholders who have already elected to exercise their Redemption Rights, such selling shareholders would be required to revoke their prior elections to redeem their Public Shares.
The purpose of such share purchases and other transactions would be to reduce the number of Public Shares electing to redeem.
Entering into any such arrangements may have a depressive effect on the price of IRHO Ordinary Shares (e.g., by giving an investor or holder the ability to effectively purchase shares at a price lower than market, such investor or holder may therefore become more likely to sell the shares he, she or it owns, either at or prior to the Proposed Transaction). If such transactions are effected, the consequence could be to cause the Proposed Transaction to be consummated in circumstances where such consummation could not otherwise occur.
Regulatory Matters
Neither IRHO nor Electra is aware of any material regulatory approvals or actions that are required for completion of the Business Combination, other than the regulatory notices and approvals discussed in “The Business Combination Proposal — Merger Agreement — Closing Conditions — Conditions to the Obligations of Each Party”. It is presently contemplated that if any such additional regulatory approvals or actions are required, those approvals or actions will be sought. There can be no assurance, however, that any additional approvals or actions will be obtained.
Stock Exchange Listing
IRHO has applied to list the Electra Pubco Class A Common Stock on Nasdaq under the proposed symbol “___________” upon the Closing.
19
Table of Contents
Pursuant to the terms of the Merger Agreement, as a closing condition, IRHO is required to cause the Electra Pubco Class A Common Stock to be issued in connection with the Business Combination to be approved for listing on Nasdaq or another national securities exchange, but there can be no assurance that such listing condition will be met. If such listing condition is not met, the Business Combination will not be consummated unless the listing condition is waived by the parties to the Merger Agreement. It is important for you to know that, at the time of the extraordinary general meeting, IRHO may not have received from Nasdaq either confirmation of the listing of the Electra Pubco Class A Common Stock or that approval will be obtained prior to the consummation of the Business Combination. As a result, you may be asked to vote to approve the Business Combination and the other proposals included in this proxy statement/prospectus without such confirmation, and, further, it is possible that such confirmation may never be received and the Business Combination could still be consummated if such condition is waived and therefore the Electra Pubco Class A Common Stock would not be listed on any nationally recognized securities exchange.
Recommendation to Shareholders of IRHO
The IRHO Board believes that the Business Combination Proposal and the other proposals to be presented at the extraordinary general meeting are in the best interests of IRHO’s shareholders and unanimously recommends that its shareholders vote “FOR” the approval of the Business Combination Proposal, “FOR” the approval of the Domestication Proposal, “FOR” the approval of the Stock Issuance Proposal, “FOR” the approval of the Organizational Document Proposal, “FOR” the approval, on an advisory basis, of each of the separate Advisory Organizational Documents Proposals, “FOR” the approval of the Electra Pubco Equity Incentive Plan Proposal and “FOR” the approval of the Adjournment Proposal, if presented to the extraordinary general meeting.
The existence of financial and personal interests of one or more of IRHO’s directors may result in a conflict of interest on the part of such director(s) between what he, she or they may believe is in the best interests of IRHO and its shareholders and what he, she or they may believe is best for himself, herself or themselves in determining to recommend that shareholders vote for the proposals. In addition, IRHO’s officers have interests in the Proposed Transaction that may conflict with your interests as a shareholder. See “The Business Combination Proposal — Certain Interests of IRHO’s Directors and Officers and Others in the Business Combination”.
U.S. Federal Income Tax Considerations
For a discussion summarizing certain U.S. federal income tax considerations of the Domestication and an exercise of Redemption Rights in connection with the Proposed Transaction, please see “Material U.S. Federal Income Tax Considerations”.
Accounting Considerations
The Business Combination will be accounted for as a reverse recapitalization, in accordance with U.S. Generally Accepted Accounting Principles (“GAAP”). Under this method of accounting, IRHO will be treated as the “acquired” company for financial reporting purposes. Accordingly, the Business Combination will be treated as the equivalent of Electra issuing stock for the net assets of IRHO, accompanied by a recapitalization. The net assets of IRHO will be stated at historical cost, with no goodwill or other intangible assets recorded.
Summary Risk Factors
IRHO believes it is important to communicate its expectations to its securityholders. However, there may be events in the future that neither IRHO nor Electra are able to predict accurately or over which they have control. The section in this proxy statement/prospectus entitled “Risk Factors” and the other cautionary language discussed in this proxy statement/prospectus provide examples of certain risks, uncertainties and events that may cause actual results to differ materially from the expectations described by IRHO or Electra in such forward-looking statements. Set forth below is only a summary of certain principal risks associated with an investment in our securities. You should consider carefully the following discussion of risks, as well as the discussion of risks included elsewhere in this proxy statement/prospectus, including those described under “Risk Factors.”
• Electra could be subject to additional tax liabilities.
• The requirements of being a public company may strain Electra’s resources and distract management and Electra will incur substantial costs as a result of being a public company.
20
Table of Contents
• There can be no assurance that the shares of Electra Pubco Common Stock that will be issued in connection with the Business Combination will be approved for listing on Nasdaq following the Closing, or that Electra Pubco will be able to comply with the continued listing rules of Nasdaq.
• Since the Sponsor and IRHO’s directors and officers have interests that are different, or in addition to (and which may conflict with), the interests of IRHO’s shareholders, a conflict of interest may have existed in determining whether the Business Combination with Electra is appropriate as IRHO’s initial business combination. Such interests include that the Sponsor will lose its entire investment in IRHO if its business combination is not completed.
• The historical financial results of Electra and unaudited condensed combined pro forma financial information included elsewhere in this proxy statement/prospectus may not be indicative of what Electra Pubco’s actual financial position or results of operations would have been.
• If IRHO is not able to complete the Business Combination with Electra by December 18, 2027 nor able to complete another business combination by such date, in each case, as such date may be extended pursuant to the Cayman Constitutional Documents, IRHO would cease all operations except for the purpose of winding up and would redeem its Ordinary Shares and liquidate the Trust Account, in which case IRHO’s Public Shareholders may only receive approximately $10.00 per share and its rights will be worthless.
21
Table of Contents
Market Price and Dividends of Securities
Market Price of IRHO Units, IRHO Ordinary Shares and Public Rights
Market Price and Ticker Symbol
The IRHO Units, IRHO Ordinary Shares and Public Rights are traded on Nasdaq under the symbols “IRHOU,” “IRHO” and “IRHOR,” respectively. The IRHO Units began public trading on December 17, 2025, and the IRHO Ordinary Shares and Public Rights began public trading on February 6, 2026.
On ______________, 2026, the last trading date prior to the public announcement of the Proposed Transaction, IRHO Units, IRHO Ordinary Shares and Public Rights closed at $____________________, respectively. As of ___________, 2026, the last trading day immediately prior to the filing date of this proxy statement/prospectus, the closing price for each IRHO Unit, IRHO Ordinary Share and Public Right was $____________, respectively.
Holders of the IRHO Units, IRHO Ordinary Shares and Public Rights should obtain current market quotations for their securities. The market price of IRHO’s securities could vary at any time before the Closing.
Holders
As of the Record Date, there were [•] holders of record of IRHO Units, [•] holders of record of Public Shares, [•] holders of record of Founder Shares, and [•] holders of record of IRHO Rights. The number of holders of record does not include a substantially greater number of “street name” holders or beneficial holders whose IRHO Units, Public Shares and Public Rights are held of record by banks, brokers and other financial institutions.
Dividends of IRHO Securities
IRHO has not paid any cash dividends on the IRHO Ordinary Shares to date and does not intend to pay cash dividends prior to the completion of an initial business combination. The payment of cash dividends in the future will be dependent upon our revenues and earnings, if any, capital requirements and general financial condition subsequent to completion of an initial business combination. The payment of any cash dividends subsequent to the Business Combination will be within the discretion of the Electra Pubco Board at such time. If we incur any indebtedness, our ability to declare dividends may be limited by restrictive covenants we may agree to in connection therewith.
Electra
Market Price of Electra Securities
Historical market price information regarding Electra is not provided because there is no public market for Electra’s securities. For information regarding Electra’s liquidity and capital resources, see “Electra’s Management’s Discussion and Analysis of Financial Condition and Results of Operations — Liquidity and Capital Resources.”
Dividend Policy of Electra Pubco Following the Business Combination
Electra Pubco does not intend to pay cash dividends after the completion of the Business Combination. The payment of cash dividends in the future will be dependent upon our revenues and earnings, if any, capital requirements and general financial condition subsequent to completion of the Business Combination. The payment of any cash dividends subsequent to the Business Combination will be within the discretion of the Electra Pubco Board at such time. If we incur any indebtedness, our ability to declare dividends may be limited by restrictive covenants we may agree to in connection therewith.
22
Table of Contents
Risk Factors
Shareholders should carefully consider the following risk factors, together with all of the other information included in this proxy statement/prospectus, including the financial statements and notes to the financial statements included herein, before they decide whether to vote or instruct their vote to be cast to approve the proposals described in this proxy statement/prospectus. Certain of the following risk factors apply to the business and operations of Electra and will also apply to the business and operations of Electra Pubco following the completion of the Business Combination. If any of the following risks actually occurs, it may have a material adverse effect on the business, results of operations or financial condition of Electra or Electra Pubco and could adversely affect the trading price of its common stock following the business combination. The risks described in this “Risk Factors” section may also be incorrect or may change. If the risks and uncertainties that Electra or Electra Pubco plan for are incorrect or incomplete, or if Electra or Electra Pubco fail to fully understand and manage these risks successfully this failure may have a material adverse effect on the business, financial condition and results of operation of Electra Pubco following the Business Combination. The following risks should be read in conjunction with the financial statements and notes to the financial statements included herein.
Unless the context requires otherwise, references to “Electra,” “we,” “us,” “our” and “the company” in this section are to the business and operations of Electra prior to the Business Combination and the business and operations of Electra Pubco as directly or indirectly affected by Electra by virtue of Electra Pubco’s ownership of the business of Electra following the Business Combination.
Risks Related to Electra’s Business and Industry
We will need substantial additional capital in the future to fund our business and may be unable to meet our future capital requirements, impairing our financial position and results of operations.
The development and commercialization of AI-powered battery intelligence software is a capital-intensive business. We expect to sustain substantial operating expenses, without generating sufficient revenues to cover expenditures, for a number of years. To date, we have funded our operations through offering of our existing preferred stock, short term borrowings, sales of digital assets, the Celtic Bank revolving line of credit and the Senior Convertible Notes. These funds are expected to finance our principal sources of liquidity and ongoing costs, such as research and development costs for our AI-powered battery management platform, including cloud-based analytics and embedded AI solutions for BESS, EVs, robotics, and other applications that rely on stored energy. In the future, if we are not able to fund our operations from cash flows generated from anticipated product sales, we expect that we will need to raise additional funds through a variety of possible methods, including, but not limited to, entry into joint ventures or other strategic arrangements, issuance of equity (including through at-the-market sales), equity-related or debt securities or through obtaining credit from financial institutions, as well as anticipated future revenue from product sales.
Following the business combination, additional funding may be required for a variety of reasons, including merger and acquisition opportunities, development costs. Our ability to successfully develop our products and expand our business will depend on many factors, including our working capital needs, the availability of equity and/or debt financing and, over time, our ability to generate positive cash flows from operations.
We cannot be certain that additional capital will be available on attractive terms, if at all, when needed, which could be dilutive to stockholders. We may be forced to decrease our level of investment in product development or scale back our operations, which could have an adverse impact on our business and financial prospects. Furthermore, the cost of debt could be higher than anticipated, which could negatively affect our earnings.
Our Senior Secured Convertible Notes are secured by substantially all of our assets and contain restrictive covenants, and a default could result in foreclosure on our assets.
Our Senior Secured Convertible Notes are secured by a first-priority security interest in substantially all of our assets, including our intellectual property, and rank senior to all of our other indebtedness. The Bridge Notes Purchase Agreement restricts, among other things, our ability to enter into variable rate transactions, redeem securities or pay cash dividends, and grants the holders participation rights in our future financings through September 2028. If we default under the Senior Secured Convertible Notes, the holders could declare them immediately due and payable and foreclose on the collateral. In addition, repayment of the Senior Secured Convertible Notes in cash at 115% of principal, or $5,031,250, upon the Closing will reduce the cash available to Electra Pubco.
23
Table of Contents
Our ability to scale our AI-powered battery intelligence platform depends on our ability to continue to develop, enhance and deploy our software solutions, maintain our cloud infrastructure, and expand our engineering capabilities.
Because we rely heavily on complex AI models, well-trained engineering personnel, and robust cloud infrastructure for our operations, the continued development and deployment of our platform will involve a significant degree of uncertainty and risk in terms of performance, scalability and costs.
Our platform infrastructure, including cloud-hosted AI models, data pipelines and production systems, may suffer unexpected disruptions, outages or performance degradation from time to time, and will depend on the continued availability and reliability of third-party cloud services, particularly Amazon Web Services (“AWS”). Any disruption to, or material change in the terms of, our relationship with AWS, or any outages or performance issues with our cloud infrastructure, could significantly affect our ability to deliver our products and services, thus materially and adversely affecting our business, financial condition and operating results.
We also rely on third-party technology platforms and partnerships for the continued operation and development of our products and services, as well as third-party data sources and open datasets to supplement our proprietary training data. There can be no assurance that these third-party platforms and partnerships will continue to be available on acceptable terms, or at all. Any disruption to, or deterioration of, these relationships could delay our product development, impair our ability to deliver our solutions, and adversely affect our business and results of operations.
Our technology and operational performance can be difficult to predict and are often influenced by factors outside of our control, such as, but not limited to, changes in cloud computing costs or availability, cybersecurity threats, defects or errors in our AI models or software, changes in third-party APIs or data formats, evolving customer requirements, and rapid changes in the competitive landscape for battery intelligence solutions. Should operational risks materialize, they may result in reduced platform performance or customer dissatisfaction, which would negatively affect our revenue growth and profitability as projected. Additionally, they could result in delays, data losses, potential legal liabilities, reputational damage and increased insurance costs, all of which could have a material adverse effect on our business, financial condition, operating results and prospects.
The market for battery intelligence solutions is relatively new and may not develop as we anticipate. In addition, the market is competitive and rapidly evolving, and certain competitors have significantly greater resources than we do.
The market for AI-driven battery intelligence and battery management solutions is relatively new and still developing. Our future revenue growth depends on the willingness of potential customers to adopt third-party software solutions for battery management rather than relying on in-house capabilities or conventional approaches. If the market for battery intelligence does not develop as we expect, or develops more slowly than anticipated, our business, financial condition and results of operations could be adversely affected.
A number of companies are seeking to develop battery analytics, embedded BMS, and AI-driven battery management technologies. Some of these competitors offer cloud-based battery analytics, embedded BMS solutions, or both, and may have established relationships with OEMs and fleet operators. Additionally, many OEMs are investing in developing their own in-house battery management capabilities, which could reduce demand for third-party solutions such as ours. We expect competition in battery intelligence to intensify due to increased demand for AI-driven battery management solutions across BESS, EVs, robotics, and other applications. Developments in competing technologies or improvements in battery management solutions made by competitors may materially adversely affect the sales, pricing and gross margins of our products. If a competing technology is developed that has superior operational or price performance, or that offers both cloud-based and embedded capabilities, our business will be harmed. Similarly, if we fail to accurately predict and ensure that our platform can address customers’ changing needs or emerging technological trends, or if our customers fail to achieve the benefits expected from our solutions, our business will be harmed. For more information, see “Competition.”
We have a limited operating history and have not yet established significant brand recognition, which may make it more difficult to attract and retain customers and could adversely affect our business and results of operations.
As a relatively early-stage company, we have not yet established widespread brand recognition in the battery intelligence market. Our ability to compete effectively and attract new customers depends in part on building and maintaining our reputation for delivering reliable, high-quality solutions. We compete against larger, better-resourced
24
Table of Contents
companies that may have stronger brand recognition and established customer relationships. If we are unable to establish and grow our brand, or if any events occur that negatively affect our reputation, we may be unable to attract new customers and retain existing customers, which could harm our business, results of operations and financial condition.
If we fail to effectively manage our growth and expansion, or if underlying battery technology evolves in ways that reduce demand for our solutions, we may be unable to execute our business plan, maintain high levels of customer service, and/or adequately address competitive challenges.
We intend to continue to expand our business significantly within existing and new market segments of the larger clean energy industry. Our growth has placed, and any future growth may place, a significant strain on our management, operational, and financial infrastructure. In the continued growth and expansion of the Company, our management will also be required to maintain and expand our relationships with customers, suppliers, and other third parties and attract new customers and suppliers, as well as manage multiple geographic locations. To manage our growth, we must continue to improve and expand our information technology and financial infrastructure and systems, our operating and administrative systems and controls, our ability to manage headcount, capital, and other systems and processes in an efficient manner. Our current and planned future infrastructure, plans, and processes might be inadequate to support our future growth and may require us to make additional unanticipated investment and improvements, which may adversely impact our financial condition and may disrupt our operations and business.
Our success and ability to further scale our business depends, in part, on our ability to manage expansion and growth in a cost-effective and efficient manner. If we cannot manage our growth, we may be unable to take advantage of market opportunities, execute our business strategies, or respond appropriately and quickly to competitive pressures. This could also result in declines in product quality and customer satisfaction, reputational damage, increased costs, difficulties in introducing new offerings, reduce demand for our offerings, or other operational difficulties. Our future operating results depend on a large extent on our ability to manage our continued expansion and growth successfully and any failure to effectively manage expansion and growth could adversely impact our business and reputation.
In addition, our business is predicated on the continued growth and complexity of battery systems across industries. Changes in underlying battery technology, such as the emergence of new battery chemistries or other energy storage technologies could reduce the need for third-party battery intelligence software. If battery technology evolves in ways that reduce the complexity of battery management or diminish the value of our AI-driven solutions, demand for our products and services could decline, which would adversely affect our business, financial condition and results of operations.
Our product roadmap, including the development of closed-loop autonomous battery control technology, may not achieve our intended results or timelines.
Our product roadmap is organized in three phases: foundation monitoring, optimization, and closed-loop AI control. Accordingly, our business depends, in part, on our ability to successfully advance through these phases and develop and deploy new products and capabilities, and our efforts may not result in commercially viable products or produce results on the timelines we expect.
The development of advanced AI models, particularly for safety-critical autonomous battery control, is inherently uncertain, time-consuming and capital intensive. AI models that demonstrate promising performance in laboratory or controlled testing environments may fail to achieve required performance, accuracy, safety, or reliability standards under real-world conditions. Our embedded AI solutions currently under development may not meet OEM or customer specifications or may not be adopted at all.
In addition, scaling AI model deployment from pilot engagements to large-scale commercial adoption presents significant technical and operational risks, including model accuracy across diverse battery chemistries and hardware platforms, real-time performance constraints for embedded deployment, and customer integration challenges. Commercial adoption of new AI-driven battery management solutions typically involves lengthy qualification and validation cycles, and competing technologies or approaches may reduce demand for our products. If we are unable to successfully develop, deploy and commercialize our advanced AI solutions on a timely and cost-effective basis, our business and results of operations could be materially adversely affected.
25
Table of Contents
Our business depends substantially on the continuing efforts of our senior executives and other key personnel as well as the ability to attract, train and retain highly skilled employees and key personnel.
Our success depends on our ability to attract and retain our executive officers, key employees and other qualified personnel, and our operations may be severely disrupted if we lost their services. As we build our brand and become better known, there is increased risk that competitors or other companies will seek to hire our personnel. All of our executives and engineering staff are subject to non-competition agreements, but we may face challenges in enforcing these non-competition agreements. The failure to attract, integrate, train, motivate and retain these personnel could seriously harm our business and prospects.
To execute our business plan, we must attract and retain highly qualified personnel in research and development, artificial intelligence and machine learning, sales and marketing, production and other leadership roles. Competition for these employees is intense, and we may not be successful in attracting and retaining qualified personnel. We have from time to time in the past experienced, and we expect to continue to experience, difficulty in hiring and retaining highly skilled employees with appropriate qualifications in relevant industries. Many of the companies with which we compete for experienced personnel have greater resources than we have. In addition, in making employment decisions, particularly in high-technology industries, job candidates often consider the value of the equity they are to receive in connection with their employment. Employees may be more likely to leave us if the shares they own or the shares underlying their equity incentive awards have significantly appreciated or significantly reduced in value. A significant talent pool consists of nationals from countries that may require a license from the United States Bureau of Industry and Security to work with our technology, which raises the cost of hiring due to the uncertainty that a license may not be granted and the candidate would be unemployable in the role envisioned. If we fail to attract new personnel, or fail to retain and motivate our current personnel, our business and growth prospects could be harmed.
In addition, we are highly dependent on the services of Fabrizio Martini, our Founder and Chief Executive Officer, and other senior technical and management personnel, including our executive officers, who may take significant amounts of time to replace. If Mr. Martini or other key personnel were to depart, we may not be able to successfully attract and retain senior leadership necessary to grow our business.
If we do not maintain and continue to develop our corporate culture as we grow and evolve, it could also harm our ability to foster the innovation, creativity and teamwork we believe that we need to support our growth. Additions of executive-level management, significant numbers of new employees, our workforce reduction and higher employee turnover could significantly and adversely impact our culture.
Our insurance coverage may not be adequate to protect us from all business risks.
We may be subject, in the ordinary course of business, to losses resulting from product liability, cyber-attacks, accidents, acts of God, and other claims against us, for which we may have no insurance coverage. As a general matter, the policies that we do have may include significant deductibles or self-insured retentions, and we cannot be certain that our insurance coverage will be sufficient to cover all future losses or claims against us. A loss that is uninsured or which exceeds policy limits may require us to pay substantial amounts, which could adversely affect our financial condition and operating results.
Electra could be subject to additional tax liabilities.
We are subject to federal, state, and local income taxes in the United States and numerous foreign jurisdictions. Determining our provision for income taxes requires significant management judgment, and the ultimate tax outcome may be uncertain. In addition, our provision for income taxes is subject to volatility and could be adversely affected by many factors, including, among other things, changes to our operating or holding structure, changes in the amounts of earnings in jurisdictions with differing statutory tax rates, changes in the valuation of deferred tax assets and liabilities, and changes in U.S. and foreign tax laws. Moreover, we are subject to the examination of our income tax returns by tax authorities in the United States and various foreign jurisdictions, which may disagree with our calculation of research and development tax credits, cross-jurisdictional transfer pricing, or other matters and assess additional taxes, interest or penalties. While we regularly assess the likely outcomes of these examinations to determine the adequacy of our provision for income taxes and we believe that our financial statements reflect adequate reserves to cover any such contingencies, there can be no assurance that the outcomes of such examinations will not have a material impact on our results of operations and cash flows. If U.S. or other foreign tax authorities change applicable tax laws, our overall taxes could increase, and our financial condition or results of operations may be adversely impacted.
26
Table of Contents
Provisions enacted by the 2017 Tax Cuts and Jobs Act related to the capitalization for tax purposes of research and experimental (“R&E”) expenditures became effective on January 1, 2022. Beginning January 1, 2022, all U.S. and non-U.S. based R&E expenditures must be capitalized and amortized over five years and 15 years, respectively.
Costs incurred in the development of software programs for Electra’s products are charged to operations as incurred until technological feasibility of the software has been established. Generally, technological feasibility is established when the software module performs its primary functions described in its original specifications, contains features required for it to be usable in a production environment, is completely documented and the related hardware portion of the product is complete. After technological feasibility is established, any additional costs are capitalized. Capitalization of software costs ceases when the software is substantially complete and is ready for its intended use.1
Changes in the pace or direction of the global transition to electrification could reduce demand for our products and services.
Our business is closely tied to the continued growth and adoption of battery-powered systems across multiple industries, including BESS, robotics, autonomous systems and data centers. The pace and trajectory of the global transition to electrification are subject to significant uncertainty and may be influenced by a wide range of factors beyond our control, including changes in government policies and incentive programs, fluctuations in the relative cost of fossil fuels and renewable energy, developments in alternative energy storage technologies, and macroeconomic conditions. If the adoption of battery-powered systems slows, stalls, or shifts toward technologies or approaches that do not require the type of battery intelligence solutions we provide, demand for our products and services could be materially adversely affected. In addition, if improvements in battery hardware or energy efficiency reduce the complexity of battery management or extend battery lifespan without the need for third-party software optimization, the addressable market for our solutions could be smaller than we anticipate, which would adversely affect our business, financial condition and results of operations.
Our embedded software solutions may require industry certifications and compliance with evolving standards, which could increase our costs, delay our product development, and limit our ability to commercialize our products.
Our embedded AI solutions are designed to be integrated into battery management systems used in electric vehicles, energy storage systems, and robotics. Customers and regulatory bodies may require that our embedded software meet certain industry certifications and standards, including ISO certifications and other applicable safety, quality, and functional safety standards. Achieving and maintaining such certifications can be time-consuming, costly, and technically complex, and there can be no assurance that we will be able to obtain or maintain the certifications required by our customers or applicable regulatory bodies. In addition, industry standards and certification requirements are evolving and may become more stringent over time. If we are unable to obtain or maintain required certifications, or if new certification requirements are imposed that we cannot meet on a timely or cost-effective basis, our ability to commercialize our embedded solutions could be delayed or limited, and our business, financial condition and results of operations could be adversely affected.
Risks Relating to Artificial Intelligence
The use of AI in our products and services may result in reputational harm and competitive harm.
We use artificial intelligence and machine learning extensively in our business, including in our cloud-based battery fleet analytics platform and our embedded AI-driven battery management system. AI is core to our value proposition and central to virtually all of our products and services. As with many technological innovations, there are significant risks and challenges involved in maintaining and deploying these technologies. Artificial intelligence algorithms or training methodologies may be flawed. Datasets may be overbroad or insufficient, and information generated by artificial intelligence may be inaccurate or harmful. There may also be insufficient back-testing. Additionally, if the content, analyses, predictions, or recommendations that our AI applications produce are or are alleged to be inaccurate, deficient, or biased, our business, financial condition and results of operations may be adversely affected. The rapid evolution and increased adoption of AI technologies may also intensify our cybersecurity risks. Overall, there can be no assurance that the usage of such technologies will enhance our products or services or be beneficial to our business, including our efficiency or profitability.
____________
1 Internal Note to Electra: Please confirm this description is accurate.
27
Table of Contents
Our use of artificial intelligence and machine learning may result in legal and regulatory risks.
Artificial intelligence entails significant legal risks. The IP ownership and license rights of new technologies such as artificial intelligence and machine learning have not been fully addressed by U.S. courts, and there is uncertainty and ongoing litigation in different jurisdictions as to the degree and extent of protection warranted for artificial intelligence technologies and relevant system input and outputs. If we fail to obtain protection for the intellectual property rights concerning technologies developed using artificial intelligence or machine learning, or later have our intellectual property rights invalidated or otherwise diminished, our competitors may be able to take advantage of our research and development efforts to develop competing products, which could adversely affect our business, reputation, financial condition, or results of operations. Moreover, the use or adoption of artificial intelligence and machine learning in our technology may expose us to breach of a data or software license, website terms of service claims, claimed violations of privacy rights or other tort claims.
The market for AI-powered battery intelligence solutions is still emerging, and our products may not achieve the growth potential we expect.
We are seeking to accelerate our pace of innovation by utilizing AI across the spectrum of our business, from cloud-based battery fleet analytics to embedded AI-driven battery management systems and future closed-loop autonomous battery control. AI and the application of AI to battery management is a new and emerging field, characterized by rapidly changing technology and evolving government regulations and industry standards and presents additional risks, costs, and challenges, including those discussed in these risk factors. Our ability to derive revenue from our AI-powered products will depend on the growth and acceptance of AI-based battery management solutions generally, and our ability to successfully develop and train AI models for use in our products. In addition, developing AI-based models requires significant computing power, which can require significant capital expenditures and may be difficult to procure. The implementation of AI can be costly and there is no guarantee that our use of AI will enhance our technologies, benefit our business operations, or produce products and services that are preferred by our customers.
Risks Relating to Our Intellectual Property
Our patent applications may not result in issued patents or our patent rights may be challenged, invalidated or limited in scope, any of which could have a material adverse effect on our ability to prevent others from competing or interfering with the commercialization of our products.
Our key technological innovations, including innovations that are currently commercialized in our products and innovations that we plan to deploy in the future, are described in our issued patents and pending patent applications, as well as patent applications that we plan to file in the future. For more information, see “Part I, Item 1. Business-Intellectual Property.” The process of applying for and obtaining a patent is expensive, time consuming and does not always result in patent claims as expected or needed. We may not be able to file and prosecute all necessary or desirable patent applications at a reasonable cost, in a timely manner, or in all jurisdictions where protection may be commercially advantageous, or we financially may not be able to protect our proprietary rights at all. There is also no assurance that the pending applications will result in issued patents.
In addition, the issuance of a patent does not give us the right to practice the patented invention. Third parties may have blocking patents that could prevent us from marketing our products and practicing our technology. Alternatively, third parties may seek to market their products similar to or otherwise competitive with our products. In these circumstances, we may need to defend and/or assert our patents, including by filing lawsuits alleging patent infringement. In any of these types of proceedings, a court or agency with jurisdiction may find our patents invalid and/or unenforceable. Even if we have valid and enforceable patents, these patents still may not provide protection against competing products or processes sufficient to achieve our business objectives.
We rely heavily on our intellectual property portfolio, including unpatented proprietary technology. If we are unable to protect our intellectual property rights from unauthorized use, our business and competitive position would be harmed.
We may not be able to prevent unauthorized use of our intellectual property, which could harm our business and competitive position. We rely upon a combination of the intellectual property protections afforded by patent, trademark and trade secret laws in the United States and other jurisdictions, as well as license agreements and other contractual protections, to establish, maintain and enforce rights in our proprietary technologies.
28
Table of Contents
We also rely substantially on unpatented proprietary technology, including know-how or trade secrets. We seek to protect our intellectual property rights in various ways, including through nondisclosure and invention assignment agreements with our employees and consultants and through non-disclosure agreements with business partners and other third parties. We cannot ensure that these agreements will provide meaningful protection for our trade secrets, know-how or other proprietary information in the event of any unauthorized use, misappropriation, or disclosure of such trade secrets, know-how or other proprietary information. There can be no assurance that employees, consultants, vendors and customers have executed such agreements or have not breached or will not breach their agreements with us, that we will have adequate remedies for any breach, or that our trade secrets will not otherwise become known or independently developed by competitors. The theft or unauthorized use or publication of our trade secrets and other confidential business information could reduce the differentiation of our products and harm our business, the value of our investment in development or business acquisitions could be reduced and third parties might make claims against us related to losses of their confidential or proprietary information. Any of the foregoing could materially and adversely affect our business.
Additionally, despite our efforts to protect our proprietary rights, third parties may attempt to copy or otherwise obtain and use our intellectual property. Monitoring unauthorized use of our intellectual property is difficult and costly, and the steps we have taken or will take to prevent misappropriation may not be sufficient. Any enforcement efforts we undertake, including litigation, could be time-consuming and expensive and could divert management’s attention, which could harm our business, results of operations and financial condition. In addition, existing intellectual property laws and contractual remedies may afford less protection than needed to safeguard our intellectual property portfolio.
We may need to defend ourselves against intellectual property infringement claims, which may be time-consuming and could cause us to incur substantial costs.
Companies, organizations or individuals, including our current and future competitors, may hold or obtain patents, trademarks or other proprietary rights that would prevent, limit or interfere with our ability to make, use, develop or sell our products, which could make it more difficult for us to operate our business. From time to time, we have received, and we may in the future receive, claims or inquiries from holders of patents or trademarks claiming that and/or inquiring whether we are infringing their proprietary rights and/or seeking court declarations that they do not infringe upon our intellectual property rights. Companies holding patents or other intellectual property rights relating to embedded BMS technology, AI models or adaptive control systems may bring suits alleging infringement of such rights or otherwise asserting their rights and seeking licenses. In addition, if we are determined to have infringed upon a third party’s intellectual property rights, we may be required to do one or more of the following:
• cease selling, incorporating or using products that incorporate the challenged intellectual property;
• pay damages;
• obtain a license from the holder of the infringed intellectual property right, which license may not be available on reasonable terms or at all; or
• redesign our software or products.
In the event of a successful claim of infringement against us and our failure or inability to obtain a license to the infringed technology, our business, prospects, operating results and financial condition could be materially adversely affected. In addition, any litigation or claims, whether or not valid, could result in substantial costs and diversion of resources and management’s attention.
We may face risks relating to protecting our intellectual property in various countries.
Patent, trademark and trade secret laws vary significantly throughout the world. Filing, prosecuting, and defending patents in all countries throughout the world would be prohibitively expensive, and the laws of foreign countries may not protect our rights to the same extent as the laws of the United States. Competitors may use our technologies in jurisdictions where we have not obtained patent protection to develop their own products and, further, may export otherwise infringing products to territories where we have patent protection or licenses, but enforcement is not as strong as that in the United States.
29
Table of Contents
A number of foreign countries do not protect intellectual property rights to the same extent as do the laws of the United States. Therefore, our intellectual property rights may not be as strong or as easily enforced outside of the United States, and efforts to protect against the unauthorized use of our intellectual property rights, technology, and other proprietary rights may be more expensive and difficult outside of the United States. Some courts inside and outside the United States may be less willing or unwilling to protect trade secrets and agreement terms that address non-competition are difficult to enforce in many jurisdictions and might not be enforceable in certain cases. Failure to adequately protect our intellectual property rights could result in our competitors using our intellectual property to offer products, potentially resulting in the loss of some of our competitive advantage and a decrease in our revenue, which would adversely affect our business, financial condition, operating results and prospects.
Risks Relating to Privacy and Security
If we experience a significant cybersecurity breach or disruption in our information systems or any of our partners’ information systems, our business could be adversely affected.
Our business operations rely on information technology systems and cloud-based infrastructure, primarily hosted on AWS, to deliver our products and services, store proprietary AI models, and process customer battery data. Malicious actors may be able to penetrate our network and misappropriate or compromise our confidential information or that of third parties, create system disruptions or cause shutdowns. Malicious actors also may be able to develop and deploy viruses, worms and other malicious software programs that attack our products or otherwise exploit any security vulnerabilities of our products. We manage and store various proprietary information, including our AI models, training data, and sensitive or confidential data relating to our business as well as operational data from our customers’ battery systems.
While we employ protective measures, including private cloud networks, encryption at rest and in transit, strict role-based access controls, and secure development practices such as repository-level static code analysis, these measures may fail to prevent or detect attacks on our systems due to the frequently evolving nature of cybersecurity threats. Although these measures are designed to ensure the confidentiality, integrity and availability of our information and technology systems, there is no assurance that these measures will detect all threats or prevent a cybersecurity attack. If there are any breaches of our security measures or the accidental loss, inadvertent disclosure or unapproved dissemination of proprietary information, AI models, or customer data, it could expose us to risk of loss, disruption of business operations, litigation, regulatory scrutiny, and potential liability, damage our brand and reputation, or otherwise harm our business. The costs to us to eliminate or mitigate cybersecurity problems could be significant and, if our efforts to address these problems are not successful, could result in interruptions, delays, cessation of service and loss of existing or potential customers.
Any actual or perceived failure to comply with data privacy and data security laws, regulations, and industry standards could have a material adverse effect on our reputation, results of operations, and financial condition.
We are subject to various laws, regulations, industry standards and other requirements involving data privacy and information security in the jurisdictions in which we operate and where our customers are located. Our cloud-based SaaS platform ingests operational battery data from customers, including data that may be subject to data localization, privacy, or security regulations. Such laws and regulations relating to data privacy and information security are continuously evolving and subject to potentially differing interpretations. In the United States, there are numerous federal and state data privacy and security laws, including the California Consumer Privacy Act (“CCPA”), as amended by the California Privacy Rights Act, and similar laws in other states. In Europe, we may be subject to the General Data Protection Regulation (“GDPR”) and national supplementing laws as our business expands. Our platform’s ability to deploy instances in specific geographic regions based on customer needs, local laws, and data requirements helps address some compliance obligations, but the evolving patchwork of global data privacy regulations increases the cost and complexity of compliance. Failure to comply with applicable data privacy and security requirements could result in regulatory investigations, fines, penalties, reputational harm, and could adversely affect our business, financial condition, and results of operations.
30
Table of Contents
We have international operations and serve customers across multiple geographies, which subjects us to additional risks.
We maintain operations in the United States and Italy and serve customers across the transportation, energy infrastructure, and industrial sectors worldwide. Our international operations subject us to a variety of risks, including compliance with multiple, potentially conflicting and changing laws, regulations, and policies; limited or unfavorable intellectual property protection in certain jurisdictions; exposure to currency exchange rate fluctuations; geopolitical or economic conditions or uncertainty; challenges associated with managing operations across multiple countries; and compliance with export controls, anti-corruption laws, and data localization requirements. Our platform’s ability to deploy instances in specific geographic regions based on customer needs, local laws, and data requirements helps address some of these challenges, but changes in international trade conditions, tariffs, sanctions, or regulatory environments could adversely affect our ability to serve customers, increase our costs, and harm our business, financial condition, and results of operations.
Risks Related to Ownership of Electra Pubco Securities
The ability of Public Shareholders to exercise Redemption Rights with respect to a large number of Public Shares may adversely affect the liquidity and trading of Electra Pubco securities following Closing.
At the time of entering into the Merger Agreement, IRHO did not know how many Public Shareholders may exercise their Redemption Rights and therefore, it needed to structure the transaction based on its expectations as to the number of shares that will be submitted for redemption. The Merger Agreement provides that Electra’s obligation to consummate the Business Combination is conditioned on, among other things, the minimum cash amount.
The exercise of Redemption Rights with respect to a large number of Public Shares may result in insufficient cash available to fund Electra’s business and may make IRHO and Electra unable to take such actions as may be desirable in order to optimize the capital structure of Electra Pubco upon consummation of the Business Combination.
Our common stock price may be volatile.
If a public trading market does develop for the Electra Pubco Common Stock, its market price is likely to be highly volatile and could fluctuate widely in price in response to various factors, many of which are beyond our control, including the following:
• the concentration of the ownership of our shares by a limited number of affiliated stockholders may limit interest in our securities;
• limited “public float” with a small number of persons whose sales or lack of sales could result in positive or negative pricing pressure on the market price for the Electra Pubco Common Stock;
• additions or departures of key personnel;
• loss of a strategic relationship;
• variations in operating results from the expectations of securities analysts or investors;
• announcements of new products or services by us or our competitors;
• reductions in the market share of our products;
• announcements by us or our competitors of significant acquisitions, strategic partnerships, joint ventures or capital commitments;
• investor perception of our industry or prospects;
• insider selling or buying;
• investors entering into short sale contracts;
• regulatory developments affecting our industry;
31
Table of Contents
• changes in our industry;
• competitive pricing pressures;
• our ability to obtain working capital financing;
• sales of the Electra Pubco Common Stock;
• our ability to execute our business plan;
• operating results that fall below expectations;
• revisions in securities analysts’ estimates or reductions in security analysts’ coverage; and
• economic and other external factors.
Many of these factors are beyond our control and may decrease the market price of the Electra Pubco Common Stock, regardless of our operating performance. We cannot make any predictions or projections as to what the prevailing market price for the Electra Pubco Common Stock will be at any time, including as to whether the Electra Pubco Common Stock will sustain current market prices, or as to what effect that the sale of shares or the availability of the Electra Pubco Common Stock for sale at any time will have on the prevailing market price.
In addition, the securities markets have from time-to-time experienced significant price and volume fluctuations that are unrelated to the operating performance of particular companies. These market fluctuations may also materially and adversely affect the market price of the Electra Pubco Common Stock.
Our executive officers and directors will continue to exercise significant control over us after the Business Combination, which will limit your ability to influence corporate matters and could delay or prevent a change in corporate control.
Following the Business Combination (assuming maximum redemptions), Fabrizio Martini, co-founder and Chief Executive Officer, will beneficially own (including shares underlying Converted Stock Options) approximately ___% of the combined voting power for the election of directors to the Electra Pubco Board. As a result, these stockholders will be able to influence our management and affairs and control the outcome of matters submitted to our stockholders for approval, including the election of directors and any sale, merger, consolidation, or sale of all or substantially all of our assets.
These stockholders may have interests, with respect to their Electra Pubco Common Stock, which are different from those of the public investors and the concentration of voting power among one or more of these stockholders may have an adverse effect on the price of the Electra Pubco Common Stock.
In addition, this concentration of ownership might adversely affect the market price of the Electra Pubco Common Stock by: (1) delaying, deferring or preventing a change of control; (2) impeding a merger, consolidation, takeover or other business combination involving us; or (3) discouraging a potential acquirer from making a tender offer or otherwise attempting to obtain control of us.
The requirements of being a public company may strain the Company’s resources and distract management and we will incur substantial costs as a result of being a public company.
Following the consummation of the Business Combination, the Company will be subject to the reporting requirements of the Exchange Act, the Sarbanes-Oxley Act, and the Securities Act. These rules, regulations and requirements are extensive. We will incur significant costs associated with our public company corporate governance and reporting requirements. The Exchange Act requires, among other things, that we file annual, quarterly and current reports with respect to our business and operating results. The Sarbanes-Oxley Act requires, among other things, that we maintain effective disclosure controls and procedures and internal control over financial reporting. In order to maintain and, if required, improve our disclosure controls and procedures and internal control over financial reporting to meet this standard, significant resources and management oversight may be required. As a result, management’s attention may be diverted from other business concerns, which could adversely affect our business and operating results. We may need to hire more corporate employees to comply with these requirements or engage outside consultants, which would increase our costs and expenses. This may divert management’s attention from other business concerns,
32
Table of Contents
which could have a material adverse effect on our business, financial condition and results of operations. These applicable rules and regulations may make it more difficult and more expensive for us to obtain director and officer liability insurance and it may be required to accept reduced policy limits and coverage or incur substantially higher costs to obtain the same or similar coverage. As a result, it may be more difficult for us to attract and retain qualified individuals to serve on the Electra Pubco Board or as executive officers.
In addition, changing laws, regulations and standards relating to corporate governance and public disclosure are creating uncertainty for public companies, increasing legal and financial compliance costs and making some activities more time-consuming. These laws, regulations and standards are subject to varying interpretations, in many cases due to their lack of specificity, and, as a result, their application in practice may evolve over time as new guidance is provided by regulatory and governing bodies. This could result in continuing uncertainty regarding compliance matters and higher costs necessitated by ongoing revisions to disclosure and governance practices. We intend to invest resources to comply with evolving laws, regulations and standards, and this investment may result in increased general and administrative expenses and a diversion of management’s time and attention from revenue-generating activities to compliance activities. If our efforts to comply with new laws, regulations and standards differ from the activities intended by regulatory or governing bodies due to ambiguities related to their application and practice, regulatory authorities may initiate legal proceedings against us and our business may be adversely affected.
As a result of disclosure of information in this proxy statement/prospectus and in the filings that we are required to make as a public company, our business, operating results and financial condition have become more visible, which may result in threatened or actual litigation, including by competitors and other third parties. If any such claims are successful, our business, operating results and financial condition could be adversely affected, and even if the claims do not result in litigation or are resolved in our favor, these claims, and the time and resources necessary to resolve them, could divert the resources of our management and adversely affect our business, operating results and financial condition.
Sales of a substantial amount of Electra Pubco Common Stock in the public market, particularly sales by our executive officers, directors and significant stockholders, or the perception that these sales could occur, could cause the market price of Electra Pubco Common Stock to decline.
Sales of a substantial number of shares of Electra Pubco Common Stock in the public market, particularly sales by our executive officers, directors and principal stockholders, or the perception that these sales might occur, could cause the market price of Electra Pubco Common Stock to decline. Some of our executive officers, directors and the holders of a substantial number of shares of Electra Pubco Common Stock following the Business Combination are subject to lock-up provisions in that, for a period of at least six months from the date of closing of the Business Combination, subject to certain exceptions, prohibit them from offering for sale, selling, contracting to sell, granting any option for the sale of, transferring or otherwise disposing of any shares of Electra Pubco Common Stock and of any securities convertible into or exercisable for Electra Pubco Common Stock, unless waived, amended, or repealed by the Electra Pubco Board.
When the applicable lock-up periods expire, our security holders subject to lock-up provisions will be able to sell shares of Electra Pubco Common Stock in the public market. In addition, the Electra Pubco Board may, in its discretion, permit our security holders to sell shares prior to the expiration of the restrictive provisions contained in the Proposed Bylaws. Sales of a substantial number of such shares upon expiration of the lock-up provisions, the perception that such sales may occur or early release of these provisions could cause our market price to fall or make it more difficult for you to sell your common stock at a time and price that you deem appropriate.
In addition, we may file a registration statement to register shares reserved for future issuance under our equity compensation plans. Subject to the satisfaction of applicable vesting requirements and expiration of the lock-up provisions referred to above, the shares issued upon exercise of outstanding stock options would be available for immediate resale in the open market.
A decline in the price of Electra Pubco Common Stock could affect our ability to raise working capital and adversely impact our ability to continue operations.
A prolonged decline in the price of Electra Pubco Common Stock could result in a reduction in the liquidity of the common stock and a reduction in our ability to raise capital. A decline in the price of Electra Pubco Common Stock could be especially detrimental to our liquidity, operations and strategic plans. Such reductions may force
33
Table of Contents
us to reallocate funds from other planned uses and may have a significant negative effect on our business plan and operations, including our ability to develop new products and services and continue current operations. If Electra Pubco Common Stock’s price declines, we can offer no assurance that we will be able to raise additional capital or generate funds from operations sufficient to meet our obligations. If we are unable to raise sufficient capital in the future, we may not be able to have the resources to continue our normal operations.
We do not intend to pay any cash dividends in the foreseeable future and, therefore, any return on your investment in our capital stock must come from increases in the fair market value and trading price of the capital stock.
We have not paid any cash dividends on Electra Pubco Common Stock and do not intend to pay cash dividends on Electra Pubco Common Stock in the foreseeable future. We intend to retain future earnings, if any, for reinvestment in the development and expansion of our business. Any credit agreements, which we may enter into with institutional lenders, may restrict our ability to pay dividends. Whether we pay cash dividends in the future will be at the discretion of the Electra Pubco Board and will be dependent upon our financial condition, results of operations, capital requirements and any other factors that the Electra Pubco Board decides is relevant. Therefore, any return on your investment in our capital stock must come from increases in the fair market value and trading price of the capital stock.
If our stock price fluctuates after the Business Combination, you could lose a significant part of your investment.
The market price of Electra Pubco Common Stock could be subject to wide fluctuations in response to, among other things, the risk factors described in this proxy statement/prospectus, and other factors beyond our control, such as fluctuations in the valuation of companies perceived by investors to be comparable to us. Furthermore, the stock markets have experienced price and volume fluctuations that have affected and continue to affect the market prices of equity securities of many companies. These fluctuations often have been unrelated or disproportionate to the Earnout of those companies. These broad market and industry fluctuations, as well as general economic, political, and market conditions, such as the ongoing Russia-Ukraine war, recessions, inflation, interest rate changes or international currency fluctuations, may negatively affect the market price of our common stock. In the past, many companies that have experienced volatility in the market price of their stock have been subject to securities class action litigation. We may be the target of this type of litigation in the future. Securities litigation against us could result in substantial costs and divert our management’s attention from other business concerns, which could seriously harm our business.
The public stockholders will experience immediate dilution as a consequence of the issuance of Electra Pubco Common Stock as consideration in the Business Combination and due to future issuances pursuant to the Electra Pubco Equity Incentive Plan. Having a minority share position may reduce the influence that our current stockholders have on the management of Electra Pubco.
It is anticipated that, following the Business Combination, an aggregate of [•] shares of Electra Pubco Common Stock will be outstanding, assuming maximum redemptions consisting of (i) [•] Parent Class A Common Shares issued to Electra Shareholders constituting approximately % of the outstanding Pubco Common Stock; (ii) [•] Parent Class B Common Stock issued to Fabrizio Martini, consisting of approximately [•]% of the outstanding Electra Pubco Common Stock; (iii) up to 15,000,000 Earnout Shares issued to certain Electra Securityholders, constituting approximately % of the outstanding Pubco Common Stock; (iv) [*] shares of Pubco Class A Common Stock issued to Company Equity Interest Holders in the Merger, constituting approximately % of the outstanding Pubco Common Stock; (v) shares of Pubco Class A Common Stock issued to the Sponsor (includes the conversion of the Sponsor Convertible Notes and [*] shares issued as a result of the PIPE Investment), constituting approximately % of the outstanding shares of Pubco Class A Common Stock; (vi) no shares of Electra Pubco Common Stock held by IRHO Public Shareholders, and (vii) ___________ shares of Electra Pubco Common Stock issuable to certain service providers, including Cantor, constituting approximately ___% of the outstanding Electra Pubco Common Stock. These percentages assume that all IRHO Rights have been exchanged for Electra Pubco Common Stock and there are no other issuances of equity securities of Electra Pubco prior to or in connection with the Closing, including any equity awards that may be issued under the Electra Pubco Equity Incentive Plan following the Business Combination. If the actual facts are different from these assumptions, the percentage ownership retained by IRHO’s existing shareholders in the combined company will be different.
In addition, Electra employees and consultants hold, and after the Business Combination, are expected to be granted, equity awards under equity incentive plans. You will experience additional dilution when those equity awards and purchase rights become vested and settled or exercisable, as applicable, for shares of Electra Pubco Common Stock.
34
Table of Contents
The issuance of additional common stock will significantly dilute the equity interests of existing holders of IRHO securities and may adversely affect prevailing market prices for our Public Shares or Public Rights.
There can be no assurance that the shares of Electra Pubco Common Stock that will be issued in connection with the Business Combination will be approved for listing on Nasdaq following the Closing, or that Electra Pubco will be able to comply with the continued listing rules of Nasdaq.
IRHO Units, Public Shares and Public Rights are currently listed on Nasdaq. If IRHO’s securities do not meet Nasdaq’s continued listing requirements, Nasdaq may delist IRHO’s securities from trading on its exchange, which could limit investors’ ability to make transactions in IRHO’s securities and subject us to additional trading restrictions.
We have applied for listing of the Electra Pubco Class A Common Stock on Nasdaq. However, there can be no assurance that the shares of Electra Pubco Class A Common Stock that will be issued in connection with the Business Combination will be approved for listing on Nasdaq following the Closing. Even if Electra Pubco’s securities are so listed at Closing, Electra Pubco may be unable to maintain the listing of its securities in the future.
The continued eligibility for listing of Electra Pubco’s securities may depend on, among other things, the number of our shares that are redeemed. If, after the Business Combination, Nasdaq delists the shares of Electra Pubco Common Stock or Public Rights from trading on its exchange for failure to meet its listing rules, Electra Pubco and its stockholders could face significant material adverse consequences including:
• a limited availability of market quotations for our securities;
• reduced liquidity for our securities;
• a determination that the Electra Pubco Common Stock is a “penny stock” which will require brokers trading in shares of Electra Pubco Common Stock to adhere to more stringent rules and possibly result in a reduced level of trading activity in the secondary trading market for our securities;
• a limited amount of news and analyst coverage; and
• a decreased ability to issue additional securities or obtain additional financing in the future.
The National Securities Markets Improvement Act of 1996, which is a federal statute, prevents or preempts the states from regulating the sale of certain securities, which are referred to as “covered securities.” The Electra Pubco Common Stock and Public Rights are covered securities. Although the states are preempted from regulating the sale of our securities, the federal statute does allow the states to investigate companies if there is a suspicion of fraud, and, if there is a finding of fraudulent activity, then the states can regulate or bar the sale of covered securities in a particular case. While we are not aware of a state, other than the state of Idaho, having used these powers to prohibit or restrict the sale of securities issued by blank check companies, certain state securities regulators view blank check companies unfavorably and might use these powers, or threaten to use these powers, to hinder the sale of securities of blank check companies in their states. Further, if Electra Pubco’s securities were no longer listed on Nasdaq, such securities would not qualify as covered securities and Electra Pubco would be subject to regulation in each state in which it offers its securities.
The future exercise of registration rights may adversely affect the market price of the Electra Pubco Common Stock.
Pursuant to the A&R Registration Rights Agreement, Electra Pubco will agree to register for resale, pursuant to Rule 415 under the Securities Act, certain shares of Electra Pubco Common Stock and other equity securities of Electra Pubco that are held by the Registration Rights Holders from time to time. Pursuant to the A&R Registration Rights Agreement, the Registration Rights Holders will have customary registration Rights, including demand and piggy-back Rights, subject to cooperation and cut back provisions with respect to Electra Pubco Common Stock held by such parties following the consummation of the Merger. We estimate that an aggregate of ____________ shares of Electra Pubco Common Stock will be subject to registration Rights immediately following Closing.
The registration of these securities will permit the public resale of such securities, subject to any applicable contractual lock-up obligation. The registration and availability of a significant number of securities for trading in the public market may have an adverse effect on the market price of the Electra Pubco Common Stock post-Closing.
35
Table of Contents
We are a “smaller reporting company” and “emerging growth company” under the U.S. federal securities laws, and the reduced reporting requirements applicable to smaller reporting companies and emerging growth companies could make our common stock less attractive to investors.
We are a “smaller reporting company” and an “emerging growth company” under U.S. federal securities laws. For as long as we continue to be a smaller reporting company, we may take advantage of exemptions from various reporting requirements that are applicable to other public companies that are not smaller reporting companies, including reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements. Furthermore, as an emerging growth company, we intend to take advantage of exemptions from certain reporting requirements including not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act and exemptions from the requirements of holding a non-binding advisory vote on executive compensation. Investors may not find our common stock attractive because we may rely on these exemptions and reduced disclosures. If some investors find our common stock less attractive as a result, there may be a less active trading market for our common stock and our stock price may be more volatile.
We will remain a smaller reporting company until the last day of the fiscal year in which (1) the market value of our common stock held by non-affiliates exceeds $250 million as of the prior June 30, or (2) our annual revenues exceeded $100 million during such completed fiscal year and the market value of our common stock held by non-affiliates exceeds $700 million as of the prior June 30.
We will remain an emerging growth company until the earlier of: (1) the last day of the fiscal year (a) following the fifth anniversary of the closing of IRHO’s IPO, (b) in which we have total annual gross revenue of at least $1.23 billion, or (c) in which we are deemed to be a large accelerated filer, which means the market value of our common equity that is held by non-affiliates exceeds $700 million as of the end of the prior fiscal year’s second fiscal quarter; and (2) the date on which we have issued more than $1.00 billion in non-convertible debt securities during the prior three-year period.
Risks Related to the Business Combination and IRHO
Unless the context otherwise requires, all references in this subsection to the “Company,” “we,” “us” or “our” refer to IRHO prior to the consummation of the Business Combination.
The Sponsor has agreed to vote in favor of the Business Combination, regardless of how IRHO’s Public Shareholders vote.
The Sponsor and each director and officer of IRHO have agreed to, among other things, vote in favor of the Merger Agreement and the transactions contemplated thereby, in the case of the Sponsor, subject also to the terms and conditions contemplated by the Parent Support Agreement. The Sponsor, which includes among its members each of the directors and officers of IRHO, owns 5,750,000 Founder Shares, and 370,000 Private Placement Units (Cantor owns the remaining 200,000 Private Placement Units). As a result, as of the date of this proxy statement/prospectus, the Insiders own approximately 21% of the issued and outstanding IRHO Ordinary Shares and have the right to vote approximately 21% of the issued and outstanding IRHO Ordinary Shares. Accordingly, assuming all issued and outstanding IRHO Ordinary Shares are voted, in addition to the shares held by the Insiders, we would need the affirmative vote of holders of 8,540,001 public Ordinary Shares (or approximately 29%) to approve each proposal requiring an ordinary resolution, including the Business Combination Proposal, the Stock Issuance Proposal, the Electra Pubco Equity Incentive Plan Proposal and, if presented, the Adjournment Proposal, and the affirmative vote of holders of 13,426,667 public Ordinary Shares (or approximately 46%) to approve each proposal requiring a special resolution.
We may be forced to close the Business Combination even if we determine it is no longer in our shareholders’ best interest.
Our Public Shareholders are protected from a material adverse event of Electra arising between the date of the Merger Agreement and the Closing primarily by the right to redeem their Public Shares for a pro rata portion of the funds held in the Trust Account that are available for distribution to Public Shareholders, calculated as of two business days prior to the scheduled vote at the extraordinary general meeting. Accordingly, if a material adverse event were to occur after approval of the Condition Precedent Proposals at the extraordinary general meeting, we may be forced
36
Table of Contents
to close the Business Combination even if we determine it is no longer in our shareholders’ best interest to do so (as a result of such material adverse event) which could have a significant negative impact on our business, financial condition or results of operations.
IRHO’s ability to complete an initial business combination with Electra may be impacted if such initial business combination is subject to U.S. foreign investment regulations and review by a U.S. government entity, such as the Committee on Foreign Investment in the United States (“CFIUS”), and ultimately prohibited.
The Sponsor is a Cayman Islands exempted limited partnership and is likely to be considered a “foreign person” under the regulations administered by CFIUS. As such, an initial business combination with Electra may be subject to CFIUS jurisdiction, the scope of which includes controlling investments (within the meaning of “control” under the CFIUS regulations) as well as certain non-passive, non-controlling investments in sensitive U.S. businesses meeting certain criteria. The parties have determined that Electra is not a TID U.S. business, as that term is defined in 31 C.F.R. §800.248, and as a result, it is not mandatory to submit a CFIUS filing with respect to the Business Combination. The parties may determine to submit a voluntary filing to CFIUS, or to proceed with the initial business combination without notifying CFIUS and risk CFIUS intervention, before or after closing the initial business combination. CFIUS may decide to delay the Business Combination, impose conditions to mitigate national security concerns with respect to the Business Combination or recommend that the U.S. president block the initial business combination or order IRHO to divest all or a portion of Electra following the Closing. Moreover, the process of government review, whether by the CFIUS or otherwise, could be lengthy and IRHO has limited time to complete its initial business combination. If IRHO cannot complete its initial business combination by December 18, 2027, or such later date that may be approved by IRHO’s shareholders, because the review process extends beyond such timeframe or because the Business Combination is ultimately prohibited by CFIUS or another U.S. government entity, IRHO may be required to liquidate. If IRHO liquidates, its Public Shareholders may only receive their pro rata share of amounts held in the Trust Account that are available for distribution to Public Shareholders, and the IRHO Rights will expire worthless. This will also cause shareholders to lose the investment opportunity in Electra and the chance of realizing future gains on their investment through any price appreciation in the combined company.
(i) If IRHO is deemed to be an investment company under the Investment Company Act, we may be required to institute burdensome compliance requirements and IRHO’s activities may be restricted, which may make it difficult for us to complete IRHO’s initial Business Combination.
The SEC’s adopting release with respect to the 2024 SPAC Rules provided guidance relating to the potential status of SPACs as investment companies subject to regulation under the Investment Company Act and the regulations thereunder. Whether a SPAC is an investment company is dependent on specific facts and circumstances and we can give no assurance that a claim will not be made that we have been operating as an unregistered investment company.
If IRHO is deemed to be an investment company under the Investment Company Act, IRHO’s activities may be restricted, including (i) restrictions on the nature of IRHO’s investments; and (ii) restrictions on the issuance of securities, each of which may make it difficult for us to complete IRHO’s initial Business Combination.
In addition, IRHO may become subject to more burdensome requirements, including: (i) registration as an investment company; (ii) adoption of a specific form of corporate structure; and (iii) reporting, record keeping, voting, proxy and disclosure requirements and other rules and regulations.
In order not to be regulated as an investment company under the Investment Company Act, unless IRHO can qualify for an exclusion, IRHO must ensure that IRHO is engaged primarily in a business other than investing, reinvesting or trading in securities and that IRHO’s activities do not include investing, reinvesting, owning, holding or trading “investment securities” constituting more than 40% of IRHO’s total assets (exclusive of U.S. government securities and cash items) on an unconsolidated basis. IRHO is mindful of the SEC’s investment company definition and guidance and intends to complete an initial Business Combination with an operating business, and not with an investment company, or to acquire minority interests in other businesses exceeding the permitted threshold.
IRHO does not believe that IRHO’s business activities will subject us to the Investment Company Act. To this end, the proceeds held in the Trust Account were initially invested only in U.S. government treasury obligations with a maturity of 185 days or less or in money market funds meeting certain conditions under Rule 2a-7 under the Investment Company Act, which invest only in direct U.S. government treasury obligations; the holding of these assets in this form is intended to be temporary and for the sole purpose of facilitating the intended Business Combination.
37
Table of Contents
Pursuant to the Trust Agreement, Continental is not permitted to invest in securities or assets other than as described above. By restricting the investment of the proceeds to these instruments, and by having a business plan targeted at acquiring and growing businesses for the long term (rather than on buying and selling businesses in the manner of a merchant bank or private equity fund), IRHO intended to avoid being deemed an “investment company” within the meaning of the Investment Company Act. IRHO’s Initial Public Offering was not intended for persons who were seeking a return on investments in government securities or investment securities. The Trust Account is intended solely as a temporary depository for funds pending the earliest to occur of: (i) the completion of IRHO’s initial Business Combination; (ii) the redemption of any Public Shares properly submitted in connection with a stockholder vote to amend IRHO’s Amended and Restated Memorandum and Articles of Association (x) in a manner that would affect the substance or timing of IRHO’s obligation to redeem 100% of IRHO’s Public Shares if IRHO does not complete IRHO’s initial Business Combination within the Combination Period; or (y) with respect to any other provision relating to the rights of holders of shares of IRHO’s Ordinary Shares or pre initial Business Combination activity; or (iii) absent an initial Business Combination within the Combination Period, IRHO’s return of the funds held in the Trust Account to IRHO’s Public Shareholders as part of IRHO’s redemption of the Public Shares.
IRHO is aware of litigation claiming that certain SPACs should be considered investment companies. Although IRHO believes that these claims are without merit, IRHO cannot guarantee that IRHO will not be deemed to be an investment company and thus subject to the Investment Company Act. If IRHO were deemed to be subject to the Investment Company Act, compliance with these additional regulatory burdens would require additional expenses for which IRHO has not allotted funds and may hinder IRHO’s ability to complete an initial Business Combination or may result in IRHO’s liquidation. If IRHO is unable to complete IRHO’s initial Business Combination, IRHO’s Public Shareholders may receive only approximately $10.[•] per Public Share upon the liquidation of IRHO’s Trust Account and IRHO’s Rights will be worthless.
Since the Sponsor and IRHO’s directors and officers have interests that are different, or in addition to (and which may conflict with), the interests of our shareholders, a conflict of interest may have existed in determining whether the Business Combination with Electra is appropriate as our initial business combination. Such interests include that the Sponsor will lose its entire investment in us if our business combination is not completed.
When you consider the recommendation of the IRHO Board in favor of approval of the Business Combination Proposal, you should keep in mind that the Sponsor and IRHO’s directors and officers have interests in such proposal that are different from, or in addition to, those of IRHO shareholders and rights holders generally.
Such interests include the following:
• The Sponsor paid (i) $32,000 or approximately $0.0056 per share for the Founder Shares, which such Founder Shares, if unrestricted and freely tradeable, would be valued at approximately $________________, based on the $[*] closing price of the IRHO Ordinary Shares on Nasdaq on ___________, 2026, (ii) $____________ or approximately $10.00 per unit for the 370,000 Private Placement Units, which such Private Placement Units, if unrestricted and freely tradeable, would be valued at approximately $____________, based on the $___ closing price of the IRHO Units on Nasdaq on _____, 2026 based on the $_____ closing price of the IRHO Ordinary Shares on Nasdaq on ______, 2026.
• If IRHO does not consummate a business combination by December 18, 2027 (or if such date is extended at a duly called extraordinary general meeting, such later date), it would cease all operations except for the purpose of winding up, redeeming all of the outstanding Public Shares for cash and, subject to the approval of its remaining shareholders and the IRHO Board, liquidating and dissolving, subject in each case to its obligations under Cayman Islands law to provide for claims of creditors and the requirements of other applicable law. In such event, the Founder Shares owned by the Sponsor would be worthless because following the redemption of the Public Shares, IRHO would likely have few, if any, net assets and because the Insiders have agreed to waive their respective rights to liquidating distributions from the Trust Account in respect of the Founder Shares if IRHO fails to complete a business combination within the required period. Additionally, in such event, the 370,000 Private Placement Units (including the underlying securities) will also expire worthless. IRHO’s directors and executive officers have an indirect economic interest in the Private Placement Units and Founder Shares owned by the Sponsor.
38
Table of Contents
• As a result of the low purchase price paid for the Founder Shares, even if the trading price of the Electra Pubco Common Stock were as low as $0.65 per share, the aggregate market value of the Founder Shares alone (without taking into account the value of the Electra Pubco Common Stock issued in respect of the Private Placement Units or the Public Shares held by the Sponsor) would be approximately equal to the investment in IRHO by the Sponsor. As a result, if the Business Combination is completed, the Sponsor is likely to be able to make a substantial profit on its investment in us even at a time when the Electra Pubco Common Stock has lost significant value. On the other hand, if the Business Combination is not completed and IRHO liquidates without completing another initial business combination before the end of the completion window, the Sponsor would lose its entire investment in us.
• Upon liquidation, the Sponsor will lose its entire investment in the Founder Shares and Private Placement Units, which totals $3,732,000 in the aggregate. The potential loss of this investment could incentivize the Sponsor and its affiliates to pursue a business combination transaction on unfavorable terms in order to avoid a liquidation.
• IRHO’s existing directors and officers will be eligible for continued indemnification and continued coverage under IRHO’s directors’ and officers’ liability insurance policy after the Merger and pursuant to the Merger Agreement and indemnification agreements entered into with such directors and officers in connection with the IPO.
• In order to protect the amounts held in the Trust Account, the Sponsor has agreed that it will be liable to IRHO if and to the extent any claims by a third party (other than IRHO’s independent registered public accounting firm) for services rendered or products sold to IRHO, or a prospective target business with which IRHO has discussed entering into a transaction agreement, reduce the amount of funds in the Trust Account to below the lesser of (a) $10.00 per Public Share and (b) the actual amount per Public Share held in the Trust Account as of the date of the liquidation of the Trust Account, if less than $10.00 per Public Share, due to reductions in value of the trust assets, in each case net of the interest that may be withdrawn to pay taxes. This liability will not apply to any claims by a third party who executed a waiver of any and all Rights to seek access to the Trust Account and as to any claims under the indemnity of the underwriters of the IPO against certain liabilities, including liabilities under the Securities Act.
• The Sponsor and its affiliates have made an aggregate of $_____________ of advances to IRHO as of the date of this proxy statement/prospectus, which will be repaid in cash at the closing of the Business Combination. Additionally, IRHO’s officers and directors and their affiliates are entitled to reimbursement of out-of-pocket expenses incurred by them related to identifying, investigating, negotiating and completing an initial business combination. As of the date of this proxy statement/prospectus the current value of the reimbursement of the out-of-pocket expenses owed to IRHO’s officers and directors and their affiliates is $0. However, if IRHO fails to consummate a business combination by December 18, 2027 (or if such date is extended at a duly called extraordinary general meeting, such later date), such persons will not have any claim against the Trust Account for reimbursement. Accordingly, IRHO may not be able to reimburse these advances and expenses if the Business Combination or another business combination is not completed by such date.
Pursuant to the A&R Registration Rights Agreement, the Insiders will have customary registration rights, including demand and piggy-back Rights, subject to cooperation and cut-back provisions with respect to the Electra Pubco Common Stock held by such parties following the consummation of the Proposed Transaction. We estimate that the Initial Shareholders will hold an aggregate of 6,320,000 shares of Electra Pubco Common Stock subject to registration rights, not reflecting forfeitures and the Share Contribution pursuant to the Parent Support Agreement, which includes the up to 800,000 At Risk Shares, where up to 800,000 At-Risk Shares shall be subject to forfeiture as follows: For each $1,000,000 by which the Parent Closing Cash is less than $80,000,000, the Sponsor shall forfeit 16,000 At-Risk Shares, up to the maximum of 800,000 Parent Common Shares. (For illustrative purposes only: (i) if the Parent Closing Cash equals or exceeds $80,000,000, no At-Risk Shares shall be forfeited; (ii) if the Parent Closing Cash is $60,000,000, the Sponsor shall forfeit 320,000 At-Risk Shares; and (iii) if the Parent Closing Cash is $30,000,000 or less, the Sponsor shall forfeit all 800,000 At-Risk Shares.
39
Table of Contents
See “The Business Combination Proposal — Certain Interests of IRHO’s Directors and Officers and Others in the Business Combination.”
The existence of financial and personal interests of one or more of IRHO’s directors may result in a conflict of interest on the part of such director(s) between what he, she or they may believe is in the best interests of IRHO and its shareholders and what he, she or they may believe is best for himself, herself or themselves in determining to recommend that shareholders vote for the proposals. In addition, IRHO’s officers have interests in the Business Combination that may conflict with your interests as a shareholder. See “— Certain Interests of IRHO’s Directors and Officers and Others in the Business Combination” for a further discussion of these considerations.
The personal and financial interests of the Sponsor as well as IRHO’s directors and officers may have influenced their motivation in identifying and selecting Electra as a business combination target, completing an initial business combination with Electra and influencing the operation of the business following the initial business combination. Because the Sponsor and IRHO’s directors and officers will lose their entire investment in IRHO if IRHO does not complete an initial business combination and will benefit from the completion of a business combination, they may be incentivized to complete an acquisition of a less favorable target company or on terms less favorable to IRHO shareholders rather than liquidate. In considering the recommendations of the IRHO Board to vote for the proposals, its shareholders should consider these interests.
The exercise of IRHO’s directors’ and officers’ discretion in agreeing to changes or waivers in the terms of the Business Combination may result in a conflict of interest when determining whether such changes to the terms of the Business Combination or waivers of conditions are appropriate and in IRHO’s shareholders’ best interest.
In the period leading up to the Closing, events may occur that, pursuant to the Merger Agreement, would require IRHO to agree to amend the Merger Agreement, to consent to certain actions taken by Electra or to waive rights that IRHO is entitled to under the Merger Agreement. Such events could arise because of changes in the course of Electra’s business or a request by Electra to undertake actions that would otherwise be prohibited by the terms of the Merger Agreement. In any of such circumstances, it would be at IRHO’s discretion, acting through the IRHO Board, to grant its consent or waive those rights. The existence of financial and personal interests of one or more of the directors described in the preceding risk factors (and described elsewhere in this proxy statement/prospectus) may result in a conflict of interest on the part of such director(s) between what he, she or they may believe is best for IRHO and its shareholders and what he, she or they may believe is best for himself, herself or themselves in determining whether or not to take the requested action. As of the date of this proxy statement/prospectus, IRHO does not believe there will be any changes or waivers that IRHO’s directors and executive officers would be likely to make after shareholder approval of the Business Combination Proposal has been obtained. While certain changes could be made without further shareholder approval, IRHO will circulate a new or amended proxy statement/prospectus and resolicit IRHO’s shareholders if changes to the terms of the transaction that would have a material impact on its shareholders are required prior to the vote on the Business Combination Proposal.
IRHO and Electra will incur significant transaction and transition costs in connection with the Business Combination.
IRHO and Electra have both incurred and expect to incur significant, non-recurring costs in connection with consummating the Business Combination and operating as a public company following the consummation of the Business Combination. IRHO and Electra may also incur additional costs to retain key employees. Certain transaction costs incurred in connection with the Merger Agreement (including the Business Combination), including all legal, accounting, consulting, investment banking and other fees, expenses and costs, will be paid by Electra Pubco following the closing of the Business Combination.
Subsequent to the consummation of the Business Combination, Electra Pubco may be exposed to unknown or contingent liabilities and may be required to subsequently take write-downs or write-offs, restructuring and impairment or other charges that could have a significant negative effect on its financial condition, results of operations and its share price, which could cause you to lose some or all of your investment.
We cannot assure you that the due diligence conducted in relation to Electra has identified all material issues or risks associated with Electra, its business or the industry in which it competes. Furthermore, we cannot assure you that factors outside of Electra’s and our control will not later arise. As a result of these factors, we may be exposed to liabilities and incur additional costs and expenses and we may be forced to later write-down or write-off assets, restructure our
40
Table of Contents
operations, or incur impairment or other charges that could result in our reporting losses. Even if our due diligence has identified certain risks, unexpected risks may arise and previously known risks may materialize in a manner not consistent with our preliminary risk analysis. If any of these risks materialize, this could have a material adverse effect on our financial condition and results of operations and could contribute to negative market perceptions about our securities or Electra Pubco. Additionally, we have no indemnification rights against the Electra Securityholders under the Merger Agreement and all of the purchase price consideration will be delivered at the Closing.
Accordingly, any shareholders or rights holders of IRHO who choose to remain Electra Pubco stockholders or rights holders following the Business Combination could suffer a reduction in the value of their shares or rights. Such shareholders or rights holders are unlikely to have a remedy for such reduction in value unless they are able to successfully claim that the reduction was due to the breach by our directors or officers of a duty of care or other fiduciary duty owed to them, or if they are able to successfully bring a private claim under securities laws that the registration statement or proxy statement/prospectus relating to the Business Combination contained an actionable material misstatement or material omission.
The historical financial results of Electra and unaudited condensed combined pro forma financial information included elsewhere in this proxy statement/prospectus may not be indicative of what Electra Pubco’s actual financial position or results of operations would have been.
The historical financial results of Electra included in this proxy statement/prospectus do not reflect the financial condition, results of operations or cash flows they would have achieved as a standalone public company during the periods presented or those Electra Pubco will achieve in the future. This is primarily the result of the following factors: (i) Electra Pubco will incur additional ongoing costs as a result of the Business Combination, including costs related to public company reporting, investor relations and compliance with the Sarbanes-Oxley Act; and (ii) Electra Pubco’s capital structure will be different from that reflected in Electra’s historical financial statements. Electra Pubco’s financial condition and future results of operations could be materially different from amounts reflected in its historical financial statements included elsewhere in this proxy statement/prospectus, so it may be difficult for investors to compare Electra Pubco’s future results to historical results or to evaluate its relative performance or trends in its business.
Similarly, the unaudited condensed combined pro forma financial information in this proxy statement/prospectus is presented for illustrative purposes only and has been prepared based on a number of assumptions including, but not limited to, IRHO being treated as the “acquired” company for financial reporting purposes in the Business Combination, the total debt obligations and the cash and cash equivalents of Electra on the Closing Date and the number of IRHO Ordinary Shares that are redeemed in connection with the Business Combination. Accordingly, such unaudited condensed combined pro forma financial information may not be indicative of Electra Pubco’s future operating or financial performance and Electra Pubco’s actual financial condition and results of operations may vary materially from Electra Pubco’s pro forma results of operations and balance sheet contained elsewhere in this proxy statement/prospectus, including as a result of such assumptions not being accurate. See “Unaudited Pro Forma Condensed Combined Financial Information.”
Following the consummation of the Business Combination, our only significant asset will be our ownership interest in Electra and such ownership may not be sufficient to pay dividends or make distributions or loans to enable us to pay any dividends on Electra Pubco Common Stock or satisfy our other financial obligations.
Following the consummation of the Business Combination, we will have no direct operations and no significant assets other than our ownership of Electra. We will depend on Electra for distributions, loans and other payments to generate the funds necessary to meet our financial obligations, including our expenses as a publicly traded company and to pay any dividends with respect to Electra Pubco Common Stock. The financial condition and operating requirements of Electra may limit our ability to obtain cash from Electra. The earnings from, or other available assets of, Electra may not be sufficient to pay dividends or make distributions or loans to enable us to pay any dividends on Electra Pubco Common Stock or satisfy our other financial obligations.
This lack of diversification may subject us to numerous economic, competitive and regulatory risks, any or all of which may have a substantial adverse impact upon the particular industry in which we may operate subsequent to our Business Combination.
41
Table of Contents
IRHO Insiders may elect to purchase shares from Public Shareholders prior to the consummation of the Business Combination, which may influence the vote on the Business Combination and reduce the public “float” of our Ordinary Shares or Public Rights.
At any time at or prior to the Business Combination, subject to applicable securities laws (including with respect to material non-public information), the Sponsor or our or its respective directors, officers, advisors or affiliates may (a) purchase Public Shares from institutional and other investors who elect to redeem, or indicate an intention to redeem, Public Shares, (b) execute agreements to purchase such shares from such investors in the future, or (c) enter into transactions with such investors and others to provide them with incentives to acquire Public Shares or not redeem their Public Shares. Such a purchase may include a contractual acknowledgement that such shareholder, although still the record holder of IRHO’s shares, is no longer the beneficial owner thereof and therefore agrees not to exercise its Redemption Rights. In the event that the Sponsor or our or its respective directors, officers, advisors or affiliates purchase shares in privately negotiated transactions from Public Shareholders, such shares that are purchased by the Sponsor or our or its respective directors, officers, advisors or affiliates would not be voted in favor of the Business Combination Proposal, and the Sponsor or our or its respective directors, officers, advisors or affiliates would waive their Redemption Rights. In the event that the Sponsor or our or its respective directors, officers, advisors or affiliates purchase shares in privately negotiated transactions from Public Shareholders who have already elected to exercise their Redemption Rights, such selling shareholders would be required to revoke their prior elections to redeem their Public Shares.
The purpose of such share purchases and other transactions would be to reduce the number of Public Shares electing to redeem.
Entering into any such arrangements may have a depressive effect on the ordinary shares (e.g., by giving an investor or holder the ability to effectively purchase shares or rights at a price lower than market, such investor or holder may therefore become more likely to sell the shares he, she or it owns, either at or prior to the Business Combination). If such transactions are effected, the consequence could be to cause the Business Combination to be consummated in circumstances where such consummation could not otherwise occur. In addition, if such purchases are made, the public “float” of our securities and the number of beneficial holders of our securities may be reduced, possibly making it difficult to maintain or obtain the quotation, listing or trading of our securities on a national securities exchange.
Additionally, in the event the Sponsor, or our or its directors, officers, advisors or affiliates were to purchase shares or rights in privately negotiated transactions from Public Shareholders, such purchases would be structured in compliance with the requirements of Rule 14e-5 under the Exchange Act including, in pertinent part, through adherence to the following:
• This proxy statement/prospectus discloses the possibility that the Sponsor or our or its respective directors, officers, advisors or affiliates may purchase shares or rights from Public Shareholders outside the redemption process, along with the purpose of such purchases;
• If the Sponsor or our or its respective directors, officers, advisors or affiliates were to purchase shares or rights from Public Shareholders, they would do so at a price no higher than the price offered through our redemption process;
• This proxy statement/prospectus includes a representation that any of our securities purchased by the Sponsor or our or its respective directors, officers, advisors or affiliates would not be voted in favor of approving the Business Combination transaction;
• The Sponsor or our or its respective directors, officers, advisors or affiliates would not possess any Redemption Rights with respect to our securities or, if they do acquire and possess Redemption Rights, they would waive such rights in the event that the Business Combination is consummated; and
• IRHO would disclose in a Current Report on Form 8-K, before the extraordinary general meeting, the following material items:
• the amount of our securities purchased outside of the redemption offer by the Sponsor, or our or its respective directors, officers, advisors or affiliates, along with the purchase price;
• the purpose of the purchases by the Sponsor, or our or its respective directors, officers, advisors or affiliates;
42
Table of Contents
• the impact, if any, of the purchases by the Sponsor or our or its respective directors, officers, advisors or affiliates on the likelihood that the Business Combination transaction will be approved;
• the identities of our security holders who sold to our Sponsor or our or its respective directors, officers, advisors or affiliates (if not purchased on the open market) or the nature of our security holders (e.g., 5% security holders) who sold to our Sponsor or our or its respective directors, officers, advisors or affiliates; and
• the number of IRHO Ordinary Shares for which IRHO has received redemption requests pursuant to the redemption offer.
If third parties bring claims against us, the proceeds held in the Trust Account could be reduced and the per share redemption amount received by shareholders may be less than $10.00 per share (which was the offering price per unit in IRHO’s IPO).
Our placing of funds in the Trust Account may not protect those funds from third-party claims against us. Although we will seek to have all vendors, service providers, prospective target businesses and other entities with which we do business execute agreements with us waiving any right, title, interest or claim of any kind in or to any monies held in the Trust Account, there is no guarantee that they will execute such agreements or even if they execute such agreements that they would be prevented from bringing claims against the Trust Account, including, but not limited to, fraudulent inducement, breach of fiduciary responsibility or other similar claims, as well as claims challenging the enforceability of the waiver, in each case in order to gain advantage with respect to a claim against our assets, including the funds held in the Trust Account. If any third party refuses to execute an agreement waiving such claims to the monies held in the Trust Account, our management will consider whether competitive alternatives are reasonably available to us and will only enter into an agreement with such third party if management believes that such third party’s engagement would be in the best interests of the company under the circumstances.
Examples of possible instances where we may engage a third party that refuses to execute a waiver include the engagement of a third party consultant whose particular expertise or skills are believed by management to be significantly superior to those of other consultants that would agree to execute a waiver or in cases where management is unable to find a service provider willing to execute a waiver. In addition, there is no guarantee that such entities will agree to waive any claims they may have in the future as a result of, or arising out of, any negotiations, contracts or agreements with us and will not seek recourse against the Trust Account for any reason. Upon redemption of our Public Shares, if we have not completed our business combination within the required time period, or upon the exercise of a Redemption Right in connection with our business combination, we will be required to provide for payment of claims of creditors that were not waived that may be brought against us within the 10 years following redemption. Accordingly, the per share redemption amount received by Public Shareholders could be less than the $10.00 per Public Share initially held in the Trust Account, due to claims of such creditors.
The Sponsor has agreed that it will be liable to us if and to the extent any claims by a third party for services rendered or products sold to us, or a prospective target business with which we have entered into a written letter of intent, confidentiality or other similar agreement or business combination agreement, reduce the amount of funds in the Trust Account to below the lesser of (i) $10.00 per Public Share and (ii) the actual amount per Public Share held in the Trust Account as of the date of the liquidation of the Trust Account, if less than $10.00 per share, due to reductions in value of the trust assets, less taxes payable, except as to any claims by a third party who executed a waiver of any and all rights to seek access to the Trust Account and except as to any claims under our indemnity of the underwriters of our IPO against certain liabilities, including liabilities under the Securities Act. Moreover, in the event that an executed waiver is deemed to be unenforceable against a third party, the Sponsor will not be responsible to the extent of any liability for such third-party claims. We have not independently verified whether the Sponsor has sufficient funds to satisfy its indemnity obligations and believe that the Sponsor’s only assets are securities of our company. The Sponsor may not have sufficient funds available to satisfy those obligations. We have not asked the Sponsor to reserve for such obligations, and therefore, no funds are currently set aside to cover any such obligations. As a result, if any such claims were successfully made against the Trust Account, the funds available for our business combination and redemptions could be reduced to less than $10.00 per Public Share. In such event, we may not be able to complete our business combination, and you would receive such lesser amount per share in connection with any redemption of your Public Shares. None of our directors or officers will indemnify us for claims by third parties including, without limitation, claims by vendors and prospective target businesses.
43
Table of Contents
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.
In recent months, the market for directors and officers liability insurance for special purpose acquisition companies has changed in ways adverse to us and our management team. Fewer insurance companies are offering quotes for directors and officers liability coverage, the premiums charged for such policies have generally increased and the terms of such policies have generally become less favorable. These trends may continue into the future. The increased cost and decreased availability of directors and officers liability insurance could make it more difficult and more expensive for us to negotiate an initial business combination. In order to obtain directors and officers liability insurance or modify its coverage as a result of becoming a public company, the post-business combination entity might need to incur greater expense, accept less favorable terms or both. However, any failure to obtain adequate directors and officers liability insurance could have an adverse impact on the post-business combination’s ability to attract and retain qualified officers and directors.
In addition, even after we complete the Business Combination, our directors and officers could still be subject to potential liability from claims arising from conduct alleged to have occurred prior to the Business Combination. As a result, in order to protect our directors and officers, Electra Pubco may need to purchase additional insurance with respect to any such claims (“run-off insurance”). The need for run-off insurance would be an added expense for the post-business combination entity, and could interfere with or frustrate our ability to consummate the Business Combination on terms favorable to our investors.
If, after we distribute the proceeds in the Trust Account to our Public Shareholders, IRHO files a winding-up or bankruptcy petition or an involuntary winding-up or bankruptcy petition is filed against us that is not dismissed, a bankruptcy or insolvency court may seek to recover such proceeds, and we and our board of directors may be exposed to claims of punitive damages.
If, after we distribute the proceeds in the Trust Account to our Public Shareholders, we file a winding-up or bankruptcy petition or an involuntary winding-up or bankruptcy petition is filed against us that is not dismissed, any distributions received by shareholders could be viewed under applicable debtor/creditor and/or insolvency laws as a voidable performance. As a result, a bankruptcy or insolvency court could seek to recover all amounts received by our shareholders. In addition, the IRHO Board may be viewed as having breached its fiduciary duty to our creditors or having acted in bad faith, thereby exposing it and us to claims of punitive damages, by paying Public Shareholders 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.
If, before distributing the proceeds in the Trust Account to our Public Shareholders, we file a winding-up or bankruptcy petition or an involuntary winding-up or bankruptcy petition is filed against us that is not dismissed, the claims of creditors in such proceeding may have priority over the claims of our shareholders and the per share amount that would otherwise be received by our shareholders in connection with our liquidation may be reduced.
If, before distributing the proceeds in the Trust Account to our Public Shareholders, we file a winding-up or bankruptcy petition or an involuntary winding-up or bankruptcy petition is filed against us that is not dismissed, the proceeds held in the Trust Account could be subject to applicable insolvency law, and may be included in our liquidation estate and subject to the claims of third parties with priority over the claims of our shareholders. To the extent any liquidation claims deplete the Trust Account, the per share amount that would otherwise be received by our shareholders in connection with our liquidation may be reduced.
Our shareholders may be held liable for claims by third parties against us to the extent of distributions received by them upon redemption of their shares.
If we are forced to enter into an insolvent liquidation, any distributions received by shareholders could be viewed as an unlawful payment if it was proved that immediately following the date on which the distribution was made, we were unable to pay our debts as they fall due in the ordinary course of business. As a result, a bankruptcy or insolvency court could seek to recover all amounts received by our shareholders. Furthermore, our directors may be viewed as having breached their fiduciary duties to us or our creditors or may have acted in bad faith, and thereby exposing themselves and our company to claims, by paying Public Shareholders from the Trust Account prior to addressing
44
Table of Contents
the claims of creditors. We cannot assure you that claims will not be brought against us for these reasons. We and our directors and officers who knowingly and willfully authorized or permitted any distribution to be paid out of our share premium account while we were unable to pay our debts as they fall due in the ordinary course of business would be guilty of an offence and may be liable to a fine of approximately $18,293 and to imprisonment for five years in the Cayman Islands.
We are currently an emerging growth company and a smaller reporting company within the meaning of the Securities Act, and to the extent we have taken advantage of certain exemptions from disclosure requirements available to emerging growth companies or 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.
We are currently an “emerging growth company” within the meaning of the Securities Act, as modified by the JOBS Act, and we may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from the requirements of holding a non-binding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously approved. Additionally, we are a “smaller reporting company” as defined in Item 10(f)(1) of Regulation S-K. smaller reporting companies may take advantage of certain reduced disclosure obligations, including, among other things, providing only two years of audited financial statements. As a result, our shareholders may not have access to certain information they may deem important. We cannot predict whether investors will find our securities less attractive because we will rely on these exemptions. If some investors find our securities less attractive as a result of our reliance on these exemptions, the trading prices of our securities may be lower than they otherwise would be, there may be a less active trading market for our securities and the trading prices of our securities may be more volatile.
Further, Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered under the Exchange Act) are required to comply with the new or revised financial accounting standards. The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies but any such election to opt out is irrevocable. We have elected not to opt out of such extended transition period, which means that when a standard is issued or revised and it has different application dates for public or private companies, we, as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard. This may make comparison of our financial statements with another public company, which is neither an emerging growth company nor an emerging growth company which has opted out of using the extended transition period difficult or impossible because of the potential differences in accountant standards used. Once we lose our “emerging growth company” and “smaller reporting company” status, we will no longer be able to take advantage of certain exemptions from reporting, and we will also be required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act. We will incur additional expenses in connection with such compliance and our management will need to devote additional time and effort to implement and comply with such requirements.
We will remain a smaller reporting company until the last day of the fiscal year in which (1) the market value of our common stock held by non-affiliates exceeds $250 million as of the prior June 30, or (2) our annual revenues exceeded $100 million during such completed fiscal year and the market value of our common stock held by non-affiliates exceeds $700 million as of the prior June 30.
We will remain an emerging growth company until the earlier of: (1) the last day of the fiscal year (a) following the fifth anniversary of the closing of IRHO’s IPO, (b) in which we have total annual gross revenue of at least $1.23 billion, or (c) in which we are deemed to be a large accelerated filer, which means the market value of our common equity that is held by non-affiliates exceeds $700 million as of the end of the prior fiscal year’s second fiscal quarter; and (2) the date on which we have issued more than $1.00 billion in non-convertible debt securities during the prior three-year period.
45
Table of Contents
There is a risk that the new 1% U.S. federal excise tax may be imposed on us in connection with redemptions of our shares.
The Code imposes a 1% excise tax on the fair market value of certain repurchases (including certain redemptions) of stock by “covered corporations” (which include publicly traded domestic (i.e., U.S.) corporations). The excise tax will apply to stock repurchases occurring in 2023 and beyond. The amount of the excise tax is generally 1% of the fair market value of the shares of stock repurchased at the time of the repurchase. Although guidance and regulations issued by the U.S. Department of the Treasury (the “Treasury”) clarify certain aspects of the excise tax, the interpretation and operation of other aspects of the excise tax remain unclear, and such interim operating rules are subject to change. Because we will be a Delaware corporation as a result of the Domestication and because our securities trade on Nasdaq, we would be a “covered corporation” within the meaning of the Code. While not free from doubt, absent any further guidance from the U.S. Department of the Treasury (the “Treasury”), who has been given authority to provide regulations and other guidance to carry out and prevent the abuse or avoidance of the Excise Tax, the Excise Tax may apply to any redemptions of our Public Shares after December 31, 2022, including redemptions in connection with the Business Combination, unless an exemption is available. Generally, issuances of securities by us in connection with our initial Business Combination transaction (including any PIPE transaction at the time of our initial Business Combination), as well as any other issuances of securities not in connection with our initial Business Combination, would be expected to reduce the amount of the Excise Tax in connection with redemptions occurring in the same calendar year. In addition, any Excise Tax would be payable by us, and not by the redeeming holder. Further, based on recently issued interim guidance from the IRS and Treasury, subject to certain exceptions, the Excise Tax should not apply in the event of our liquidation.
IRHO may be or may have been a PFIC during the holding period of a U.S. Holder of IRHO Ordinary Shares.
A non-U.S. corporation generally will be treated as a PFIC for U.S. federal income tax purposes in any taxable year if either (1) at least 75% of its gross income for such year is passive income or (2) at least 50% of the value of its assets (generally based on an average of the quarterly values of the assets) during such year is attributable to assets that produce or are held for the production of passive income. The determination of whether IRHO will be treated as a PFIC for the taxable year that includes the Business Combination will depend on a number of factors, including the timing of the Business Combination and the amount of cash held by IRHO and its subsidiaries at the time of the Business Combination, among others.
If IRHO is a PFIC or has been a PFIC during the holding period of a U.S. holder of IRHO Ordinary Shares, such U.S. holder of IRHO Ordinary Shares may be subject to certain adverse U.S. federal income tax consequences as a result of the Domestication. There is no assurance that IRHO is not currently or has not been a PFIC during the holding period of a U.S. holder of IRHO Ordinary Shares. If IRHO has been a PFIC for any taxable year during the holding period of a U.S. holder of IRHO Ordinary Shares (and a U.S. holder of IRHO Ordinary Shares has not made certain elections with respect to its IRHO Ordinary Shares), such U.S. holder of IRHO Ordinary Shares may recognize gain (but not loss if the Domestication qualifies as a “reorganization” within the meaning of Section 368(a) of the Code) upon the exchange of IRHO Ordinary Shares and IRHO Rights for Parent Class A Common Shares and Parent Rights, as applicable, pursuant to the Domestication.
Whether IRHO is treated as a PFIC for U.S. federal income tax purposes is a factual determination that must be made annually at the close of each taxable year and, thus, is subject to significant uncertainty. Nonetheless, based on the current composition of IRHO’s income and assets, if the Domestication occurs as contemplated in this proxy statement/prospectus, causing IRHO’s current taxable year to end at such time for U.S. federal income tax purposes, IRHO believes that it will likely be a PFIC for the current taxable year.
However, there can be no assurance that IRHO will be treated as a PFIC in the taxable year that includes the Business Combination or any other taxable year. Moreover, the application of the PFIC rules are subject to uncertainty in several respects, and there can be no assurance that the IRS will not take a contrary position or that a court will not sustain such a challenge by the IRS. Please see “Material U.S. Federal Income Tax Considerations — U.S. Holders — Tax Effects of the Domestication to U.S. Holders — PFIC Considerations” for a more detailed discussion with respect to IRHO’s potential PFIC status and certain tax implications thereof.
46
Table of Contents
Future sales of substantial amounts of our securities in the public market (including the Electra Pubco Common Stock issuable upon conversion of Electra Pubco Rights), or the perception that such sales may occur, could cause Electra Pubco’s share price to decline.
Future sales of substantial amounts of our securities in the public market (including the Electra Pubco Common Stock issuable upon conversion of Electra Pubco Rights), or the perception that such sales may occur, could cause Electra Pubco’s share price to decline. Also as previously disclosed, the Sponsor paid the nominal price of approximately $0.0056 per share for the Founder Shares. Given the differential in the purchase price that the Sponsor paid for the Founder Shares as compared to the price of IRHO Ordinary Shares as of the Record Date, which was $[•] per share, and the $10.00 per unit price paid in IRHO’s IPO, the holders of the Founder Shares may earn a positive rate of return on their investment even if other holders of IRHO Ordinary Shares experience a negative rate of return. As a result, the holders of the Founder Shares may be incentivized to sell such securities when others are not.
The underwriters of the IPO were to be compensated in part on a deferred basis for already-rendered services in connection with IRHO’s IPO.
Cantor was the lead underwriter in the IRHO IPO. Pursuant to the Underwriting Agreement, Cantor was entitled to deferred compensation in the aggregate amount of $10,950,000 as consideration for services rendered to IRHO in connection with the IPO, which is to become payable upon consummation of a business combination transaction.
In addition, with respect to the Business Combination, IRHO continues to have customary obligations under certain provisions of the Underwriting Agreement. These provisions include the relevant clauses of the underwriters’ standard terms and conditions, including IRHO’s obligation to (i) indemnify and hold harmless each of the underwriters, the directors, officers, employees, affiliates and agents of each underwriter, and each person, if any, who controls any of the underwriters or any affiliate within the meaning of the Securities Act or the Exchange Act, against any and all losses, claims, damages or liabilities, joint or several, to which they or any of them may become subject under the Securities Act, the Exchange Act or other U.S. federal or state statutory law or regulation, at common law or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon any untrue statement or alleged untrue statement of a material fact contained in the registration statement for the registration of the securities sold in the IPO as originally filed or in any amendment thereof, or in any Preliminary Prospectus, the Prospectus, any “road show” as defined in Section 433(h) of the Act or any Written Testing-the-Waters Communication, or in any amendment thereof or supplement thereto (each as defined in the Underwriting Agreement), or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, and (ii) reimburse each such indemnified party, as incurred, for any legal or other expenses reasonably incurred by them in connection with investigating or defending any such loss, claim, damage, liability or action; provided, however, that IRHO will not be liable in any such case to the extent that any such loss, claim, damage or liability arises out of or is based upon any such untrue statement or alleged untrue statement or omission or alleged omission made therein in reliance upon and in conformity with written information furnished to IRHO by or on behalf of any underwriter through Cantor specifically for inclusion therein.
Further, the Underwriting Agreement contains a contribution provision in the event the indemnification obligations described above are unavailable or otherwise prohibited by law. The contribution obligations of the underwriters under the Underwriting Agreement are limited to the total underwriting discounts and commissions paid, in the aggregate, by IRHO to the underwriters upon the consummation of IRHO’s IPO.
Cantor had no role in connection with this Business Combination. Cantor have not been involved in the preparation of any disclosure that is included in this proxy statement/prospectus, or any business analysis underlying such disclosure, and IRHO Shareholders do not have the benefit of any such involvement. IRHO Shareholders should not place any reliance on the fact that Cantor was involved with IRHO’s IPO.
There are risks to IRHO shareholders who are not affiliates of the Sponsor of becoming stockholders of Electra Pubco through the Business Combination rather than acquiring securities of Electra Pubco directly in an underwritten public offering, including no independent due diligence review by an underwriter and conflicts of interest of the Sponsor.
Because there is no independent third-party underwriter involved in the Business Combination or the issuance of securities in connection therewith, investors will not receive the benefit of an outside independent review of Electra Pubco’s, Electra’s and IRHO’s respective finances and operations typically performed in an initial public securities
47
Table of Contents
offering. Underwritten public offerings of securities conducted by a licensed broker-dealer are subjected to a due diligence review by the underwriter or dealer manager to satisfy statutory duties under the Securities Act, the rules of Financial Industry Regulatory Authority, Inc. (FINRA) and the national securities exchange where such securities are listed. Additionally, underwriters or dealer-managers conducting such public offerings are subject to liability for material misstatements or omissions in a registration statement filed with the SEC in connection with the public offering. As no such review has been or will be conducted in connection with the Business Combination, IRHO shareholders must rely on the information in this proxy statement/prospectus and will not have the benefit of an independent review and investigation of the type normally performed by an underwriter in a public securities offering.
In addition, the Insiders have interests in the Business Combination that may be different from, or in addition to, the interests of IRHO shareholders generally. Such interests may have influenced IRHO’s directors in making their recommendation that you vote in favor of the Business Combination Proposal and the other proposals described in this proxy statement/prospectus. See “Risk Factors — Since the Sponsor and IRHO’s directors and officers have interests that are different, or in addition to (and which may conflict with), the interests of our shareholders, a conflict of interest may have existed in determining whether the Business Combination with Electra is appropriate as our initial business combination. Such interests include that the Sponsor will lose its entire investment in us if our business combination is not completed.”
The process of taking a company public by means of a business combination with a special purpose acquisition company (a “SPAC”) is different from taking a company public through an underwritten public offering and may create risks for unaffiliated investors.
An underwritten offering involves a company engaging underwriters to purchase its shares and resell them to the public. An underwritten offering imposes statutory liability on the underwriters for material misstatements or omissions contained in the registration statement unless they are able to sustain the burden of providing that they did not know and could not reasonably have discovered such material misstatements or omissions. This is referred to as a “due diligence” defense and results in the underwriters undertaking a detailed review of the company’s business, financial condition and results of operations. Going public via a business combination with a SPAC does not involve any underwriters and does not generally necessitate the level of review required to establish a “due diligence” defense as would be customary in an underwritten offering.
In addition, going public via a business combination with a SPAC does not involve a book-building process as is the case in an underwritten public offering. In any underwritten public offering, the initial value of a company is set by investors who indicate the price at which they are prepared to purchase shares from the underwriters. In the case of a SPAC transaction, the value of the company is established by means of negotiations between the target company, the SPAC and, in some cases, other investors who agree to purchase shares at the time of the business combination. The process of establishing the value of a company in a SPAC business combination may be less effective than the book-building process in an underwritten public offering and also does not reflect events that may have occurred between the date of the merger agreement and the closing of the transaction. In addition, underwritten public offerings are frequently oversubscribed resulting in additional potential demand for shares in the aftermarket following the underwritten public offering. There is no such book of demand built up in connection with a SPAC transaction and no underwriters with the responsibility of stabilizing the share price which may result in the share price being harder to sustain after the transaction.
If IRHO’s due diligence investigation of Electra was inadequate, then IRHO shareholders following the consummation of the Business Combination could lose some or all of their investment.
Even though IRHO and its legal advisors conducted a due diligence investigation of Electra, it cannot be sure that this due diligence uncovered all material issues that may be present in Electra and its business and operations, or that it would be possible to uncover all material issues through a customary amount of due diligence, or that factors outside of Electra and its business and operations and outside of its control will not later arise.
During the pendency of the Business Combination, IRHO will not be able to enter into an agreement with another party because of restrictions in the Merger Agreement. If the Proposed Transaction is not completed, those restrictions may make it harder for IRHO to complete an alternate business combination before its liquidation date.
While the Merger Agreement is in effect, neither IRHO nor Electra may solicit, assist, facilitate the making, submission or announcement of, or intentionally encourage any alternative acquisition proposal, such as a merger, material sale of assets or equity interests or other business combination, with any third party, even though any such
48
Table of Contents
alternative acquisition could be more favorable to their respective shareholders than the Proposed Transaction. In addition, if the Business Combination is not completed, these provisions will make it more difficult for IRHO to complete an alternative business combination following the termination of the Merger Agreement due to the passage of time during which these provisions have remained in effect.
IRHO shareholders may not know prior to the redemption deadline or prior to the extraordinary general meeting whether IRHO will have satisfied the Minimum Cash Condition.
We cannot assure you of this. If IRHO receives valid redemption requests from holders of Public Shares prior to the redemption deadline, IRHO may, at its sole discretion, following the redemption deadline and until the Closing Date, seek and permit withdrawals by one or more of such holders of their redemption requests. IRHO may select which holders to seek such withdrawals of redemption requests from based on any factors IRHO may deem relevant and the purpose of seeking such withdrawals may be to increase the funds held in the Trust Account, including where IRHO otherwise would not satisfy the Minimum Cash Condition. This process could take a number of days and there may be a period of time after the extraordinary general meeting and before the Closing when shareholders do not know how much cash Electra Pubco will have upon the closing or whether IRHO has satisfied the Minimum Cash Condition. Accordingly, Public Shareholders may be required to make redemption and voting decisions without knowing whether we will satisfy all of the conditions to closing the Business Combination.
There is no guarantee that a Public Shareholder’s decision to redeem its Public Shares will put the shareholder in a better future economic position.
IRHO can give no assurance as to the price at which a shareholder may be able to sell its Public Shares in the future following the completion of the Business Combination or any alternative initial business combination. Certain events following the consummation of any initial business combination, including the Business Combination, may cause an increase in IRHO’s share price and may result in a lower value realized now than a stockholder of IRHO might realize in the future had the stockholder not redeemed its shares. Similarly, if a shareholder does not redeem its shares, the shareholder will bear the risk of ownership of the Electra Pubco Common Stock after the consummation of the Business Combination and there can be no assurance that a shareholder can sell its shares in the future for a greater amount than the redemption price set forth in this proxy statement/prospectus. A shareholder should consult the shareholder’s own tax and/or financial advisor for assistance on how this may affect his, her or its individual situation.
If Public Shareholders fail to properly demand redemption, they will not be entitled to have their Public Shares redeemed for a pro rata portion of the Trust Account.
IRHO’s Public Stockholders may demand that IRHO redeem their Public Shares for their respective pro rata portion of the Trust Account, calculated as of two business days prior to the anticipated consummation of the Business Combination, including interest earned on the funds held in the Trust Account (which interest will be net of taxes payable). Public Shareholders who seek to exercise this Redemption Right must (a) submit a written request, including the legal name, phone number and address of the beneficial owner of the shares for which redemption is requested and (b) deliver their Public Shares (either physically or electronically through DTC) to IRHO’s transfer agent two business days prior to the scheduled date of the extraordinary general meeting. Any Public Shareholder who fails to properly deliver their Public Shares will not be entitled to have his or her shares redeemed. See the section of this proxy statement/prospectus entitled “The Extraordinary General Meeting — Redemption Rights” for the procedures to be followed if you wish to have your Public Shares redeemed for cash.
If you or a “group” of shareholders of which you are a part are deemed to hold 15% or more of the Public Shares, you will lose the ability to redeem your Public Shares.
A Public Shareholder, together with any of his, her or its affiliates or any other person with whom it is acting in concert or as a “group” (as defined under Section 13 of the Exchange Act), will be restricted from redeeming in the aggregate his, her or its shares or, if part of such a group, the group’s shares, of 15% or more of the Public Shares, which we refer to as “Excess Shares.” In order to determine whether a shareholder is acting in concert or as a group with another shareholder, IRHO will require each Public Shareholder seeking to exercise Redemption Rights to certify to IRHO whether such shareholder is acting in concert or as a group with any other shareholder. Such certifications, together with other public information relating to stock ownership available to IRHO at that time, such as Section 13D,
49
Table of Contents
Section 13G and Section 16 filings under the Exchange Act, will be the sole basis on which IRHO makes the above-referenced determination. Your inability to redeem any Excess Shares will reduce your influence over IRHO’s ability to consummate the Business Combination and you could suffer a material loss on your investment in IRHO if you sell Excess Shares in open market transactions. Additionally, you will not receive redemption distributions with respect to the Excess Shares if IRHO consummates the Business Combination. As a result, in order to dispose of such shares, you would be required to sell your shares in open market transactions, potentially at a loss. Notwithstanding the foregoing, shareholders may challenge IRHO’s determination as to whether a shareholder is acting in concert or as a group with another shareholder in a court of competent jurisdiction.
IRHO may be targeted by securities class action and derivative lawsuits that could result in substantial costs and may delay or prevent the Business Combination from being completed.
Securities class action lawsuits and derivative lawsuits are often brought against public companies that have entered into merger agreements. Even if the lawsuits are without merit, defending against these claims can result in substantial costs and divert management time and resources. An adverse judgment could result in monetary damages, which could have a negative impact on IRHO’s liquidity and financial condition. Additionally, if a plaintiff is successful in obtaining an injunction prohibiting completion of the Business Combination, then that injunction may delay or prevent the Business Combination from being completed, or from being completed within the expected timeframe, which may adversely affect IRHO’s and Electra’s respective businesses, financial condition and results of operation.
IRHO’s management has identified material weaknesses in IRHO’s internal control over financial reporting. If IRHO is unable to develop and maintain an effective system of internal control over financial reporting, IRHO may not be able to accurately report IRHO’s financial results in a timely manner, which may adversely affect investor confidence in IRHO and materially and adversely affect IRHO’s business and operating results.
IRHO’s management has identified material weaknesses in IRHO’s internal controls over financial reporting relating to IRHO’s accounting for complex financial instruments and accruals. A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected and corrected on a timely basis.
Effective internal controls are necessary for IRHO to provide reliable financial reports and prevent fraud. Measures to remediate material weaknesses may be time-consuming and costly and there is no assurance that such initiatives will ultimately have the intended effects. If IRHO is unable to develop and maintain an effective system of internal control over financial reporting, IRHO may not be able to accurately report IRHO’s financial results in a timely manner, which may adversely affect investor confidence in u IRHO and materially and adversely affect IRHO’s business and operating results. If IRHO identifies any new material weaknesses in the future, any such newly identified material weakness could limit IRHO’s ability to prevent or detect a misstatement of IRHO’s accounts or disclosures that could result in a material misstatement of IRHO’s annual or interim financial statements. In such case, IRHO may be unable to maintain compliance with securities law requirements regarding timely filing of periodic reports in addition to applicable stock exchange listing requirements, investors may lose confidence in IRHO’s financial reporting and adversely affect IRHO’s business and operating results. IRHO cannot assure you that the measures IRHO has taken to date, or any measures IRHO may take in the future, will be sufficient to avoid potential future material weaknesses.
Risks Related to the Consummation of the Domestication
The Domestication may result in adverse tax consequences for holders of IRHO Ordinary Shares and IRHO Rights, including holders exercising their Redemption Rights with respect to the Public Shares.
Subject to the limitations and qualifications described in “Material U.S. Federal Income Tax Considerations,” including the application of the PFIC rules and Section 367(b) of the Code, the Domestication is intended to qualify as a “reorganization” within the meaning of Section 368(a) of the Code and, if so treated, a U.S. holder (as defined below) would not recognize gain or loss on the exchange of IRHO Ordinary Shares or IRHO Rights for Parent Class A Common Shares or Parent Rights, as applicable, pursuant to the Domestication. If the Domestication qualifies as a “reorganization” within the meaning of Section 368(a) of the Code, a U.S. holder of IRHO Ordinary Shares or IRHO
50
Table of Contents
Rights may still recognize gain (but not loss) or be required to include the “all earnings and profits amount” upon the exchange of its IRHO Ordinary Shares or IRHO Rights for Parent Class A Common Shares or Parent Rights, as applicable, pursuant to the Domestication under Section 367(b) of the Code.
Alternatively, if the Domestication does not qualify as a “reorganization” within the meaning of Section 368(a) of the Code, then a U.S. holder that exchanges its IRHO Ordinary Shares and IRHO Rights for the consideration pursuant to the Domestication generally will recognize gain or loss equal to the difference between (i) the sum of the fair market value of the Parent Class A Common Shares and Parent Rights received and (ii) the U.S. holder’s adjusted tax basis in the IRHO Ordinary Shares and IRHO Rights exchanged therefor, as applicable.
Additionally, the Domestication may cause non-U.S. holders (as defined in “Material U.S. Federal Income Tax Considerations”) of IRHO Ordinary Shares to become subject to U.S. federal withholding taxes on any dividends paid in respect of such non-U.S. holder’s Parent Class A Common Shares after the Domestication.
Because the Domestication will occur immediately prior to the redemptions of holders that exercise Redemption Rights with respect to Public Shares, holders exercising Redemption Rights would still be subject to the potential tax consequences of the Domestication, and for U.S. holders, the determination of whether a U.S. holder is a 10% U.S. Shareholder or is otherwise subject to Section 367 of the Code would be determined as if the Redemptions had not yet occurred at the time of the Domestication. Holders should consult their tax advisors with respect to the potential tax consequences to them of the Domestication and exercise of Redemption Rights.
The tax consequences of the Domestication are complex and will depend on the particular circumstances of a holder of IRHO Ordinary Shares or IRHO Rights. All holders of IRHO Ordinary Shares and IRHO Rights are strongly urged to consult their tax advisors for a full description and understanding of the tax consequences of the Domestication, including the applicability and effect of U.S. federal, state, local and foreign income and other tax laws. For additional information, see “Material U.S. Federal Income Tax Considerations.”
Upon consummation of the Business Combination, the rights of holders of Electra Pubco Common Stock arising under the DGCL as well as Proposed Organizational Documents will differ from and may be less favorable to the rights of holders of IRHO Ordinary Shares arising under the Companies Act as well as our Cayman Constitutional Documents.
Upon consummation of the Business Combination, the rights of holders of Electra Pubco Common Stock will arise under the Proposed Organizational Documents as well as the DGCL. Those new organizational documents and the DGCL contain provisions that differ in some respects from those in our Cayman Constitutional Documents and the Companies Act and, therefore, some rights of holders of Electra Pubco Common Stock could differ from the rights that holders of IRHO Ordinary Shares currently possess. For instance, while class actions are generally not available to shareholders under Companies Act, such actions are generally available under the DGCL. This change could increase the likelihood that Electra Pubco becomes involved in costly litigation, which could have a material adverse effect on Electra Pubco.
In addition, there are differences between the new organizational documents of Electra Pubco and the current constitutional documents of IRHO. For a more detailed description of the Rights of holders of Electra Pubco Common Stock and how they may differ from the Rights of holders of IRHO Ordinary Shares, please see “Comparison of Corporate Governance and Shareholder Rights.” The forms of the Proposed Charter and the Proposed Bylaws of Electra Pubco are attached as Annex B-1 and Annex B-2, respectively, to this proxy statement/prospectus and we urge you to read them.
Delaware law and Electra Pubco’s Proposed Organizational Documents contain certain provisions, including anti-takeover provisions that limit the ability of stockholders to take certain actions and could delay or discourage takeover attempts that stockholders may consider favorable.
The Proposed Organizational Documents that will be in effect upon consummation of the Business Combination, and the DGCL, contain provisions that could have the effect of rendering more difficult, delaying, or preventing an acquisition that stockholders may consider favorable, including transactions in which stockholders might otherwise receive a premium for their shares. These provisions could also limit the price that investors might be willing to pay in the future for shares of our common stock, and therefore depress the trading price of Electra Pubco’s common stock. These provisions could also make it difficult for stockholders to take certain actions, including electing directors who
51
Table of Contents
are not nominated by the current members of the Electra Pubco Board or taking other corporate actions, including effecting changes in our management. Among other things, the Proposed Organizational Documents include provisions regarding:
• the ability of the Electra Pubco Board to issue shares of preferred stock, including “blank check” preferred stock and to determine the price and other terms of those shares, including preferences and voting rights, without stockholder approval, which could be used to significantly dilute the ownership of a hostile acquirer;
• the Electra Pubco Proposed Charter will prohibit cumulative voting in the election of directors, which limits the ability of minority stockholders to elect director candidates;
• the limitation of the liability of, and the indemnification of, Electra Pubco’s directors and officers;
• the ability of the Electra Pubco Board to amend the Proposed Bylaws, which may allow the Electra Pubco Board to take additional actions to prevent an unsolicited takeover and inhibit the ability of an acquirer to amend the Proposed Bylaws to facilitate an unsolicited takeover attempt; and
• advance notice procedures with which stockholders must comply to nominate candidates to the Electra Pubco Board or to propose matters to be acted upon at a stockholders’ meeting, which could preclude stockholders from bringing matters before annual or special meetings of stockholders and delay changes in the Electra Pubco Board and also may discourage or deter a potential acquirer from conducting a solicitation of proxies to elect the acquirer’s own slate of directors or otherwise attempting to obtain control of Electra Pubco.
These provisions, alone or together, could delay or prevent hostile takeovers and changes in control or changes in the Electra Pubco Board or management.
The provisions of the Proposed Charter requiring exclusive forum in the Court of Chancery of the State of Delaware and the federal district courts of the United States for certain types of lawsuits may have the effect of discouraging lawsuits against our directors and officers.
Electra Pubco’s Proposed Charter provides that, to the fullest extent permitted by law, and unless Electra Pubco consents in writing to the selection of an alternative forum, the Court of Chancery of the State of Delaware (or, in the event that the Chancery Court does not have jurisdiction, the federal district court for the District of Delaware or other state courts of the State of Delaware) will be the sole and exclusive forum for (i) any derivative action, suit or proceeding brought on Electra Pubco’s behalf, (ii) any action, suit or proceeding asserting a claim of breach of a fiduciary duty owed by any director, officer or stockholder of Electra Pubco to Electra Pubco or Electra Pubco’s stockholders, (iii) any action, suit or proceeding arising pursuant to any provision of the DGCL or Electra Pubco’s Proposed Bylaws or Electra Pubco’s Proposed Charter (as each may be amended from time to time), (iv) any action, suit or proceeding as to which the DGCL confers jurisdiction on the Court of Chancery of the State of Delaware, or (v) any action, suit or proceeding asserting a claim against Electra Pubco or any current or former director, officer or stockholder governed by the internal affairs doctrine.
Section 22 of the Securities Act creates concurrent jurisdiction for federal and state courts over all suits brought to enforce any duty or liability created by the Securities Act or the rules and regulations thereunder. Accordingly, both state and federal courts have jurisdiction to entertain such Securities Act claims. To prevent having to litigate claims in multiple jurisdictions and the threat of inconsistent or contrary rulings by different courts, among other considerations, the Proposed Charter will also provide that, unless Electra Pubco consents in writing to the selection of an alternative forum, to the fullest extent permitted by law, the federal district courts of the United States of America will be the exclusive forum for the resolution of any complaint asserting a cause of action arising under the Securities Act; however, there is uncertainty as to whether a court would enforce such provision, and investors cannot waive compliance with federal securities laws and the rules and regulations thereunder. Notwithstanding the foregoing, the Proposed Charter will provide that the exclusive forum provision will not apply to suits brought to enforce any cause of action arising under the Securities Act, any duty or liability created by the Exchange Act or any other claim for which the federal courts have exclusive jurisdiction. Section 27 of the Exchange Act creates exclusive federal jurisdiction over all suits brought to enforce any duty or liability created by the Exchange Act or the rules and regulations thereunder.
52
Table of Contents
These provisions may have the effect of discouraging lawsuits against Electra Pubco’s directors and officers. The enforceability of similar choice of forum provisions in other companies’ certificates of incorporation has been challenged in legal proceedings, and it is possible that, in connection with any applicable action brought against Electra Pubco, a court could find the choice of forum provisions contained in the Proposed Charter to be inapplicable or unenforceable in such action.
Electra Pubco will be a “controlled company” within the meaning of Nasdaq listing standards and, as a result, will qualify for exemptions from certain corporate governance requirements. You may not have the same protections afforded to shareholders of companies that are subject to such requirements.
Electra Pubco will be a “controlled company” within the meaning of Nasdaq listing standards and, as a result, will qualify for, and may rely on, exemptions from certain corporate governance requirements. You may not have the same protections afforded to shareholders of companies that are subject to such requirements.
Following the Business Combination (assuming maximum redemptions), Fabrizio Martini, Electra’s co-founder and Chief Executive Officer, will beneficially own (including shares underlying Converted Stock Options) approximately 23% of the outstanding shares of Electra Pubco Common Stock and approximately ____% of the combined voting power for the election of directors to the Electra Pubco Board, as a result of his ownership of all of the outstanding shares of Electra Pubco Class B Common Stock, which are entitled to ten votes per share, and, as a result, Electra Pubco will be considered a “controlled company” for the purposes of Nasdaq listing rules. As such, Electra Pubco will qualify for, and may rely on, exemptions from certain corporate governance requirements, including that a majority of the Electra Pubco consist of “independent directors,” as defined under Nasdaq listing rules. In addition, Electra Pubco will not be required to have a nominating and corporate governance committee or compensation committee that is composed entirely of independent directors with written charters addressing the committees’ purposes and responsibilities and an annual performance evaluation of these committees. Because of the ten-to-one voting ratio of the Electra Pubco Class B Common Stock, Mr. Martini may continue to control a majority of the combined voting power even if he holds significantly less than a majority of the outstanding shares of Electra Pubco Common Stock.
If at any time Electra Pubco ceases to be a “controlled company” under Nasdaq listing rules, the Electra Pubco Board intends to take any action that may be necessary to comply with Nasdaq listing rules, subject to a permitted “phase-in” period. These and any other actions necessary to achieve compliance with such rules may increase Electra Pubco’s legal and administrative costs, will make some activities more difficult, time-consuming and costly and may also place additional strain on Electra Pubco’s personnel, systems and resources.
Risks if the Domestication and the Business Combination are not Consummated
If we are not able to complete the Business Combination with Electra by December 18, 2027 nor able to complete another business combination by such date, in each case, as such date may be further extended pursuant to the Cayman Constitutional Documents, we would cease all operations except for the purpose of winding up and we would redeem our Ordinary Shares and liquidate the Trust Account, in which case our Public Shareholders may only receive approximately $10.00 per share and our rights will be worthless.
Our ability to complete our initial business combination may be negatively impacted by general market conditions, volatility in the capital and debt markets and the other risks described herein.
If IRHO is not able to complete the Business Combination with Electra by December 18, 2027, nor able to complete another business combination by such date, in each case, as such date may be extended pursuant to the Cayman Constitutional Documents IRHO will: (i) cease all operations except for the purpose of winding up, (ii) as promptly as reasonably possible but not more than ten business days thereafter, redeem the Public Shares, at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the Trust Account, including interest earned on the funds held in the Trust Account (less taxes payable and up to $100,000 of interest to pay dissolution expenses), divided by the number of then outstanding Public Shares, which redemption will completely extinguish Public Shareholders’ rights as shareholders (including the right to receive further liquidation distributions, if any) and (iii) as promptly as reasonably possible following such redemption, subject to the approval of IRHO’s remaining shareholders and the IRHO Board, liquidate and dissolve, subject, in each case, to our obligations under Cayman Islands law to provide for claims of creditors and in all cases subject to the other requirements of applicable law. In such case, our Public Shareholders may only receive approximately $10.00 per share and our rights will be worthless.
53
Table of Contents
You will not have any rights or interests in funds from the Trust Account, except under certain limited circumstances. To liquidate your investment, therefore, you may be forced to sell your Public Shares and/or Public Rights, potentially at a loss.
Our Public Shareholders will be entitled to receive funds from the Trust Account only upon the earliest to occur of (1) our completion of an initial business combination (including the Closing), and then only in connection with those Public Shares that such Public Shareholder properly elected to redeem, subject to certain limitations; (2) the redemption of any Public Shares properly submitted in connection with a shareholder vote to amend the Cayman Constitutional Documents to (A) modify the substance and timing of our obligation to allow redemption in connection with our initial business combination or to redeem 100% of the Public Shares if we do not complete a business combination by December 18, 2027 or (B) with respect to any other provision relating to shareholders’ rights or pre-initial business combination activity; and (3) the redemption of the Public Shares if we have not completed an initial business combination by December 18, 2027 (or if such date is further extended at a duly called extraordinary general meeting, such later date), subject to applicable law. In no other circumstances will a shareholder have any right or interest of any kind to or in the Trust Account. Holders of Public Rights will not have any right to the proceeds held in the Trust Account with respect to the Public Rights. Accordingly, to liquidate your investment, you may be forced to sell your Public Shares and/or Public Rights, potentially at a loss.
If we have not completed our initial business combination, our Public Shareholders may be forced to wait until after December 18, 2027 before redemption from the Trust Account.
If we have not completed our initial business combination by December 18, 2027 (or if such date is further extended at a duly called extraordinary general meeting, such later date), we will distribute the aggregate amount then on deposit in the Trust Account (less taxes payable and up to $100,000 of interest to pay dissolution expenses), pro rata to our Public Shareholders by way of redemption and cease all operations except for the purposes of winding up of our affairs, as further described in this proxy statement/prospectus. Any redemption of Public Shareholders from the Trust Account will be affected automatically by function of the Cayman Constitutional Documents prior to any voluntary winding up. If we are required to wind-up, liquidate the Trust Account and distribute such amount therein, pro rata, to our Public Shareholders, as part of any liquidation process, such winding up, liquidation and distribution must comply with the applicable provisions of the Companies Act. In that case, investors may be forced to wait beyond December 18, 2027 (or if such date is further extended at a duly called extraordinary general meeting, such later date), before the redemption proceeds of the Trust Account become available to them, and they receive the return of their pro rata portion of the proceeds from the Trust Account. We have no obligation to return funds to investors prior to the date of our redemption or liquidation unless, prior thereto, we consummate our initial business combination or amend certain provisions of our Cayman Constitutional Documents and only then in cases where investors have properly sought to redeem their Public Shares. Only upon our redemption or any liquidation will Public Shareholders be entitled to distributions if we have not completed our initial business combination within the required time period and do not amend certain provisions of our Cayman Constitutional Documents prior thereto.
If the net proceeds of IRHO’s IPO not being held in the Trust Account are insufficient to allow us to operate through to December 18, 2027 (or if such date is further extended at a duly called extraordinary general meeting, such later date) and we are unable to obtain additional capital, we may be unable to complete our initial business combination, in which case our Public Shareholders may only receive $10.00 per share, and our rights will be worthless.
As of December 31, 2025, IRHO had cash of $__________ held outside the Trust Account, which is available for use by us to cover the costs associated with identifying a target business and negotiating a business combination and other general corporate uses. In addition, as of December 31, 2025, IRHO had total current liabilities of $____________.
The funds available to us outside of the Trust Account may not be sufficient to allow us to operate until December 18, 2027 (or if such date is further extended at a duly called extraordinary general meeting, such later date), assuming that our initial business combination is not completed during that time. Of the funds available to us, we could use a portion of the funds available to us to consummate the Business Combination with Electra, or, if the Merger Agreement is terminated, to pay fees to consultants to assist us with our search for another target business. In such event, we could also use a portion of the funds as a down payment or to fund a “no-shop” provision (a provision in letters of intent designed to keep target businesses from “shopping” around for transactions with other companies on terms more favorable to such target businesses) with respect to a particular proposed business combination, although
54
Table of Contents
we do not have any current intention to do so. If we entered into a letter of intent where we paid for the right to receive exclusivity from a target business and were subsequently required to forfeit such funds (whether as a result of our breach or otherwise), we might not have sufficient funds to continue searching for, or conduct due diligence with respect to, a target business.
If we are required to seek additional capital, we would need to borrow funds from our Sponsor, members of our management team or other third parties to operate or may be forced to liquidate. Neither the members of our management team nor any of their affiliates is under any further obligation to advance funds to IRHO in such circumstances. Any such advances would be repaid only from funds held outside the Trust Account or from funds released to us upon completion of our initial business combination. If we are unable to obtain additional financing, we may be unable to complete our initial business combination. If we are unable to complete our initial business combination because we do not have sufficient funds available to us, we will be forced to cease operations and liquidate the Trust Account. Consequently, our Public Shareholders may only receive approximately $10.00 per share on our redemption of the Public Shares and the Public Rights will expire worthless.
IRHO’s independent registered public accounting firm’s report for the year ended November 30, 2025 the period from November 26, 2024 (inception) through November 30, 2024 contains an explanatory paragraph that expresses substantial doubt about its ability to continue as a “going concern.”
As of December 31, 2025, IRHO had approximately $______ in cash and may not have sufficient liquidity to fund its working capital needs. Further, IRHO has incurred and expects to continue to incur significant costs in pursuit of its financing and acquisition plans, including the Business Combination. IRHO cannot assure you that its plans to raise capital or to consummate an initial business combination, including the Business Combination, will be successful. These factors, among others, raise substantial doubt about its ability to continue as a going concern. The financial statements contained elsewhere in this proxy statement/prospectus do not include any adjustments that might result from its inability to consummate the Business Combination or its inability to continue as a going concern.
55
Table of Contents
Extraordinary General Meeting of IRHO
General
IRHO is furnishing this proxy statement/prospectus to its shareholders as part of the solicitation of proxies by the IRHO Board for use at the extraordinary general meeting to be held virtually at [•], Eastern Time, on [•], and at any adjournment or postponement thereof. This proxy statement/prospectus provides IRHO shareholders with information they need to know to be able to vote or direct their vote to be cast at the extraordinary general meeting.
Date, Time and Place of the Extraordinary General Meeting
The extraordinary general meeting will be held virtually at [•], Eastern Time, on [•] and will be a virtual meeting conducted via live webcast at [•]. For the purposes of Cayman Islands law and the Cayman Constitutional Documents, the physical location of the extraordinary general meeting will be at the offices of Loeb & Loeb LLP at 345 Park Avenue, New York, New York 10154.
Purpose of the Extraordinary General Meeting
At the extraordinary general meeting, IRHO is asking holders of IRHO Ordinary Shares to consider and vote upon:
• A copy of the Merger Agreement and the Amendment to Merger Agreement, dated as of May 14, 2026, are attached to this proxy statement/prospectus as Annex A-1 and Annex-2;
• the Domestication Proposal. The Proposed Charter is attached to this proxy statement/prospectus as Annex B-1;
• the Stock Issuance Proposal;
• the Organizational Documents Proposal. The Proposed Charter and the Proposed Bylaws are attached to this proxy statement/prospectus as Annex B-1 and Annex B-2, respectively;
• the Advisory Organizational Documents Proposals;
• the Electra Pubco Equity Incentive Plan Proposal. A copy of the Electra Pubco Equity Incentive Plan is attached to this proxy statement/prospectus as Annex C; and
• the Adjournment Proposal.
Each of the Condition Precedent Proposals is cross-conditioned on the approval of each other. The Adjournment Proposal and the Advisory Organizational Documents Proposals are not conditioned upon the approval of any other proposal set forth in this proxy statement/prospectus.
Recommendation of the IRHO Board
The IRHO Board believes that the Business Combination Proposal and the other proposals to be presented at the extraordinary general meeting are in the best interests of IRHO’s shareholders and unanimously recommends that its shareholders vote “FOR” the approval of the Business Combination Proposal, “FOR” the approval of the Domestication Proposal, “FOR” the approval of the Stock Issuance Proposal, “FOR” the approval of the Organizational Documents Proposal, “FOR” the approval, on an advisory basis, of each of the separate Advisory Organizational Documents Proposals, “FOR” the approval of the Electra Pubco Equity Incentive Plan Proposal and “FOR” the approval of the Adjournment Proposal, in each case, if presented to the extraordinary general meeting.
The existence of financial and personal interests of one or more of IRHO’s directors may result in a conflict of interest on the part of such director(s) between what he, she or they may believe is in the best interests of IRHO and its shareholders and what he, she or they may believe is best for himself, herself or themselves in determining to recommend that shareholders vote for the proposals. In addition, IRHO’s officers have interests in the Proposed Transaction that may conflict with your interests as a shareholder. See “The Business Combination Proposal — Certain Interests of IRHO’s Directors and Officers and Others in the Business Combination” for a further discussion of these considerations.
56
Table of Contents
Record Date; Who is Entitled to Vote
IRHO shareholders will be entitled to vote or direct votes to be cast at the extraordinary general meeting if they owned IRHO Ordinary Shares at the close of business on [•], which is the “Record Date” for the extraordinary general meeting. Shareholders will have one vote for each IRHO Ordinary Share owned at the close of business on the Record Date. If your shares are held in “street name” or are in a margin or similar account, you should contact your broker to ensure that votes related to the shares you beneficially own are properly counted. IRHO Rights do not have voting Rights. As of the close of business on the Record Date, there were 29,320,000 IRHO Ordinary Shares issued and outstanding, of which 6,320,000 are not Public Shares held by Insiders and Initial Shareholders.
The Insiders have agreed to, among other things, vote in favor of the Proposed Transaction. The Sponsor, which includes among its members each of the directors and officers of IRHO, owns 5,750,000 Founder Shares, and 370,000 Private Placement Units, and Cantor owns 200,000 Private Placement Units. As a result, as of the date of this proxy statement/prospectus, the Initial Shareholders own approximately 21% of the issued and outstanding IRHO Ordinary Shares and have the right to vote approximately 21% of the issued and outstanding IRHO Ordinary Shares.
Quorum
A quorum of IRHO shareholders is necessary to hold a valid meeting. A quorum will be present at the extraordinary general meeting if the holders of a majority of the issued and outstanding IRHO Ordinary Shares entitled to vote at the extraordinary general meeting are represented in person or by proxy. As of the Record Date for the extraordinary general meeting, 14,660,001 IRHO Ordinary Shares would be required to achieve a quorum. Because the Sponsor has the right to vote 6,120,000 IRHO Ordinary Shares, the presence at the extraordinary general meeting of holders of 8,540,001 IRHO Ordinary Shares will be needed to establish a quorum.
Abstentions and Broker Non-Votes
Proxies that are marked “abstain” and proxies relating to “street name” shares that are returned to IRHO but marked by brokers as “not voted” will be treated as shares present for purposes of determining the presence of a quorum on all matters, but they will not be treated as shares voted on the matter. Under the rules of various national and regional securities exchanges, your broker, bank, or nominee cannot vote your shares with respect to non-discretionary matters unless you provide instructions on how to vote in accordance with the information and procedures provided to you by your broker, bank, or nominee. IRHO believes all the proposals presented to the shareholders will be considered non-discretionary and therefore your broker, bank, or nominee cannot vote your shares without your instruction.
Vote Required for Approval
The approval of the Business Combination Proposal requires an ordinary resolution under Cayman Islands law, being the affirmative vote of a majority of the IRHO Ordinary Shares, who, being entitled to do so, attend in person or by proxy and vote thereon at the extraordinary general meeting. The Business Combination Proposal is conditioned on the approval of the other Condition Precedent Proposals. Therefore, if the other Condition Precedent Proposals are not approved, the Business Combination Proposal will have no effect, even if approved by holders of IRHO Ordinary Shares.
The approval of the Domestication Proposal requires a special resolution under Cayman Islands law, being the affirmative vote of at least two-thirds of IRHO Ordinary Shares, who, being entitled to do so, attend in person or by proxy and vote thereon at the extraordinary general meeting. The Domestication Proposal is conditioned on the approval of the other Condition Precedent Proposals. Therefore, if the other Condition Precedent Proposals are not approved, the Domestication Proposal will have no effect.
The approval of the Stock Issuance Proposal requires an ordinary resolution under Cayman Islands law, being the affirmative vote of a majority of the IRHO Ordinary Shares, who, being entitled to do so, attend in person or by proxy and vote thereon at the extraordinary general meeting. The Stock Issuance Proposal is conditioned on the approval of the other Condition Precedent Proposals. Therefore, if the other Condition Precedent Proposals are not approved, the Stock Issuance Proposal will have no effect, even if approved by holders of IRHO Ordinary Shares.
57
Table of Contents
The approval of the Organizational Documents Proposal requires a special resolution under Cayman Islands law, being the affirmative vote of the holders of at least two-thirds of the IRHO Ordinary Shares, who, being entitled to do so, attend in person or by proxy and vote thereon at the extraordinary general meeting. The Organizational Documents Proposal is conditioned on the approval of the other Condition Precedent Proposals. Therefore, if the other Condition Precedent Proposals are not approved, the Organizational Documents Proposal will have no effect, even if approved by holders of IRHO Ordinary Shares.
The separate approval of each of the Advisory Organizational Documents Proposals, each of which is a non-binding vote, requires an ordinary resolution under Cayman Islands law, being the affirmative vote of a majority of the IRHO Ordinary Shares, who, being entitled to do so, attend in person or by proxy and vote thereon at the extraordinary general meeting. The Advisory Organizational Documents Proposals are not conditioned upon any other proposal.
The approval of the Electra Pubco Equity Incentive Plan Proposal requires an ordinary resolution under Cayman Islands law, being the affirmative vote of a majority of the IRHO Ordinary Shares, who, being entitled to do so, attend in person or by proxy and vote thereon at the extraordinary general meeting. The Electra Pubco Equity Incentive Plan Proposal is conditioned on the approval of the other Condition Precedent Proposals. Therefore, if the other Condition Precedent Proposals are not approved, the Electra Pubco Equity Incentive Plan Proposal will have no effect, even if approved by holders of IRHO Ordinary Shares.
The approval of the Adjournment Proposal requires an ordinary resolution under Cayman Islands law, being the affirmative vote of a majority of the IRHO Ordinary Shares, who, being entitled to do so, attend in person or by proxy and vote thereon at the extraordinary general meeting. The Adjournment Proposal is not conditioned upon any other proposal.
The Sponsor, which includes among its members each of the directors and officers of IRHO, owns 5,750,000 Founder Shares, and 370,000 Private Placement Units. As a result, as of the date of this proxy statement/prospectus, the Insiders own approximately 21% of the issued and outstanding IRHO Ordinary Shares and have the right to vote approximately 21% of the issued and outstanding IRHO Ordinary Shares. Accordingly, assuming all issued and outstanding IRHO Ordinary Shares are voted, we would need the affirmative vote of holders of 8,540,001 public Ordinary Shares (or approximately 29%), in addition to the shares held by the Insiders, to approve each proposal requiring an ordinary resolution, including the Business Combination Proposal, the Stock Issuance Proposal, the Electra Pubco Equity Incentive Plan Proposal and, if presented, the Adjournment Proposal, and the affirmative vote of holders of 13,426,667 public Ordinary Shares (or approximately 46%) to approve each proposal requiring a special resolution.
Voting Your Shares
Each IRHO Ordinary Share that you own in your name entitles you to one vote. Your proxy card shows the number of IRHO Ordinary Shares that you own.
If you are a record owner of your shares, there are two ways to vote your IRHO Ordinary Shares at the extraordinary general meeting:
You Can Vote By Signing and Returning the Enclosed Proxy Card.
If you vote by proxy card, your “proxy,” whose name is listed on the proxy card, will vote your shares as you instruct on the proxy card. If you sign and return the proxy card but do not give instructions on how to vote your shares, your shares will be voted as recommended by IRHO’s board “FOR” the approval of the Business Combination Proposal, “FOR” the approval of the Domestication Proposal, “FOR” the approval of the Stock Issuance Proposal, “FOR” the approval of the Organizational Document Proposal, “FOR” the approval, on an advisory basis, of each of the separate Advisory Organizational Documents Proposals, “FOR” the approval of the Electra Pubco Equity Incentive
58
Table of Contents
Plan Proposal and “FOR” the approval of the Adjournment Proposal, in each case, if presented to the extraordinary general meeting. Votes received after a matter has been voted upon at the extraordinary general meeting will not be counted.
You Can Attend the Extraordinary General Meeting and Vote in Person.
• If your shares are registered in your name with the Transfer Agent and you wish to attend the extraordinary general meeting, go to [•], enter the 12-digit control number included on your proxy card or notice of the extraordinary general meeting and click on the “Click here to preregister for the online meeting” link at the top of the page. Just prior to the start of the extraordinary general meeting you will need to log back into the extraordinary general meeting site using your control number. Pre-registration is recommended but is not required in order to attend.
• Beneficial shareholders (those holding shares through a stock brokerage account or by a bank or other holder of record) who wish to attend the extraordinary general meeting must obtain a legal proxy by contacting their account representative at the bank, broker, or other nominee that holds their Public Shares and e-mail a copy (a legible photograph is sufficient) of their legal proxy to proxy@continentalstock.com. Beneficial shareholders who e-mail a valid legal proxy will be issued a 12-digit meeting control number that will allow them to register to attend and participate in the extraordinary general meeting. After contacting the Transfer Agent, a beneficial holder will receive an e-mail prior to the extraordinary general meeting with a link and instructions for entering the extraordinary general meeting. Beneficial shareholders should contact the Transfer Agent Company at least five business days prior to the extraordinary general meeting date in order to ensure access.
If your shares are held in “street name” or are in a margin or similar account, you should contact your broker to ensure that votes related to the shares you beneficially own are properly counted. If you wish to attend the meeting and vote in person or online and your shares are held in “street name,” you must obtain a legal proxy from your broker, bank or nominee. That is the only way IRHO can be sure that the broker, bank or nominee has not already voted your shares.
Revoking Your Proxy
If you are an IRHO shareholder and you give a proxy, you may revoke it at any time before it is exercised by doing any one of the following:
• you may send another proxy card with a later date;
• you may notify Bill Caragol, Chief Financial Officer of IRHO, in writing before the extraordinary general meeting that you have revoked your proxy; or
• you may attend the extraordinary general meeting, revoke your proxy, and vote, as indicated above.
If your shares are held in “street name” or are in a margin or similar account, you should contact your broker for information on how to change or revoke your voting instructions.
Who Can Answer Your Questions About Voting Your Shares
If you are a shareholder and have any questions about how to vote or direct a vote in respect of your IRHO Ordinary Shares, you may call ____________, our proxy solicitor, by email at IRHO_____. Individuals may also call _____________; banks and brokers can call _____.
Redemption Rights
Pursuant to the Cayman Constitutional Documents, a Public Shareholder may request that IRHO redeem all or a portion of its Public Shares for cash if the Proposed Transaction is consummated. As a holder of Public Shares, you will be entitled to receive cash for any Public Shares to be redeemed only if you:
• (a) hold Public Shares or (b) hold Public Shares through IRHO Units and elect to separate your IRHO Units into the underlying Public Shares and Public Rights prior to exercising your Redemption Rights with respect to the Public Shares;
59
Table of Contents
• submit a written request to the Transfer Agent, including the legal name, phone number and address of the beneficial owner of the Public Shares for which redemption is requested, that IRHO redeem all or a portion of your Public Shares for cash; and
• tender or deliver the certificates for your Public Shares (if any) along with the redemption forms to the Transfer Agent, physically or electronically through DTC.
Holders must complete the procedures for electing to redeem their Public Shares in the manner described above prior to [•], Eastern Time, on [•] (two business days before the scheduled date of the extraordinary general meeting) in order for their Public Shares to be redeemed.
Therefore, the election to exercise Redemption Rights occurs prior to the Domestication, but the Redemption might be with respect to the Electra Pubco Common Stock that an electing Public Shareholder holds after the Domestication. For the purposes of the Cayman Constitutional Documents, the exercise of Redemption Rights will be treated as an election to have such Public Shares redeemed for cash and references in this proxy statement/prospectus to “redemption” or “redeeming” will be interpreted accordingly. Immediately following the Domestication and the consummation of the Proposed Transaction, Electra Pubco will satisfy the exercise of Redemption Rights by redeeming the corresponding Electra Pubco Common Stock issued to the Public Shareholders that validly exercised their Redemption Rights.
Public Shareholders may elect to redeem all or a portion of the Public Shares held by them, regardless of if or how they vote in respect of the Business Combination Proposal and regardless of whether they hold Public Shares on the Record Date. Holders of IRHO Units must elect to separate Units held by them into the underlying Public Shares and Public Rights prior to exercising their Redemption Rights with respect to the Public Shares. If the Business Combination is not consummated, the Public Shares will be returned to the respective holder, broker or bank. If the Proposed Transaction is consummated, and if a Public Shareholder properly exercises its Redemption Rights to redeem all or a portion of the Public Shares that it holds and timely tenders or delivers the certificates for its shares (if any) along with the Redemption forms to the Transfer Agent, IRHO will redeem such Public Shares for a per-share price, payable in cash, equal to the pro rata portion of the funds held the Trust Account that are available for distribution to Public Shareholders, calculated as of two business days prior to the consummation of the Proposed Transaction. For illustrative purposes, as of the Record Date, this would have amounted to approximately $[•] per issued and outstanding Public Share. If a Public Shareholder exercises its Redemption Rights in full, then it will be electing to exchange its Public Shares for cash and will no longer own Public Shares.
If you hold the shares in “street name,” you will have to coordinate with your broker to have your shares certificated or tendered or delivered electronically. Public Shares that have not been tendered (either physically or electronically) in accordance with these procedures will not be redeemed for cash. There is a nominal cost associated with this tendering process and the act of certificating the shares or tendering or delivering them through DTC’s DWAC (deposit withdrawal at custodian) system. In the event the Proposed Transaction is not consummated this may result in an additional cost to shareholders for the return of their Public Shares.
An IRHO shareholder may withdraw a request for Redemption until the redemption deadline and, following this deadline, with IRHO’s consent up until the Closing. Furthermore, if a holder of a Public Share tenders or delivers its share certificates (if any) along with the Redemption forms in connection with an election of its Redemption and subsequently decides prior to the applicable date not to elect to exercise such rights, it may simply request that IRHO permit the withdrawal of the Redemption request and instruct the Transfer Agent to return the certificate (physically or electronically). The holder can make such request by contacting the Transfer Agent at the address or email address listed in this proxy statement/prospectus.
Any corrected or changed written exercise of Redemption Rights must be received by the Transfer Agent prior to the vote taken on the Business Combination Proposal at the extraordinary general meeting. No request for Redemption will be honored unless the holder’s Public Shares have been tendered or delivered (either physically or electronically) to the Transfer Agent at least two business days prior to the scheduled vote at the extraordinary general meeting.
Notwithstanding the foregoing, a Public Shareholder, together with any affiliate of such Public Shareholder or any other person with whom such Public Shareholder is acting in concert or as a “group” (as defined in Section 13(d)(3) of the Exchange Act), will be restricted from redeeming its Public Shares with respect to more than an aggregate of 15%
60
Table of Contents
of the Public Shares without IRHO’s prior consent. Accordingly, if a Public Shareholder, alone or acting in concert or as a group, seeks to redeem more than 15% of the Public Shares, then any such shares in excess of that 15% limit would not be redeemed for cash without IRHO’s prior consent.
The closing price of Public Shares on ______, 2026, the most recent practicable date prior to the date of this proxy statement/prospectus, was $_____. As of the Record Date, funds in the Trust Account totaled $[•] and were held in an interest-bearing bank deposit account.
Prior to exercising Redemption Rights, Public Shareholders should verify the market price of the Public Shares as they may receive higher proceeds from the sale of their Public Shares in the public market than from exercising their Redemption Rights if the market price per share is higher than the Redemption Price. IRHO cannot assure its shareholders that they will be able to sell their Public Shares in the open market, even if the market price per share is higher than the Redemption Price, as there may not be sufficient liquidity in its securities when its shareholders wish to sell their Public Shares.
Appraisal Rights and Dissenters’ Rights
Proxy Solicitation
IRHO is soliciting proxies on behalf of the IRHO Board. This solicitation is being made by mail but also may be made by telephone or in person. IRHO and its directors, officers and employees may also solicit proxies in person, by telephone or by other electronic means. IRHO will file with the SEC all scripts and other electronic communications as proxy soliciting materials. IRHO will bear the cost of the solicitation.
IRHO has engaged ______________ to assist in the solicitation process and will pay ___________ a fee of $______________, plus disbursements.
IRHO will ask banks, brokers and other institutions, nominees and fiduciaries to forward the proxy materials to their principals and to obtain their authority to execute proxies and voting instructions. IRHO will reimburse them for their reasonable expenses.
IRHO Shareholders
As of the date of this proxy statement/prospectus, there are 29,320,000 IRHO Ordinary Shares issued and outstanding, which includes 5,750,000 Founder Shares and 570,000 IRHO Ordinary Shares underlying the Private Placement Units, of which 370,000 are held by the Sponsor and 200,000 are held by Cantor. As of the date of this proxy statement/prospectus, there is outstanding an aggregate of 23,570,000 IRHO Rights, which includes the 370,000 Private Placement Rights held by the Sponsor, 200,000 Private Placement Rights held by Cantor and the 23,000,000 Public Rights.
At any time at or prior to the Proposed Transaction, subject to applicable securities laws (including with respect to material non-public information), the Sponsor, the existing equity holders of Electra or IRHO or our or their respective directors, officers, advisors or respective affiliates may (a) purchase Public Shares from institutional and other investors who elect to redeem, or indicate an intention to redeem, Public Shares, (b) execute agreements to purchase such shares from such investors in the future, or (c) enter into transactions with such investors and others to provide them with incentives to acquire Public Shares or not redeem their Public Shares. Such a purchase may include a contractual acknowledgement that such shareholder, although still the record holder of IRHO Ordinary Shares, is no longer the beneficial owner thereof and therefore agrees not to exercise its Redemption Rights. In the event that the Sponsor, the existing equity holders of Electra or IRHO or our or their respective directors, officers, advisors or respective affiliates purchase shares in privately negotiated transactions from Public Shareholders, such shares that are purchased by the Sponsor, the Electra Shareholders or our or their respective directors, officers, advisors or respective affiliates would not be voted in favor of the Business Combination Proposal, and the Sponsor, the existing equity holders of Electra or IRHO or our or their respective directors, officers, advisors or respective affiliates would waive their Redemption Rights. In the event that the Sponsor, the existing equity holders of Electra or IRHO or our or their
61
Table of Contents
respective directors, officers, advisors, or respective affiliates purchase shares in privately negotiated transactions from Public Shareholders who have already elected to exercise their Redemption Rights, such selling shareholders would be required to revoke their prior elections to redeem their Public Shares.
The purpose of such share purchases and other transactions would be to reduce the number of Public Shares electing to redeem.
Entering into any such arrangements may have a depressive effect on the price of IRHO Ordinary Shares (e.g., by giving an investor or holder the ability to effectively purchase shares at a price lower than market, such investor or holder may therefore become more likely to sell the shares he, she or it owns, either at or prior to the Proposed Transaction). If such transactions are effected, the consequence could be to cause the Proposed Transaction to be consummated in circumstances where such consummation could not otherwise occur.
62
Table of Contents
The Business Combination Proposal
Background of the Business Combination
The Business Combination was the result of a thorough search by IRHO for a potential transaction utilizing the global network, investing and operating experience of its management team and board of directors. The terms of the Business Combination were the result of negotiations between IRHO’s independent directors, management team, and the Sponsor, in consultation with IRHO’s legal advisors and professional service providers, and representatives of Electra, in consultation with their financial and legal advisors. The following is a brief description of the background of these negotiations, the Business Combination and related transactions.
IRHO is a blank check company incorporated in the Cayman Islands on September 12, 2025, and formed for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses. Our intention was to capitalize on the substantial deal sourcing, investing and operating expertise of our Sponsor, directors and management team to identify and combine with one or more businesses with high growth potential.
On December 18, 2025, we consummated our IPO of 23,000,000 IRHO Units at an offering price of $10.00 per IRHO Unit, generating gross proceeds to IRHO of $230,000,000, including the exercise in full by the underwriters of an option to purchase up to 3,000,000 Units at the offering price to cover over-allotments. On September 29, 2025, pursuant to an agreement by and between IRHO and the Sponsor, the Sponsor purchased 5,750,000 IRHO Founder Shares for an aggregate purchase price of $32,000. Simultaneously with the closing of the IPO, pursuant to a private Placement Units purchase agreement, IRHO completed the private sale of an aggregate of 370,000 Private Placement Units to the Sponsor at a purchase price of $10.00 per Private Placement Unit, with Cantor purchasing 200,000 Private Placement Units, generating gross proceeds to IRHO of $5,700,000.
As part of the Letter Agreement entered into at the time of IRHO’s IPO, the Insiders agreed to waive their Redemption Rights with respect to all of the Founder Shares in connection with the completion of the Business Combination. The Insiders did not receive any separate consideration paid in connection with providing such waiver.
The prospectus for IRHO’s IPO states that IRHO intended to use the following general criteria and guidelines to evaluate potential acquisition opportunities:
• Growth Prospects: companies with high growth trajectories that are driven by competitive advantages that can be accelerated or magnified through a partnership with us and access to the public markets.
• Earnings Potential: businesses that have multiple and diverse potential drivers of revenue and earnings growth and that have the potential to generate strong and stable free cash flow.
• M&E Focus: entities within our team’s core spheres of expertise and from among our team’s networks, such as family entertainment, animation, gaming, music, and businesses which we believe have benefited from the evolution of media and AI.
• Public Advantages: target companies that are public market ready and whose leadership teams have the vision to take advantage of and appreciate the benefits of becoming a publicly-traded entity.
• Evolving Circumstance: companies which are capitalizing on industry shifts and trends created by various factors such as the proliferation of AI-based technologies.
• Valuations: companies with a respectable market share and growth potential in the segments in which they operate.
Following the IPO, IRHO’s management team began actively searching for potential business combination targets. Commencing in January, 2026, weekly meetings via video teleconference were held among members of IRHO’s management team and the IRHO Board to discuss matters relating to IRHO’s initial business combination. Such meetings were intended to allow IRHO’s executive management team to discuss updates regarding the status of the evaluation of, and outreach to, potential business combination targets. As described below, IRHO’s executive management team actively pursued several potential business combination targets, conducting preliminary due diligence on, having management meetings with and negotiating terms of potential transactions with such potential business combination targets.
63
Table of Contents
Post-completion of its IPO, IRHO’s executive management team considered numerous potential target businesses with the objective of consummating its initial business combination. IRHO contacted, and was contacted by, numerous individuals and entities with respect to business combination opportunities, including financial advisors and companies in diverse sectors.
IRHO’s executive management team considered approximately forty-three (43) potential business combination targets across a broad range of sectors including media, entertainment, technology, AI, energy, music, fashion, and more and entered into non-disclosure agreements (“NDAs”) with eight (8) potential candidates. These potential business combination targets focused on sectors where the management team had experience and were viewed as attractive to current and potential shareholders. The targets were growth stage, both pre revenue and revenue generating. Management generally disqualified pre revenue companies believing that most were too early for public markets and posed a far higher risk as were still in a validating phase of their development. While the targets spanned a broad geographic scope, including South American, European and Asian targets, the majority were U.S. based companies. The targets that the management team pursued had several common characteristics including proprietary technology, strong management teams, and synergies with management’s expertise.
Of the eight NDAs that were signed, IRHO sent letters of intent (“LOIs”) to two (2) potential targets from early February to early March 2026, including Electra, and ultimately signed an LOI with Electra. Without foreclosing the possibility of a future business combination with any of these potential targets, IRHO did not pursue further a potential transaction with the other potential business combination targets to which it sent an LOI, other than Electra.
In general, any potential target that IRHO determined not to pursue was due to one or more of the following reasons (i) the target was pursuing an alternative transaction or strategy, (ii) the target did not have realistic valuation expectations, (iii) IRHO determined that the amount of capital the target required to successfully complete a business combination would not be possible to raise without undue effort, (iv) IRHO determined that the potential target’s business would not be a suitable business combination for IRHO based on, among other factors, initial due diligence indicating that the potential target’s business did not meet the investment criteria IRHO had established and the terms on which the potential targets would be willing to consider a potential transaction or (v) IRHO concluded that, although the potential target’s business may be an attractive business combination opportunity for IRHO, a business combination transaction with Electra aligned more closely with IRHO’s investment criteria as further described elsewhere in this proxy statement/prospectus. During the course of this process, the management team of IRHO kept the members of the IRHO Board apprised of the various target businesses, the discussions with such businesses during periods when exclusivity restrictions had lapsed, and the status thereof to discuss material issues as they arose.
In early January 2026, IRHO began discussions with a potential target company in the music industry which had revenue generating properties, which we refer to as Company A. The parties were introduced through the SPAC’s CEO who had a relationship with chief operators of Company A. The SPAC conducted in-depth management meetings, due diligence and site visits; however, Company A’s capital plan required a significant amount of capital to be raised for asset acquisitions and operational viability post business combination. The amount of capital added both transactional risk as well as long term operational risk for the Company. Due to information obtained during due diligence and the risks identified, management decided not to pursue the Company A opportunity.
In late January 2026, the SPAC began discussions and entered into an NDA with a potential target company in the AI industry which had a compelling technology under development at the pre-revenue stage, which we refer to as Company B. The parties were introduced through the SPAC’s CFO via a mutual contact with the founders of Company B. The SPAC conducted in-depth management meetings along with financial and industry due diligence on Company B. Company B’s capital plan required a significant amount of capital to be raised and carried operational risk in achieving its growth trajectories. This amount of capital also added transactional risk in addition to the long term operational risk for this business. The Board and management ultimately decided to end business combination discussions due to the complexities of Company B’s capital needs, including disagreements surrounding strategy.
In late January/early February 2026, the SPAC began discussions and entered into an NDA with a target company in the technology space with a focus on food delivery which we refer to as Company C, which was in the growth stage with a clear path to profitability. The SPAC was introduced to Company C through Cantor. The SPAC and Company C entered into an NDA on January 23, 2026, and the SPAC and its advisors began to conduct extensive due diligence on Company C. The SPAC conducted in-depth management and strategy meetings along with financial and industry due diligence on Company C. Discussions ultimately failed following the SPAC and Company C disagreeing on valuation as reflected in an LOI that was sent to Company C on February 6, 2026. All discussions terminated on February 12, 2026 without either party having signed the LOI.
64
Table of Contents
IRHO’s Reasons for Selecting Electra
After reviewing multiple potential targets IRHO’s management and the IRHO Board determined to proceed with Electra because Electra provided IRHO with the most attractive potential business combination for the following primary reasons: (1) Electra’s position in a large technology consumer market, with an experienced management team; (2) the belief that Electra has the ability to grow sustainably and gain broader market share in globally post-combination; (3) Electra’s ability to leverage its success with existing customers to expand its customer basis into new technologies; (4) Electra’s potential to grow organically through innate improvements in its own AI models; and (5) the potential benefit to Electra from the capabilities of the Sponsor and its affiliates and the SPAC’s management team to help Electra position itself as a compelling investment opportunity in U.S. capital markets. Electra is an AI-driven B2B software company focused on accelerating the global transition to electrification by developing technology designed to unlock the full potential of battery systems. Electra provides an “AI Brain for Batteries” platform — a unified intelligence layer that enables battery systems to be monitored, optimized, and controlled across their full lifecycle. By combining AI and physics-informed battery modeling, Electra’s platform is designed to transform batteries from passive hardware into intelligent, adaptive, and increasingly autonomous assets. Electra provides battery intelligence solutions across major battery-powered sectors, including energy storage (BESS) for data centers, grid and renewables, robotics and humanoid systems, drones, space satellites and e-mobility — helping make electrification safer, more resilient, and more economically productive. Electra has developed what it believes to be one of the most advanced AI-powered platforms for battery management in the world, underpinned by approximately 1.5 billion data points, four million lines of code, over 10,000 parameters, and nine patent families. Electra’s software is currently in pilot phase with several leading companies. For the reasons discussed above, IRHO management and the IRHO Board focused their resources on the diligence of the business of Electra.
Timeline of the Preliminary Negotiations
In January 2026, a longtime friend and colleague of Mr. Caragol, made the introduction with Alessandro Gadotti at Park Avenue Capital, financial advisor to Electra, since Mr. Gadotti deals with companies who are looking for merger or investment opportunities. Mr. Gadotti shared several possible target candidates with Mr. Caragol over the next couple of weeks. Mr. Caragol reviewed several of these company decks and determined that Electra held the most promise. Mr. Caragol then requested that Mr. Gadotti arrange for a call to explore Electra as a possible Target, and dismissed the other opportunities.
On February 23, 2026, Bill Caragol, IRHO’s Chief Financial Officer, held a virtual conference call with Mr. Gadotti, and Fabrizio Martini, Electra’s Chief Executive Officer, and Nicholas Chakalos, President & Chief Financial Officer as part of the Electra’s management team to discuss Electra’s potential fit with IRHO as a business combination target. On the call the parties discussed signing an NDA and scheduling a follow-up call to share more detailed information. The NDA was signed on February 24, 2026, and on February 27, 2026, a virtual conference call for all parties was scheduled.
On the February 27, 2026 conference call, the following were present: Jose Antonio Bengochea, CEO of IRHO; Bill Caragol, CFO of IRHO; Daniel Becker, Independent Director of IRHO; plus the full management team of Electra, as well as Electra’s advisors Park Avenue Capital and Roth. On the call the parties discussed the merits of a potential business combination and Electra gave IRHO its company presentation. On the call, IRHO asked detailed questions regarding the business, customers, and market.
Between February 27, 2026 and March 2, 2026, the SPAC and the Electra team had several virtual meetings to discuss Target’s business, growth strategy, management team, competition and revenue/business model streams. These discussions included a valuation framework, due diligence questions that might arise, current and future business plans, current and post-transaction financing needs and structural and procedural items related to the merger process. During this period, representatives of SPAC and Electra discussed various aspects of a potential business combination, including, among other things, valuation, process considerations applicable to transactions with special purpose acquisition companies (for example, with respect to required approvals, typical due diligence process and investor outreach), public company readiness and related topics, Electra’s capital structure, financing options, and the de-SPAC transaction structure. During this time period management reviewed the Company’s business plan and began due diligence on the assumptions underlying Electra’s business plan.
65
Table of Contents
After discussions with its management team, Board of Directors, and legal advisors, the SPAC ultimately determined to pursue a business combination with Electra due to, among other things, (1) Electra’s position in a large consumer market, with an experienced management team; (2) the belief that Electra has the ability to grow sustainably and gain broader market share post-combination; (3) Electra’s ability to leverage its technological expertise to expand organically through new customer acquisition; (5) the potential benefit to Electra from the capabilities of the Sponsor and its affiliates and SPAC’s management team to help Electra position itself as a compelling investment opportunity in U.S. capital markets; and (6) SPAC management’s and certain of the Sponsor’s affiliates’ familiarity with the Electra streams from traditional resources that could enhance the value of Electra post-transaction.
These discussions led to the SPAC sending the Target a draft Letter of Intent (“LoI”) on March 2, 2026. After sending the LoI, between March 2, 2026 and March 12, 2026, the two parties engaged in discussions over the LoI. These discussions focused primarily on the Target’s valuation and financing needs and included an in-person visit by Mr. Caragol and Mr. Bengochea to the Target’s Boston offices on March 4, 2026. During this in-person session, IRHO asked numerous questions regarding Electra’s business, supply chain, clients, technology, pipeline, risks, financials and employees. The proposed valuation was derived from the financial statements provided to IRHO by Electra and an analysis prepared by Park Avenue Capital (the “PAC Analysis”), which included both a summary of valuation comparable references and a discounted cash flow analysis.
Over the next few days, Mr. Caragol and Mr. Bengochea reviewed the discounted cash flow analysis and evaluated each public comparable included in the PAC Analysis. Mr. Bengochea and Mr. Caragol then performed a cross check by doing a separate search of public comparables, which produced many of the same candidates that were included in the PAC Analysis, which corroborated the PAC Analysis. Mr. Bengochea and Mr. Caragol were satisfied that the range of valuation was reasonable. At this point, Mr. Bengochea and Mr. Caragol laid out what a transaction between Electra and IRHO might look like to the Board, being comfortable that the PAC Analysis together with the discounted cash flow analysis, fully supported the $250 million valuation having presented an enterprise value for Electra between $270 million and $380 million. The companies set forth in the valuation and PAC Analysis was presented to the Board. See “IRHO Board of Directors’ Reasons for the Approval of the Business Combination” below.
Ultimately, the two parties signed the LoI on March 12, 2026, which included a $250 million equity value for Electra plus an earn-out provision for a potential additional $150 million and a targeted PIPE financing, and a minimum net cash on the balance sheet at closing of $30 million, with a $2 million SPAC expense cap.
The SPAC management team (Willliam Caragol and Jose Bengochea) also observed the extensive intellectual property portfolio, a large and rapidly growing addressable market and the potential for revenue enhancement via expansion of Electra’s AI systems into new battery-powered devices, such as drones and solar farms, and acquisition of new customers. The SPAC management team felt confidence that given the evolving energy landscape, Electra had more than ample opportunities to grow beyond the agreed Target valuation of $250 million in alignment with range specified in the PAC Analysis.
Immediately following signing the LoI on March 12, 2026, the SPAC was given data room access to begin detailed due diligence. Between March 12, 2026 and the signing of the BCA on April 21, 2026, Messrs. Caragol and Bengochea evaluated Electra’s company presentations and Electra data room materials.
IRHO’s management team and representatives of Electra held a series of recurring weekly meetings via virtual conference call on March 13, March 20, March 27, April 3, April 10, and April 17, 2026. Attendees at these meetings included Mr. Bengochea; Mr. Caragol; Fabrizio Martini, CEO of Electra; Nick Chakalos, COO of Electra; Alessandro Gadotti of Park Avenue Capital, financial advisor to Electra; and representatives of Roth Capital, financial advisors to Electra. These weekly sessions were used to review and discuss potential provisions to be reflected in the Merger Agreement, advance due diligence workstreams, and to address outstanding items in the transaction documentation, including matters related to employment agreements, intellectual property, and technology diligence.
In addition to the virtual meetings, Mr. Bengochea traveled to Electra’s offices in Boston on April 1, 2026 and April 13, 2026 to meet in person with Mr. Martini and Electra’s senior management. These in-person sessions provided an opportunity to discuss key business combination terms directly, review Electra’s facilities and operations, and advance the parties’ working relationship as they approached execution of the Merger Agreement.
66
Table of Contents
Timeline of the Due Diligence Review
Between February 27, 2026 and April 21, 2026, IRHO conducted due diligence on the prospective business combination with Electra, including, but not limited to, financial, technical, business plan, operational, and key management diligence, among other areas.
On March 12, 2026, Messrs. Bengochea and Caragol held a call via virtual conference line with its legal counsel, Loeb & Loeb LLP (“Loeb”) to present the Electra opportunity and to discuss implications of the deal. Loeb conducted legal due diligence on Electra commencing on March 12, 2026.
On March 19, 2026, Messrs. Bengochea and Caragol, on behalf of IRHO and Messrs. Fabrizio Martini and Nick Chakalos, on behalf of Electra, held a technical diligence session with Electra’s leadership covering an in-depth overview of Electra technology, system architecture and deployment scenarios across various customer segments.
Between March 12, 2026, and April 10, 2026, several virtual calls were held to discuss valuation, comparables, customers, and more. In parallel technical, financial, IP, and other diligence was conducted. Supplemental diligence lists were provided, and diligence continued through the signing of the BCA.
Timeline of Public Announcement & Preparation of the Definitive Documents
On February 24, 2026, IRHO and Electra fully executed the NDA.
On March 13, 2026, Loeb held an all-hands kickoff call with Messrs. Bengochea and Caragol, on behalf of IRHO, and representatives from Latham & Watkins LLP (“Latham”), Electra’s legal counsel, to formally launch the business combination process. On the call, several topics were discussed, including the Electra investor presentation, status of the Electra audit and workstreams.
Between March 13, 2026 and April 19, 2026, IRHO held meetings with the Sponsor and a limited group of investors to discuss the Electra financing opportunity and Roth Capital, LLC (“Roth”), financial advisors to Electra, held meetings with a limited group of PIPE investors to discuss the Electra PIPE opportunity.
On March 20, 2026, Electra and Roth executed a financing engagement letter naming Roth as exclusive placement agent in connection with the PIPE and pre-PIPE financing for a period of six months until September 20, 2026.
On March 27, 2026, Messrs. Bengochea and Caragol, along with Electra, Park Avenue, and Roth, held a virtual conference call to discuss updates, including progress on the financing and PIPE raise.
During March and early April 2026, Electra, IRHO and Roth held targeted meetings with investors discussing the Electra financing opportunity and the Electra PIPE opportunity, during which investors expressed their desire to have a business combination agreement in place and announced prior to considering a PIPE investment.
From mid-March 2026 through April 19, 2026, IRHO and Loeb communicated daily via virtual conference line and email discussing the status of the Merger Agreement, ancillary documents and negotiations between IRHO and Electra. Key business point negotiations between IRHO and Electra included the earnout provision, lockup provisions, Electra’s equity incentive plan and Electra employee compensation, among other items.
On March 27, 2026, Messrs. Bengochea and Caragol, Electra’s management, Latham, Roth and Loeb held a virtual conference call to discuss an update on the Merger Agreement and disclosure schedules.
On April 3, 2026, Messrs. Bengochea and Caragol, Electra’s management, Latham, Roth and Loeb held a virtual conference call to discuss the outstanding business points on the Merger Agreement, including, but not limited to, the earnout, equity incentive compensation and Electra employee compensation increases.
On April 10, 2026, Messrs. Bengochea and Caragol, Electra’s management, Latham, Roth and Loeb held a virtual conference call to discuss the status of the Merger Agreement. Outstanding business points on the Merger Agreement were discussed and resolved, including the earnout, equity incentive compensation and Electra employee compensation.
67
Table of Contents
On April 17, 2026, Messrs. Bengochea and Caragol, Electra’s management, Latham, Roth and Loeb held an update call to discuss progress with outstanding business points on the Merger Agreement including the company support agreement, parent support agreement and non-redemption agreement end date. On the call, IRHO and Electra were able to resolve all outstanding business points.
On April 17, 2026, Messrs. Bengochea and Caragol, Electra’s management, Latham, Roth and Loeb held a virtual conference call to discuss final outstanding items on the Merger Agreement, including, but not limited to, the lock-up for company shareholders. IRHO and Electra were able to reach agreement on the structure of the lock-up.
On April 19, 2026, IRHO and Electra held their respective board meetings approving the resolutions supporting the Business Combination.
The parties then agreed to exchange signatures and sign and announcing the transaction publicly on April 21, 2026, and discussed what remaining work was required on the investor presentation, press release and Current Report on Form 8-K to allow for the public announcement.
On April 21, 2026, IRHO and Electra announced the signing of the Merger Agreement via press release and filed a Current Report on Form 8-K including the ancillary documents, the investor presentation and the press release.
On May 5, 2026, Latham and PAC discussed the need to amend the Merger Agreement to clarify certain provisions and ensure consistency with the parties’ original intent at signing.
On May 6, 2026, Latham sent Loeb a proposed draft of the Amendment to the Merger Agreement (the “Merger Agreement Amendment”) reflecting such discussions which (1) provided that the Conversion Ratio multiplier would apply to the Class B share carveout in the definition of Aggregate Merger Consideration and (2) clarified that shares issuable to Company Convertible Note holders would not dilute the existing Company stockholders’ share of the Aggregate Merger Consideration.
On May 12, 2026, following further discussion among the parties, Latham circulated a revised draft of the proposed Merger Agreement Amendment to Loeb, which additionally clarified that (1) Company Convertible Note holders would receive a fixed amount of Parent Common Shares based on the Conversion Ratio and (2) that shares issuable to Company Convertible Note holders and upon exercise of Converted Stock Options would be excluded from the determination of whether Company stockholders achieve the 50.1% ownership requirement.
On May 13, 2026 Loeb and Latham exchanged minor comments to the draft and the parties indicated that they were in agreement with the proposed Merger Agreement Amendment, including clarifying certain elements of the Merger Agreement that the parties did not believe reflected the intention of the parties which resulted in revising the definition of the Merger Consideration, clarify who is eligible to receive Earnout Shares, the treatment of the Convertible Notes, and defining the Minimum Ownership Threshold to better reflect the business agreement of the parties.
On May 14, 2026, an Amendment to the Merger Agreement was signed reflecting these clarifications which are reflected in the Summary of the Proxy Statement, and further in this section beginning on page 75 — “The Merger Agreement.”.
On the morning of May 14, 2026, the IRHO Board unanimously approved the Merger Agreement Amendment, which amendment was executed shortly thereafter.
IRHO Board of Directors’ Reasons for the Approval of the Business Combination
The IRHO Board considered a wide variety of factors in connection with its evaluation of the Business Combination. Such factors are described in detail below. The IRHO Board considered all of these factors as a whole and, on balance, concluded that they supported a favorable determination that the Merger Agreement and the Business Combination are fair from a financial point of view to and in the best interests of IRHO and its shareholders. In view of the wide variety of factors considered by the IRHO Board in connection with its evaluation, negotiation and recommendation of the Business Combination and related transactions and the complexity of these matters, the IRHO Board did not consider it practical to, nor did it attempt to, quantify, rank or otherwise assign relative weights to the specific factors that it considered in reaching its decision. Rather, the IRHO Board based its evaluation, negotiation and recommendation of the Business Combination on the totality of the information presented to, and considered by,
68
Table of Contents
it. The IRHO Board evaluated the reasons described above. In considering the factors described above and any other factors, individual members of the IRHO Board may have viewed factors differently or given different weights to other or different factors.
This explanation of IRHO’s reasons for the Business Combination and all other information presented in this section is forward-looking in nature and, therefore, should be read in light of the factors discussed under the “Cautionary Note Regarding Forward-Looking Statements” and “Risk Factors” sections of this proxy statement/prospectus.
After careful consideration, the IRHO Board unanimously (i) agreed as to the advisability of the Business Combination and the other transactions contemplated by the Merger Agreement, (ii) determined that the Business Combination and the other transactions contemplated by the Merger Agreement are in the best interests of the shareholders of IRHO, (iii) determined that the Business Combination constitutes a “Business Combination” as such term is defined in the Cayman Constitutional Documents and (iv) resolved to recommend that the IRHO shareholders approve the Business Combination and the other proposals set forth in this proxy statement/prospectus.
Before reaching its decision, the IRHO Board reviewed the results of the due diligence conducted by its management and advisors, which included:
Extensive meetings with Electra’s management team to understand and analyze Electra’s hardware and software offerings, technology, system architecture, deployment scenarios, current and potential future clients and business prospects;
Analysis of Electra’s intellectual property portfolio, and its potential to provide both a near term and sustaining market advantage addressing a very large and growing market;
Review of Electra’s financial statements, and detailed pipeline information provided by Electra;
Research on industry trends, market opportunities and serviceable addressable market provided by Electra, as well as information obtained from publicly available sources;
Legal due diligence conducted by IRHO and Loeb;
Review of the proposed structure of the Business Combination and drafts of definitive documents; and
Review of an analysis prepared by Park Avenue Capital, financial advisor to Electra, which included both a summary of valuation comparable references and a discounted cash flow analysis. The companies set forth in the valuation comparable analysis and their relevant metrics are set forth below.
| Company | EV/Revenues | EV/Revenues | EV/EBITDA | |||
| Simulation and Physics Software | ||||||
| Ansys (Nasdaq: ANSS) | 16.1 | 13.5 | 28.4 | |||
| Altair Engineering (Nasdaq: ALTR) | 6.2 | 5.1 | 21.5 | |||
| Aspen Technology (Nasdaq: AZPN) | 14.6 | 12.8 | 24.0 | |||
| Auto Software and Mobility AI | ||||||
| Mobileye (Nasdaq: MBLY) | 14.8 | 11.2 | 22.5 | |||
| KPIT Technologies (Nasdaq: KPIT) | 5.8 | 4.9 | 18.2 | |||
| Cerence (Nasdaq: CRNC) | 3.2 | 2.6 | 8.5 | |||
| Fleet Analytics and Internet of Things | ||||||
| Samsara (NYSE: IOT) | 16.5 | 13.0 | 65.0 | |||
| Descartes Systems (Nasdaq: DSGX) | 10.4 | 9.2 | 26.0 | |||
| Manhattan Assoc. (Nasdaq: MANH) | 9.3 | 8.1 | 36.5 | |||
| Overall Average | 10.48 | 8.66 | 26.69 |
The PAC Analysis used a 20% public company discount and showed illustrative valuations for Electra of between $270 and $300 million based on revenue multiples and between $340 and $380 million based on EBITDA multiples. The analysis was prepared as of February 26, 2026. The LTM financial information was unaudited as the Company was in process of having their financials audited. The financial data that was used in the illustrative valuation disclosure were obtained from the Park Avenue Capital analysis.
69
Table of Contents
The discounted cashflow analysis used discount rates based on estimated weighted average cost of capital ranging from 20% to 35% and haircut to base case ranging from 0% to 50%. This analysis showed illustrative valuations for Electra of between $162 million and $884 million, with target valuations between $307 million and $373 million.
The PAC Analysis stated that the valuation comparables and discounted cash flow analyses supported enterprise value for Electra between $270 million and $380 million. No projections were used in the analysis, and no projections for Electra, were provided to, or evaluated or relied on by, the IRHO Board. As noted above under the caption “Background of the Business Combination,” in the prospectus for our IPO, we identified certain general criteria and guidelines that we believed would be important in evaluating prospective target businesses, although we indicated we may enter into a business combination with a target business that does not meet these criteria and guidelines. These criteria were not intended to be exhaustive. We stated in the IPO prospectus that 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 that our management team may deem relevant. In the event that we decided to enter into a business combination with a target business that does not meet such criteria and guidelines, we indicated that we would disclose that the target business does not meet the above criteria in our shareholder communications related to our initial business combination.
The positive factors related to the Business Combination considered by the IRHO Board included, but were not limited to, the following:
High Growth and Large Addressable Markets: The IRHO Board believes that Electra is well positioned to capitalize on this large and growing total addressable market.
Companies with Competitive Technological Edge: The IRHO Board believes that Electra has developed a software solution that clients describe as best-in-class and as having more scalability and customization than competing products.
Companies with a Strong Management Team: The IRHO Board believes that Electra has a technically competent management team that has successfully run the business for approximately ten years. The management team includes a CEO with unique government and commercial experience that is beneficial to selling into large companies and agencies and a COO with prior public company experience.
Companies that Can Benefit from Access to Capital: The IRHO Board believes that Electra is at an inflection point where access to capital and access to the public markets can provide a strong benefit to the business.
Terms of Merger Agreement and Ancillary Agreements. The IRHO Board reviewed the financial and other terms of the Merger Agreement and related agreements, including the proposed consideration to be paid to the Electra securityholders and determined that they were the product of arm’s-length negotiations among the parties.
Shareholder Approval and Redemption Rights. The IRHO Board considered the fact that in connection with the Business Combination IRHO shareholders have the ability to vote for or against the Business Combination and that, regardless of whether such public shareholders vote for or against the Business Combination or abstain from voting, they will have the option to (i) remain stockholders of Electra Pubco following the Business Combination, (ii) sell their shares in the open market or (iii) exercise their Redemption Rights and receive a pro rata portion of the cash held in the Trust Account.
In the course of its deliberations, the IRHO Board also considered a variety of uncertainties, risks and other potentially negative factors relevant to the Business Combination, including the below:
Benefits Not Achieved. The risk that the potential benefits of the Business Combination may not be fully achieved or may not be achieved within the expected timeframe.
Liquidation of IRHO. The risks and costs to IRHO if the Business Combination is not completed, including the risk of diverting management focus and resources from other business combination opportunities, which could result in IRHO being unable to affect a business combination by December 18, 2027, and force IRHO to liquidate.
70
Table of Contents
Exclusivity. The fact that the Merger Agreement includes a provision that generally restricts IRHO from soliciting other business combination proposals, which limits IRHO’s ability, so long as the Merger Agreement is in effect, to consider other potential business combinations. In addition, under the Merger Agreement, unless required by applicable law, the IRHO Board may not change or withdraw its recommendation to the IRHO shareholders to vote in favor of the Business Combination Proposal and any other proposals required to consummate the transactions contemplated by the Merger Agreement that are submitted to, and require the vote of, the IRHO shareholders.
Post-Business Combination Corporate Governance. The IRHO Board considered the corporate governance provisions of the Merger Agreement and the material provisions of the Proposed Charter and Proposed Bylaws. In particular, they considered the rights that certain stockholders would have in Electra Pubco and that these rights are not generally available to public stockholders, including stockholders that may hold a large number of shares.
Closing Conditions. The fact that completion of the Business Combination is conditioned on the satisfaction of certain closing conditions that are not within IRHO’ control, including satisfying the Minimum Cash Condition and approval by Nasdaq of the initial listing application in connection with the Business Combination.
Litigation. The possibility of litigation challenging the Business Combination or that an adverse judgment granting permanent injunctive relief could indefinitely enjoin consummation of the Business Combination.
External Risks. Economic downturns and political and market conditions beyond Electra’s control could adversely affect its business, financial condition, results of operations and prospects.
Risk of Future Growth. Electra’s ability to achieve revenue and profitability is subject to significant risks, assumptions, estimates and uncertainties and Electra’s operating results may vary, which may make future results difficult to predict with certainty.
Fees and Expenses. The fees and expenses associated with completing the Business Combination.
Inability to Evolve. Electra’s growth prospects may suffer if it is unable to develop successful product offerings, if it fails to pursue additional product offerings or if it loses any of its key executives or other key employees. In addition, if Electra fails to make the optimal investment decisions in its product offerings and technology platform, it may not attract and retain key customers and its revenue and results of operations may decline.
Interest of Certain Persons. Some of our officers and directors may have interests in the Business Combination as individuals that are in addition to, and that may be different from, the interests of IRHO’ shareholders. For instance, the Sponsor will benefit from the completion of a business combination and may be incentivized to complete an acquisition of a less favorable target company or on terms less favorable to shareholders. In addition, Roth will receive customary financial advisory fees and is entitled to receive customary placement agent and referral fees in any pre-PIPE or PIPE financing. Such interests are described in more detail below under the caption “The Business Combination Proposal — Certain Interests of IRHO’ Directors and Officers and Others in the Business Combination.”
Termination Of Electra’s Largest Customer Contract. IRHO’s Board was aware of the contact termination of Electra’s largest customer contract during the fourth quarter of 2025. Electra’s business plan and strategy were aligned in 2025 to focus on its product development and the launch of its commercial go-to-market strategy, focused on the sale of its product in a SaaS model. In line with that strategy the decision was made to shift away from consulting agreements such as the customer contract referenced. These contracts were an important element of the Company’s formation strategy, providing “paid for” learning and product development, however these are a distraction of resources as it relates to the companies forward business model and projections.
Other Risks. Various other risks associated with the Business Combination, the business of IRHO and the business of Electra described in this proxy statement/prospectus under the caption “Risk Factors.”
Satisfaction of 80% Test
Nasdaq rules require that IRHO’s initial business combination must be with one or more target businesses that together have an aggregate fair market value equal to at least 80% of the value of the funds in the Trust Account (excluding the deferred underwriting commissions and taxes payable on the income earned on the funds held in the
71
Table of Contents
Trust Account) at the time of the execution of a definitive agreement for IRHO’s initial business combination. As of ____________, the date of the execution of the Merger Agreement, the fair value of the funds held in the Trust Account was approximately $_________ million (excluding taxes payable on the income earned on the funds held in the Trust Account at that time), and 80% thereof represents approximately $_________ million. Based on the enterprise value of Electra of approximately $[250] million compared to the approximately $_____ in the Trust Account (excluding the taxes payable on the income earned on the funds held in the Trust Account), the fact that the purchase price for Electra was the result of an arm’s length negotiation and all of the factors described in this section and “The Business Combination Proposal — Merger Agreement”, the IRHO Board determined that this requirement was met.
Summary of IRHO’s Financial Analysis
The following is a summary of the material financial analyses delivered to the IRHO Board in connection with approving the transaction described above.
Board of Electra’s Reasons for Approval of the Business Combination
In determining to approve the Business Combination and to recommend the Business Combination to Electra’s equity holders, Electra’s Board weighed the following benefits and detriments to Electra and its current equity holders:(i) the benefit of accessing the public equity markets for capital at likely a lower cost than that available to Electra in the private markets; (ii) the benefit of obtaining public currency and having more efficient access to additional public currency in the future to be able to capitalize organic and opportunistic inorganic growth opportunities; (iii) the benefit of providing greater liquidity for existing equity holders; (iv) the beneficial timing of the Business Combination relative to market conditions; (v) the dilution to be incurred by Electra’s existing equity holders as a result of the transaction; and (vi) the additional costs, resources and diversion of management attention associated with becoming a public company. The benefits described in clauses (ii), (iii) and (iv) above were also heavily considered by Electra’s Board in determining to approve the Business Combination at the time it did as opposed to waiting to evaluate other strategic initiatives that could provide the same benefits. In assessing timing, Electra’s Board considered, among other factors, market receptivity to de-SPAC transactions in Electra’s sector and the availability and expected terms of PIPE financing and any other committed capital and concluded that proceeding with the Business Combination at such time would better position Electra to access public-market capital with lower execution and market-timing risk than waiting for a traditional IPO window to reopen. In addition, Electra considered the market conditions in the advanced battery technology and AI-enabled battery optimization sectors, including a recent increased demand for battery deployment and technologies designed to improve battery performance and efficiency.
Ownership of Electra Pubco after the Closing
The following table illustrates estimated ownership levels in Electra Pubco, immediately following the consummation of the Business Combination, based on varying levels of redemptions by Public Shareholders, excluding the dilutive effect of Electra Options, that will be assumed by IRHO in the Proposed Transaction.
| No | 25% | 50% | 75% | Maximum | |||||||||||||||||||||
| Shares | Percentage | Shares | Percentage | Shares | Percentage | Shares | Percentage | Shares | Percentage | ||||||||||||||||
| Public Shareholders(1) | 25,300,000 | 31.5 | % | 19,550,000 | 30.2 | % | 13,800,000 | 28.0 | % | 8,050,000 | 19.8 | % | 5,982,780 | 15.9 | % | ||||||||||
| Sponsor(2) | 6,157,000 | 7.7 | % | 6,157,000 | 9.5 | % | 6,157,000 | 12.5 | % | 5,695,874 | 14.0 | % | 5,357,000 | 14.2 | % | ||||||||||
| Cantor | 220,000 | 0.3 | % | 220,000 | 0.3 | % | 220,000 | 0.4 | % | 220,000 | 0.5 | % | 220,000 | 0.6 | % | ||||||||||
| Electra Shareholders(3) | 41,995,572 | 52.3 | % | 33,882,560 | 52.3 | % | 25,769,546 | 52.3 | % | 25,051,931 | 61.6 | % | 25,051,931 | 66.5 | % | ||||||||||
| Others(4) | 6,625,333 | 8.2 | % | 4,975,812 | 7.7 | % | 3,326,292 | 6.8 | % | 1,676,771 | 4.1 | % | 1,083,741 | 2.8 | % | ||||||||||
| Total | 80,297,905 | 100.0 | % | 64,785,372 | 100.0 | % | 49,272,838 | 100.0 | % | 40,694,576 | 100.0 | % | 37,695,452 | 100.0 | % | ||||||||||
____________
(1) Includes 2,300,000 shares of Pubco Common Stock issued to all public shareholders upon exchange of the rights issued in the IPO, and in the case of the maximum redemptions scenario, such number reflects the maximum number of shares that could be redeemed to ensure a minimum of $30,000,000 in Parent Closing Cash at the time of the Closing.
(2) Reflects the number of Shares that will be held by the Sponsor after the forfeiture of up to 800,000 Risk Shares as contemplated by the Merger Agreement.
(3) Includes all Shares to be issued to the stockholders of Electra as adjusted to ensure the minimum ownership threshold of 50.1% at the Closing.
(4) Includes Shares issued to vendors and financial advisors to Electra and IRHO other than Cantor.
72
Table of Contents
Dilution
Dilution per share to Public Shareholders is determined by IRHO’s net tangible book value (“NTBV”) per share, as adjusted, while excluding the Business Combination, while giving effect to material probable or consummated transactions and other material effects on NTBV per share, from the Public Shareholders as set forth as follows under five redemption scenarios.
The following table illustrates NTBV per share and the change in NTBV per share, as adjusted, following the Closing, but excluding the other effects of the Business Combination, while giving effect to probable or consummated transactions that are material and other material effects on NTBV per share. These are presented in relation to the offering price per Public Share in the IRHO IPO as set forth as follows under the five redemption scenarios:
| Assuming | Assuming | Assuming | Assuming | Assuming | ||||||||||||||||
| Public Shareholders |
| |
|
| |
|
| |
|
| |
|
| |
| |||||
| Sponsor |
| |
|
| |
|
| |
|
| |
|
| |
| |||||
| Cantor |
| |
|
| |
|
| |
|
| |
|
| |
| |||||
| Total IRHO Ordinary Shares outstanding as of August 31, 2026 |
| |
|
| |
|
| |
|
| |
|
| |
| |||||
| Ordinary Shares issuable on conversion of all IRHO Rights |
| |
|
| |
|
| |
|
| |
|
| |
| |||||
| Total IRHO Ordinary Shares outstanding as of August 31, 2026, as adjusted |
| |
|
| |
|
| |
|
| |
|
| |
| |||||
| NTBV as of August 31, | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | |||||
|
|
|
|
|
|
|
|
|
|
| |||||||||||
| Adjusted for(2): |
|
|
|
|
|
|
|
|
|
| ||||||||||
| Reclassification of IRHO Ordinary Shares subject to redemption to equity |
| |
|
| |
|
| |
|
| |
|
| |
| |||||
| Transaction expenses to be paid by IRHO |
| ( | ) |
| ( | ) |
| ( | ) |
| ( | ) |
| ( | ) | |||||
| NTBV as of August 31, 2026, as adjusted | $ | |
| $ | |
| $ | |
| $ | |
| $ | |
| |||||
| NTBV per share as of August 31, 2026, as | $ | |
| $ | |
| $ | |
| $ | |
| $ | |
| |||||
| Dilution(3) | $ | |
| $ | |
| $ | |
| $ | |
| $ | |
| |||||
____________
(1)
(2)
(3)
For purposes of Item 1604(c)(1) of Regulation S-K, Electra Pubco would have 80,297,905 total Pubco Class A and Class B Ordinary Shares outstanding immediately after giving effect to the Business Combination under the “No Redemptions” scenario based on the assumptions set forth in the preceding paragraph and as further described above. Where there are no redemptions of Public Shares prior to the Closing, the valuation is based on the $10.00 issuance
73
Table of Contents
price per Public Share in the IRHO IPO and is therefore calculated as: $10.00 (IRHO per share IPO price) multiplied by 80,297,905 shares, or $802,979,050. The following table illustrates the valuation at the $10.00 issuance price per share in the IRHO IPO for each redemption scenario:
| No |
25% |
50% |
75% |
Maximum |
|||||||||||
| Shares |
Shares |
Shares |
Shares |
Shares |
|||||||||||
| Public Shareholders |
|
25,300,000 |
|
19,550,000 |
|
13,800,000 |
|
8,050,000 |
|
5,982,780 |
|||||
| Sponsor |
|
6,157,000 |
|
6,157,000 |
|
6,157,000 |
|
5,695,874 |
|
5,357,000 |
|||||
| Cantor |
|
220,000 |
|
220,000 |
|
220,000 |
|
220,000 |
|
220,000 |
|||||
| Electra Shareholders |
|
41,995,572 |
|
33,882,560 |
|
25,769,546 |
|
25,051,931 |
|
25,051,931 |
|||||
| Others |
|
6,625,333 |
|
4,975,812 |
|
3,326,292 |
|
1,676,771 |
|
1,083,741 |
|||||
| Total shares outstanding post Business Combination |
|
80,297,905 |
|
64,785,372 |
|
49,272,838 |
|
40,694,576 |
|
37,695,452 |
|||||
| Total valuation based on |
$ |
802,979,050 |
$ |
647,853,720 |
$ |
492,728,380 |
$ |
406,945,760 |
$ |
376,954,520 |
|||||
The foregoing required disclosure is not a guarantee that the trading price of Electra Pubco Class A Ordinary Shares will not be below the offering price in the IRHO IPO, nor is the required disclosure a guarantee that Electra Pubco will attain any of the levels of valuation presented.
Certain Interests of IRHO’s Directors and Officers and Others in the Business Combination
In considering the recommendation of the IRHO Board in favor of approval of the Business Combination, it should be noted that IRHO’s directors and officers have interests in the Business Combination that are different from, or in addition to, your interests as a shareholder. These interests include, among other things:
• The Sponsor paid (i) $32,000 or approximately $0.0056 per share for the Founder Shares, which such Founder Shares, if unrestricted and freely tradeable, would be valued at approximately $________, based on the $[*] closing price of the IRHO Ordinary Shares on Nasdaq on __________________, (ii) $__________ or approximately $10.00 per unit for the 370,000 Private Placement Units, which such Private Placement Units, if unrestricted and freely tradeable, would be valued at approximately $___________, based on the $________ closing price of the IRHO Units on Nasdaq on _______________.
• If IRHO does not consummate a business combination by December 18, 2027 (or if such date is extended at a duly called extraordinary general meeting, such later date), it would cease all operations except for the purpose of winding up, redeeming all of the outstanding Public Shares for cash and, subject to the approval of its remaining shareholders and the IRHO Board, liquidating and dissolving, subject in each case to its obligations under Cayman Islands law to provide for claims of creditors and the requirements of other applicable law. In such event, the Founder Shares owned by the Sponsor would be worthless because following the redemption of the Public Shares, IRHO would likely have few, if any, net assets and because the Insiders have agreed to waive their respective Rights to liquidating distributions from the Trust Account in respect of the Founder Shares if IRHO fails to complete a business combination within the required period. Additionally, in such event, the 370,000 Private Placement Units (including the underlying securities) will also expire worthless. IRHO’s directors and executive officers have an indirect economic interest in the Private Placement Units and Founder Shares owned by the Sponsor.
• As a result of the low purchase price paid for the Founder Shares, even if the trading price of the Electra Pubco Common Stock were as low as $0.65 per share, the aggregate market value of the Founder Shares alone (without taking into account the value of the Electra Pubco Common Stock issued in respect of the Private Placement Units or the Public Shares held by the Sponsor) would be approximately equal to the investment in IRHO by the Sponsor. As a result, if the Business Combination is completed, the Sponsor is likely to be able to make a substantial profit on its investment in us even at a time when the Electra Pubco Common Stock has lost significant value. On the other hand, if the Business Combination is not completed and IRHO liquidates without completing another initial business combination before the end of the completion window, the Sponsor would lose its entire investment in us.
74
Table of Contents
• Upon liquidation, the Sponsor will lose its entire investment in the Founder Shares and Private Placement Units, which totals $3,732,000 in the aggregate. The potential loss of this investment could incentivize the Sponsor and its affiliates to pursue a business combination transaction on unfavorable terms in order to avoid liquidation.
• IRHO’s existing directors and officers will be eligible for continued indemnification and continued coverage under IRHO’s directors’ and officers’ liability insurance policy after the Merger and pursuant to the Merger Agreement and indemnification agreements entered into with such directors and officers in connection with the IPO.
• The Sponsor and its affiliates have made an aggregate of $___________ of advances to IRHO as of the date of this proxy statement/prospectus, which will be repaid in cash at the closing of the Business Combination. Additionally, IRHO’s officers and directors and their affiliates are entitled to reimbursement of out-of-pocket expenses incurred by them related to identifying, investigating, negotiating and completing an initial business combination. As of the date of this proxy statement/prospectus the current value of the reimbursement of the out-of-pocket expenses owed to IRHO’s officers and directors and their affiliates is $0. However, if IRHO fails to consummate a business combination by December 18, 2027 (or if such date is extended at a duly called extraordinary general meeting, such later date), such persons will not have any claim against the Trust Account for reimbursement. Accordingly, IRHO may not be able to reimburse these advances and expenses if the Business Combination or another business combination is not completed by such date.
• Pursuant to the A&R Registration Rights Agreement, the Insiders will have customary registration Rights, including demand and piggy-back Rights, subject to cooperation and cut-back provisions with respect to the Electra Pubco Common Stock held by such parties following the consummation of the Proposed Transaction. We estimate that the Initial Shareholders will hold an aggregate of 6,320,000 shares of Electra Pubco Common Stock subject to registration rights, not reflecting forfeitures [and the Share Contribution] pursuant to the Parent Support Agreement.
• The Sponsor agreed that effective as of and conditioned upon the Closing, up to 800,000 Parent Ordinary Shares held by the Sponsor together with all Parent Common Shares issued upon conversion thereof in connection with the Domestication (the “At-Risk Shares”) shall be subject to forfeiture as follows: For each $1,000,000 by which the Parent Closing Cash is less than $80,000,000, the Sponsor shall forfeit 16,000 At-Risk Shares, up to the maximum of 800,000 Parent Common Shares. For illustrative purposes only: (i) if the Parent Closing Cash equals or exceeds $80,000,000, no At-Risk Shares shall be forfeited; (ii) if the Parent Closing Cash is $60,000,000, the Sponsor shall forfeit 320,000 At-Risk Shares; and (iii) if the Parent Closing Cash is $30,000,000 or less, the Sponsor shall forfeit all 800,000 At-Risk Shares.
The Merger Agreement
This subsection of the proxy statement/prospectus describes the material provisions of the Merger Agreement, but does not purport to describe all of the terms of the Merger Agreement. The following summary is qualified in its entirety by reference to the complete text of the Merger Agreement and the Amendment to Merger Agreement, dated as of May 14, 2026, copies of which are attached as Annex A-1 and Annex A-2 to this proxy statement/prospectus. You are urged to read the Merger Agreement in its entirety because it is the primary legal document that governs the Merger.
The Merger Agreement contains representations, warranties and covenants that the respective parties made to each other as of the date of the Merger Agreement or other specific dates set forth therein. The assertions embodied in those representations, warranties and covenants were made for purposes of the contract among the respective parties and are subject to important qualifications and limitations agreed to by the parties in connection with negotiating the Merger Agreement. The representations, warranties and covenants in the Merger Agreement are also modified in part by the underlying disclosure letters (the “disclosure letters”), which are not filed publicly and which are subject to a contractual standard of materiality different from that generally applicable to shareholders and were used for the purpose of allocating risk among the parties rather than establishing matters as facts. We do not believe that the disclosure letters contain information that is material to an investment decision. Additionally, the representations and warranties of the parties to the Merger Agreement may or may not have been accurate as of any specific date and do not purport to be accurate as of the date of this proxy statement/prospectus. Accordingly, no person should rely on the representations and warranties in the Merger Agreement or the summaries thereof in this proxy statement/prospectus as characterizations of the actual state of facts about IRHO, Electra or any other matter.
75
Table of Contents
Structure of the Merger
On April 21, 2026, Iron Horse Acquisition II Corp., a Cayman Islands exempted company (“IRHO” or “Parent”), entered into a merger agreement, by and among IRHO, IRHO Merger Sub Inc., a Delaware corporation and a direct, wholly owned subsidiary of IRHO (“Merger Sub”), and Electra Vehicles, Inc., a Delaware corporation (“Electra” or the “Company”) (as amended and as may be further amended and/or restated from time to time, the “Merger Agreement”).
On May 14, 2026, the same parties entered into that certain Amendment to the Merger Agreement (the “Merger Agreement Amendment”), the terms of which are reflected in the summary of the Merger Agreement below. For additional information related to the Merger Agreement Amendment, see “The Business Combination Proposal — Background of the Business Combination — Timeline of Public Announcement & Preparation of the Definitive Documents.”
Electra is dedicated to enhancing battery performance through AI-powered battery intelligence, providing solutions for electric vehicles, battery energy storage systems (BESS), and fleet operators.
The board of directors of IRHO has unanimously approved and declared advisable the Merger Agreement and the Business Combination (as defined below) and resolved to recommend approval of the Merger Agreement and related matters to IRHO’s shareholders. Pursuant to the Merger Agreement, (a) IRHO will domesticate from the Cayman Islands to Delaware (the “Domestication”), and (b) at least one business day following the Domestication, Merger Sub will merge with and into Electra (the “Merger”), after which Electra will be the surviving corporation (the “Surviving Corporation”) and a wholly-owned subsidiary of IRHO. In connection with the Merger, the Surviving Corporation will change its name to a name to be mutually agreed by the parties and Parent will change its name to “ELECTRA AI, Inc.”
The Domestication and Merger
In accordance with the Merger Agreement, and subject to the satisfaction or waiver of the conditions set forth therein, on the day that is at least one Business Day prior to the Effective Time, IRHO shall de-register from the Register of Companies in the Cayman Islands and transfer by way of continuation out of the Cayman Islands and into the State of Delaware so as to migrate to and domesticate as a Delaware entity.
In connection with the Domestication, IRHO will (i) file a certificate of incorporation with the Secretary of State of the State of Delaware whereby Parent shall have a dual class common stock consisting of Class A common stock, par value $0.0001 per share (the “Parent Class A Common Shares”) and Class B common stock, par value $0.0001 per share (the “Parent Class B Common Shares” and together with the Parent Class A Common Shares, the “Parent Common Shares”); and (ii) adopt amended and restated bylaws substantially in the form attached as Exhibit 3.2 hereto and incorporated by reference herein, in each case, with such changes as may be agreed in writing by Parent and the Company.
In connection with the Domestication, (i) each then issued and outstanding IRHO Ordinary Share, will convert automatically, on a one-for-one basis, into one Parent Class A Common Share; (ii) each then issued and outstanding IRHO Right entitling the holder thereof to 1/10 of one IRHO Ordinary Share shall convert automatically into a right to receive 1/10 of one Parent Class A Common Share at the Closing, pursuant to the Parent Rights Agreement dated as of December 16, 2025, by and between IRHO and Continental Stock Transfer & Trust Company, as Rights agent; and (iii) each then issued and outstanding IRHO Unit shall separate and convert automatically into one Parent Class A Common Share and an IRHO Right to receive 1/10 of one Parent Class A Common Share at the Closing.
Upon the terms and subject to the conditions of the Merger Agreement, at least one business day following the Domestication, Merger Sub will merge with and into Electra after which Electra will be the surviving corporation and a wholly-owned subsidiary of Parent.
The Merger will become effective upon the filing of a certificate of merger with the Secretary of State of the State of Delaware or at such later time as is agreed to by the parties to the Merger Agreement and specified in the certificate of merger (the “Effective Time”). The Domestication, the Merger, and other transactions contemplated by the Merger Agreement are collectively referred to herein as the “Business Combination,” the consummation of the Merger is referred to as the “Closing” and the date of the Closing is referred to as the “Closing Date.”
In connection with the Business Combination, IRHO will be renamed “ELECTRA AI, Inc.” and Electra, as a wholly-owned subsidiary of ELECTRA AI, Inc., will change its name to a name to be mutually agreed by the parties.
76
Table of Contents
Merger Consideration and Structure
Pursuant to the Merger Agreement, IRHO has agreed to acquire all of the equity interests of Electra for the sum of $250,000,000 plus the Aggregate Exercise Price, as adjusted pursuant to the terms of the Merger Agreement (the “Base Purchase Price”), comprising of a number of Parent Common Shares equal to the quotient obtained by dividing (a) the Base Purchase Price, by (b) US$10.00 (the “Aggregate Merger Consideration”), which Parent Common Shares shall include no more than a number of Parent Class B Common Shares equal to the Conversion Ratio multiplied by 3,994,802. “Aggregate Exercise Price” means the aggregate dollar amount payable to the Company upon the exercise or conversion of all vested in-the-money Company Options that are outstanding immediately prior to the Effective Time.
The Base Purchase Price shall be automatically adjusted upwards in increments of $10.00 until the Aggregate Merger Consideration (excluding shares of Parent Common Stock issuable in respect of convertible notes and upon the exercise of Converted Stock Options) represents at least 50.1% of the Aggregate Parent Fully Diluted Shares. “Aggregate Parent Fully Diluted Shares” means, as of immediately after the Effective Time, the sum, without duplication, of (a) all Parent Common Shares issued and outstanding (after giving effect to the Domestication, the Merger, the conversion of all Parent Rights, any PIPE Financing, and any forfeiture or surrender of Sponsor Shares); plus (b) the aggregate number of Parent Common Shares issuable upon exercise of all outstanding Converted Stock Options (as defined below).
Effect of the Merger
At the Effective Time (i) each share of Company Capital Stock (as defined below), if any, that is owned by Parent or Merger Sub or Electra (as treasury stock or otherwise), will automatically be cancelled; (ii) each share of Company Preferred Stock issued and outstanding immediately prior to the Effective Time will be converted into the right to receive a number of Parent Common Shares equal to: (a) (x) the Conversion Ratio multiplied by (y) the number of shares of Company Common Stock issuable upon conversion of such share of Company Preferred Stock as of immediately prior to the Effective Time plus (b) a number of Earnout Shares equal to the Earnout Pro Rata Share in accordance with, and subject to the contingencies set forth in the Merger Agreement; (iii) each share of Company Class A Common Stock issued and outstanding immediately prior to the Effective Time will be converted into the right to receive: (x) a number of Parent Class A Common Shares equal to the Conversion Ratio plus (y) a number of Earnout Shares equal to the Earnout Pro Rata Share in accordance with, and subject to the contingencies set forth in the Merger Agreement; and (iv) each share of Company Class B Common Stock issued and outstanding immediately prior to the Effective Time will be converted into the right to receive: (x) a number of Parent Class B Common Shares equal to the Conversion Ratio plus (y) a number of Earnout Shares equal to the Earnout Pro Rata Share in accordance with, and subject to the contingencies set forth in the Merger Agreement. At the Effective Time, all shares of Company Capital Stock shall no longer be outstanding and shall automatically be canceled and shall cease to exist, and each holder of Company Capital Stock shall thereafter cease to have any rights with respect to such securities, except the right to receive a portion of the Aggregate Merger Consideration plus the contingent right to receive their applicable portion of Earnout Shares in accordance with their Earnout Pro Rata Share.
“Company Capital Stock” means “Company Common Stock,” consisting of the Class A common stock of the Company, $0.00001 par value per share, the Class B common stock of the Company, $0.00001 par value per share, and “Company Preferred Stock,” consisting of the Company Series Seed Preferred Stock, the Company Series A Preferred Stock and the Company Series B Preferred Stock.
“Conversion Ratio” means the quotient obtained by dividing (a) the number of Parent Common Shares constituting the Aggregate Merger Consideration, by (b) the number of shares constituting the Aggregate Fully Diluted Company Common Stock (without regard to the shares described in clause (c) of the definition thereof).
“Aggregate Fully Diluted Company Common Stock” means the sum, without duplication, of (a) all shares of Company Common Stock that are issued and outstanding immediately prior to the Effective Time; plus (b) the aggregate number of shares of Company Common Stock issuable upon full conversion of all Company Preferred Stock outstanding as of immediately prior to the Effective Time; plus (c) the aggregate number of shares of Company Common Stock issuable upon exercise of all Company Options that are vested as of immediately prior to the Effective Time; plus (d) the aggregate number of shares of Company Common Stock issuable upon full conversion, exercise or exchange of any other securities of the Company (other than Company Options and The Company Convertible Notes) outstanding immediately prior to the Effective Time directly or indirectly convertible into or exchangeable or exercisable for shares of Company Common Stock.
77
Table of Contents
Conversion of Merger Sub Capital Stock.
Each share of common stock, par value $0.0001 per share, of Merger Sub issued and outstanding immediately prior to the Effective Time shall be converted into and become one newly issued, fully paid and nonassessable share of common stock of the Surviving Corporation.
Treatment of Options and Convertible Notes.
At the Effective Time, each Company Option shall be converted into (i) an option to acquire, subject to substantially the same terms and conditions as were applicable under such Company Option (including expiration date, vesting conditions, and exercise provisions), the number of Parent Class A Common Shares (rounded down to the nearest whole share), determined by multiplying the number of shares of Company Class A Common Stock subject to such Company Option as of immediately prior to the Effective Time by the Conversion Ratio, at an exercise price per Parent Class A Common Share (rounded up to the nearest whole cent) equal to (A) the exercise price per share of Company Class A Common Stock of such Company Option divided by (B) the Conversion Ratio (a “Converted Stock Option”), and (ii) the right to receive a number of Earnout Shares in accordance with, and subject to the contingencies, set forth in the Merger Agreement.
At the Effective Time, each Company Convertible Note shall be converted into the right to receive a number of Parent Common Shares equal to (i) the Conversion Ratio multiplied by (ii) the number of shares of Company Common Stock issuable upon conversion of such Company Convertible Note as of immediately prior to the Effective Time.
The Earnout Shares
From the period commencing on the Closing Date and until such date which is the five-year anniversary of the Closing Date (the “Earnout Period”), as additional consideration in the Merger, the holders of Company Common Stock, Company Preferred Stock and Company Options (whether vested or unvested) (the “Company Earnout Holders”) shall be entitled to earn, in accordance with their respective Earnout Pro Rata Share, up to an aggregate amount of 15,000,000 additional Parent Common Shares (the “Earnout Cap”) (which, for the avoidance of doubt, shall be issued as Parent Class A Common Shares to Company Earnout Holders who hold exclusively Company Class A Common Stock, Company Preferred Stock or Company Options and as Parent Class B Common Shares to Company Earnout Holders who hold any shares of Company Class B Common Stock) (the “Earnout Shares”), subject to the following contingencies:
A. Subject to the Earnout Cap, one-third (1/3) of the Earnout Shares if, at any time during the Earnout Period, (1) over any ten (10) Trading Days within any twenty (20) consecutive Trading Day period the VWAP of the Parent Common Shares is greater than or equal to $14.00 per share or (2) as reported in Parent’s Form 10-Q or Form 10-K the Annual Run Rate (“ARR”), which is defined in the Merger Agreement as (i) the net revenues of Parent following the Closing calculated in accordance with U.S. GAAP for a fiscal quarter multiplied by (ii) 4.0, is greater than or equal to $45 million (the “First Earnout Milestone”), whichever occurs earlier;
B. Subject to the Earnout Cap, one-third (1/3) of the Earnout Shares if, at any time during the Earnout Period, (1) over any ten (10) Trading Days within any twenty (20) consecutive Trading Day period the VWAP of the Parent Common Shares is greater than or equal to $16.00 per share or (2) as reported in Parent’s Form 10-Q or Form 10-K the ARR is greater than or equal to $55 million (the “Second Earnout Milestone”), whichever occurs earlier; and
C. Subject to the Earnout Cap, one-third (1/3) of the Earnout Shares if, at any time during the Earnout Period, (1) over any ten (10) Trading Days within any twenty (20) consecutive Trading Day period the VWAP of the Parent Common Shares is greater than or equal to $18.00 per share or (2) as reported in Parent’s Form 10-Q or Form 10-K the ARR is greater than or equal to $65 million (the “Third Earnout Milestone”), whichever occurs earlier.
The applicable Earnout Shares will be delivered to the Company Earnout Holders promptly (within 10 Business Days) following the date in which any such earnout milestone is achieved. Each earnout milestone shall only occur once, if at all.
78
Table of Contents
By way of example, based on Electra’s net revenues of $15,000 for the fiscal quarter ended June 30, 2026, ARR for that quarter would be calculated as $60,000, or approximately 0.13% of the $45 million ARR required to achieve the First Earnout Milestone. To achieve the First Earnout Milestone, the Second Earnout Milestone and the Third Earnout Milestone on the basis of ARR, Parent would be required to generate net revenues for a single fiscal quarter of at least $11.25 million, $13.75 million and $16.25 million, respectively.
Parent and Electra Post-Closing Board of Directors and Executive Officers
Immediately following the Closing, Parent’s board of directors will consist of seven (7) directors, of which Electra has the right to designate five (5) directors and the remaining two directors shall be jointly designated by Electra and IRHO SPAC Sponsor LLC (the “Sponsor”). At least a majority of the board of directors shall qualify as independent directors under Nasdaq or Alternate Exchange rules, as applicable.
At the Closing, all of the officers of Parent shall resign and the following individuals are expected to be appointed as officers of Parent: Fabrizio Martini, as Chief Executive Officer and Nicholas Chakalos, President & Chief Financial Officer.
Immediately following the Closing, Electra’s board of directors will consist of the same individuals serving as directors of Parent.
Representations, Warranties and Covenants
The parties to the Merger Agreement have made customary representations, warranties and covenants in the Merger Agreement, including, among other things, covenants with respect to the conduct of the Company and IRHO and their respective subsidiaries prior to the Closing, including the Company’s covenant to provide to Parent no later than May 14, 2026, its audited financial statements for the years ended December 31, 2025 and 2024 for inclusion in the registration statement on Form S-4 to be filed by IRHO and the Company in connection with the Business Combination (the “Registration Statement”), and Parent and the Company shall jointly prepare and file with the SEC, mutually acceptable proxy materials which shall be included in the Registration Statement.
During the period commencing on date of execution of the Merger Agreement and until the earlier of the Closing Date and the termination of the Merger Agreement, IRHO and Electra will use commercially reasonable best efforts to enter into and consummate subscription agreements with investors to purchase securities of IRHO in connection with a private placement on terms mutually agreeable to the parties (any such purchase by investors, a “PIPE Financing”).
Conditions to Closing
The Closing of the Business Combination is subject to certain customary conditions of the respective parties, including, among other things: (i) approval of the Business Combination and related agreements and transactions by the respective shareholders of IRHO and the Company; (ii) effectiveness of the Registration Statement; (iii) Parent’s initial listing application shall have been conditionally approved for listing on The Nasdaq Stock Market (“Nasdaq”) or another national stock exchange; (iv) there shall not have occurred a respective Material Adverse Effect in respect of the Company and Parent that is continuing; (v) that the respective Fundamental Representations shall be true and correct in all respects; (vi) Parent Certificate of Incorporation shall have been filed with, and declared effective by, the Secretary of State of the State of Delaware; (vii) that all respective officer certificates of the Company and Parent shall have been delivered; (viii) all Parties shall have executed and delivered to each other a copy of each Ancillary Agreement to which they are a party; (ix) accrued but unpaid fees, costs and expenses, including fees of outside legal counsel (but excluding the Deferred Underwriting Commission), of the Parent Parties as of immediately prior to the Closing shall collectively not exceed $2,000,000 without the prior written consent of the Company; it being agreed that any such excess fees incurred without the Company’s prior written consent will reduce the share consideration remaining for the Sponsor such that only the Sponsor bears such excess fees, costs and expenses assuming $10 price per Parent Common Share; and (x) the amount of Parent Closing Cash at the Closing shall equal or exceed $30,000,000.
The Sponsor has agreed that, effective as of and conditioned upon the Closing, up to 800,000 Parent Ordinary Shares held by the Sponsor together with all Parent Common Shares issued upon conversion thereof in connection with the Domestication (the “At-Risk Shares”) shall be subject to forfeiture as follows: For each $1,000,000 by which the Parent Closing Cash is less than $80,000,000, the Sponsor shall forfeit 16,000 At-Risk Shares, up to the maximum of 800,000 Parent Common Shares. For illustrative purposes only: (i) if the Parent Closing Cash equals or exceeds
79
Table of Contents
$80,000,000, no At-Risk Shares shall be forfeited; (ii) if the Parent Closing Cash is $60,000,000, the Sponsor shall forfeit 320,000 At-Risk Shares; and (iii) if the Parent Closing Cash is $30,000,000 or less, the Sponsor shall forfeit all 800,000 At-Risk Shares.
Termination
The Merger Agreement may be terminated by Parent and the Company under certain circumstances, including:
(i) by mutual written agreement of Parent and Electra;
(ii) by either Parent or the Company if (a) the Closing has not occurred on or before January 21, 2027 (the “Outside Closing Date”) and (b) the material breach or violation of any representation, warranty, covenant or obligation under the Merger Agreement by the party seeking to terminate the Merger Agreement was not the cause of, or resulted in, the failure of the Closing to occur on or before such date;
(iii) by either Parent or Electra if the Business Combination is prohibited or made illegal by a final, non-appealable governmental order or law and the failure to comply with any provision of the Merger Agreement by the party seeking to terminate the Merger Agreement is not a substantial cause of, or has not substantially resulted in, such order or law;
(iv) by Parent, if Electra, (a) at any time prior to the Closing, has breached any of its covenants, agreements, representations and warranties contained in the Merger Agreement except that, if such breach is curable by the Company through the exercise of its reasonable best efforts, then, for a period of up to 30 days after receipt of a notice from IRHO, of such breach, but only as long as the Company continues to use its reasonable best efforts to cure such breach, such termination shall not be effective, and such termination shall become effective only if it is not cured within such 30 day period or (b) at any time after the Company Stockholder Written Consent Deadline if the Company has not delivered the Company Stockholder Approval to Parent (provided, that upon the Company delivering the Company Stockholder Approval to Parent, Parent shall no longer have any right to terminate the Merger Agreement); or
(v) by Electra, if Parent, at any time prior to the Closing, has breached any of its covenants, agreements, representations and warranties contained in the Merger Agreement except that, if such breach is curable by Parent through the exercise of its reasonable best efforts, then, for a period of up to 30 days after receipt of a notice from Electra, of such breach, but only as long as Parent continues to use its reasonable best efforts to cure such breach, such termination shall not be effective, and such termination shall become effective only if it is not cured within such 30 day period.
Proxy Solicitation
Electra and IRHO have agreed to, as promptly as practicable after the execution of the Merger Agreement, jointly prepare, and IRHO has agreed to file with the SEC, a mutually acceptable registration statement of which this proxy statement/prospectus forms a part (the “Registration Statement”). Electra and IRHO have agreed to use their reasonable best efforts to cause the Registration Statement to comply with the rules and regulations promulgated by the SEC, to have the Registration Statement declared effective under the Securities Act as promptly as practicable after such filing and to keep the Registration Statement effective as long as is necessary to consummate the transactions contemplated in the Merger Agreement.
IRHO has agreed to use its best efforts to obtain all necessary state securities laws or “blue sky” governmental authorizations required to carry out the transactions contemplated in the Merger Agreement, and Electra has agreed to furnish all information concerning itself and any of its equityholders as may be reasonably requested in connection with any such action.
IRHO and Electra have agreed to furnish to each other all information concerning itself and its officers, directors, managers and equityholders, and information regarding such other matters as may be reasonably necessary or advisable or as may be reasonably requested in connection with the Registration Statement, a Current Report on Form 8-K pursuant to the Exchange Act in connection with the transactions contemplated by the Merger Agreement, or any other statement, filing, notice or application made by or on behalf of IRHO or its subsidiaries or Electra to any governmental authority or to Nasdaq, in connection with the Merger and the other transactions contemplated in the Merger Agreement.
80
Table of Contents
IRHO has agreed to use its reasonable best efforts to, as promptly as practicable, (i) establish the record date for, duly call, give notice of, convene and hold the extraordinary general meeting in accordance with the Companies Act and the Cayman Constitutional Documents, (ii) cause the Registration Statement to be disseminated to the IRHO shareholders in compliance with applicable law and the Merger Agreement, and (iii) solicit proxies from the holders of IRHO Ordinary Shares to vote in favor of each of the proposals set forth herein.
Electra Stockholder Approval
The Electra Board will recommend to Electra Shareholders that they vote in favor of the Merger Agreement, each Ancillary Agreement to which Electra is or will be a party, and the transactions contemplated thereby and other related matters, and the Electra Board will not withhold, withdraw, amend, modify or change, in each case in a manner adverse to IRHO, such recommendation. As promptly as reasonably practicable after the effective date of the Registration Statement, and in any event within 5 business days following such date, Electra will obtain and deliver to IRHO the written consent of the Electra stockholders holding not less than the minimum number of votes that would be necessary to authorize the Merger at a meeting at which all shares entitled to vote were present and voted (consisting of (i) Persons holding a majority (on an as-converted basis) of the voting power of all Electra stockholders, (ii) Persons holding a majority of the outstanding shares of Electra Series Seed Preferred Stock, voting as a separate class, (iii) Persons holding a majority of the outstanding shares of Electra Series A Preferred Stock, voting as a separate class, and (iv) Persons holding a majority of the outstanding shares of Electra Series B Preferred Stock, voting as a separate class) approving the Merger Agreement and the transactions contemplated thereby (the “Electra Shareholder Approval”). Promptly following the receipt of the Electra Shareholder Approval, Electra will prepare and deliver to each Electra Shareholder a written notice, in form and substance required under the DGCL that sufficient shareholder consents have been executed, which notice will include a description of any dissenters’ rights and any other disclosure, information or document required by applicable law.
Related Agreements
This section describes certain additional agreements entered into or to be entered into pursuant to the Merger Agreement, but does not purport to describe all of the terms thereof. The following summary is qualified in its entirety by reference to the complete text of each of the agreements. The full text of the below related agreements, or forms thereof, are filed as annexes to this proxy statement/prospectus or as exhibits to the registration statement of which this proxy statement/prospectus forms a part, and the following descriptions are qualified in their entirety by the full text of such annexes and exhibits. Shareholders and other interested parties are urged to read such related agreements in their entirety prior to voting on the proposals presented at the extraordinary general meeting.
Parent Support Agreement
In connection with the execution of the Merger Agreement, Parent entered into a support agreement (the “Parent Support Agreement”) with the Sponsor and the Company, pursuant to which the Sponsor agreed to, among other things, (i) vote all of its Parent Common Shares in favor of the various proposals related to the Business Combination and the Merger Agreement and any other matters requested by Parent for consummation of the Business Combination, (ii) vote against any alternative proposal or alternative transaction or any proposal relating to a business combination transaction (other than the Merger Agreement, the Merger or any of the transactions contemplated thereby), (iii) vote against any merger agreement or merger, consolidation, combination, sale of substantial assets, reorganization, recapitalization, dissolution, liquidation or winding up of or by Parent (other than the Merger Agreement or the Ancillary Agreements and the Merger and the other transactions contemplated thereby), (iv) vote against any change in the business, management or board of directors of Parent (other than in connection with the Merger Agreement, the Merger or any of the transactions contemplated thereby), (v) vote against any proposal, action or agreement that would (A) impede, interfere with, delay, postpone, frustrate, prevent or nullify any provision of the Parent Support Agreement, the Merger Agreement, the Ancillary Agreements or the Merger or any of the transactions contemplated thereby, (B) result in a breach in any respect of any covenant, representation, warranty or any other obligation or agreement of Parent or the Merger Sub or the Sponsor under the Merger Agreement or the Parent Support Agreement, as applicable, (C) result in any of the conditions set forth in Article IX of the Merger Agreement not being fulfilled or (D) change in any manner the dividend policy or capitalization of, including the voting rights of any class of capital stock of, IRHO and (vi) vote in favor of any proposal to extend the period of time IRHO is afforded under its organizational documents to consummate an initial business combination, in each case, subject to the terms and conditions of the Parent Support Agreement.
81
Table of Contents
During the period commencing on the date hereof and ending on the earliest of (a) the Effective Time, (b) such date and time as the Merger Agreement shall be validly terminated in accordance with its terms and (c) the liquidation of Parent, the Sponsor shall not, without the prior written consent of the Company, directly or indirectly, (i) sell, offer to sell, contract or agree to sell, hypothecate, pledge, grant any option to purchase or otherwise dispose of or agree to dispose of, file (or participate in the filing of) a registration statement with the SEC (other than the Proxy Statement/Prospectus) or establish or increase a put equivalent position or liquidate or decrease a call equivalent position within the meaning of Section 16 of the Exchange Act, with respect to any Parent Common Shares owned by the Sponsor, (ii) enter into any swap or other arrangement that transfers to another, in whole or in part, any of the economic consequences of ownership of any Parent Common Shares owned by the Sponsor or (iii) publicly announce any intention to effect any transaction; provided, however, that the foregoing restrictions shall not apply to any Permitted Transfer (as defined in the Parent Support Agreement).
Company Support Agreement
In connection with the execution of the Merger Agreement, IRHO entered into a support agreement (the “Company Support Agreement”) with the Company and certain stockholders of the Company (the “Company Supporting Shareholders”) pursuant to which the Company Supporting Shareholders agreed to, among other things, (i) vote to adopt and approve, the Merger Agreement and the transactions contemplated thereby, (ii) vote against any merger agreement or merger, consolidation, combination, sale of substantial assets, reorganization, recapitalization, dissolution, liquidation or winding up of or by the Company (other than the Merger Agreement or the Ancillary Agreements and the Merger and the other transactions contemplated thereby), (iii) vote against any change in the business (to the extent in violation of the Merger Agreement), management or board of directors of the Company (other than in connection with the Merger Agreement and the transactions contemplated thereby, including the Merger), and (iv) vote against any proposal, action or agreement that would (A) impede, interfere with, delay, postpone, frustrate, prevent or nullify any provision of the Company Support Agreement, the Merger Agreement, the Ancillary Agreements or the Merger or any of the transactions contemplated thereby, (B) result in a breach in any respect of any covenant, representation, warranty or any other obligation or agreement of the Company or the Company Stockholders under the Merger Agreement or the Company Support Agreement, as applicable, (C) result in any of the conditions set forth in Article IX of the Merger Agreement not being fulfilled, or (D) change in any manner the dividend policy or capitalization of the Company, including the voting rights of any share capital of the Company.
In addition, the Company Supporting Shareholders agreed that during the period commencing on the date of entry into the Company Support Agreement until the earliest of (a) the Effective Time, (b) such date and time as the Merger Agreement shall be validly terminated in accordance with its terms, each Company Supporting Stockholder agrees to not, without the prior written consent of Parent, directly or indirectly, (i) sell, offer to sell, contract or agree to sell, hypothecate, transfer, pledge, grant any option to purchase or otherwise dispose of or agree to dispose of or transfer, each with respect to any Electra shares owned by such Company Supporting Stockholder, (ii) enter into any swap or other arrangement that transfers to another, in whole or in part, any of the economic consequences of ownership of any Electra shares owned by such Company Supporting Stockholder, or (iii) publicly announce any intention to effect any such transaction; provided, however, that the foregoing restrictions shall not apply to any Permitted Transfer (as defined in the Company Support Agreement).
Lock-Up Agreement
On or before the Closing Date, Parent and the Company will enter into a Lock-Up Agreement (the “Lock-Up Agreement”) with certain stockholders of the Company and the Sponsor, pursuant to which the Parent Common Shares and any other equity securities convertible into or exchangeable for or representing the rights to receive Parent Common Shares, if any, held by such holders immediately following the Closing shall be subject to a lock-up for the Lock-Up Period. The “Lock-Up Period” means the period beginning on the Closing Date and ending in four consecutive equal quarterly installments following the Closing Date, in accordance with the following schedule:
(a) one-fourth of the securities subject to the Lock-Up shall be released from the Lock-Up upon the Company issuing its first quarterly earnings release that occurs at least 120 days after the Closing Date;
(b) one-fourth of the securities subject to the Lock-Up shall be released from the Lock-Up upon the Company issuing its second quarterly earnings release that occurs at least 120 days after the Closing Date;
82
Table of Contents
(c) one-fourth of the securities subject to the Lock-Up shall be released from the Lock-Up upon the Company issuing its third quarterly earnings release that occurs at least 120 days after the Closing Date; and
(d) one-fourth of the securities subject to the Lock-Up shall be released from the Lock-Up upon the Company issuing its fourth quarterly earnings release that occurs at least 120 days after the Closing Date.
Amended and Restated Registration Rights Agreement
The Merger Agreement contemplates that, at the Closing, Parent, the Company, the Sponsor and certain stockholders of the Company (collectively, the “Holders”) will enter into an amended and restated registration rights agreement (the “Registration Rights Agreement”), pursuant to which Parent will agree to register for resale, pursuant to Rule 415 under the Securities Act, certain Parent Common Shares that are held by the Holders from time to time, including (a) any outstanding Parent Common Shares and Parent Common Shares issued or issuable upon the exercise of any other equity security and any Parent Common Shares issued or issuable upon the exercise of any Equity Awards of Parent held by a Holder immediately following the Closing (including any securities distributable pursuant to the Merger Agreement); (b) any outstanding Parent Common Shares, Equity Awards, Earnout Shares, Parent Common Shares issued or issuable upon the exercise of any other equity security of Parent acquired by a Holder following the Closing Date to the extent that such securities are “restricted securities” (as defined in Rule 144) or are otherwise held by an “affiliate” (as defined in Rule 144) of Parent; (c) any Additional Holder Common Stock (as defined in the Registration Rights Agreement); and (d) any other equity security of Parent or any of its subsidiaries issued or issuable with respect to any securities referenced in clause (a), (b) or (c) above by way of a stock dividend or stock split or in connection with a recapitalization, merger, consolidation, spin-off, reorganization or similar transaction.
The Registration Rights Agreement amends and restates the registration rights agreement that was entered into by IRHO, the Sponsor and the other parties thereto in connection with IRHO’s initial public offering. The Registration Rights Agreement will terminate on the earlier of (a) the five year anniversary of the date of the Registration Rights Agreement or (b) with respect to any Holder, on the date that such Holder no longer holds any Registrable Securities (as defined therein).
Expected Accounting Treatment of the Business Combination Proposal
The Domestication
There will be no accounting effect or change in the carrying amount of the assets and liabilities of IRHO as a result of the Domestication. The business, capitalization, assets and liabilities and financial statements of IRHO immediately following the Domestication will be the same as those immediately prior to the Domestication.
The Business Combination
The Business Combination will be accounted for as a reverse recapitalization, in accordance with GAAP. Under this method of accounting, IRHO will be treated as the “acquired” company for financial reporting purposes. Accordingly, the Business Combination will be treated as the equivalent of Electra issuing stock for the net assets of IRHO, accompanied by a recapitalization. The net assets of IRHO will be stated at historical cost, with no goodwill or other intangible assets recorded.
Regulatory Matters
Neither IRHO nor Electra are aware of any material regulatory approvals or actions that are required for completion of the Business Combination, other than the regulatory notices and approvals discussed in “The Business Combination Proposal — Merger Agreement — Closing Conditions — Conditions to the Obligations of Each Party”. It is presently contemplated that if any such additional regulatory approvals or actions are required, those approvals or actions will be sought. There can be no assurance, however, that any additional approvals or actions will be obtained.
83
Table of Contents
Vote Required for Approval
The approval of the Business Combination Proposal requires an ordinary resolution under Cayman Islands law, being the affirmative vote of a majority of the IRHO Ordinary Shares, who, being entitled to do so, attend in person or by proxy and vote thereon at the extraordinary general meeting. Abstentions and broker non-votes, while considered present for the purposes of establishing a quorum, will not count as votes cast at the extraordinary general meeting and otherwise will have no effect on a particular proposal under Cayman Islands law.
The Business Combination Proposal is conditioned on the approval of each of the other Condition Precedent Proposals. Therefore, if each of the Condition Precedent Proposals is not approved, the Business Combination Proposal will have no effect, even if approved by holders of IRHO Ordinary Shares. The Sponsor, which includes among its members each of the directors and officers of IRHO, owns 5,750,000 Founder Shares, 370,000 Private Placement Units, (200,000 Private Placement Units being owned by Cantor). As a result, as of the date of this proxy statement/prospectus, the Initial Shareholders own approximately 21% of the issued and outstanding IRHO Ordinary Shares and have the right to vote approximately 21% of the issued and outstanding IRHO Ordinary Shares. Accordingly, assuming all issued and outstanding IRHO Ordinary Shares are voted, we would only need 8,340,001 additional IRHO Ordinary Shares (or approximately 28%) to approve the Business Combination Proposal.
Resolution to be Voted Upon
The full text of the resolution to be passed is as follows:
“RESOLVED, as an ordinary resolution, that Iron Horse Acquisition II Corp.’s (“IRHO”) entry into the Merger Agreement, dated as of April 21, 2026 (as amended and as may be further amended and/or restated from time to time, the “Merger Agreement”), by and among IRHO, Merger Sub, Inc., a Delaware corporation and a direct, wholly-owned subsidiary of IRHO (“Merger Sub”), and Electra Vehicles, Inc., a Delaware corporation (“Electra”), (a copy of the Merger Agreement and the Amendment to Merger Agreement, dated as of May 14, 2026, are attached to the proxy statement/prospectus as Annex A-1 and Annex A-2), pursuant to which, among other things, following the domestication and transfer by way of continuation of IRHO to the State of Delaware as described below, the merger of Merger Sub with and into Electra (the “Merger”), with Electra surviving the Merger, in accordance with the terms and subject to the conditions of the Merger Agreement, and in accordance with the Delaware General Corporation Law, as amended (the “DGCL”), to be approved, ratified and confirmed in all respects.”
Recommendation of the IRHO Board
THE IRHO BOARD UNANIMOUSLY RECOMMENDS THAT IRHO SHAREHOLDERS VOTE “FOR” THE APPROVAL OF THE BUSINESS COMBINATION PROPOSAL.
The IRHO Board believes that the Business Combination Proposal to be presented at the extraordinary general meeting is in the best interests of IRHO’s shareholders and unanimously recommends that its shareholders vote “FOR” the approval of the Business Combination Proposal.
The existence of financial and personal interests of one or more of IRHO’s directors may result in a conflict of interest on the part of such director(s) between what he, she or they may believe is in the best interests of IRHO and its shareholders and what he, she or they may believe is best for himself, herself or themselves in determining to recommend that shareholders vote for the proposals. In addition, IRHO’s officers have interests in the Business Combination that may conflict with your interests as a shareholder. See “The Business Combination Proposal — Certain Interests of IRHO’s Directors and Officers and Others in the Business Combination” for a further discussion.
84
Table of Contents
The Domestication Proposal
Overview
As discussed in this proxy statement/prospectus, if the Business Combination Proposal is approved, then IRHO is asking its shareholders to approve the Domestication Proposal. Under the Merger Agreement, the approval of the Domestication Proposal is also a condition to the consummation of the Merger. If, however, the Domestication Proposal is approved, but the Business Combination Proposal is not approved, then neither the Domestication nor the Merger will be consummated.
As a condition to Closing the Merger, the IRHO Board has unanimously approved a change of IRHO’s jurisdiction of incorporation by de-registering as an exempted company from the Register of Companies in the Cayman Islands (the “Cayman Registrar”) and transfer by way of continuation out of the Cayman Islands and into the State of Delaware so as to migrate to and domesticate as a Delaware corporation in accordance with the Cayman Constitutional Documents, Section 388 of the DGCL, and Part XII of the Companies Act. To effect the Domestication, IRHO will (i) file a notice of de-registration with the Cayman Registrar, together with the necessary accompanying documents, (ii) file a certificate of corporate domestication (the “Certificate of Domestication”) with the Secretary of State of the State of Delaware, together with the Proposed Charter, in each case, in accordance with the provisions thereof and Section 388 of the DGCL, and (iii) obtain a certificate of de-registration from the Cayman Registrar, pursuant to which IRHO will be domesticated and continue as a Delaware corporation. In connection with the Domestication and simultaneously with the Proposed Transaction, the corporate name of IRHO will change to “ELECTRA AI, Inc.”
In accordance with applicable law, the Certificate of Domestication will provide that at the effective time of the Domestication, by virtue of the Domestication, and without any action on the part of any shareholder, (i) each then issued and outstanding ordinary share of IRHO, par value $0.0001 per share (each, an “IRHO Ordinary Share”), will convert automatically, on a one-for-one basis, into one Parent Class A Common Share; (ii) each then issued and outstanding right entitling the holder thereof to 1/10 of one IRHO Ordinary Share (each, an “IRHO Right”) shall convert automatically into a right to receive 1/10 of one Parent Class A Common Share at the Closing, pursuant to the Parent Rights Agreement dated as of December 16, 2025, by and between IRHO and Continental Stock Transfer & Trust Company, as Rights agent; and (iii) each then issued and outstanding unit of IRHO (each, an “IRHO Unit”) shall separate and convert automatically into one Parent Class A Common Share and a right to receive 1/10 of one Parent Class A Common Share at the Closing.
The Domestication Proposal, if approved, will approve a change of IRHO’s jurisdiction of incorporation from the Cayman Islands to the State of Delaware. Accordingly, while IRHO is currently governed by the Companies Act, upon the Domestication, Electra Pubco will be governed by the DGCL. IRHO encourages shareholders to carefully consult the information in “Comparison of Corporate Governance and Shareholder Rights”.
Reasons for the Domestication
The IRHO Board believes that it would be in the best interests of IRHO, simultaneously with the completion of the Proposed Transaction, to effect the Domestication. Further, the IRHO Board believes that any direct benefit that the DGCL provides to a corporation also indirectly benefits its stockholders, who are the owners of the corporation. In addition, because Electra Pubco will operate within the United States following the Proposed Transaction, it was the view of the IRHO Board that Electra Pubco should be structured as a corporation organized in the United States.
The IRHO Board believes that there are several reasons why a reincorporation in Delaware is in the best interests of IRHO and its shareholders. These additional reasons can be summarized as follows:
• Prominence, Predictability and Flexibility of Delaware Law. For many years, Delaware has followed a policy of encouraging incorporation in its state and, in furtherance of that policy, has been a leader in adopting, construing, and implementing comprehensive, flexible corporate laws responsive to the legal and business needs of corporations organized under its laws. Many corporations have chosen Delaware initially as a state of incorporation or have subsequently changed corporate domicile to Delaware. Because of Delaware’s prominence as the state of incorporation for many major corporations, both the legislature and courts in Delaware have demonstrated the ability and a willingness to act quickly and effectively to meet changing business needs. The DGCL is frequently revised and updated to accommodate changing
85
Table of Contents
legal and business needs and is more comprehensive, widely used and interpreted than other state corporate laws. This favorable corporate and regulatory environment is attractive to businesses such as Electra Pubco’s.
• Well-Established Principles of Corporate Governance. There is substantial judicial precedent in the Delaware courts as to the legal principles applicable to measures that may be taken by a corporation and to the conduct of a company’s board of directors, such as under the business judgment rule and other standards. Because the judicial system is based largely on legal precedents, the abundance of Delaware case law provides clarity and predictability to many areas of corporate law. IRHO believes such clarity would be advantageous to Electra Pubco, the Electra Pubco Board and management to make corporate decisions and take corporate actions with greater assurance as to the validity and consequences of those decisions and actions. Further, investors and securities professionals are generally more familiar with Delaware corporations, and the laws governing such corporations, increasing their level of comfort with Delaware corporations relative to other jurisdictions. The Delaware courts have developed considerable expertise in dealing with corporate issues, and a substantial body of case law has developed construing Delaware law and establishing public policies with respect to corporate legal affairs. Moreover, Delaware’s vast body of law on the fiduciary duties of directors provides appropriate protection for Electra Pubco’s stockholders from possible abuses by directors and officers.
• Increased Ability to Attract and Retain Qualified Directors. Reincorporation from the Cayman Islands to Delaware is attractive to directors, officers, and stockholders alike. Electra Pubco’s incorporation in Delaware may make Electra Pubco more attractive to future candidates for the Electra Pubco Board, because many such candidates are already familiar with Delaware corporate law from their past business experiences. To date, IRHO has not experienced difficulty in retaining directors or officers, but directors of public companies are exposed to significant potential liability. Thus, candidates’ familiarity and comfort with Delaware laws — especially those relating to director indemnification (as discussed below) - draw such qualified candidates to Delaware corporations. The IRHO Board therefore believes that providing the benefits afforded directors by Delaware law will enable Electra Pubco to compete more effectively with other public companies in the recruitment of talented and experienced directors and officers. Moreover, Delaware’s vast body of law on the fiduciary duties of directors provides appropriate protection for IRHO’s stockholders from possible abuses by directors and officers.
The frequency of claims and litigation pursued against directors and officers has greatly expanded the risks facing directors and officers of corporations in carrying out their respective duties. The amount of time and money required to respond to such claims and to defend such litigation can be substantial. While both Cayman Islands and Delaware law permit a corporation to include a provision in its governing documents to reduce or eliminate the monetary liability of directors for breaches of fiduciary duty in certain circumstances, IRHO believes that, in general, Delaware law is more developed and provides more guidance than Cayman Islands law on matters regarding a company’s ability to limit director liability. As a result, IRHO believes that the corporate environment afforded by Delaware will enable Electra Pubco to compete more effectively with other public companies in attracting and retaining new directors.
Reasons for the Name Change
The IRHO Board believes that it would be in the best interests of IRHO to, in connection with the Domestication and simultaneously with the Business Combination, change the corporate name to “ELECTRA AI, Inc.” in order to more accurately reflect the business purpose and activities of Electra Pubco.
Regulatory Approvals; Third-Party Consents
IRHO is not required to make any filings or to obtain any approvals or clearances from any antitrust regulatory authorities in the United States or other countries in order to complete the Domestication. However, because the Domestication must occur simultaneously with the Merger, it will not occur unless the Merger can be completed, which will require the approvals as described under “The Business Combination Proposal”. IRHO must comply with applicable United States federal and state securities laws in connection with the Domestication, including the filing with Nasdaq of a press release disclosing the Domestication, among other things.
86
Table of Contents
The Domestication will not breach any covenants or agreements binding upon IRHO and will not be subject to any additional federal or state regulatory requirements, except compliance with the laws of the Cayman Islands and Delaware necessary to effect the Domestication.
Proposed Charter and Proposed Bylaws
Commencing with the effective time of the Domestication, which will be the effective time of the Business Combination, the Proposed Charter and the Proposed Bylaws will govern the Rights of stockholders in Electra Pubco.
A chart comparing your rights as a holder of IRHO Ordinary Shares as a Cayman Islands exempted company with your rights as a holder of the shares of Electra Pubco Common Stock can be found in “Comparison of Corporate Governance and Shareholder Rights”.
Accounting Treatment of the Domestication
The Domestication is being proposed solely for the purpose of changing the legal domicile of IRHO. There will be no accounting effect or change in the carrying amount of the assets and liabilities of IRHO as a result of the Domestication. The business, capitalization, assets and liabilities and financial statements of IRHO immediately following the Domestication will be the same as those immediately prior to the Domestication.
Vote Required for Approval
The approval of the Domestication Proposal requires a special resolution under Cayman Islands law, being the affirmative vote of at least two-thirds of IRHO Ordinary Shares, who, being entitled to do so, attend in person or by proxy and vote thereon at the extraordinary general meeting. Abstentions and broker non-votes, while considered present for the purposes of establishing a quorum, will not count as votes cast at the extraordinary general meeting and otherwise will have no effect on a particular proposal under Cayman Islands law.
The Domestication Proposal is conditioned on the approval of each of the Condition Precedent Proposals. Therefore, if each of the Condition Precedent Proposals is not approved, the Domestication Proposal will have no effect. As of the date of this proxy statement/prospectus, we will need the vote of holders of 8,540,001 Ordinary Shares (or 29%), present in person or by proxy, and entitled to vote to be able to approve the Domestication Proposal.
Resolution to be Voted Upon
The full text of the resolution to be passed is as follows:
“RESOLVED, as a special resolution, that Iron Horse Acquisition II Corp. (“IRHO”) be de-registered from the Register of Companies in the Cayman Islands pursuant to Article 46 of the articles of association of the IRHO and transfer by way of continuation out of the Cayman Islands and into the State of Delaware so as to migrate to and domesticate as a Delaware corporation in accordance with Section 388 of the Delaware General Corporation Law, as amended, and Part XII of the Companies Act (Revised) of the Cayman Islands (the “Domestication”) and conditional upon, and with effect from, the effective time of the Domestication, and the name of IRHO be changed to “ELECTRA AI, Inc. and the registered office of IRHO be changed to [•].”
Recommendation of the IRHO Board
THE IRHO BOARD UNANIMOUSLY RECOMMENDS THAT IRHO SHAREHOLDERS VOTE “FOR” THE APPROVAL OF THE DOMESTICATION PROPOSAL.
The existence of financial and personal interests of one or more of IRHO’s directors may result in a conflict of interest on the part of such director(s) between what he, she or they may believe is in the best interests of IRHO and its shareholders and what he, she or they may believe is best for himself, herself or themselves in determining to recommend that shareholders vote for the proposals. In addition, IRHO’s officers have interests in the Proposed Transaction that may conflict with your interests as a shareholder. See “The Business Combination Proposal — Certain Interests of IRHO’s Directors and Officers and Others in the Business Combination” for a further discussion of these considerations.
87
Table of Contents
The Stock Issuance Proposal
Overview
Assuming the Business Combination Proposal, the Domestication Proposal and the other Condition Precedent Proposals are approved, IRHO’s shareholders are also being asked to approve, by ordinary resolution, the Stock Issuance Proposal.
Why IRHO Needs Shareholder Approval
Under Nasdaq Listing Rule 5635(a), shareholder approval is required prior to the issuance of securities in connection with the acquisition of another company if, due to the present or potential issuance of common stock, including shares issued pursuant to an earn-out provision or similar type of provision, or securities convertible into or exercisable for common stock, such securities are not issued in a public offering for cash and (A) have, or will have upon issuance, voting power equal to or in excess of 20% of the voting power outstanding before the issuance of common stock (or securities convertible into or exercisable for common stock); or (B) the number of shares of common stock to be issued is or will be equal to or in excess of 20% of the number of shares of common stock outstanding before the issuance of the stock or securities.
Under Nasdaq Listing Rule 5635(b), shareholder approval is required prior to an issuance of securities when the issuance or potential issuance will result in a change of control of the issuer.
Under Nasdaq Listing Rule 5635(d), shareholder approval is required for a transaction other than a public offering involving the sale, issuance or potential issuance by an issuer of common stock (or securities convertible into or exercisable for common stock) at a price that is less than the lower of (i) the closing price immediately preceding the signing of the binding agreement or (ii) the average closing price of the common stock for the five trading days immediately preceding the signing of the binding agreement, if the number of shares of common stock (or securities convertible into or exercisable for common stock) to be issued equals to 20% or more of the shares of common stock, or 20% or more of the voting power, outstanding before the issuance.
The aggregate shares of Electra Pubco Common Stock that Electra Pubco will and potentially will issue in connection with the Proposed Transaction will exceed 20% of both the voting power and the shares of Electra Pubco Common Stock outstanding before such issuance and may result in a change of control under the applicable Nasdaq Listing Rules. Accordingly, IRHO is seeking the approval of IRHO shareholders for the issuance of shares of Electra Pubco Common Stock in connection with the Proposed Transaction.
Vote Required for Approval
The approval of the Stock Issuance Proposal requires an ordinary resolution under Cayman Islands law, being the affirmative vote of a majority of the IRHO Ordinary Shares, who, being entitled to do so, attend in person or by proxy and vote thereon at the extraordinary general meeting. Abstentions and broker non-votes, while considered present for the purposes of establishing a quorum, will not count as votes cast at the extraordinary general meeting and otherwise will have no effect on a particular proposal under Cayman Islands law.
The Stock Issuance Proposal is conditioned on the approval of each of the Condition Precedent Proposals. Therefore, if each of the Condition Precedent Proposals is not approved, the Stock Issuance Proposal will have no effect, even if approved by holders of IRHO Ordinary Shares. The Sponsor, which includes among its members each of the directors and officers of IRHO, owns 5,750,000 Founder Shares, 370,000 Private Placement Units, and Cantor owning 200,000 Private Placement Units. As a result, as of the date of this proxy statement/prospectus, the Initial Shareholders own approximately 21% of the issued and outstanding IRHO Ordinary Shares and have the right to vote approximately 21% of the issued and outstanding IRHO Ordinary Shares. Accordingly, we would only need 8,540,001 IRHO Ordinary Shares (or 29%) to approve the Stock Issuance Proposal.
88
Table of Contents
Resolution to be Voted Upon
The full text of the resolution to be passed is as follows:
“RESOLVED, as an ordinary resolution, that, for the purposes of complying with the applicable provisions of Nasdaq Listing Rules 5635(a), (b) and (d), the issuance of shares of Electra Pubco Common Stock to Electra equityholders pursuant to the Merger Agreement, and any other persons pursuant to subscription, purchase or similar agreements IRHO may enter into prior to Closing be approved in all respects.”
Recommendation of the IRHO Board
THE IRHO BOARD UNANIMOUSLY RECOMMENDS THAT IRHO SHAREHOLDERS VOTE “FOR” THE APPROVAL OF THE STOCK ISSUANCE PROPOSAL.
The existence of financial and personal interests of one or more of IRHO’s directors may result in a conflict of interest on the part of such director(s) between what he, she or they may believe is in the best interests of IRHO and its shareholders and what he, she or they may believe is best for himself, herself or themselves in determining to recommend that shareholders vote for the proposals. In addition, IRHO’s officers have interests in the Proposed Transaction that may conflict with your interests as a shareholder. See “The Business Combination Proposal — Certain Interests of IRHO’s Directors and Officers and Others in the Business Combination” for a further discussion of these considerations.
89
Table of Contents
The Organizational Documents Proposal
If the Domestication Proposal is approved and the Business Combination is consummated, IRHO will replace the Cayman Constitutional Documents, under the Companies Act, with the Proposed Charter and the Proposed Bylaws of Electra Pubco and change the name of IRHO to “ELECTRA AI, Inc.”, in each case, pursuant to the DGCL.
IRHO’s shareholders are asked to consider and vote upon and to adopt the Proposed Organizational Documents in connection with the replacement of the Cayman Constitutional Documents with the Proposed Organizational Documents. The Organizational Documents Proposal is conditioned on the approval of the Condition Precedent Proposals. Therefore, if any of the Condition Precedent Proposals is not approved, the Organizational Documents Proposal will have no effect, even if approved by holders of IRHO Ordinary Shares.
Reasons for the Amendments
The IRHO Board’s reasons for proposing the Proposed Organizational Documents are set forth below. The following is a summary of the key changes effected by the Proposed Organizational Documents, but this summary is qualified in its entirety by reference to the full text of the Proposed Charter, a copy of which is included as Annex B-1, and by reference to the full text of the Proposed Bylaws, a copy of which is included as Annex B-2:
• To change the corporate name from “Iron Horse Acquisition II Corp.” to “ELECTRA AI, Inc.”;
• To change the total number of shares of our capital stock from (a) 50,000,000 IRHO Ordinary Shares, and 1,000,000 preference shares, par value $0.0001 per share, of IRHO to (b) _______________Class A common stock, par value $0.0001 per share, ____________ Class B common stock, par value $0.0001 per share, and 5,000,000 shares of preferred stock, par value $0.0001 per share, of Electra Pubco; and
• To authorize all other changes in connection with the replacement of the Cayman Constitutional Documents with the Proposed Charter and the Proposed Bylaws in connection with the consummation of the Business Combination (copies of which are attached to this proxy statement/prospectus as Annex B-1 and Annex B-2, respectively).
Resolution to be Voted Upon
The full text of the resolutions to be passed is as follows:
“RESOLVED, as a special resolution, that the Cayman Constitutional Documents currently in effect be amended and restated by the deletion in their entirety and the substitution in their place of the Proposed Charter and Proposed Bylaws (copies of which are attached to the proxy statement/prospectus as Annex B-1 and Annex B-2, respectively), with such principal changes as described in the Advisory Organizational Documents Proposals 5A through 5F.”
Vote Required for Approval
The approval of the Organizational Documents Proposal requires a special resolution under Cayman Islands law, being the affirmative vote of the holders of at least two-thirds of the IRHO Ordinary Shares, who, being entitled to do so, attend in person or by proxy and vote thereon at the extraordinary general meeting. Abstentions and broker non-votes, while considered present for the purposes of establishing a quorum, will not count as a vote cast at the extraordinary general meeting and otherwise will have no effect on a particular proposal under Cayman Islands law.
The Organizational Documents Proposal is conditioned on the approval of each of the Condition Precedent Proposals. Therefore, if each of the Condition Precedent Proposals is not approved, the Organizational Documents Proposal will have no effect, even if approved by holders of IRHO Ordinary Shares. The Sponsor, which includes among its members each of the directors and officers of IRHO, owns 5,750,000 Founder Shares, 370,000 Private Placement Units, and Cantor owning 200,000 Private Placement Units. As a result, as of the date of this proxy statement/prospectus, the Initial Shareholders own approximately 21% of the issued and outstanding IRHO Ordinary Shares and have the right to vote approximately 21% of the issued and outstanding IRHO Ordinary Shares. Accordingly, assuming all issued and outstanding IRHO Ordinary Shares are voted, we will need the vote of holders of 13,226,667 additional Ordinary Shares (or approximately 45%), present in person or by proxy, and entitled to vote to be able to approve the Organizational Documents Proposal.
90
Table of Contents
Recommendation of the IRHO Board
THE IRHO BOARD UNANIMOUSLY RECOMMENDS THAT IRHO SHAREHOLDERS VOTE “FOR” THE APPROVAL OF THE ORGANIZATIONAL DOCUMENTS PROPOSAL.
The existence of financial and personal interests of one or more of IRHO’s directors may result in a conflict of interest on the part of such director(s) between what he, she or they may believe is in the best interests of IRHO and its shareholders and what he, she or they may believe is best for himself, herself or themselves in determining to recommend that shareholders vote for the proposals. In addition, IRHO’s officers have interests in the Proposed Transaction that may conflict with your interests as a shareholder. See “The Business Combination Proposal — Certain Interests of IRHO’s Directors and Officers and Others in the Business Combination” for a further discussion.
91
Table of Contents
The Advisory Organizational Documents Proposals
Overview
IRHO’s shareholders are also being asked to vote on a separate proposal with respect to certain governance provisions in the Proposed Organizational Documents, which are separately being presented in accordance with SEC guidance to give shareholders the opportunity to present their separate views on important corporate governance provisions and which will be voted upon on a non-binding advisory basis. This separate vote is not otherwise required by the Companies Act or Delaware law separate and apart from the Organizational Documents Proposal, but pursuant to SEC guidance, IRHO is required to submit these provisions to its shareholders separately for approval. However, the shareholder votes regarding these proposals are advisory in nature, and are not binding on IRHO or the IRHO Board (separate and apart from the approval of the Organizational Documents Proposal). Furthermore, the Business Combination is not conditioned on the separate approval of the advisory charter proposals (separate and apart from approval of the Organizational Documents Proposal). Accordingly, regardless of the outcome of the non-binding advisory vote on this proposal, IRHO intends that the Proposed Organizational Documents will take effect at the Closing (assuming approval of the Organizational Documents Proposal).
The Proposed Organizational Documents differ materially from the Cayman Constitutional Documents. The following table sets forth a summary of the principal changes proposed between the Cayman Constitutional Documents and the Proposed Organizational Documents. This summary is qualified by reference to the complete text of the Cayman Constitutional Documents of IRHO, the complete text of the Proposed Charter, a copy of which is attached to this proxy statement/prospectus as Annex B-1, and the complete text of the Proposed Bylaws, a copy of which is attached to this proxy statement/prospectus as Annex B-2. All shareholders are encouraged to read the Proposed Organizational Documents in their entirety for a more complete description of their terms. Additionally, as the Cayman Constitutional Documents are governed by the Companies Act and the Proposed Organizational Documents will be governed by the DGCL, IRHO encourages shareholders to carefully consult the information set out under the section entitled “Comparison of Corporate Governance and Shareholder Rights”.
| Advisory Organizational | Description of Change | |
| Authorized Shares (Advisory Organizational Documents Proposal 5A) | The Cayman Constitutional Documents authorize 50,000,000 IRHO Ordinary Shares, and 1,000,000 IRHO preference shares. See paragraph 4 of the Cayman Constitutional Documents. The Proposed Organizational Documents authorize ______ shares of Common Stock, consisting of ___________ shares of Electra Pubco Class A Common Stock, ___________ shares of Electra Pubco Class B Common Stock and ___________ shares of Electra Pubco preferred stock. See Article IV of the Proposed Charter. | |
| Exclusive Forum Provision (Advisory Organizational Documents Proposal 5B) | The Cayman Constitutional Documents do not contain a provision adopting an exclusive forum for certain shareholder litigation. The Proposed Organizational Documents adopt (a) Delaware as the exclusive forum for certain stockholder litigation and (b) the federal district courts of the United States as the exclusive forum for the resolution of any complaint asserting a cause of action arising under the Securities Act. See Article XII of the Proposed Charter. | |
| Required Vote to Amend Charter (Advisory Organizational Documents Proposal 5C) | The Cayman Constitutional Documents provide that amendments may be made by a special resolution under Cayman Islands law, being the affirmative vote of holders of a majority of at least two-thirds of the IRHO Ordinary Shares represented in person or by proxy and entitled to vote at a general meeting and who vote at a general meeting. See Article 17.3 of the Cayman Constitutional Documents. The Proposed Organizational Documents adopt provisions providing the affirmative vote of at least 66 and 2/3% of the voting power of all the then outstanding shares of capital stock entitled to vote thereon, voting together as a single class, to amend, alter, repeal or rescind all or any portion of Article V(B), Article VII, Article VIII, Article IX, Article X, Article XI, Article XII, Article XIII and Article XIV of the Proposed Charter. See Article XIV of the Proposed Charter. |
92
Table of Contents
| Advisory Organizational | Description of Change | |
| Removal of Directors (Advisory Organizational Documents Proposal 5D) | The Cayman Constitutional Documents provide that prior to the closing of an initial business combination, holders of IRHO Ordinary Shares may remove any director by an ordinary resolution under Cayman Islands law, being the affirmative vote of holders of a majority of IRHO Ordinary Shares, who, being entitled to do so, attend in person or by proxy and vote at a general meeting. See Article 28 of the Cayman Constitutional Documents. The Proposed Organizational Documents adopt provisions permitting the removal of a director, with or without cause, by the affirmative vote of at least 66 and 2/3% of the outstanding shares entitled to vote generally in the election of directors, voting together as a single class. See Article VII of the Proposed Charter. | |
| Stockholder Action by Written Consent (Advisory Organizational Documents Proposal 5E) | The Cayman Constitutional Documents permit shareholders to approve matters by written resolution (including a special resolution) of the shareholders entitled to receive notice of and to attend and vote at general meetings. See Article 21.3 of the Cayman Constitutional Documents. The Proposed Organizational Documents approve provisions that require or permit stockholders to take action at an annual or special meeting and prohibit stockholder action by written consent in lieu of a meeting. See Article VIII of the Proposed Charter. | |
| Additional Changes (Advisory Organizational Documents Proposal 5F) | The Cayman Constitutional Documents include provisions related to IRHO’s status as a blank check company prior to the consummation of an initial business combination. See Article 48 of the Cayman Constitutional Documents. The Proposed Organizational Documents do not include such provisions related to IRHO’s status as a blank check company, which will no longer apply upon consummation of the Merger, as IRHO will cease to be a blank check company at such time. |
Advisory Organizational Documents Proposal 5A — Authorized Shares
IRHO’s shareholders are being asked to approve and adopt an amendment to the Cayman Constitutional Documents to authorize the change in the authorized capital stock of IRHO from (a) 50,000,000 IRHO Ordinary Shares, and 1,000,000 preference shares, par value $0.0001 per share, of IRHO to (b) __________ shares of Electra Pubco Class A Common Stock, __________ shares of Electra Pubco Class B Common Stock and ____________ shares of preferred stock.
As of the date of this proxy statement/prospectus, there are (a) 29,320,000 IRHO Ordinary Shares issued and outstanding. In addition, as of the date of this proxy statement/prospectus, there is an aggregate of (i) 23,000,000 Public Rights and (ii) 570,000 Private Placement Rights, in each case, issued and outstanding. Subject to the terms and conditions of the Rights Agreement, ten such Rights will be exchanged after giving effect to the Merger for one share of Electra Pubco Common Stock at the Closing equal to an additional 2,357,000 shares of Electra Pubco Common Stock.
Pursuant to the Merger Agreement, (i) the holders of Electra Common Stock, Electra Options, and Electra Preferred Stock immediately prior to the Closing will receive aggregate consideration of $250.0 million plus the Aggregate Exercise Price in the form of shares of Electra Pubco Class A Common Stock (at a deemed value of $10.00 per share) in exchange for their outstanding equity interests (ii) that the Electra Earnout Holders have the contingent right to receive up to 15.0 million Earnout Shares, and (iii) Electra Pubco will assume all obligations of Electra with respect to the Converted Stock Options, and will issue or, as applicable, reserve for issuance in respect of shares underlying the Converted Stock Options.
In the Merger, each share of Electra Class B Common Stock will be converted into Electra Pubco Class B Common Stock, which will likewise be entitled to ten votes per share, and Mr. Martini will be the sole holder of Electra Pubco Class B Common Stock.
93
Table of Contents
In order to ensure that Electra Pubco has sufficient authorized capital for future issuances, the IRHO Board has approved, subject to shareholder approval, that the Proposed Organizational Documents of Electra Pubco change the authorized capital stock of IRHO from (a) 50,000,000 IRHO Ordinary Shares, and 1,000,000 IRHO preference shares to (b) __________ shares of Electra Pubco Class A Common Stock, __________ shares of Electra Pubco Class B Common Stock and ____________ shares of preferred stock.
This summary is qualified by reference to the complete text of the Proposed Organizational Documents of Electra Pubco, copies of which are attached to this proxy statement/prospectus as Annex B-1 and Annex B-2. All shareholders are encouraged to read the Proposed Organizational Documents in their entirety for a more complete description of their terms.
Reasons for Amendment
The principal purpose of this proposal is to provide for an authorized capital structure of Electra Pubco that will enable it to continue as an operating company governed by the DGCL. The IRHO Board believes that it is important for IRHO to have available for issuance a number of authorized shares of Electra Pubco Common Stock and preferred stock sufficient to support its growth and to provide flexibility for future corporate needs.
Resolution to be Voted Upon
The full text of the resolution to be considered and if thought fit, passed and approved is as follows:
“RESOLVED, as an ordinary resolution, on an advisory non-binding basis, that the authorized capital stock of IRHO be changed from 50,000,000 IRHO Ordinary Shares, par value $0.0001 per share, and 1,000,000 preference shares, par value $0.0001 per share, to __________ shares of Electra Pubco Class A Common Stock, par value $0.0001 per share, __________ shares of Electra Pubco Class B Common Stock, par value $0.0001 per share and ____________ shares of preferred stock, par value $0.0001 per share, as described in Advisory Organizational Documents Proposal 5A.”
Advisory Organizational Documents Proposal 5B — Exclusive Forum Provision
IRHO’s shareholders are being asked to approve and adopt an amendment to the Cayman Constitutional Documents to authorize adopting Delaware as the exclusive forum for certain stockholder litigation and adopting the federal district courts of the United States as the exclusive forum for resolving complaints asserting a cause of action under the Securities Act.
The Proposed Organizational Documents stipulate that, unless Electra Pubco consents in writing to the selection of an alternative forum, the Court of Chancery of the State of Delaware (the “Court of Chancery”) (or, if and only if the Court of Chancery lacks subject matter jurisdiction, any state court located within the State of Delaware or, if and only if all such state courts lack subject matter jurisdiction, the federal district court for the District of Delaware) and any appellate court thereof will, to the fullest extent permitted by law, be the sole and exclusive forum for the following claims or causes of action under the Delaware statutory or common law: (i) any derivative action, suit or proceeding brought on behalf of Electra Pubco, (ii) any action, suit or proceeding asserting a claim of breach of a fiduciary duty owed by any current or former director, officer or other employee of Electra Pubco to Electra Pubco or Electra Pubco’s stockholders, (iii) any action, suit or proceeding against Electra Pubco or any current or former director, officer or other employee of Electra Pubco arising pursuant to any provision of the DGCL or the Proposed Charter or the Proposed Bylaws (as each may be amended from time to time), (iv) any claim or cause of action seeking to interpret, apply, enforce or determine the validity of the Proposed Charter or the Proposed Bylaws (as each may be amended from time to time, including any right, obligation, or remedy thereunder), (v) any action, suit or proceeding as to which the DGCL confers jurisdiction on the Court of Chancery, or (vi) any action, suit or proceeding asserting a claim against Electra Pubco or any current or former director, officer or other employee of Electra Pubco governed by the internal affairs doctrine or otherwise related to Electra Pubco’s internal affairs, in all cases to the fullest extent permitted by law and subject to the court having personal jurisdiction over the indispensable parties named as defendants. The Proposed Charter further provides that unless Electra Pubco consents in writing to the selection of an alternative forum, to the fullest extent permitted by law, the federal district courts of the United States will be the exclusive forum for the resolutions of any complaint asserting a cause of action arising under the Securities Act. This provision in the Proposed Charter will not apply to any claim or action arising under the Exchange Act or any other claim for which the federal courts of the United States have exclusive jurisdiction; however, Section 27 of the Exchange Act creates exclusive federal jurisdiction over all suits brought to enforce any duty or liability created by the Exchange Act or the rules and regulations thereunder.
94
Table of Contents
This summary is qualified by reference to the complete text of the Proposed Organizational Documents of Electra Pubco, copies of which are attached to this proxy statement/prospectus as Annex B-1 and Annex B-2. All shareholders are encouraged to read the Proposed Organizational Documents in their entirety for a more complete description of their terms.
Reasons for Amendment
Adopting Delaware as the exclusive forum for certain stockholder litigation is intended to assist Electra Pubco in avoiding multiple lawsuits in multiple jurisdictions regarding the same matter. The ability to require such claims to be brought in a single forum will help to assure consistent consideration of the issues, the application of a relatively known body of case law and level of expertise and should promote efficiency and cost-savings in the resolutions of such claims. The IRHO Board believes that the Delaware courts are best suited to address disputes involving such matters given that after the Domestication, Electra Pubco will be incorporated in Delaware. Delaware law generally applies to such matters and the Delaware courts have a reputation for expertise in corporate law matters. Delaware offers a specialized Court of Chancery to address corporate law matters, with streamlined procedures and processes, which help provide relatively quick decisions. This accelerated schedule can minimize the time, cost and uncertainty of litigation for all parties. The Court of Chancery has developed considerable expertise with respect to corporate law issues, as well as a substantial and influential body of case law construing Delaware’s corporate law and long-standing precedent regarding corporate governance. This provides stockholders and the post-combination company with more predictability regarding the outcome of intra-corporate disputes. In the event the Court of Chancery does not have jurisdiction, the other state courts located in Delaware would be the most appropriate forums because these courts have more expertise on matters of Delaware law compared to other jurisdictions. The IRHO Board further believes that providing that, unless we consent in writing to an alternative forum, the federal district courts of the United States of America will be the exclusive forum for resolving actions arising under the Securities Act, provides the flexibility to file such suits in any federal district court while providing the benefits of eliminating duplicative litigation and having such cases heard by courts that are well-versed in the applicable law. This provision in the Proposed Charter will not apply to any claim or action arising under the Exchange Act or any other claim for which the federal courts of the United States have exclusive jurisdiction; however, Section 27 of the Exchange Act creates exclusive federal jurisdiction over all suits brought to enforce any duty or liability created by the Exchange Act or the rules and regulations thereunder. To the extent these provisions could be construed to apply to such claims, there is uncertainty as to whether a court would enforce such provisions in connection with such claims, and stockholders cannot waive compliance with the federal securities laws and the rules and regulations thereunder.
In addition, this amendment would promote judicial fairness and avoid conflicting results, as well as make Electra Pubco’s defense of applicable claims less disruptive and more economically feasible, principally by avoiding duplicative discovery.
Resolution to be Voted Upon
The full text of the resolution to be considered and if thought fit, passed and approved is as follows:
“RESOLVED, as an ordinary resolution, on an advisory non-binding basis, that (a) Delaware be adopted as the exclusive forum for certain stockholder litigation and (b) the federal district courts of the United States be adopted as the exclusive forum for asserting a cause under the Securities Act of 1933, as amended, as described in Advisory Organizational Documents Proposal 5B.”
Advisory Organizational Documents Proposal 5C — Required Vote to Amend Charter
IRHO’s shareholders are being asked to approve provisions providing that the affirmative vote of at least 66 and 2/3% of the voting power of all the then outstanding shares of capital stock of Electra Pubco entitled to vote thereon, voting together as a single class, will be required to amend, alter, repeal or rescind any provision of Article V(B), Article VII, Article VIII, Article IX, Article X, Article XI, Article XII, Article XIII and Article XIV of the Proposed Charter.
The above is qualified by a provision that so long as any shares of Electra Pubco Common Stock remain outstanding, Electra Pubco may not, without the prior affirmative vote of the holders of a majority of the outstanding shares of Electra Pubco Common Stock, voting as a separate class, in addition to any other vote required by applicable law or the Proposed Charter, directly or indirectly, whether by amendment, or through merger, recapitalization,
95
Table of Contents
consolidation or otherwise amend, alter, change, repeal or adopt any provision of the Proposed Charter in a manner that is inconsistent with, or that otherwise alters or changes the powers, preferences, or special Rights of the shares of Electra Pubco Common Stock so as to affect them adversely.
Reasons for Amendment
The Cayman Constitutional Documents provide that amendments may be made by a special resolution under Cayman Islands law, being the affirmative vote of holders of a majority of at least two-thirds of the IRHO Ordinary Shares who, being present in person or by proxy and entitled to vote at a general meeting, vote at a general meeting. The Proposed Organizational Documents require the affirmative vote of at least 66 and 2/3% of the voting power of all the then outstanding shares of capital stock of Electra Pubco entitled to vote thereon, voting together as a single class, to amend, alter, repeal or rescind any provision of Article V(B), Article VII, Article VIII, Article IX, Article X, Article XI, Article XII, Article XIII and Article XIV of the Proposed Charter. The amendments are intended to protect certain key provisions of the Proposed Charter from arbitrary amendment and to prevent a simple majority of stockholders from taking actions that may be harmful to other stockholders or making changes to provisions that are intended to protect all stockholders.
Resolution to be Voted Upon
The full text of the resolution to be considered and if thought fit, passed and approved is as follows:
“RESOLVED, as an ordinary resolution, on an advisory non-binding basis, that the provisions providing that the affirmative vote of at least 66 and 2/3% of the voting power of all the then outstanding shares of capital stock of Electra Pubco entitled to vote thereon, voting together as a single class, will be required to amend, alter, repeal or rescind any provision of Article V(B), Article VII, Article VIII, Article IX, Article X, Article XI, Article XII, Article XIII and Article XIV of the Proposed Charter; provided that, so long as any shares of Electra Pubco Common Stock remain outstanding, Electra Pubco may not, without the prior affirmative vote of the holders of a majority of the outstanding shares of Electra Pubco Common Stock, voting as a separate class, in addition to any other vote required by applicable law or the Proposed Charter, directly or indirectly, whether by amendment, or through merger, recapitalization, consolidation or otherwise amend, alter, change, repeal or adopt any provision of the Proposed Charter in a manner that is inconsistent with, or that otherwise alters or changes the powers, preferences, or special rights of the shares of Electra Pubco Common Stock so as to affect them adversely as described in Advisory Organizational Documents Proposal 5C, be approved.”
Advisory Organizational Documents Proposal 5D — Removal of Directors
IRHO’s shareholders are being asked to approve provisions permitting the removal of a director, with or without cause, by the affirmative vote of at least 66 and 2/3% of the outstanding shares entitled to vote generally in the election of directors, voting together as a single class.
This summary is qualified by reference to the complete text of the Proposed Organizational Documents of Electra Pubco, copies of which are attached to this proxy statement/prospectus as Annex B-1 and Annex B-2. All stockholders are encouraged to read the Proposed Organizational Documents in their entirety for a more complete description of their terms.
Reasons for Amendment
The Cayman Constitutional Documents provide that before a business combination, holders of IRHO Ordinary Shares may remove any director by an ordinary resolution under Cayman Islands law, being the affirmative vote of holders of a majority of IRHO Ordinary Shares, who, being entitled to do so, attend in person or by proxy and vote at a general meeting. The Proposed Organizational Documents permit the removal of a director, with or without cause, by the affirmative vote of at least 66 and 2/3% of the outstanding shares entitled to vote generally in the election of directors, voting together as a single class. The IRHO Board believes that such a standard will (a) increase board continuity and the likelihood that experienced board members with familiarity of Electra Pubco’s business operations would serve on the board at any given time and (b) make it more difficult for a potential acquiror or other person, group or entity to gain control of the Electra Pubco Board.
96
Table of Contents
Resolution to be Voted Upon
The full text of the resolution to be considered and if thought fit, passed and approved is as follows:
“RESOLVED, as an ordinary resolution, on an advisory non-binding basis, that the provisions permitting the removal of a director, with or without cause, by the affirmative vote of at least 66 and 2/3% of the outstanding shares entitled to vote generally in the election of directors, voting together as a single class, as described in Advisory Organizational Documents Proposal 5D, be approved.”
Advisory Organizational Documents Proposal 5E — Stockholder Action by Written Consent
IRHO’s shareholders are being asked to approve provisions that require or permit stockholders to take action at an annual or special meeting and prohibit stockholder action by written consent in lieu of a meeting.
This summary is qualified by reference to the complete text of the Proposed Organizational Documents of Electra Pubco, copies of which are attached to this proxy statement/prospectus as Annex B-1 and Annex B-2. All stockholders are encouraged to read the Proposed Organizational Documents in their entirety for a more complete description of their terms.
Reasons for Amendment
Under the Proposed Organizational Documents, for so long as Electra Pubco qualifies as a “controlled company” within the meaning of Nasdaq listing standards, any stockholder action may, except as otherwise required by applicable law or the Proposed Charter, be taken without a meeting, without prior notice and without a vote, if a consent in writing, setting forth the action so taken, is signed by the holders of outstanding shares of stock having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all the shares entitled to vote thereon were present. From and after the date Electra Pubco ceases to qualify as a controlled company, any stockholder action must be effected at a duly called annual or special meeting of the stockholders (and may not be taken by consent of the stockholders in lieu of a meeting). The IRHO Board believes that prohibiting stockholder action by written consent is a prudent corporate governance measure to reduce the possibility that a block of stockholders could take corporate actions without the benefit of a stockholder meeting to consider important corporate issues.
The elimination of the stockholders’ ability to act by written consent may have certain anti-takeover effects by forcing a potential acquirer to take control of the Electra Pubco Board only at a duly called special or annual meeting. However, this proposal is not in response to any effort of which IRHO is aware to obtain control of Electra Pubco, and IRHO and its management do not presently intend to propose other anti-takeover measures in future proxy solicitations. Further, the IRHO Board does not believe that the effects of the elimination of stockholder action by written consent will create a significant impediment to a tender offer or other effort to take control of Electra Pubco. Inclusion of these provisions in the Proposed Organizational Documents might also increase the likelihood that a potential acquirer would negotiate the terms of any proposed transaction with Electra Pubco Board and thereby help protect stockholders from the use of abusive and coercive takeover tactics.
Resolution to be Voted Upon
The full text of the resolution to be considered and if thought fit, passed and approved is as follows:
“RESOLVED, as an ordinary resolution, on an advisory non-binding basis, that the provisions requiring or permitting stockholders to take action at an annual or special meeting and prohibit stockholder action by written consent in lieu of a meeting, as described in Advisory Organizational Documents Proposal 5E, be approved.”
Advisory Organizational Documents Proposal 5F — Additional Changes
IRHO’s shareholders are being asked to approve and adopt an amendment to the Cayman Constitutional Documents to authorize certain additional changes, including, among other things, (a) making Electra Pubco’s corporate existence perpetual, and (b) removing certain provisions related to IRHO’s status as a blank check company that will no longer be applicable upon Closing, all of which the IRHO Board believes is necessary to adequately address the needs of Electra Pubco after the Business Combination.
97
Table of Contents
The Proposed Organizational Documents will not contain provisions related to a blank check company (including those related to operation of the Trust Account, winding up of IRHO’s operations should IRHO not complete a business combination by a specified date, and other such blank check-specific provisions as are present in the Cayman Constitutional Documents) because following the Closing, Electra Pubco will not be a blank check company.
This summary is qualified by reference to the complete text of the Proposed Organizational Documents of Electra Pubco, copies of which are attached to this proxy statement/prospectus as Annex B-1 and Annex B-2. All shareholders are encouraged to read the Proposed Organizational Documents in their entirety for a more complete description of their terms.
Reasons for Amendment
The IRHO Board believes that making corporate existence perpetual is desirable to reflect the Business Combination with Electra and to clearly identify Electra Pubco as the publicly traded entity. Perpetual existence is the usual period of existence for public corporations, and the IRHO Board believes it is the most appropriate period for Electra Pubco following the Closing.
The elimination of certain provisions related to IRHO’s status as a blank check company is desirable because these provisions will serve no purpose following the Business Combination. For example, the Proposed Organizational Documents do not include the requirement to dissolve Electra Pubco and allow it to continue as a corporate entity with perpetual existence following consummation of the Business Combination. In addition, certain other provisions in the Cayman Constitutional Documents require that proceeds from the IPO be held in the Trust Account until a business combination or liquidation of IRHO has occurred. These provisions cease to apply once the Business Combination is consummated and are therefore not included in the Proposed Organizational Documents.
Implementation of the provisions of the Proposed Organizational Documents will result, upon the Domestication, in the wholesale replacement of the Cayman Constitutional Documents with the Proposed Organizational Documents. While certain material changes between the Cayman Constitutional Documents and the Proposed Organizational Documents have been unbundled into distinct organizational documents proposals or otherwise identified in these Advisory Organizational Documents Proposals, there are other differences between the Cayman Constitutional Documents and the Proposed Organizational Documents (arising from, among other things, differences between the Companies Act and the DGCL and the typical form of organizational documents under each such body of law) that will be approved (subject to the approval of the aforementioned related proposals and consummation of the Business Combination) if IRHO shareholders approve the Organizational Documents Proposal.
Resolution to be Voted Upon
The full text of the resolution to be considered and if thought fit, passed and approved is as follows:
“RESOLVED, as an ordinary resolution, on an advisory non-binding basis, that certain additional changes, including, among other things, (i) making Electra Pubco’s corporate existence perpetual and (ii) removing certain provisions related to IRHO’s status as a blank check company that will no longer be applicable upon consummation of the Business Combination, all of which the IRHO Board believes is necessary to adequately address the needs of Electra Pubco after the Business Combination, as described in Advisory Organizational Documents Proposal 5F, be approved.”
Vote Required for Approval
The separate approval of each of the Advisory Organizational Documents Proposals, each of which is a non-binding vote, requires an ordinary resolution under Cayman Islands law, being the affirmative vote of a majority of the IRHO Ordinary Shares, who, being entitled to do so, attend in person or by proxy and vote thereon at the extraordinary general meeting. Abstentions and broker non-votes, while considered present for the purposes of establishing a quorum, will not count as votes cast at the extraordinary general meeting and otherwise will have no effect on a particular proposal under Cayman Islands law. The Advisory Organizational Documents Proposals are not conditioned upon any other proposal.
98
Table of Contents
The Sponsor, which includes among its members each of the directors and officers of IRHO, owns 5,750,000 Founder Shares, 370,000 Private Placement Units (Cantor own 200,000 Private Placement Units). As a result, as of the date of this proxy statement/prospectus, the Initial Shareholders own approximately 21% of the issued and outstanding IRHO Ordinary Shares and have the right to vote approximately 21% of the issued and outstanding IRHO Ordinary Shares. Accordingly, we will need the holders of 8,540,000 Ordinary Shares issued and outstanding, represented in person or by proxy and entitled to vote thereon and who vote at the extraordinary general meeting to approve the Advisory Organizational Documents Proposals.
Recommendation of the IRHO Board
THE IRHO BOARD UNANIMOUSLY RECOMMENDS THAT IRHO SHAREHOLDERS VOTE “FOR” THE APPROVAL OF EACH OF THE ADVISORY ORGANIZATIONAL DOCUMENTS PROPOSALS.
The existence of financial and personal interests of one or more of IRHO’s directors may result in a conflict of interest on the part of such director(s) between what he, she or they may believe is in the best interests of IRHO and its shareholders and what he, she or they may believe is best for himself, herself or themselves in determining to recommend that shareholders vote for the proposals. In addition, IRHO’s officers have interests in the Business Combination that may conflict with your interests as a shareholder. See “The Business Combination Proposal — Certain Interests of IRHO’s Directors and Officers and Others in the Business Combination” for a further discussion of these considerations.
99
Table of Contents
The Electra Pubco Equity Incentive Plan Proposal
Assuming the Business Combination Proposal, the Domestication Proposal, the Organizational Documents Proposal and the Stock Issuance Proposal are approved, IRHO is asking its shareholders to approve by ordinary resolution the Electra AI, Inc. 2026 Incentive Award Plan (referred to herein as the Electra Pubco Equity Incentive Plan) and the material terms thereunder. The IRHO Board intends to approve the Electra Pubco Equity Incentive Plan, prior to the extraordinary general meeting, subject to shareholder approval at the extraordinary general meeting. The Electra Pubco Equity Incentive Plan will become effective on the Closing Date, subject to the approval of the IRHO Board and the approval from the IRHO shareholders within 12 months following the date the IRHO Board approved the Electra Pubco Equity Incentive Plan.
The Electra Pubco Equity Incentive Plan is described in more detail below. A copy of the Electra Pubco Equity Incentive Plan is attached to this proxy statement/prospectus as Annex C.
The Electra Pubco Equity Incentive Plan
The purpose of the Electra Pubco Equity Incentive Plan is to enhance Electra Pubco’s ability to attract, retain and motivate persons who make (or are expected to make) important contributions to Electra Pubco by providing these individuals with equity ownership opportunities and/or equity-linked compensatory opportunities. Equity awards and equity-linked compensatory opportunities are intended to motivate high levels of performance and align the interests of officers, employees, directors, consultants and advisers with those of shareholders by giving officers, employees, directors, consultants and advisers the perspective of an owner with an equity or equity-linked stake in our company and providing a means of recognizing their contributions to our success. The IRHO Board believes that equity awards are necessary for Electra Pubco to remain competitive in its industry and are essential to recruiting and retaining highly qualified officers, employees, directors, consultants and other service providers.
Summary of the Electra Pubco Equity Incentive Plan
This section summarizes certain principal features of the Electra Pubco Equity Incentive Plan. The summary is qualified in its entirety by reference to the complete text of the Electra Pubco Equity Incentive Plan.
Eligibility and Administration
Employees, consultants and directors of the combined company and its subsidiaries will be eligible to receive awards under the Electra Pubco Equity Incentive Plan. Following the closing of the Business Combination, the combined company is expected to have approximately [__] employees, [__] non-employee directors and [__] other individual service providers who will be eligible to receive awards under the Electra Pubco Equity Incentive Plan.
Following the closing of the Business Combination, the Electra Pubco Equity Incentive Plan will be administered by the Electra Pubco Board with respect to awards to non-employee directors and by the compensation committee of the Electra Pubco Board with respect to other participants, each of which may delegate its duties and responsibilities to committees of its directors and/or officers (referred to collectively as the plan administrator below), subject to certain limitations that may be imposed under the Electra Pubco Equity Incentive Plan, Section 16 of the Exchange Act, stock exchange rules and/or other applicable laws. The plan administrator will have the authority to take all actions and make all determinations under the Electra Pubco Equity Incentive Plan, to interpret the Electra Pubco Equity Incentive Plan and award agreements and to adopt, amend and repeal rules for the administration of the Electra Pubco Equity Incentive Plan as it deems advisable. The plan administrator will also have the authority to determine which eligible service providers receive awards, grant awards and set the terms and conditions of all awards under the Electra Pubco Equity Incentive Plan, including any vesting and vesting acceleration provisions, subject to the conditions and limitations in the Electra Pubco Equity Incentive Plan.
Limitation on Awards and Shares Available
The initial aggregate number of shares of Electra Pubco Common Stock that will be available for issuance under the Electra Pubco Equity Incentive Plan will be equal to 10% of the Fully-Diluted Shares (as defined below) as of immediately after the Closing Date, plus any shares which, as of the effective date of the Electra Pubco Equity Incentive Plan, are subject to awards outstanding under the Electra Vehicles, Inc. 2016 Equity Incentive Plan
100
Table of Contents
(the “2016 Plan”) and which, on or following such effective date, become available for issuance under the Electra Pubco Equity Incentive Plan in accordance with its terms. In addition, the number of shares of Electra Pubco Common Stock available for issuance under the Electra Pubco Equity Incentive Plan will be subject to (a) an annual increase on the first day of each of 2027, 2028, and 2029 equal to the lesser of (i) a number equal to 6% of the Fully-Diluted Shares on the final day of the immediately preceding calendar year and (ii) such small number of shares as is determined by the Electra Pubco Board, and (b) an annual increase on the first day of each remaining calendar year during the term of the Electra Pubco Equity Incentive Plan beginning January 1, 2030 and ending on and including January 1, 2036, equal to the lesser of (i) a number equal to 5% of the Fully-Diluted Shares on the final day of the immediately preceding calendar year and (ii) such smaller number of shares as is determined by the Electra Pubco Board. For purposes of the Electra Pubco Equity Incentive Plan, “Fully-Diluted Shares” means, as of any date, (A) shares of Electra Pubco Preferred Stock, Electra Pubco Class A Common Stock, and Electra Pubco Class B Common Stock outstanding on such date, (B) shares of Electra Pubco Class A Common Stock subject to compensatory equity awards (including stock options and restricted stock units) outstanding on such date, with performance-based compensatory equity awards calculated at the “target” level of performance, and (C) shares issuable upon the exercise or settlement of other equity securities with respect to which shares of Electra Pubco Class A Common Stock or Electra Pubco Class B Common Stock have not actually been issued and the conversion of all convertible securities into shares of Electra Pubco Class A Common Stock or Electra Pubco Class B Common Stock, in each case, counted on an as-converted-to shares of common stock basis. Any shares issued pursuant to the Electra Pubco Equity Incentive Plan may consist, in whole or in part, of authorized and unissued common stock, treasury common stock or common stock purchased on the open market.
Assuming there are no redemptions in connection with the Business Combination, the maximum potential initial share limit for the Electra Pubco Equity Incentive Plan as of the closing of the Business Combination will be [_____] shares. The maximum number of shares that may be issued pursuant to the exercise of incentive stock options (“ISOs”) granted under the Electra Pubco Equity Incentive Plan, will be 250,000,000 (but in no event greater than the applicable aggregate share limit).
If an award under the Electra Pubco Equity Incentive Plan or 2016 Plan expires, lapses or is terminated, exchanged for or settled in cash, any shares subject to such award (or portion thereof) may, to the extent of such expiration, lapse, termination or cash settlement, be used again for new grants under the Electra Pubco Equity Incentive Plan. The following shares will become or again be available for award grants under the Electra Pubco Equity Incentive Plan: (i) shares delivered to us to satisfy the applicable exercise or purchase price of an award under the Electra Pubco Equity Incentive Plan or 2016 Plan and/or to satisfy any applicable tax withholding obligations (including shares retained by us from the award under the Electra Pubco Equity Incentive Plan or 2016 Plan being exercised or purchased, and/or creating the tax obligation), (ii) shares subject to stock appreciation rights (“SARs”) that are not issued in connection with the stock settlement of the SAR on exercise, and (iii) shares purchased on the open market with the cash proceeds from the exercise of options. Further, the payment of dividend equivalents in cash in conjunction with any awards under the Electra Pubco Equity Incentive Plan will not reduce the shares available for grant under the Electra Pubco Equity Incentive Plan.
Awards granted under the Electra Pubco Equity Incentive Plan upon the assumption of, or in substitution for, awards authorized or outstanding under a qualifying equity plan maintained by an entity with which we enter into a merger or similar corporate transaction will not reduce the shares available for grant under the Electra Pubco Equity Incentive Plan but will count against the maximum number of shares that may be issued upon the exercise of ISOs.
The Electra Pubco Equity Incentive Plan provides that the sum of any cash compensation and the aggregate grant date fair value (determined as of the date of the grant under Financial Accounting Standards Board Accounting Standards Codification Topic 718, or any successor thereto) of all awards granted to a non-employee director as compensation for services as a non-employee director during any fiscal year, or director limit, may not exceed an amount equal to $750,000 (increased to $1,000,000 in the calendar year of a non-employee director’s initial service as a non-employee director or any calendar year during which a non-employee director serves as chairman of the Electra Pubco Board or lead independent director), which limits will not apply to the compensation for any non-employee director who serves in any capacity in addition to that of a non-employee director for which he or she receives additional compensation.
101
Table of Contents
Awards
The Electra Pubco Equity Incentive Plan provides for the grant of stock options, including ISOs, and nonqualified stock options (“NSOs”), restricted stock, dividend equivalents, restricted stock units (“RSUs”), SARs and other stock or cash based awards. Certain awards under the Electra Pubco Equity Incentive Plan may constitute or provide for a payment of “nonqualified deferred compensation” under Section 409A of the Code, which may impose additional requirements on the terms and conditions of such awards. All awards under the Electra Pubco Equity Incentive Plan will be evidenced by award agreements, which will detail the terms and conditions of the awards, including any applicable vesting conditions (which may be based wholly or in part on the achievement of specified performance criteria) and payment terms and post-termination exercise limitations. Awards other than cash awards generally will be settled in shares of Electra Pubco Common Stock, but the applicable award agreement may provide for cash settlement of any award. A brief description of each award type follows.
• Stock Options and SARs. Stock options provide for the purchase of shares of our Electra Pubco Common Stock in the future at an exercise price set on the grant date. ISOs, in contrast to NSOs, may provide tax deferral beyond exercise and favorable capital gains tax treatment to their holders if certain holding period and other requirements of the Code are satisfied. SARs entitle their holder, upon exercise, to receive from us an amount equal to the appreciation of the shares subject to the award between the grant date and the exercise date. Unless otherwise determined by the Electra Pubco Board, the exercise price of a stock option or SAR may not be less than 100% of the fair market value of the underlying share on the grant date (or 110% in the case of ISOs granted to certain significant stockholders), except with respect to certain substitute awards granted in connection with a corporate transaction. The term of a stock option or SAR may not be longer than ten years (or five years in the case of ISOs granted to certain significant stockholders). Conditions applicable to stock options and/or SARs may be based on continuing service, the attainment of performance goals and/or such other conditions as the plan administrator may determine.
• Restricted Stock and RSUs. Restricted stock is an award of non-transferable shares of Electra Pubco Common Stock that are subject to certain vesting conditions and other restrictions. RSUs are contractual promises to deliver shares of Electra Pubco Common Stock in the future, which may also remain forfeitable unless and until specified conditions are met and may be accompanied by the right to receive the equivalent value of dividends paid on shares of Electra Pubco Common Stock prior to the delivery of the underlying shares (i.e., dividend equivalent rights). The plan administrator may provide that the delivery of the shares underlying RSUs will be deferred on a mandatory basis or at the election of the participant. The terms and conditions applicable to RSUs will be determined by the plan administrator, subject to the conditions and limitations contained in the Electra Pubco Incentive Plan. Conditions applicable to restricted stock and RSUs may be based on continuing service, the attainment of performance goals and/or such other conditions as the plan administrator may determine.
• Other Stock or Cash Based Awards. Other stock or cash-based awards are awards of cash, fully vested shares of our Electra Pubco Common Stock and other awards valued wholly or partially by referring to, or otherwise based on, shares of our Electra Pubco Common Stock. Other stock or cash-based awards may be granted to participants and may also be available as a payment form in the settlement of other awards, as standalone payments and as payment in lieu of compensation to which a participant is otherwise entitled.
• Dividend Equivalents. Dividend equivalents represent the right to receive the equivalent value of dividends paid on shares of our Electra Pubco Common Stock and may be granted alone or in tandem with awards other than stock options or SARs. Dividend equivalents are credited as of the dividend record dates during the period between the date an award is granted and the date such award vests, is exercised, is distributed or expires, as determined by the plan administrator. Unless otherwise determined by the plan administrator, dividend equivalents payable with respect to an award prior to the vesting of such award instead will be paid out to the participant only to the extent that the vesting conditions are subsequently satisfied and the award vests.
Certain Transactions
The plan administrator has broad discretion to take action under the Electra Pubco Equity Incentive Plan, as well as make adjustments to the terms and conditions of existing and future awards, to prevent the dilution or enlargement of intended benefits and facilitate necessary or desirable changes in the event of certain transactions and events
102
Table of Contents
affecting Electra Pubco Common Stock, such as stock dividends, stock splits, mergers, acquisitions, consolidations and other corporate transactions. In addition, in the event of certain non-reciprocal transactions with our stockholders known as “equity restructurings,” the plan administrator will make equitable adjustments to the Electra Pubco Equity Incentive Plan and outstanding awards. In the event of a change in control (as defined in the Electra Pubco Equity Incentive Plan), to the extent that the surviving entity declines to continue, convert, assume or replace outstanding awards, then the plan administrator may provide that all such awards will become fully vested and exercisable in connection with the transaction. Upon or in anticipation of a change of control, the plan administrator may cause any outstanding awards to terminate at a specified time in the future and give the participant the right to exercise such awards during a period of time determined by the plan administrator in its sole discretion. Individual award agreements may provide for additional accelerated vesting and payment provisions.
Repricing
The plan administrator may, without approval of the stockholders, reduce the exercise price of any stock option or SAR, or cancel any stock option or SAR in exchange for cash, other awards or stock options or SARs with an exercise price per share that is less than the exercise price per share of the original stock options or SARs.
Foreign Participants, Claw-back Provisions, Transferability and Participant Payments
The plan administrator may modify award terms, establish subplans and/or adjust other terms and conditions of awards, subject to the share limits described above, in order to facilitate grants of awards subject to the laws and/or stock exchange rules of countries outside of the United States. All awards will be subject to any company clawback policy as set forth in such clawback policy or the applicable award agreement. Awards under the Electra Pubco Equity Incentive Plan are generally non-transferrable, except by will or the laws of descent and distribution, or, subject to the plan administrator’s consent, pursuant to a domestic relations order, and are generally exercisable only by the participant. With regard to tax withholding, exercise price and purchase price obligations arising in connection with awards under the Electra Pubco Equity Incentive Plan, the plan administrator may, in its discretion, accept cash or check, shares of Electra Pubco Common Stock that meet specified conditions, a “market sell order” or such other consideration as it deems suitable.
Plan Amendment and Termination
The Electra Pubco Board may amend or terminate the Electra Pubco Equity Incentive Plan at any time; however, no amendment, other than an amendment that increases the number of shares available under the Electra Pubco Equity Incentive Plan, may materially and adversely affect an award outstanding under the Electra Pubco Equity Incentive Plan without the consent of the affected participant, and stockholder approval will be obtained for any amendment to the extent necessary to comply with applicable laws. The Electra Pubco Equity Incentive Plan will remain in effect until terminated by the plan administrator in accordance with the Electra Pubco Equity Incentive Plan. No awards may be granted under the Electra Pubco Equity Incentive Plan after its termination. Notwithstanding the foregoing, an ISO may not be granted under the Electra Pubco Equity Incentive Plan after the tenth anniversary of the earlier of (i) the date the Electra Pubco Board adopts the Electra Pubco Equity Incentive Plan, or (ii) the date the Company’s stockholders approve the Electra Pubco Equity Incentive Plan.
Material U.S. Federal Income Tax Consequences
The following is a general summary under current law of the principal U.S. federal income tax consequences related to awards under the Electra Pubco Equity Incentive Plan. This summary deals with the general federal income tax principles that apply and is provided only for general information. Some kinds of taxes, such as state, local and foreign income taxes and federal employment taxes, are not discussed. This summary is not intended as tax advice to participants, who should consult their own tax advisors.
• Non-Qualified Stock Options. If a participant is granted an NSO under the Electra Pubco Equity Incentive Plan, the optionee should not have taxable income on the grant of the option. Generally, the participant should recognize ordinary income at the time of exercise in an amount equal to the fair market value of the shares acquired on the date of exercise, less the exercise price paid for the shares. The participant’s basis in the common stock for purposes of determining gain or loss on a subsequent sale or disposition of such
103
Table of Contents
shares generally will be the fair market value of Electra Pubco Common Stock on the date the participant exercises such option. Any subsequent gain or loss will be taxable as a long-term or short-term capital gain or loss. Electra Pubco or its subsidiaries or affiliates generally should be entitled to a federal income tax deduction at the time and for the same amount as the participant recognizes ordinary income.
• Incentive Stock Options. A participant receiving ISOs should not recognize taxable income upon grant. Additionally, if applicable holding period requirements are met, the participant should not recognize taxable income at the time of exercise. However, the excess of the fair market value of the shares of our Electra Pubco Common Stock received over the option exercise price is an item of tax preference income potentially subject to the alternative minimum tax. If stock acquired upon exercise of an ISO is held for a minimum of two years from the date of grant and one year from the date of exercise and otherwise satisfies the ISO requirements, the gain or loss (in an amount equal to the difference between the fair market value on the date of disposition and the exercise price) upon disposition of the stock will be treated as a long-term capital gain or loss, and we will not be entitled to any deduction. If the holding period requirements are not met, the ISO will be treated as one that does not meet the requirements of the Code for ISOs and the participant will recognize ordinary income at the time of the disposition equal to the excess of the amount realized over the exercise price, but not more than the excess of the fair market value of the shares on the date the ISO is exercised over the exercise price, with any remaining gain or loss being treated as capital gain or capital loss. Electra Pubco or its subsidiaries or affiliates generally are not entitled to a federal income tax deduction upon either the exercise of an ISO or upon disposition of the shares acquired pursuant to such exercise, except to the extent that the participant recognizes ordinary income on disposition of the shares.
• Other Awards. The current federal income tax consequences of other awards authorized under the Electra Pubco Equity Incentive Plan generally follow certain basic patterns: SARs are taxed and deductible in substantially the same manner as NSOs; nontransferable restricted stock subject to a substantial risk of forfeiture results in income recognition equal to the excess of the fair market value over the price paid, if any, only at the time the restrictions lapse (unless the recipient elects to accelerate recognition as of the date of grant through a Section 83(b) election); RSUs, dividend equivalents and other stock or cash based awards are generally subject to tax at the time of payment. Electra Pubco or its subsidiaries or affiliates generally should be entitled to a federal income tax deduction at the time and for the same amount as the participant recognizes ordinary income.
Section 409A of the Code
Certain types of awards under the Electra Pubco Equity Incentive Plan may constitute, or provide for, a deferral of compensation subject to Section 409A of the Code. Unless certain requirements set forth in Section 409A of the Code are complied with, holders of such awards may be taxed earlier than would otherwise be the case (e.g., at the time of vesting instead of the time of payment) and may be subject to an additional 20% penalty tax (and, potentially, certain interest, penalties and additional state taxes). To the extent applicable, the Electra Pubco Equity Incentive Plan and awards granted under the Electra Pubco Equity Incentive Plan are intended to be structured and interpreted in a manner intended to either comply with or be exempt from Section 409A of the Code and the Department of Treasury regulations and other interpretive guidance that may be issued under Section 409A of the Code. To the extent determined necessary or appropriate by the plan administrator, the Electra Pubco Equity Incentive Plan and applicable award agreements may be amended to further comply with Section 409A of the Code or to exempt the applicable awards from Section 409A of the Code.
Interests of Certain Persons in this Proposal
IRHO and Electra’s directors and executive officers may be considered to have an interest in the approval of the Electra Pubco Equity Incentive Plan because they may in the future receive awards under the Electra Pubco Equity Incentive Plan. Nevertheless, the IRHO Board believes that it is important to provide incentives and rewards for superior performance and the retention of experienced and highly qualified officers, employees, directors, consultants and other service providers by adopting the Electra Pubco Equity Incentive Plan.
104
Table of Contents
New Plan Benefits
Benefits or amounts that may be received or allocated to directors, officers and employees under the Electra Pubco Equity Incentive Plan will be determined at the discretion of the plan administrator and are not currently determinable. Therefore, it is not possible at this time to determine the future benefits or amounts that may be received by participants in the Electra Pubco Equity Incentive Plan. The per share market value of IRHO’s common stock as of the close of business on [_____], 2026 was $[____].
Resolution
The full text of the resolution to be passed is as follows:
“RESOLVED, as an ordinary resolution, that the Electra AI, Inc. 2026 Incentive Award Plan (a copy of which is attached to this proxy statement/prospectus as Annex C) and any form award agreements thereunder, be approved and adopted in all respects.”
Vote Required for Approval
The approval of the Electra Pubco Equity Incentive Plan Proposal requires an ordinary resolution under Cayman Islands law, being the affirmative vote of a majority of the IRHO Ordinary Shares, who, being entitled to do so, attend in person or by proxy and vote thereon at the extraordinary general meeting. Abstentions and broker non-votes, while considered present for the purposes of establishing a quorum, will not count as votes cast at the extraordinary general meeting and otherwise will have no effect on a particular proposal under Cayman Islands law.
The Electra Pubco Equity Incentive Plan Proposal is conditioned on the approval of each of the Condition Precedent Proposals. Therefore, if each of the Condition Precedent Approvals is not approved, the Electra Pubco Equity Incentive Plan Proposal will have no effect, even if approved by holders of IRHO Ordinary Shares. The Sponsor, which includes among its members each of the directors and officers of IRHO, owns 5,750,000 Founder Shares, 370,000 Private Placement Units, (cantor owns 200,000 Private Placement Units). As a result, as of the date of this proxy statement/prospectus, the initial Shareholders own approximately 21% of the issued and outstanding IRHO Ordinary Shares and have the right to vote approximately 21% of the issued and outstanding IRHO Ordinary Shares. Accordingly, we will need the holders of 8,540,000 Ordinary Shares issued and outstanding, represented in person or by proxy and entitled to vote thereon and who vote at the extraordinary general meeting to approve the Electra Pubco Equity Incentive Plan Proposal.
Recommendation of the IRHO Board
THE IRHO BOARD UNANIMOUSLY RECOMMENDS THAT THE IRHO SHAREHOLDERS VOTE “FOR” THE APPROVAL OF THE ELECTRA PUBCO EQUITY INCENTIVE PLAN PROPOSAL.
105
Table of Contents
The Adjournment Proposal
The Adjournment Proposal allows the IRHO Board to submit a proposal to approve, by ordinary resolution, the adjournment of the extraordinary general meeting to a later date or dates, if necessary, to permit further solicitation and vote of proxies in the event that, based on the tabulated votes, there are not sufficient votes at the time of the extraordinary general meeting to approve the Condition Precedent Proposals. The purpose of the Adjournment Proposal is to permit further solicitation of proxies and votes and to provide additional time for the Sponsor, IRHO and their members and shareholders, respectively, to make purchases of IRHO Ordinary Shares or other arrangements that would increase the likelihood of obtaining a favorable vote on the proposals to be put to the extraordinary general meeting. See “The Business Combination Proposal — Certain Interests of IRHO’s Directors and Officers and Others in the Business Combination”.
Vote Required for Approval
The approval of the Adjournment Proposal requires an ordinary resolution under Cayman Islands law, being the affirmative vote of a majority of the IRHO Ordinary Shares, who, being entitled to do so, attend in person or by proxy and vote thereon at the extraordinary general meeting. Abstentions and broker non-votes, while considered present for the purposes of establishing a quorum, will not count as votes cast at the extraordinary general meeting and otherwise will have no effect on a particular proposal under Cayman Islands law.
The Adjournment Proposal is not conditioned upon any other proposal. The Sponsor, which includes among its members each of the directors and officers of IRHO, owns 5,750,000 Founder Shares, 370,000 Private Placement Units. As a result, as of the date of this proxy statement/prospectus, the Initial Shareholders own approximately 21% of the issued and outstanding IRHO Ordinary Shares and have the right to vote approximately 21% of the issued and outstanding IRHO Ordinary Shares. Accordingly, we will need the holders of 8,340,000 Ordinary Shares issued and outstanding, represented in person or by proxy and entitled to vote thereon and who vote at the extraordinary general meeting to approve the Adjournment Proposal even if all other outstanding shares are voted against such proposal.
Resolution to be Voted Upon
The full text of the resolution to be passed is as follows:
“RESOLVED, as an ordinary resolution, that the adjournment of the extraordinary general meeting to a later date or dates, if necessary, to permit further solicitation and vote of proxies in the event that there are insufficient votes for the approval of one or more proposals at the extraordinary general meeting be approved.”
Recommendation of the IRHO Board
THE IRHO BOARD UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS VOTE “FOR” THE APPROVAL OF THE ADJOURNMENT PROPOSAL.
The existence of financial and personal interests of IRHO’s directors may result in a conflict of interest on the part of one or more of the directors between what he, she or they may believe is in the best interests of IRHO and its shareholders and what he, she or they may believe is best for himself, herself or themselves in determining to recommend that shareholders vote for the proposals. See “The Business Combination Proposal — Certain Interests of IRHO’s Directors and Officers and Others in the Business Combination” for a further discussion.
106
Table of Contents
MATERIAL U.S. Federal Income Tax Considerations
The following summary is a discussion of certain material U.S. federal income tax considerations, with respect to U.S. holders of IRHO Ordinary Shares or IRHO Rights, of the Domestication, the exercise of Redemption Rights by holders of Public Shares in connection with the Business Combination and, with respect to non-U.S. holders (as defined below) of IRHO Ordinary Shares or IRHO Rights, the ownership and disposition of Parent Class A Common Shares and Parent Rights following the Business Combination. This section applies only to holders that hold their respective IRHO Ordinary Shares and IRHO Rights, or Parent Class A Common Shares and Parent Rights, as applicable, as capital assets for U.S. federal income tax purposes (generally, property held for investment) and does not address the Sponsor or its affiliates, representatives, employees or other stakeholders.
This section is general in nature and does not discuss all aspects of U.S. federal income taxation that might be relevant to a particular holder in light of such holder’s circumstances or status, nor does it address tax considerations applicable to a holder subject to special rules, including:
• financial institutions or financial services entities;
• broker-dealers;
• governments or agencies or instrumentalities thereof;
• insurance companies;
• taxpayers subject to a mark-to-market of tax accounting with respect to IRHO Ordinary Shares, IRHO Rights, Parent Class A Common Shares or Parent Rights;
• persons holding IRHO Ordinary Shares, IRHO Rights, Parent Class A Common Shares or Parent Rights as part of a “straddle,” hedge, integrated transaction or similar transaction, or persons deemed to sell IRHO Ordinary Shares, IRHO Rights, Parent Class A Common Shares or Parent Rights under constructive sale provisions of the Code;
• taxpayers whose functional currency is not the U.S. dollar;
• partnerships (including any entity or arrangement that is treated as a partnership) for U.S. federal income tax purposes or beneficial owners in such partnerships;
• holders who are controlled foreign corporations or PFICs;
• regulated investment companies;
• real estate investment trusts;
• grantor trusts;
• subchapter S corporations, or beneficial owners of such entities;
• cooperatives;
• personal holding companies;
• persons who acquired IRHO Ordinary Shares, IRHO Rights, Parent Class A Common Shares or Parent Rights through the exercise or cancellation of employee stock options or otherwise as compensation for their services;
• persons owning (directly, indirectly, or constructively) 5% or more of the total combined voting power of all classes of stock entitled to vote of, or 5% or more of the total value of all classes of shares of, IRHO or Parent, except to the extent otherwise discussed herein;
• taxpayers that hold their respective IRHO Ordinary Shares, IRHO Rights, Parent Class A Common Shares or Parent Rights through a non-U.S. broker or other non-U.S. intermediary;
• U.S. expatriates or former long-term residents of the United States;
107
Table of Contents
• persons that are subject to “applicable financial statement rules” under Section 451(b) of the Code;
• individual retirement or other tax-deferred accounts; or
• tax-exempt entities.
If a partnership (including any entity or arrangement that is treated as a partnership) for U.S. federal income tax purposes holds IRHO Ordinary Shares, IRHO Rights, Parent Class A Common Shares or Parent Rights, the tax treatment of such partnership and a person treated as a partner of such partnership will generally depend on the status of the partner and the activities of the partnership. Partnerships holding any IRHO Ordinary Shares, IRHO Rights, Parent Class A Common Shares or Parent Rights and persons that are treated as partners of such partnerships should consult their tax advisors as to the particular U.S. federal income tax consequences to them of the Business Combination, the Domestication and an exercise of Redemption Rights by holders of Public Shares in connection with the Business Combination.
This discussion is based on the Code, and administrative pronouncements, judicial decisions and final, temporary and proposed Treasury Regulations all as of the date hereof, changes to any of which subsequent to the date of this proxy statement/prospectus may affect the tax consequences described herein (possibly with retroactive effect).
This discussion does not take into account proposed changes in such tax laws and does not address any aspect of state, local or foreign taxation, or any U.S. federal taxes other than income taxes (such as estate or gift tax consequences, the alternative minimum tax or the Medicare tax on investment income). Each of the foregoing is subject to change, possibly with retroactive effect. You should consult your tax advisors with respect to the application of U.S. federal tax laws to your particular situation, as well as any tax consequences arising under the laws of any state, local or foreign jurisdiction.
We have not and do not intend to seek any rulings from the U.S. Internal Revenue Service (the “IRS”) regarding the Business Combination, the Domestication or an exercise of Redemption Rights by holders of Public Shares in connection with the Business Combination or any other matters discussed in this proxy statement/prospectus. There can be no assurance that the IRS will not take positions concerning the tax consequences of the Business Combination, the Domestication or an exercise of Redemption Rights by holders of Public Shares in connection with the Business Combination or any other matters discussed in this proxy statement/prospectus that are inconsistent with the considerations discussed below or that any such positions would not be sustained by a court of competent jurisdiction.
THE FOLLOWING IS FOR INFORMATIONAL PURPOSES ONLY. ALL HOLDERS OF IRHO ORDINARY SHARES AND IRHO RIGHTS SHOULD CONSULT THEIR TAX ADVISORS REGARDING THE TAX CONSEQUENCES OF THE BUSINESS COMBINATION, THE DOMESTICATION AND AN EXERCISE OF REDEMPTION RIGHTS BY HOLDERS OF PUBLIC SHARES IN CONNECTION WITH THE BUSINESS COMBINATION, INCLUDING THE EFFECTS OF U.S. FEDERAL, STATE, LOCAL AND FOREIGN TAX LAWS.
U.S. Holders
This section applies to you if you are a “U.S. holder.” A U.S. holder is a beneficial owner of IRHO Ordinary Shares, IRHO Rights, Parent Class A Common Shares or Parent Rights that is, for U.S. federal income tax purposes:
• an individual who is a citizen or resident of the United States;
• a corporation (or other entity treated as a corporation) that is created or organized (or treated as created or organized) under the laws of the United States, any state thereof or the District of Columbia;
• an estate the income of which is includible in gross income for U.S. federal income tax purposes regardless of its source; or
• a trust, if (i) a court within the United States is able to exercise primary supervision over the administration of such trust and one or more “United States persons” (within the meaning of the Code) have the authority to control all substantial decisions of the trust, or (ii) the trust has validly elected to be treated as a United States person.
108
Table of Contents
Tax Consequences of the Domestication as a Reorganization
It is intended that the Domestication qualify as a “reorganization” within the meaning of Section 368(a) of the Code (a “Reorganization”) for U.S. federal income tax purposes. Due to the absence of direct guidance on the application of Section 368(a) of the Code to a statutory conversion of a corporation holding only investment-type assets such as IRHO, this result is not entirely clear. However, the completion of the Domestication is not conditioned upon the receipt of an opinion of IRHO’s legal counsel regarding the U.S. federal income tax consequences of the Domestication, and none of the parties to the Merger Agreement intend to request a ruling from the IRS regarding the U.S. federal income tax consequences of the Domestication. The remainder of this discussion assumes the Domestication qualifies as a Reorganization.
Assuming the Domestication qualifies as a Reorganization, U.S. holders generally will not recognize taxable gain or loss on the Domestication for U.S. federal income tax purposes, except as provided below under the caption headings “— Effect of Section 367 of the Code to U.S. Holders” and “— PFIC Considerations — Effect of PFIC Rules on the Domestication.” If so treated: (1) the tax basis of Parent Class A Common Shares or Parent Rights received by a U.S. holder in the Domestication will equal the U.S. holder’s adjusted tax basis in the IRHO Ordinary Shares or IRHO Rights, as the case may be, surrendered in exchange therefor, increased by any amount included in the income of such U.S. holder as a result of Section 367 of the Code (as discussed below) and (2) the holding period for Parent Class A Common Shares or Parent Rights received by a U.S. holder will include such U.S. holder’s holding period for the IRHO Ordinary Shares or IRHO Rights surrendered in exchange therefor.
If the Domestication fails to qualify as a Reorganization, a U.S. holder generally would recognize gain or loss with respect to its IRHO Ordinary Shares and IRHO Rights in an amount equal to the difference between the fair market value of the Parent Class A Common Shares and Parent Rights received in the Domestication and the U.S. holder’s adjusted tax basis in its IRHO Ordinary Shares and IRHO Rights surrendered in the Domestication, as applicable. In such event, such U.S. holder’s basis in the Parent Class A Common Shares and Parent Rights would be equal to their fair market value on the date of the Domestication, and such U.S. holder’s holding period for such Parent Class A Common Shares and Parent Rights would begin on the day following the date of the Domestication. Holders who hold different blocks of IRHO Ordinary Shares and IRHO Rights (generally, IRHO Ordinary Shares or IRHO Rights purchased or acquired on different dates or at different prices) should consult their tax advisors to determine how the above rules apply to them.
Because the Domestication will occur prior to the redemption of Public Shareholders that are U.S. holders and that exercise Redemption Rights in connection with the Business Combination, Public Shareholders that are U.S. holders and exercising such Redemption Rights in connection with the Business Combination will be subject to the potential tax consequences of the Domestication.
ALL IRHO PUBLIC SHAREHOLDERS THAT ARE U.S. HOLDERS AND CONSIDERING EXERCISING REDEMPTION RIGHTS IN CONNECTION WITH THE BUSINESS COMBINATION ARE URGED TO CONSULT THEIR TAX ADVISORS WITH RESPECT TO THE POTENTIAL TAX CONSEQUENCES OF THE DOMESTICATION AND AN EXERCISE OF SUCH REDEMPTION RIGHTS TO THEM.
Effect of Section 367 of the Code to U.S. Holders
Section 367 of the Code applies to certain non-recognition transactions involving foreign corporations, including a domestication of a foreign corporation in a Reorganization. Section 367 of the Code generally gives rise to gain recognition or other income inclusions with respect to certain U.S. persons in connection with transactions that would otherwise be non-recognition transactions for U.S. federal income tax purposes. Section 367(b) of the Code generally will apply to U.S. holders of IRHO Ordinary Shares on the date of the Domestication. Because the Domestication will occur immediately prior to the redemption of holders of Public Shares that exercise Redemption Rights in connection with the Business Combination, Public Shareholders that are U.S. holders and exercising Redemption Rights in connection with the Business Combination will be subject to the potential tax consequences of Section 367 of the Code as a result of the Domestication.
109
Table of Contents
U.S. Holders That Own 10 Percent or More of the IRHO Ordinary Shares
Subject to the discussion under “— PFIC Considerations” below, any U.S. holder who, at the Domestication Effective Time, beneficially owns (directly, indirectly, or constructively, including as a result of applicable attribution rules) 10% or more of the total combined voting power of all classes of IRHO Ordinary Shares entitled to vote or 10% or more of the total value of all classes of IRHO Ordinary Shares will generally be required to include in income as a dividend the “all earnings and profits amount,” (as defined in Treasury Regulation Section 1.367(b)-2(d)) attributable to its Public Shares, provided certain other requirements are satisfied. Any U.S. Holder that is a corporation may, under certain circumstances, effectively be exempt from taxation due to a deduction in an amount equal to a portion or all of the deemed dividend pursuant to Section 245A of the Code.
U.S. Holders That Own IRHO Ordinary Shares with a Fair Market Value of $50,000 or More And Less Than 10 Percent of the IRHO Ordinary Shares
Subject to the discussion under “— PFIC Considerations” below, any U.S. holder who, at the Domestication Effective Time, beneficially owns (directly, indirectly, or constructively, including as a result of applicable attribution rules) IRHO Ordinary Shares with a fair market value of $50,000 or more but less than 10% of the total combined voting power of all classes of IRHO Ordinary Shares entitled to vote and less than 10% of the total value of all classes of IRHO Ordinary Shares will generally recognize gain (but not loss) with respect to the Parent Class A Common Shares received in the Domestication unless such holder elects to recognize the “all earnings and profits” amount attributable to such holder as described below. Any such gain would be equal to the excess of the fair market value of such Parent Class A Common Shares received over the U.S. holder’s adjusted tax basis in the IRHO Ordinary Shares deemed to be surrendered in exchange therefor. Subject to the PFIC rules discussed below, such gain would be capital gain for U.S. federal income tax purposes, and would be long-term capital gain if the U.S. holder held the IRHO Ordinary Shares for longer than a period of one year. A U.S. holder’s ownership of IRHO Rights will be taken into account in determining such U.S. holder’s percentage ownership of IRHO Ordinary Shares. Complex attribution rules apply in determining whether a U.S. holder owns 10% or more of the total combined voting power of all classes of IRHO Ordinary Shares entitled to vote or owns 10% or more of the total value of all classes of IRHO Ordinary Shares. All U.S. holders are urged to consult their tax advisors with respect to those attribution rules.
In lieu of recognizing any gain as described in the preceding paragraph, such a U.S. holder may instead elect to include in income the all earnings and profits amount attributable to its IRHO Ordinary Shares under Section 367(b) of the Code. There are, however, strict conditions for making this election. Amongst other requirements, the election must be attached by the U.S. holder to its timely filed U.S. federal income tax return for the year in which the Domestication occurs, and the U.S. holder must send notice of making the election to Parent no later than the date such tax return is filed. In connection with this election, upon written request, Parent may in its discretion provide each U.S. holder eligible to make such an election with information regarding IRHO’s earnings and profits.
U.S. HOLDERS ARE STRONGLY URGED TO CONSULT A TAX ADVISOR REGARDING THE CONSEQUENCES OF MAKING THE ELECTION DESCRIBED ABOVE AND THE APPROPRIATE FILING REQUIREMENTS WITH RESPECT TO SUCH ELECTION.
U.S. Holders that Own IRHO Ordinary Shares with a Fair Market Value of Less Than $50,000
Subject to the discussion in “— PFIC Considerations” below, a U.S. holder who, at the Domestication Effective Time, beneficially owns (or is considered to own) IRHO Ordinary Shares with a fair market value of less than $50,000 should not be required to recognize any gain or loss under Section 367(b) of the Code in connection with the Domestication, and generally should not be required to include any part of the all earnings and profits amount in income.
Tax Consequences for U.S. Holders of IRHO Rights
Subject to the considerations described above relating to a U.S. holder’s ownership of IRHO Rights being taken into account in determining whether such U.S. holder owns less than 10% of the IRHO Ordinary Shares for purposes of Section 367(b) of the Code, and the discussion in “— PFIC Considerations” below, a U.S. holder of IRHO Rights generally should not be subject to U.S. federal income tax with respect to the exchange of IRHO Rights for Parent Rights as a result of the Domestication.
110
Table of Contents
ALL U.S. HOLDERS ARE URGED TO CONSULT THEIR OWN TAX ADVISORS REGARDING THE U.S. FEDERAL, STATE, LOCAL AND FOREIGN TAX CONSEQUENCES OF THE DOMESTICATION TO THEM, INCLUDING WITH RESPECT TO THE EFFECT OF SECTION 367 OF THE CODE.
PFIC Considerations
In addition to Section 367(b) of the Code, the Domestication may be a taxable event to U.S. holders to the extent that Section 1291(f) of the Code applies, if IRHO is or ever was a PFIC under Section 1297 of the Code (as discussed further in “PFIC Considerations — Effect of PFIC Rules on the Domestication” below).
General. A foreign corporation generally will be a PFIC for U.S. federal income tax purposes with respect to a taxable year of the foreign corporation if either:
• at least 75% of its gross income in a taxable year, including its pro rata share of the gross income of any corporation in which it is considered to own at least 25% of the shares by value, is passive income; or
• at least 50% of its assets in a taxable year, ordinarily determined based on fair market value and averaged quarterly over the year, including its pro rata share of the assets of any corporation in which it is considered to own at least 25% of the shares by value, are held for the production of, or produce, passive income.
Passive income generally includes dividends, interest, rents and royalties (other than rents or royalties derived from the active conduct of a trade or business) and gains from the disposition of passive assets.
Because IRHO is a blank check company, and based upon the composition of its income and assets, IRHO believes that it will likely be a PFIC. Whether IRHO is treated as a PFIC for U.S. federal income tax purposes is a factual determination that must be made annually at the close of each taxable year and, thus, is generally subject to significant uncertainty. Nonetheless, based on the current composition of IRHO’s income and assets, if the Domestication occurs as contemplated in this proxy statement/prospectus, causing IRHO’s current taxable year to end at such time for U.S. federal income tax purposes, IRHO believes that it will likely be a PFIC for the current taxable year.
Consequences if a PFIC. If IRHO is determined to be a PFIC for any taxable year (or portion thereof) that is included in the holding period of a U.S. holder of IRHO Ordinary Shares or IRHO Rights and, in the case of IRHO Ordinary Shares, such U.S. holder did not make a timely qualified electing fund (“QEF”) election for IRHO’s first taxable year as a PFIC in which such U.S. holder held (or was deemed to hold) such IRHO Ordinary Shares (or a QEF election along with a “purging election”) or did not make a timely mark-to-market election as discussed below, then as described below, such U.S. holder generally will be subject to special rules with respect to: (1) any gain recognized by the U.S. holder on the sale or other disposition of its IRHO Ordinary Shares or IRHO Rights; and (ii) any “excess distribution” made to the U.S. holder (generally, any distributions to such U.S. holder during a taxable year of the U.S. holder that are greater than 125% of the average annual distributions received by such U.S. holder in respect of the IRHO Ordinary Shares during the three preceding taxable years of such U.S. holder or, if shorter, such U.S. holder’s holding period for the IRHO Ordinary Shares).
Under these rules:
• the U.S. holder’s gain or excess distribution will be allocated ratably over the U.S. holder’s holding period for the IRHO Ordinary Shares or IRHO Rights;
• the amount of gain allocated to the U.S. holder’s taxable year in which the U.S. holder recognized the gain or received the excess distribution, or to the period in the U.S. holder’s holding period before the first day of the first taxable year in which IRHO is a PFIC, will be taxed as ordinary income;
• the amount of gain allocated to other taxable years (or portions thereof) of the U.S. holder and included in its holding period will be taxed at the highest rate in effect for that year and applicable to the U.S. holder; and
• the interest charge generally applicable to underpayments of tax will be imposed in respect of the tax attributable to each such other taxable year of the U.S. holder.
111
Table of Contents
Any “all earnings and profits amount” included in income by a U.S. holder for U.S. federal income tax purposes as a result of the Domestication under Section 367 of the Code, as discussed above, would generally be treated as gain subject to these rules.
QEF Election. In general, if IRHO is determined to be a PFIC, a U.S. holder may avoid the PFIC tax consequences described above in respect to its IRHO Ordinary Shares by making a timely QEF election to include in income for U.S. federal income tax purposes its pro rata share of IRHO’s net capital gains (as long-term capital gain) and other earnings and profits (as ordinary income), on a current basis, in each case whether or not distributed (unless an election is made), in each taxable year of the U.S. holder in which or with which IRHO’s taxable year ends. The QEF election is made on a shareholder-by-shareholder basis and, once made, can be revoked only with the consent of the IRS. A U.S. holder generally makes a QEF election by attaching a completed IRS Form 8621 (Information Return by a Shareholder of a Passive Foreign Investment Company or Qualified Electing Fund), including the information provided in a “PFIC Annual Information Statement,” to a timely filed U.S. federal income tax return for the tax year to which the election relates. Retroactive QEF elections generally may be made only by filing a protective statement with such return and if certain other conditions are met or with the consent of the IRS. U.S. holders should consult their tax advisors regarding the availability and tax consequences of a retroactive QEF election under their particular circumstances. However, in order to comply with the requirements of a QEF election, a U.S. holder must receive a PFIC annual information statement from IRHO. Upon written request, IRHO will endeavor to provide to a U.S. holder such information as the IRS may require, including a PFIC annual information statement, in order to enable the U.S. holder to make and maintain a QEF election, but there can be no assurance that we have provided or that we will timely provide such required information.
A U.S. holder may not make a QEF election with respect to its IRHO Rights. As a result, if a U.S. holder of IRHO Rights sells or otherwise disposes of such IRHO Rights, any gain recognized for U.S. federal income tax purposes will be subject to the special tax and interest charge rules treating the gain as an excess distribution, as described above, if IRHO were a PFIC at any time during the period the U.S. holder held the IRHO Rights.
Mark-to-Market Election. Alternatively, if a U.S. holder, at the close of its taxable year, owns shares in a PFIC that are treated as marketable stock, the U.S. holder may make a mark-to-market election with respect to such shares for such taxable year. If the U.S. holder makes a valid mark-to-market election for the first taxable year of the U.S. holder in which the U.S. holder holds (or is deemed to hold) IRHO Ordinary Shares and for which IRHO is determined to be a PFIC, such U.S. holder generally will not be subject to the PFIC rules described above in respect of its IRHO Ordinary Shares. Instead, in general, the U.S. holder will include as ordinary income for U.S. federal income tax purposes for each year the excess, if any, of the fair market value of its IRHO Ordinary Shares at the end of its taxable year over the adjusted basis in its IRHO Ordinary Shares. The U.S. holder also will be allowed to take an ordinary loss for U.S. federal income tax purposes in respect of the excess, if any, of the adjusted basis of its IRHO Ordinary Shares over the fair market value of its IRHO Ordinary Shares at the end of its taxable year (but only to the extent of the net amount of previously included income, i.e., net of mark-to-market losses, as a result of the mark-to-market election). The U.S. holder’s basis in its IRHO Ordinary Shares will be adjusted to reflect any such income or loss amounts, and the required income inclusions as well as any further gain recognized on a sale or other taxable disposition of the IRHO Ordinary Shares will be treated as ordinary income for U.S. federal income tax purposes. Any amount allowed as a deduction under the mark-to-market regime will be treated as an ordinary loss for U.S. federal income tax purposes. Currently, a mark-to-market election may not be made with respect to rights, including IRHO Rights.
The mark-to-market election is available only for stock that is regularly traded on a national securities exchange that is registered with the SEC, including Nasdaq (on which Public Shares have been listed), or on a foreign exchange or market that the IRS determines has rules sufficient to ensure that the market price represents a legitimate and sound fair market value. U.S. holders are urged to consult their tax advisors regarding the availability and tax consequences of a mark-to-market election in respect to the Public Shares under their particular circumstances.
Effect of PFIC Rules on the Domestication. Even if the Domestication qualifies as a Reorganization, Section 1291(f) of the Code requires that, to the extent provided in Treasury Regulations, a U.S. person that disposes of stock of a PFIC (including rights to acquire stock of a PFIC, such as the IRHO Rights) must recognize gain notwithstanding any other provision of the Code. No final Treasury Regulations are currently in effect under Section 1291(f) of the Code. Proposed Treasury Regulations under Section 1291(f) of the Code, or the “Proposed Regulations”, were promulgated in 1992, with a retroactive effective date once they become finalized. If finalized in their current form, or if gain recognition under Section 1291(f) of the Code is effective even in the absence of final Treasury Regulations, the Proposed Regulations may require taxable gain recognition by a U.S. holder subject to the
112
Table of Contents
PFIC rules with respect to its exchange of IRHO Ordinary Shares or IRHO Rights for Parent Class A Common Shares or Parent Rights received in the Domestication if IRHO were a PFIC at any time during such U.S. holder’s holding period in IRHO Ordinary Shares or IRHO Rights. Therefore, U.S. holders of IRHO Ordinary Shares that have not made a timely QEF election or mark-to-market election (as described above) and U.S. holders of IRHO Rights may, pursuant to the Proposed Regulations, be subject to taxation on the Domestication to the extent their shares have a fair market value in excess of their tax basis. Any such gain would generally be treated as an “excess distribution” made in the year of the Domestication Effective Time and subject to the special tax and interest charge rules discussed above.
It is difficult to predict whether, in what form and with what effective date, final Treasury Regulations under Section 1291(f) of the Code will be adopted if at all, and, further, whether the IRS would take the position that Section 1291(f) of the Code is effective in the absence of final Treasury Regulations. The rules dealing with PFICs and with the QEF election and “purging election” (or a mark-to-market election) are complex and are affected by various factors in addition to those described above. Accordingly, a U.S. holder of IRHO Ordinary Shares or IRHO Rights should consult its tax advisors concerning the application of the PFIC rules to such securities under such U.S. holder’s particular circumstances.
Effect to U.S. Holders of Public Shares Exercising Redemption Rights
This section is addressed to U.S. holders of Public Shares (which will be exchanged for Parent Class A Common Shares in the Domestication) that elect to exercise Redemption Rights in connection with the Business Combination to receive cash in exchange for their Public Shares and, because the Domestication will occur immediately prior to the redemption of Public Shares by U.S. holders that exercise Redemption Rights in connection with the Business Combination, is subject in its entirety to the discussion of the Domestication, the PFIC rules and Section 367 of the Code as discussed above.
The U.S. federal income tax consequences to a U.S. holder of Public Shares (which will be exchanged for Parent Class A Common Shares in the Domestication) that exercises its Redemption Rights in connection with the Business Combination to receive cash from the Trust Account in exchange for all or a portion of its Public Shares will depend on whether the redemption qualifies as a sale of the Public Shares redeemed under Section 302 of the Code or is treated as a distribution under Section 301 of the Code. If the redemption qualifies as a sale of such U.S. holder’s Public Shares redeemed, the U.S. holder will generally recognize capital gain or capital loss for U.S. federal income tax purposes equal to the difference, if any, between the amount of cash received and such U.S. holder’s tax basis in the Public Shares redeemed in connection with the Business Combination (which basis will depend on the treatment of the Domestication, including under Section 367 of the Code and the PFIC rules, as described above).
Whether a redemption qualifies for sale treatment will generally depend on the total amount of Public Shares treated as held by the U.S. holder (including any Public Shares constructively owned by the U.S. holder as a result of owning IRHO Rights) relative to all Public Shares outstanding both before and after the redemption in connection with the Business Combination (which will include any Parent Class A Common Shares issued under the PIPE Financing). The redemption of Public Shares will generally be treated as a sale of the Public Shares (rather than as a corporate distribution) if the redemption in connection with the Business Combination (1) is “substantially disproportionate” with respect to the U.S. holder, (2) results in a “complete termination” of the U.S. holder’s interest in Parent or (3) is “not essentially equivalent to a dividend” with respect to the U.S. holder.
In determining whether any of the foregoing tests are satisfied, a U.S. holder takes into account not only Public Shares actually owned by the U.S. holder, but also Public Shares constructively owned by the U.S. holder. A U.S. holder may constructively own, in addition to Public Shares owned directly, Public Shares owned by certain related individuals and entities in which the U.S. holder has an interest or that have an interest in such U.S. holder, as well as any Public Shares that the U.S. holder has a right to acquire by exercise of an option, which would generally include Public Shares which could be acquired pursuant to an exercise of any IRHO Rights held by such U.S. holder.
In order to meet the substantially disproportionate test, the percentage of the outstanding voting shares actually and constructively owned by the U.S. holder immediately following the redemption of Public Shares in connection with the Business Combination must, among other requirements, be less than 80% of the percentage of the outstanding voting shares actually and constructively owned by the U.S. holder immediately before the redemption of Public Shares in connection with the Business Combination. Prior to the Domestication Effective Time, the Public Shares may not be considered voting shares for this purpose and, consequently, this substantially disproportionate test may not be applicable. There will be a complete termination of such U.S. holder’s interest if either (i) all of the Public Shares
113
Table of Contents
actually and constructively owned by such U.S. holder are redeemed in connection with the Business Combination or (ii) all of the Public Shares actually owned by such U.S. holder are redeemed in connection with the Business Combination and such U.S. holder is eligible to waive, and effectively waives in accordance with specific rules, the attribution of any Public Shares actually and constructively owned by certain family members and such U.S. holder does not constructively own any other Public Shares and otherwise complies with specific conditions. In order for the redemption of Public Shares in connection with the Business Combination to not be essentially equivalent to a dividend, the redemption must result in a “meaningful reduction” of the U.S. holder’s proportionate interest in Parent following the Domestication. Whether the redemption will result in a meaningful reduction in a U.S. holder’s proportionate interest in the Parent following the Domestication will depend on the particular facts and circumstances. However, the IRS has indicated in a published ruling that even a small reduction in the proportionate interest of a minority stockholder in a publicly-held corporation who exercises no control over corporate affairs may constitute such a “meaningful reduction.”
If the redemption in connection with the Business Combination does not qualify as a sale of the Public Shares redeemed, the U.S. holder will be treated as receiving a corporate distribution from Parent at the Domestication Effective Time. Such distribution will generally be treated as a dividend for U.S. federal income tax purposes to the extent the distribution is paid out of the current or accumulated earnings and profits (as determined under U.S. federal income tax principles) of Parent at the Domestication Effective Time. Distributions in excess of any such earnings and profits will generally be applied against and reduce the U.S. holder’s basis in its other Public Shares (but not below zero) and, to the extent in excess of such basis, will be treated as capital gain for U.S. federal income tax purposes from the sale or exchange of such redeemed Public Shares. After the application of these rules, any remaining tax basis of the U.S. holder in such U.S. holder’s redeemed Public Shares will generally be added to the U.S. holder’s adjusted tax basis in its remaining Public Shares, or, if it has none, to the U.S. holder’s adjusted tax basis in its IRHO Rights or possibly in other Public Shares constructively owned by such holder.
Because the Domestication will occur immediately prior to the redemption of Public Shares by U.S. holders that exercise Redemption Rights in connection with the Business Combination, U.S. holders exercising such Redemption Rights will be subject to the potential tax consequences of Section 367 of the Code and the U.S. federal income tax rules relating to PFICs as a result of the Domestication discussed further above.
U.S. holders who directly, indirectly, or constructively own five percent or more of Parent Class A Common Shares at the Domestication Effective Time (by vote or value) may be subject to special reporting requirements with respect to a redemption of Public Shares in connection with the Business Combination, and such U.S. holders should consult with their tax advisors with respect to any applicable reporting requirements.
All U.S. holders are urged to consult with their tax advisors as to the tax consequences of a redemption of all or a portion of their Public Shares pursuant to an exercise of Redemption Rights in connection with the Business Combination.
Tax Consequences to U.S. Holders of Parent Class A Common Shares and Parent Rights of the Mergers
A U.S. holder that holds Parent Class A Common Shares and Parent Rights at the Domestication Effective Time generally should not recognize gain or loss for U.S. federal income tax purposes solely as a result of the Mergers.
Non-U.S. Holders
A “non-U.S. holder” is a beneficial owner of Parent Class A Common Shares or Parent Rights that is, for U.S. federal income tax purposes:
• a non-resident alien individual;
• a foreign corporation; or
• an estate or trust that is not a U.S. holder.
Such term, however, generally does not include an individual who is present in the United States for 183 days or more in the taxable year of disposition. If you are such an individual, you are urged to consult your tax advisor regarding the U.S. federal income tax consequences of the sale or other disposition of Parent Class A Common Shares or Parent Rights.
114
Table of Contents
Effects of the Domestication to Non-U.S. Holders
IRHO does not expect the Domestication to result in any material U.S. federal income tax consequences to non-U.S. holders of IRHO Ordinary Shares or IRHO Rights, whether the Domestication is treated as a Reorganization, and thus a non-recognition event, or whether the Domestication is treated as a taxable exchange, whereby the U.S. federal income tax consequences to a non-U.S. holder generally will be as described below under “Gain on Sale, Taxable Exchange or Other Taxable Disposition of Parent Class A Common Shares and Parent Rights.”
The following describes certain material U.S. federal income tax considerations relating to the ownership and disposition of Parent Class A Common Shares and Parent Rights by a non-U.S. holder following the Domestication.
Dividends
Any distribution of cash or property (or a constructive distribution) Parent makes following the Domestication to a non-U.S. holder of Parent Class A Common Shares or Parent Rights, to the extent paid out of Parent’s current or accumulated earnings and profits (as determined under U.S. federal income tax principles), generally will constitute a dividend for U.S. federal income tax purposes. Any such dividends paid or deemed paid to a non-U.S. holder in respect of shares of Parent Class A Common Shares (or Parent Rights) that is not effectively connected with the non-U.S. holder’s conduct of a trade or business within the United States, as described below, generally will be subject to U.S. federal withholding tax for U.S. federal income tax purposes at a rate of 30% of the gross amount of the dividend, unless such non-U.S. holder is eligible for a reduced rate of withholding tax under an applicable income tax treaty and provides proper certification of its eligibility for such reduced rate (usually on an IRS Form W-8BEN or W-8BEN-E, as applicable). Any such distribution not constituting a dividend generally will be treated, for U.S. federal income tax purposes, first as reducing the non-U.S. holder’s adjusted tax basis in such Parent Class A Common Shares or Parent Rights (but not below zero) and, to the extent such distribution exceeds the non-U.S. holder’s adjusted tax basis, as gain from the sale or other taxable disposition of such Parent Class A Common Shares or Parent Rights, which will be treated as described under “— Gain on Sale, Taxable Exchange or Other Taxable Disposition of Parent Class A Common Shares and Parent Rights” below.
Dividends (including constructive dividends) Parent pays following the Domestication to a non-U.S. holder that are effectively connected with such non-U.S. holder’s conduct of a trade or business within the United States (and, if required by an applicable income tax treaty, is attributable to a U.S. permanent establishment or fixed base of the non-U.S. holder) generally will not be subject to the foregoing U.S. federal withholding tax for U.S. federal income tax purposes, provided such non-U.S. holder complies with certain certification and disclosure requirements (usually by providing an IRS Form W-8ECI). Instead, unless an applicable income tax treaty provides otherwise, such dividends generally will be subject to U.S. federal income tax, net of certain deductions, at the same regular U.S. federal income tax rates applicable to a comparable U.S. holder. In addition, if the non-U.S. holder is a corporation, such holder’s effectively connected earnings and profits (subject to adjustments) may be subject to a U.S. federal “branch profits tax” at a rate of 30% (or such lower rate as may be specified by an applicable income tax treaty).
Gain on Sale, Taxable Exchange or Other Taxable Disposition of Parent Class A Common Shares and Parent Rights
A non-U.S. holder generally will not be subject to U.S. federal income tax in respect of gain recognized on a sale, exchange or other disposition of Parent Class A Common Shares or Parent Rights unless:
• the gain is effectively connected with the conduct of a trade or business by the non-U.S. holder within the United States (and, if required by an applicable income tax treaty, is attributable to a U.S. permanent establishment or fixed base of the non-U.S. holder);
• the non-U.S. holder is an individual who is present in the United States for 183 days or more in the taxable year of disposition and certain other conditions are met; or
• Either Parent or IRHO is or has been a “United States real property holding corporation” (“USRPHC”) for U.S. federal income tax purposes at any time during the shorter of the five-year period ending on the date of disposition or the non-U.S. holder’s holding period, and either (i) Parent Class A Common Shares or Public Shares have ceased to be regularly traded on an established securities market or (ii) the non-U.S. holder has owned or is deemed to have owned under constructive ownership rules, at any time during the shorter of the five-year period preceding the disposition or the non-U.S. holder’s holding period, more than 5% of outstanding Parent Class A Common Shares or Public Shares, as applicable.
115
Table of Contents
Unless an applicable tax treaty provides otherwise, any gain described in the first bullet point above generally will be subject to U.S. federal income tax, net of certain deductions, at the same regular U.S. federal income tax rates applicable to a comparable U.S. holder and, in addition, a non-U.S. holder described in the first bullet point that is a foreign corporation will be subject to U.S. federal “branch profits tax” at a 30% rate (or a lower applicable tax treaty rate) on such non-U.S. holder’s effectively connected earnings and profits (subject to adjustments).
Any gain of a non-U.S. holder described in the second bullet point above (which may be offset by U.S. source capital losses during the taxable year of the disposition) generally will be subject to a flat 30% U.S. federal income tax rate (or a lower applicable tax treaty rate).
Unless an applicable tax treaty provides otherwise, any gain described in the third bullet point above that is recognized by such non-U.S. holder on the sale, exchange or other disposition of Parent Class A Common Shares or Parent Rights generally will be subject to tax at generally applicable U.S. federal income tax rates. In addition, a buyer of such Parent Class A Common Shares or Parent Rights from a non-U.S. holder may be required to withhold U.S. federal income tax at a rate of 15% of the amount realized upon such disposition if such Parent Class A Common Shares or Parent Rights are not treated as “regularly traded on an established securities market.” Parent will generally be classified as a USRPHC if the fair market value of its “United States real property interests” equals or exceeds 50% of the sum of the fair market value of its worldwide real property interests and its other assets used or held for use in a trade or business, as determined for U.S. federal income tax purposes. Parent does not expect to be classified as a USRPHC following the Business Combination. However, such determination is factual in nature and subject to change, and no assurance can be provided as to whether Parent is or will be a USRPHC with respect to a non-U.S. holder following the Business Combination or at any future time.
Tax Consequences to Non-U.S. Holders That Elect to Exercise Redemption Rights
This section is addressed to non-U.S. holders of Public Shares that elect to exercise Redemption Rights in connection with the Business Combination to receive cash in exchange for all or a portion of their Public Shares. For purposes of this discussion, a “redeeming non-U.S. holder” is a non-U.S. holder that elects to exercise Redemption Rights in connection with the Business Combination in respect of all or a portion of its Public Shares.
The Domestication will occur immediately prior to the redemption in connection with the Business Combination of non-U.S. holders that exercise Redemption Rights with respect to Public Shares. The U.S. federal income tax consequences to a redeeming non-U.S. holder will depend on whether the redemption qualifies as a sale of the Public Shares redeemed in connection with the Business Combination, as described above under “— U.S. Holders — Effect to U.S. Holders of Public Shares Exercising Redemption Rights.” If such a redemption qualifies as a sale of Public Shares, the U.S. federal income tax consequences to the redeeming non-U.S. holder generally will be as described above under “— Gain on Sale, Taxable Exchange or Other Taxable Disposition of Parent Class A Common Shares and Parent Rights.” If such a redemption does not qualify as a sale of Public Shares, the redeeming non-U.S. holder generally will be treated as receiving a distribution, the U.S. federal income tax consequences of which are described above under “— Dividends.”
ALL NON-U.S. HOLDERS ARE URGED TO CONSULT THEIR TAX ADVISORS REGARDING THE U.S. FEDERAL, STATE, LOCAL AND FOREIGN TAX CONSEQUENCES OF THE DOMESTICATION TO THEM.
Information Reporting and Backup Withholding
Dividend payments with respect to Parent Class A Common Shares and proceeds from the sale, exchange or redemption of Parent Class A Common Shares or Parent Rights may be subject to information reporting to the IRS and possible U.S. backup withholding. Backup withholding will not apply, however, to a U.S. holder who furnishes a correct taxpayer identification number on an IRS Form W-9 and makes other required certifications, or who is otherwise exempt from backup withholding and establishes such exempt status.
A non-U.S. holder generally will eliminate the requirement for information reporting (other than with respect to dividends) and backup withholding by providing certification of its non-U.S. status on a duly executed applicable IRS Form W-8 or by otherwise establishing an exemption.
116
Table of Contents
Backup withholding is not an additional tax. Any amounts withheld as backup withholding may be credited against a holder’s U.S. federal income tax liability, if any, and a holder generally may obtain a refund of any excess amounts withheld under the backup withholding rules by timely filing the appropriate claim for refund with the IRS and furnishing any required information.
Foreign Account Tax Compliance Act
Pursuant to the Foreign Account Tax Compliance Act, set forth in Sections 1471 through 1474 of the Code and the Treasury Regulations and administrative guidance promulgated thereunder (commonly referred to as “FATCA”), foreign financial institutions (which include hedge funds, private equity funds, mutual funds and any other investment vehicles regardless of their size) must comply with information reporting rules with respect to their U.S. account holders and investors or bear a withholding tax on certain payments made to them (including such payments made to them in their capacity as intermediaries). Generally, if a foreign financial institution or certain other foreign entity does not comply with these reporting requirements, “withholdable payments” to the noncomplying entity will be subject to a 30% withholding tax. For this purpose, withholdable payments include U.S.-source payments otherwise subject to nonresident withholding tax and, subject to the discussion of the proposed Treasury Regulations below, the entire gross proceeds from the sale of certain equity or debt instruments of U.S. issuers. This withholding tax will apply to a non-compliant foreign financial institution regardless of whether the payment would otherwise be exempt from U.S. nonresident withholding tax.
Withholding under FATCA will generally apply to payments of dividends on Parent Class A Common Shares to foreign financial institutions that are not in compliance with FATCA. The U.S. Department of the Treasury has released proposed regulations which, if finalized in their present form, would eliminate the U.S. federal withholding tax for U.S. federal income tax purposes of 30% applicable to the gross proceeds of a sale or disposition of equity interests. In its preamble to the proposed regulations, the U.S. Department of the Treasury stated that taxpayers may generally rely on the proposed regulations until final regulations are issued.
Similar withholding requirements to the foregoing apply to dividends on and, subject to the proposed regulations, gross proceeds from the sale of, Parent Class A Common Shares held by an investor that is a non-financial foreign entity unless such entity provides certain information regarding the entity’s “substantial United States owners,” which the applicable withholding agent will in turn be required to provide to the Secretary of the Treasury.
If a dividend payment is both subject to withholding under FATCA and subject to the withholding tax discussed above, the withholding under FATCA may be credited against, and therefore reduce, such other withholding tax. Each non-U.S. holder is urged to consult its tax advisor regarding these rules and whether they may be relevant to such non-U.S. holder’s ownership and disposition of Parent Class A Common Shares and Parent Rights.
FOREIGN ENTITIES LOCATED IN JURISDICTIONS THAT HAVE ENTERED INTO INTERGOVERNMENTAL AGREEMENTS WITH THE UNITED STATES IN CONNECTION WITH FATCA MAY BE SUBJECT TO DIFFERENT RULES. ALL HOLDERS ARE URGED TO CONSULT WITH THEIR TAX ADVISORS REGARDING THE POSSIBLE IMPLICATIONS OF THE ABOVE RULES UNDER, OR RELATED TO, FATCA ON THEIR INVESTMENT IN PARENT CLASS A COMMON SHARES AND PARENT RIGHTS.
117
Table of Contents
UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION
Introduction
The following unaudited pro forma condensed combined financial information presents the combination of the historical financial information of Iron Horse Acquisition II Corp. (“IRHO” or “Parent”) and Electra Vehicles, Inc. (“Electra” or the “Company”), adjusted to give effect to the Business Combination and related transactions described below (collectively, the “Transactions”).
The unaudited pro forma condensed combined financial information has been prepared in accordance with Article 11 of Regulation S-X as in effect on the date of this registration statement and reflects only Transaction Accounting Adjustments (as defined in Article 11). IRHO and Electra have not reflected (and have elected not to present) adjustments for reasonably estimable synergies, dis-synergies, or other non-accounting transaction effects.
The unaudited pro forma condensed combined financial information is presented for illustrative purposes only and does not necessarily reflect what IRHO’s and Electra’s financial position or results of operations would have been had the Transactions been completed on the dates assumed, nor is it necessarily indicative of IRHO’s and Electra’s future financial condition or results of operations.
Pro Forma Financial Information Included
The unaudited pro forma condensed combined financial information includes:
• Unaudited pro forma condensed combined balance sheet as of August 31, 2026.
This balance sheet combines (i) the historical unaudited consolidated balance sheet of IRHO as of August 31, 2026, and (ii) the historical unaudited condensed consolidated balance sheet of Electra as of June 30, 2026, giving pro forma effect to the Transactions as if they had occurred on August 31, 2026. Because IRHO and Electra have different fiscal period ends, the historical balance sheets combined are as of different dates; Electra’s balance sheet as of June 30, 2026 is the most recent available and is dated within 93 days of IRHO’s balance sheet date. The pro forma balance sheet also gives effect to the following significant Electra financing transactions that occurred after June 30, 2026: (a) an additional advance and the issuance of convertible notes for additional proceeds of $918,254 received from investors in July through November 2026 and (b) the issuance of the Senior Secured Convertible Notes on September 29, 2026 for net cash proceeds of $3,350,000, which are repayable in cash at 115% of principal, or $5,031,250, upon the Closing (see “Description of the Transactions — Senior Secured Convertible Notes”).
• Unaudited pro forma condensed combined statement of operations for the year ended November 30, 2025.
This statement combines (i) the historical audited statement of operations of IRHO for the year ended November 30, 2025, and (ii) the historical audited consolidated statement of operations of Electra for the year ended December 31, 2025, giving pro forma effect to the Transactions as if they had occurred on December 1, 2024, the beginning of the earliest period presented. IRHO’s fiscal year ends on November 30 and Electra’s fiscal year ends on December 31. Because the fiscal year ends differ by fewer than 93 days, Electra’s historical results for the year ended December 31, 2025 have been combined with IRHO’s results for the year ended November 30, 2025, as permitted by Rule 11-02(c)(3) of Regulation S-X.
• Unaudited pro forma condensed combined statement of operations for the nine months ended August 31, 2026.
This statement combines (i) the historical unaudited consolidated statement of operations of IRHO for the nine months ended August 31, 2026, and (ii) the historical unaudited condensed consolidated statement of operations of Electra for the nine months ended June 30, 2026 (derived as described below), giving pro forma effect to the Transactions as if they had occurred on December 1, 2024, the beginning of the earliest annual period presented.
Electra’s historical statement of operations for the nine months ended June 30, 2026 has been derived by taking Electra’s audited results for the year ended December 31, 2025, subtracting its unaudited results for the nine months ended September 30, 2025, and adding its unaudited results for the six months ended June 30, 2026. As a result, Electra’s results for the three months ended December 31, 2025, including revenues of $325,744 and a net loss
118
Table of Contents
of $1,178,212, are included in both the unaudited pro forma condensed combined statement of operations for the year ended November 30, 2025 and the unaudited pro forma condensed combined statement of operations for the nine months ended August 31, 2026.
Sources of Historical Financial Information
The unaudited pro forma condensed combined financial information has been derived from and should be read in conjunction with:
• the historical audited financial statements of IRHO as of and for the year ended November 30, 2025, and the related notes thereto, included elsewhere in this registration statement;
• the historical unaudited consolidated financial statements of IRHO as of and for the nine months ended August 31, 2026, and the related notes thereto, included elsewhere in this registration statement;
• the historical audited consolidated financial statements of Electra as of and for the year ended December 31, 2025, and the related notes thereto, included elsewhere in this registration statement; and
• the historical unaudited condensed consolidated financial statements of Electra as of and for the six months ended June 30, 2026, and the related notes thereto, included elsewhere in this registration statement.
This information should also be read together with the sections entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations of IRHO,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations of Electra,” and other financial information contained elsewhere in this registration statement.
Description of the Transactions
Merger Agreement
On April 21, 2026, Iron Horse Acquisition II Corp., a Cayman Islands exempted company (“IRHO” or “Parent”), entered into a merger agreement, by and among IRHO, IRHO Merger Sub Inc., a Delaware corporation and a direct, wholly owned subsidiary of IRHO (“Merger Sub”), and Electra Vehicles, Inc., a Delaware corporation (“Electra” or the “Company”) (as amended and as may be further amended and/or restated from time to time, the “Merger Agreement”).
Pursuant to the Merger Agreement, (a) IRHO will domesticate from the Cayman Islands to Delaware (the “Domestication”), and (b) at least one business day following the Domestication, Merger Sub will merge with and into Electra (the “Merger”), after which Electra will be the surviving corporation (the “Surviving Corporation”) and a wholly-owned subsidiary of IRHO. In connection with the Merger, the Surviving Corporation will change its name to a name to be mutually agreed by the parties and Parent will change its name to “ELECTRA AI, Inc.” References herein to “Electra Pubco” refer to the combined company following the consummation of the Business Combination.
The Domestication and Merger
In accordance with the Merger Agreement, and subject to the satisfaction or waiver of the conditions set forth therein, on the day that is at least one Business Day prior to the Effective Time, IRHO shall de-register from the Register of Companies in the Cayman Islands by way of continuation out of the Cayman Islands and into the State of Delaware so as to migrate to and domesticate as a Delaware entity.
In connection with the Domestication, IRHO will (i) file a certificate of incorporation with the Secretary of State of the State of Delaware, whereby Parent shall have a dual class common stock consisting of Class A common stock, par value $0.0001 per share (the “Parent Class A Common Shares”) and Class B common stock, par value $0.0001 per share (the “Parent Class B Common Shares” and together with the Parent Class A Common Shares, the “Parent Common Shares”); and (ii) adopt amended and restated bylaws, in each case, with such changes as may be agreed in writing by Parent and the Company.
In connection with the Domestication, (i) each then issued and outstanding ordinary share of IRHO, par value $0.0001 per share (each, an “IRHO Ordinary Share”), will convert automatically, on a one-for-one basis, into one Parent Class A Common Share; (ii) each then issued and outstanding right entitling the holder thereof to 1/10 of one IRHO Ordinary Share (each, an “IRHO Right”) shall convert automatically into a right to receive 1/10 of one Parent
119
Table of Contents
Class A Common Share at the Closing, pursuant to the Parent Rights Agreement dated as of December 16, 2025, by and between IRHO and Continental Stock Transfer & Trust Company, as Rights agent; and (iii) each then issued and outstanding unit of IRHO (each, an “IRHO Unit”) shall separate and convert automatically into one Parent Class A Common Share and a right to receive 1/10 of one Parent Class A Common Share at the Closing.
Upon the terms and subject to the conditions of the Merger Agreement, at least one business day following the Domestication, Merger Sub will merge with and into Electra after which Electra will be the surviving corporation and a wholly-owned subsidiary of Parent.
The Merger will become effective upon the filing of a certificate of merger with the Secretary of State of the State of Delaware or at such later time as is agreed to by the parties to the Merger Agreement and specified in the certificate of merger (the “Effective Time”). The Domestication, the Merger, and other transactions contemplated by the Merger Agreement are collectively referred to herein as the “Business Combination,” the consummation of the Merger is referred to as the “Closing” and the date of the Closing is referred to as the “Closing Date.”
In connection with the Business Combination, IRHO will be renamed “ELECTRA AI, Inc.” and Electra, as a wholly-owned subsidiary of ELECTRA AI, Inc., will change its name to a name to be mutually agreed by the parties.
Merger Consideration and Structure
Pursuant to the Merger Agreement, IRHO has agreed to acquire all of the equity interests of Electra for the sum of $250,000,000 plus the Aggregate Exercise Price, as adjusted pursuant to the terms of the Merger Agreement (the “Base Purchase Price”), comprising of a number of Parent Common Shares equal to the quotient obtained by dividing (a) the Base Purchase Price, by (b) US$10.00 (the “Aggregate Merger Consideration”), which Parent Common Shares shall include no more than a number of Parent Class B Common Shares equal to the Conversion Ratio multiplied by 3,994,802. “Aggregate Exercise Price” means the aggregate dollar amount payable to the Company upon the exercise or conversion of all vested in-the-money Company Options that are outstanding immediately prior to the Effective Time.
The Base Purchase Price shall be automatically adjusted upwards in increments of $10.00 until the Aggregate Merger Consideration (excluding shares of Parent Common Stock issuable in respect of convertible notes and upon the exercise of Converted Stock Options) represents at least 50.1% of the Aggregate Parent Fully Diluted Shares. “Aggregate Parent Fully Diluted Shares” means, as of immediately after the Effective Time, the sum, without duplication, of (a) all Parent Common Shares issued and outstanding (after giving effect to the Domestication, the Merger, the conversion of all Parent Rights, any PIPE Financing, and any forfeiture or surrender of Sponsor Shares); plus (b) the aggregate number of Parent Common Shares issuable upon exercise of all outstanding Converted Stock Options (as defined below).
Effect of the Merger
At the Effective Time (i) each share of Company Capital Stock (as defined below), if any, that is owned by Parent or Merger Sub or Electra (as treasury stock or otherwise), will automatically be cancelled; (ii) each share of Company Preferred Stock issued and outstanding immediately prior to the Effective Time will be converted into the right to receive a number of Parent Common Shares equal to: (a) (x) the Conversion Ratio multiplied by (y) the number of shares of Company Common Stock issuable upon conversion of such share of Company Preferred Stock as of immediately prior to the Effective Time plus (b) a number of Earnout Shares equal to the Earnout Pro Rata Share in accordance with, and subject to the contingencies set forth in the Merger Agreement; (iii) each share of Company Class A Common Stock issued and outstanding immediately prior to the Effective Time will be converted into the right to receive: (x) a number of Parent Class A Common Shares equal to the Conversion Ratio plus (y) a number of Earnout Shares equal to the Earnout Pro Rata Share in accordance with, and subject to the contingencies set forth in the Merger Agreement; and (iv) each share of Company Class B Common Stock issued and outstanding immediately prior to the Effective Time will be converted into the right to receive: (x) a number of Parent Class B Common Shares equal to the Conversion Ratio plus (y) a number of Earnout Shares equal to the Earnout Pro Rata Share in accordance with, and subject to the contingencies set forth in the Merger Agreement. At the Effective Time, all shares of Company Capital Stock shall no longer be outstanding and shall automatically be canceled and shall cease to exist, and each holder of Company Capital Stock shall thereafter cease to have any rights with respect to such securities, except the right to receive a portion of the Aggregate Merger Consideration plus the contingent right to receive their applicable portion of Earnout Shares in accordance with their Earnout Pro Rata Share.
120
Table of Contents
“Aggregate Fully Diluted Company Common Stock” means the sum, without duplication, of (a) all shares of Company Common Stock that are issued and outstanding immediately prior to the Effective Time; plus (b) the aggregate number of shares of Company Common Stock issuable upon full conversion of all Company Preferred Stock outstanding as of immediately prior to the Effective Time; plus (c) the aggregate number of shares of Company Common Stock issuable upon exercise of all Company Options that are vested as of immediately prior to the Effective Time; plus (d) the aggregate number of shares of Company Common Stock issuable upon full conversion, exercise or exchange of any other securities of the Company (other than Company Options and the Company Convertible Notes) outstanding immediately prior to the Effective Time directly or indirectly convertible into or exchangeable or exercisable for shares of Company Common Stock.
“Company Capital Stock” means “Company Common Stock,” consisting of the Class A common stock of the Company, $0.00001 par value per share, the Class B common stock of the Company, $0.00001 par value per share, and “Company Preferred Stock,” consisting of the Company Series Seed Preferred Stock, the Company Series A Preferred Stock and the Company Series B Preferred Stock.
“Conversion Ratio” means the quotient obtained by dividing (a) the number of Parent Common Shares constituting the Aggregate Merger Consideration, by (b) the number of shares constituting the Aggregate Fully Diluted Company Common Stock (without regard to the shares described in clause (c) of the definition thereof).
Conversion of Merger Sub Capital Stock.
Each share of common stock, par value $0.0001 per share, of Merger Sub issued and outstanding immediately prior to the Effective Time shall be converted into and become one newly issued, fully paid and nonassessable share of common stock of the Surviving Corporation.
Treatment of Options and Convertible Notes.
At the Effective Time, each Company Option shall be converted into (i) an option to acquire, subject to substantially the same terms and conditions as were applicable under such Company Option (including expiration date, vesting conditions, and exercise provisions), the number of Parent Class A Common Shares (rounded down to the nearest whole share), determined by multiplying the number of shares of Company Class A Common Stock subject to such Company Option as of immediately prior to the Effective Time by the Conversion Ratio, at an exercise price per Parent Class A Common Share (rounded up to the nearest whole cent) equal to (A) the exercise price per share of Company Class A Common Stock of such Company Option divided by (B) the Conversion Ratio (a “Converted Stock Option”), and (ii) the right to receive a number of Earnout Shares in accordance with, and subject to the contingencies, set forth in the Merger Agreement.
At the Effective Time, each Company Convertible Note shall be converted into the right to receive a number of Parent Common Shares equal to (i) the Conversion Ratio multiplied by (ii) the number of shares of Company Common Stock issuable upon conversion of such Company Convertible Note as of immediately prior to the Effective Time. Notwithstanding the foregoing, the Company Convertible Notes issued in connection with the Bridge Financing are excluded from the Aggregate Fully Diluted Company Common Stock and, pursuant to their terms, are expected to convert at Closing into Parent Class A Common Shares at a conversion price of $6.00 per share (see “— Bridge Loan Financing” below).
The Earnout Shares
From the period commencing on the Closing Date and until such date which is the five-year anniversary of the Closing Date (the “Earnout Period”), as additional consideration in the Merger, the holders of Electra Common Stock, Electra Options and Electra Preferred Stock (the “Earnout Holders”) shall be entitled to earn, in accordance with their respective Earnout Pro Rata Share, additional Parent Common Shares (the “Earnout Shares”) in an amount not to exceed 15,000,000 Parent Common Shares in the aggregate (the “Earnout Cap”) subject to the following contingencies:
A. Subject to the Earnout Cap, one-third (1/3) of the Earnout Shares if, at any time during the Earnout Period, (1) over any ten (10) Trading Days within any twenty (20) consecutive Trading Day period the VWAP of the Parent Common Shares is greater than or equal to $14.00 per share or (2) as reported in Parent’s Form 10-Q or Form 10-K the Annual Run Rate (“ARR”), which is defined in the Merger Agreement as
121
Table of Contents
(i) the net revenues of Parent following the Closing calculated in accordance with U.S. GAAP for a fiscal quarter multiplied by (ii) 4.0, is greater than or equal to $45 million (the “First Earnout Milestone”), whichever occurs earlier;
B. Subject to the Earnout Cap, one-third (1/3) of the Earnout Shares if, at any time during the Earnout Period, (1) over any ten (10) Trading Days within any twenty (20) consecutive Trading Day period the VWAP of the Parent Common Shares is greater than or equal to $16.00 per share or (2) as reported in Parent’s Form 10-Q or Form 10-K the ARR is greater than or equal to $55 million (the “Second Earnout Milestone”), whichever occurs earlier; and
C. Subject to the Earnout Cap, one-third (1/3) of the Earnout Shares if, at any time during the Earnout Period, (1) over any ten (10) Trading Days within any twenty (20) consecutive Trading Day period the VWAP of the Parent Common Shares is greater than or equal to $18.00 per share or (2) as reported in Parent’s Form 10-Q or Form 10-K the ARR is greater than or equal to $65 million (the “Third Earnout Milestone”), whichever occurs earlier.
“Earnout Milestone” means, as applicable, the First Earnout Milestone, the Second Earnout Milestone and/or the Third Earnout Milestone. The applicable Earnout Shares will be delivered to the Earnout Holders promptly (within 10 Business Days) following the date in which any such Earnout Milestone is achieved. Each Earnout Milestone shall only occur once, if at all.
By way of example, based on Electra’s net revenues of $15,000 for the fiscal quarter ended June 30, 2026, ARR for that quarter would be calculated as $60,000, or approximately 0.13% of the $45 million ARR required to achieve the First Earnout Milestone. To achieve the First Earnout Milestone, the Second Earnout Milestone and the Third Earnout Milestone on the basis of ARR, Parent would be required to generate net revenues for a single fiscal quarter of at least $11.25 million, $13.75 million and $16.25 million, respectively.
Additionally, if a Change of Control occurs at any time during the Earnout Period, all Earnout Shares that have not yet been earned will be deemed earned and will be issued to the Company Earnout Holders immediately prior to the consummation of such Change of Control, and the Company Earnout Holders will be entitled to participate in the Change of Control transaction with respect to such Earnout Shares.
Parent and Electra Post-Closing Board of Directors and Executive Officers
Immediately following the Closing, Parent’s board of directors will consist of seven (7) directors, of which Electra has the right to designate five (5) directors and the remaining two directors shall be jointly designated by Electra and IRHO SPAC Sponsor LLC (the “Sponsor”). At least a majority of the board of directors shall qualify as independent directors under Nasdaq or Alternate Exchange rules, as applicable.
At the Closing, all of the officers of Parent shall resign and the following individuals are expected to be appointed as officers of Parent: Fabrizio Martini, as Chief Executive Officer and Nicholas Chakalos, President & Chief Operating Officer.
Immediately following the Closing, Electra’s board of directors will consist of the same individuals serving as directors of Parent.
PIPE Financing
During the period commencing on date of execution of the Merger Agreement and until the earlier of the Closing Date and the termination of the Merger Agreement, IRHO and Electra will use commercially reasonable best efforts to enter into and consummate subscription agreements with investors to purchase securities of IRHO in connection with a private placement on terms mutually agreeable to the parties (any such purchase by investors, a “PIPE Financing”). No PIPE Financing has been committed to as of the date of this registration statement, and accordingly, no adjustment has been reflected in the unaudited pro forma condensed combined financial information.
122
Table of Contents
Bridge Loan Financing
During the six months ended June 30, 2026, in connection with the contemplated Business Combination described below, the Company received advances of $500,010 from eight accredited investors as bridge financing in anticipation of the issuance of senior unsecured convertible notes (the “Bridge Loans”). As of June 30, 2026, advances from investors, including accrued interest of $14,240, totaled $514,250.
Pursuant to the non-binding executed term sheets, the Bridge Loans are expected to bear interest at rates ranging from 15% to 25% per annum and to mature upon the earlier of (i) 24 months from the closing date of each Bridge Loan or (ii) the closing of the Business Combination.
In July 2026, the Company received an additional advance of $25,000 from an investor. From July through November 2026, the Company issued convertible promissory notes with an aggregate principal amount of $793,254 to six related parties. The notes bear payable-in-kind interest at 15% per annum, mature in August 2028 or, if earlier, upon the closing of the Business Combination, and convert into shares of the combined company at $6.00 per share in connection with the Business Combination. In July 2026, the Company also issued a $100,000 convertible promissory note to an investor for cash, which has the same terms as the related party convertible notes, except that it bears interest at 20% per annum.
Upon the closing of the Business Combination, the principal and accrued interest on the Bridge Loans and subsequently issued convertible notes are expected to convert into shares of common stock of the publicly listed entity at a conversion price of $6.00 per share. Investors will also receive warrants to purchase shares of common stock of the publicly listed entity at exercise price of $11.50 per share, and certain investors will receive warrants exercisable at $12.50 per share, in each case exercisable for 60 months following the closing of the Business Combination.
If the Business Combination is not consummated within 24 months from the closing of any Bridge Loans, the principal and accrued interest will convert into ordinary shares of the Company based on a $150 million or $75 million pre-money valuation.
The pro forma adjustments reflect the conversion at Closing of the $514,250 of advances outstanding as of June 30, 2026, the $25,000 advance received in July 2026, the $793,254 of related party convertible notes, and the $100,000 convertible note, totaling $1,432,504, into 238,741 shares of Electra Pubco Class A Common Stock at $6.00 per share, together with 5,000 commitment shares issuable to two investors, for a total of 243,741 shares (see Note 5, adjustment A and F). The warrants issuable in connection with the Bridge Loans and convertible notes are assumed to be classified in equity upon the closing of the Business Combination and, accordingly, have no net effect on total shareholders’ equity. The Company is still evaluating the accounting for the Bridge Loans and associated warrants pending execution of the remaining definitive agreements governing their terms, and final amounts may differ from those reflected herein.
Senior Secured Convertible Notes
On September 29, 2026, the Company issued senior secured convertible notes with an aggregate principal amount of $4,375,000 and warrants to purchase 700,000 shares of common stock for aggregate cash proceeds of $3,500,000 ($3,350,000 net of lender’s legal fees). The notes bear no interest (15% upon an event of default), mature in March 2028, are secured by substantially all assets of the Company, including its intellectual property, and are guaranteed by its Italian subsidiary. The notes are repayable in cash at 115% upon the closing of the Business Combination; if the Business Combination does not close before maturity, the holders may convert the notes into common stock based on a $150 million or $75 million pre-money valuation. The warrants are exercisable at $12.50 per share, subject to down-round and price-reset adjustments that may increase the number of shares, only upon a U.S. stock exchange listing, and expire in September 2031. Upon the closing of the Business Combination, the combined company will also issue 500,000 shares of common stock to two of the investors.
123
Table of Contents
The unaudited pro forma condensed combined balance sheet reflects the receipt of net cash proceeds of $3,350,000 from the issuance of the Senior Secured Convertible Notes and their repayment in cash at Closing at 115% of principal, or $5,031,250. The difference of $1,681,250 between the repayment amount and the proceeds received is reflected as a loss on issuance of debt charged to accumulated deficit and, as a nonrecurring item, in the unaudited pro forma condensed combined statement of operations for the year ended November 30, 2025. The warrants issued with the Senior Secured Convertible Notes are assumed to be classified in equity upon the closing of the Business Combination; no amount has been allocated to the warrants pending completion of their valuation, and final amounts may differ from those reflected herein.
Basis of Pro Forma Presentation
The unaudited pro forma condensed combined financial information is presented under two redemption scenarios with respect to the redemption of Public Shares for cash:
• Assuming No Redemptions: This presentation assumes that no Public Shareholders exercise redemption rights with respect to their Public Shares upon consummation of the Business Combination.
• Assuming Maximum Redemptions: This presentation assumes that Public Shareholders holding 19,317,220 Public Shares, or approximately 84.0% of the outstanding Public Shares, exercise their redemption rights for aggregate redemption payments of approximately $197,914,002 upon consummation of the Business Combination, based on a redemption price of approximately $10.25 per share as of August 31, 2026. The maximum redemptions amount reflects the maximum number of Public Shares that can be redeemed while still satisfying the condition that Parent Closing Cash equal or exceed $30,000,000 (the “Minimum Cash Condition”). This scenario includes all adjustments reflected in the “Assuming No Redemptions” scenario and presents additional adjustments to reflect the impact of the maximum redemptions scenario.
The unaudited pro forma adjustments are based on information currently available and on assumptions and estimates described in the accompanying notes. Actual results may differ materially from those reflected herein.
124
Table of Contents
UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET
AS OF AUGUST 31, 2026
| Scenario 1: | Scenario 2: | |||||||||||||||||||||||
| (1) | (2) | Transaction | Pro Forma | Transaction | Pro Forma | |||||||||||||||||||
| Assets |
|
|
|
|
|
|
|
| ||||||||||||||||
| Current assets: |
|
|
|
|
|
|
|
| ||||||||||||||||
| Cash and cash equivalents | $ | 1,522 | $ | 29,782 | $ | 209,007,260 |
| A | $ | 209,038,564 | $ | (189,007,872 | ) | M | $ | 20,030,692 | ||||||||
| Accounts receivable, net |
| — |
| 15,000 |
| — |
|
| 15,000 |
| — |
|
| 15,000 | ||||||||||
| Deferred offering costs |
| — |
| 1,367,000 |
| (1,367,000 | ) | B |
| — |
| — |
|
| — | |||||||||
| Notes receivable |
| 255,000 |
| — |
| (255,000 | ) | C |
| — |
| — |
|
| — | |||||||||
| Prepaid expenses |
| 129,668 |
| 28,188 |
| — |
|
| 157,856 |
| — |
|
| 157,856 | ||||||||||
| Other current assets |
| — |
| 121,688 |
| — |
|
| 121,688 |
| — |
|
| 121,688 | ||||||||||
| Total current assets |
| 386,190 |
| 1,561,658 |
| 207,385,260 |
|
| 209,333,108 |
| (189,007,872 | ) |
| 20,325,236 | ||||||||||
| Property and equipment, net |
| — |
| 120,721 |
| — |
|
| 120,721 |
| — |
|
| 120,721 | ||||||||||
| Intangible assets, net |
| — |
| 113,203 |
| — |
|
| 113,203 |
| — |
|
| 113,203 | ||||||||||
| Long-term prepaid insurance |
| 24,613 |
| — |
| — |
|
| 24,613 |
| — |
|
| 24,613 | ||||||||||
| Cash and investments held in Trust Account |
| 235,645,815 |
| — |
| (235,645,815 | ) | D |
| — |
| — |
|
| — | |||||||||
| Total assets | $ | 236,056,618 | $ | 1,795,582 | $ | (28,260,555 | ) | $ | 209,591,645 | $ | (189,007,872 | ) | $ | 20,583,773 | ||||||||||
|
|
|
|
|
|
|
|
| |||||||||||||||||
| Liabilities and Shareholders’ Deficit |
|
|
|
|
|
|
|
| ||||||||||||||||
| Current liabilities |
|
|
|
|
|
|
|
| ||||||||||||||||
| Accounts payable | $ | — | $ | 2,605,026 | $ | — |
| $ | 2,605,026 | $ | — |
| $ | 2,605,026 | ||||||||||
| Accrued expenses |
| 18,603 |
| 2,909,242 |
| (1,367,000 | ) | E |
| 1,560,845 |
| — |
|
| 1,560,845 | |||||||||
| Accrued expenses – related party |
| 101,804 |
| — |
| — |
|
| 101,804 |
| — |
|
| 101,804 | ||||||||||
| Deferred revenue |
| — |
| 135,000 |
| — |
|
| 135,000 |
| — |
|
| 135,000 | ||||||||||
| Advances from investors |
| — |
| 514,250 |
| (514,250 | ) | F |
| — |
| — |
|
| — | |||||||||
| Current portion of long-term debt |
| — |
| 109,071 |
| — |
|
| 109,071 |
| — |
|
| 109,071 | ||||||||||
| Short-term borrowings |
| — |
| 360,624 |
| (360,624 | ) | G |
| — |
| — |
|
| — | |||||||||
| Accrued offering costs |
| 75,000 |
| — |
| — |
|
| 75,000 |
| — |
|
| 75,000 | ||||||||||
| Due to Sponsor |
| 25,545 |
| — |
| — |
|
| 25,545 |
| — |
|
| 25,545 | ||||||||||
| Total current liabilities |
| 220,952 |
| 6,633,213 |
| (2,241,874 | ) |
| 4,612,291 |
| — |
|
| 4,612,291 | ||||||||||
| Deferred legal fees |
| 413,467 |
| — |
| (413,467 | ) | H |
| — |
| — |
|
| — | |||||||||
| Deferred underwriting fees |
| 10,950,000 |
| — |
| (10,950,000 | ) | I |
| — |
| — |
|
| — | |||||||||
| Long-term debt |
| — |
| 81,338 |
| — |
|
| 81,338 |
| — |
|
| 81,338 | ||||||||||
| Earnout liability |
| — |
| — |
| 144,979,841 |
| J |
| 144,979,841 |
| — |
|
| 144,979,841 | |||||||||
| Total liabilities |
| 11,584,419 |
| 6,714,551 |
| 131,374,500 |
|
| 149,673,470 |
| — |
|
| 149,673,470 | ||||||||||
|
|
|
|
|
|
|
|
| |||||||||||||||||
| Commitments and contingencies |
|
|
|
|
|
|
|
| ||||||||||||||||
| IRHO Ordinary shares subject to possible redemption |
| 235,645,815 |
| — |
| (235,645,815 | ) | K |
| — |
| — |
|
| — | |||||||||
|
|
|
|
|
|
|
|
| |||||||||||||||||
| Shareholders’ deficit |
|
|
|
|
|
|
|
| ||||||||||||||||
| Electra Pubco Preferred |
| — |
| — |
| — |
|
| — |
| — |
|
| — | ||||||||||
| Electra Pubco Class A common stock |
| — |
| — |
| 648 |
| L |
| 648 |
| (364 | ) | N |
| 284 | ||||||||
| Electra Pubco Class B common Stock |
| — |
| — |
| 154 |
| L |
| 154 |
| (62 | ) | N |
| 92 | ||||||||
| IRHO Preference shares |
| — |
| — |
| — |
|
| — |
| — |
|
| — | ||||||||||
| IRHO Ordinary shares |
| 632 |
| — |
| (632 | ) | L |
| — |
| — |
|
| — | |||||||||
125
Table of Contents
UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET — (Continued)
AS OF AUGUST 31, 2026
| Scenario 1: | Scenario 2: | |||||||||||||||||||||||||||
| (1) | (2) | Transaction | Pro Forma | Transaction | Pro Forma | |||||||||||||||||||||||
| Electra Series Seed convertible preferred |
| — |
|
| 37 |
|
| (37 | ) | L |
| — |
|
| — |
|
| — |
| |||||||||
| Electra Series A convertible preferred stock |
| — |
|
| 23 |
|
| (23 | ) | L |
| — |
|
| — |
|
| — |
| |||||||||
| Electra Series B convertible preferred stock |
| — |
|
| 1 |
|
| (1 | ) | L |
| — |
|
| — |
|
| — |
| |||||||||
| Electra Class A common stock |
| — |
|
| 20 |
|
| (20 | ) | L |
| — |
|
| — |
|
| — |
| |||||||||
| Electra Class B common stock |
| — |
|
| 40 |
|
| (40 | ) | L |
| — |
|
| — |
|
| — |
| |||||||||
| Electra Treasury stock |
| — |
|
| (13 | ) |
| 13 |
| L |
| — |
|
| — |
|
| — |
| |||||||||
| Additional paid-in capital |
| — |
|
| 19,901,488 |
|
| 66,517,700 |
| L |
| 86,419,188 |
|
| (189,007,446 | ) | N |
| (102,588,258 | ) | ||||||||
| Accumulated other comprehensive income (loss) |
| — |
|
| (33,356 | ) |
| — |
|
| (33,356 | ) |
| — |
|
| (33,356 | ) | ||||||||||
| Accumulated deficit |
| (11,174,248 | ) |
| (24,787,209 | ) |
| 9,492,998 |
| L |
| (26,468,459 | ) |
| — |
|
| (26,468,459 | ) | |||||||||
| Total Shareholders’ |
| (11,173,616 | ) |
| (4,918,969 | ) |
| 76,010,760 |
|
| 59,918,175 |
|
| (189,007,872 | ) |
| (129,089,697 | ) | ||||||||||
| Total Liabilities, Class A Ordinary Shares Subject to Possible Redemption and Shareholders’ Deficit | $ | 236,056,618 |
| $ | 1,795,582 |
| $ | (28,260,555 | ) | $ | 209,591,645 |
| $ | (189,007,872 | ) | $ | 20,583,773 |
| ||||||||||
____________
(1) Derived from the historical unaudited consolidated balance sheet of IRHO as of August 31, 2026.
(2) Derived from the historical unaudited condensed consolidated balance sheet of Electra as of June 30, 2026.
See accompanying notes to the unaudited pro forma condensed combined financial information.
126
Table of Contents
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED NOVEMBER 30, 2025
| Scenario 1: | Scenario 2: | ||||||||||||||||||||||||||||
| (1) | (2) | Transaction | Pro Forma | Transaction | Pro Forma | ||||||||||||||||||||||||
| Revenues | $ | — |
| $ | 1,088,497 |
| $ | — |
| $ | 1,088,497 |
| $ | — | $ | 1,088,497 |
| ||||||||||||
| Operating expenses |
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||
| Cost of revenue |
| — |
|
| 1,405,035 |
|
| — |
|
| 1,405,035 |
|
| — |
| 1,405,035 |
| ||||||||||||
| Sales and marketing |
| — |
|
| 676,297 |
|
| — |
|
| 676,297 |
|
| — |
| 676,297 |
| ||||||||||||
| Research and development |
| — |
|
| 2,522,658 |
|
| — |
|
| 2,522,658 |
|
| — |
| 2,522,658 |
| ||||||||||||
| General and administrative |
| 204,391 |
|
| 2,159,183 |
|
| 1,286,607 |
| A |
| 3,650,181 |
|
| — |
| 3,650,181 |
| |||||||||||
| Total operating expenses |
| 204,391 |
|
| 6,763,173 |
|
| 1,286,607 |
|
| 8,254,171 |
|
| — |
| 8,254,171 |
| ||||||||||||
| Loss from operations |
| (204,391 | ) |
| (5,674,676 | ) |
| (1,286,607 | ) |
| (7,165,674 | ) |
| — |
| (7,165,674 | ) | ||||||||||||
| Other income (expense) |
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||
| Net gain on digital assets |
| — |
|
| 358,390 |
|
| — |
|
| 358,390 |
|
| — |
| 358,390 |
| ||||||||||||
| Interest income |
| — |
|
| 6,085 |
|
| — |
|
| 6,085 |
|
| — |
| 6,085 |
| ||||||||||||
| Interest expense |
| — |
|
| (11,926 | ) |
| — |
|
| (11,926 | ) |
| — |
| (11,926 | ) | ||||||||||||
| Loss on issuance of Senior Secured Convertible Notes |
| — |
|
| — |
|
| (1,681,250 | ) | B |
| (1,681,250 | ) |
| — |
| (1,681,250 | ) | |||||||||||
| Other income |
| — |
|
| 32,661 |
|
| — |
|
| 32,661 |
|
| — |
| 32,661 |
| ||||||||||||
| Total other income (expense), net |
| — |
|
| 385,210 |
|
| (1,681,250 | ) |
| (1,296,040 | ) |
| — |
| (1,296,040 | ) | ||||||||||||
| Net loss before income taxes |
| (204,391 | ) |
| (5,289,466 | ) |
| (2,967,857 | ) |
| (8,461,714 | ) |
| — |
| (8,461,714 | ) | ||||||||||||
| Income tax benefit (provision) |
| — |
|
| (456 | ) |
| — |
|
| (456 | ) |
| — |
| (456 | ) | ||||||||||||
| Net income (loss) | $ | (204,391 | ) | $ | (5,289,922 | ) | $ | (2,967,857 | ) | $ | (8,462,170 | ) | $ | — | $ | (8,462,170 | ) | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||
| Class A common stock: |
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||
| Weighted-average shares outstanding, basic and diluted |
| 5,000,000 |
|
| 693,860 |
|
|
|
| 64,899,922 |
| C |
|
| 28,509,976 |
| C | ||||||||||||
| Basic and diluted net income (loss) per share | $ | (0.04 | ) | $ | (1.13 | ) |
|
| $ | (0.11 | ) | C |
| $ | (0.22 | ) | C | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||
| Class B common stock: |
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||
| Weighted-average shares outstanding, basic and diluted |
| — |
|
| 3,989,264 |
|
|
|
| 15,397,983 |
| C |
|
| 9,185,476 |
| C | ||||||||||||
| Basic and diluted net income (loss) per share | $ | — |
| $ | (1.13 | ) |
|
| $ | (0.11 | ) | C |
| $ | (0.22 | ) | C | ||||||||||||
____________
(1) Derived from the historical audited statement of operations of IRHO for the year ended November 30, 2025.
(2) Derived from the historical audited consolidated statement of operations of Electra for the year ended December 31, 2025.
See accompanying notes to the unaudited pro forma condensed combined financial information.
127
Table of Contents
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
FOR THE NINE MONTHS ENDED AUGUST 31, 2026
| Scenario 1: | Scenario 2: | ||||||||||||||||||||||||||||
| (1) | (2) | Transaction | Pro Forma | Transaction | Pro Forma | ||||||||||||||||||||||||
| Revenues | $ | — |
| $ | 405,744 |
| $ | — |
| $ | 405,744 |
| $ | — | $ | 405,744 |
| ||||||||||||
| Operating expenses |
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||
| Cost of revenue |
| — |
|
| 456,498 |
|
| — |
|
| 456,498 |
|
| — |
| 456,498 |
| ||||||||||||
| Sales and marketing |
| — |
|
| 523,564 |
|
| — |
|
| 523,564 |
|
| — |
| 523,564 |
| ||||||||||||
| Research and development |
| — |
|
| 1,746,684 |
|
| — |
|
| 1,746,684 |
|
| — |
| 1,746,684 |
| ||||||||||||
| General and administrative |
| 1,284,850 |
|
| 2,998,348 |
|
| — |
|
| 4,283,198 |
|
| — |
| 4,283,198 |
| ||||||||||||
| Total operating expenses |
| 1,284,850 |
|
| 5,725,094 |
|
| — |
|
| 7,009,944 |
|
| — |
| 7,009,944 |
| ||||||||||||
| Loss from operations |
| (1,284,850 | ) |
| (5,319,350 | ) |
| — |
|
| (6,604,200 | ) |
| — |
| (6,604,200 | ) | ||||||||||||
| Other income (expense) |
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||
| Interest earned on cash and investments held in Trust Account |
| 5,820,815 |
|
| — |
|
| (5,820,815 | ) | A |
| — |
|
| — |
| — |
| |||||||||||
| Net gain on digital assets |
| — |
|
| 256,024 |
|
| — |
|
| 256,024 |
|
| — |
| 256,024 |
| ||||||||||||
| Interest income |
| — |
|
| 89 |
|
| — |
|
| 89 |
|
| — |
| 89 |
| ||||||||||||
| Interest expense |
| — |
|
| (60,057 | ) |
| — |
|
| (60,057 | ) |
| — |
| (60,057 | ) | ||||||||||||
| Other income |
| — |
|
| 6,628 |
|
| — |
|
| 6,628 |
|
| — |
| 6,628 |
| ||||||||||||
| Total other income (expense), net |
| 5,820,815 |
|
| 202,684 |
|
| (5,820,815 | ) |
| 202,684 |
|
| — |
| 202,684 |
| ||||||||||||
| Net loss before income taxes |
| 4,535,965 |
|
| (5,116,666 | ) |
| (5,820,815 | ) |
| (6,401,516 | ) |
| — |
| (6,401,516 | ) | ||||||||||||
| Income tax benefit (provision) |
| — |
|
| (456 | ) |
| — |
|
| (456 | ) |
| — |
| (456 | ) | ||||||||||||
| Net income (loss) | $ | 4,535,965 |
| $ | (5,117,122 | ) | $ | (5,820,815 | ) | $ | (6,401,972 | ) | $ | — | $ | (6,401,972 | ) | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||
| Class A common stock: |
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||
| Weighted-average shares outstanding, basic and diluted |
| 21,489,051 |
|
| 720,022 |
|
|
|
| 64,899,922 |
| B |
|
| 28,509,976 |
| B | ||||||||||||
| Basic and diluted net income (loss) per share | $ | 0.16 |
| $ | (1.09 | ) |
|
| $ | (0.08 | ) | B |
| $ | (0.17 | ) | B | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||
| Class B common stock: |
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||
| Weighted-average shares outstanding, basic |
| 6,233,285 |
|
| 3,991,192 |
|
|
|
| 15,397,983 |
| B |
|
| 9,185,476 |
| B | ||||||||||||
| Basic net income (loss) per share | $ | 0.16 |
| $ | (1.09 | ) |
|
| $ | (0.08 | ) | B |
| $ | (0.17 | ) | B | ||||||||||||
| Weighted-average shares outstanding, diluted |
| 6,282,555 |
|
| 3,991,192 |
|
|
|
| 15,397,983 |
| B |
|
| 9,185,476 |
| B | ||||||||||||
| Diluted net income (loss) | $ | 0.16 |
| $ | (1.09 | ) |
|
| $ | (0.08 | ) | B |
| $ | (0.17 | ) | B | ||||||||||||
____________
(1) Derived from the historical unaudited consolidated statement of operations of IRHO for the nine months ended August 31, 2026.
(2) Derived from the historical unaudited condensed consolidated statement of operations of Electra for the nine months ended June 30, 2026. Electra’s historical results for the nine months ended June 30, 2026 have been derived as described under “Pro Forma Financial Information Included.”
See accompanying notes to the unaudited pro forma condensed combined financial information.
128
Table of Contents
NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION
Note 1 — Description of the Proposed Transactions and the Merger Agreement
On April 21, 2026, IRHO and Electra entered into the Merger Agreement. Pursuant to the Merger Agreement, and subject to the terms and conditions set forth therein, at the Closing of the Business Combination, Electra will merge with a wholly-owned subsidiary of IRHO and become a wholly-owned subsidiary of IRHO, with the Electra Shareholders receiving Electra Pubco Common Stock.
Note 2 — Basis of Presentation and Accounting Policies
The unaudited pro forma condensed combined financial information has been prepared in accordance with Article 11 of Regulation S-X, as amended by the final rule, Release No. 33-10786, Amendments to Financial Disclosures about Acquired and Disposed Businesses. Release No. 33-10786 replaces the prior pro forma adjustment criteria with simplified requirements to depict the accounting for the transaction (“Transaction Accounting Adjustments”) and to present reasonably estimable synergies and other transaction effects (“Management’s Adjustments”). IRHO and Electra have elected not to present Management’s Adjustments and have included only Transaction Accounting Adjustments in the unaudited pro forma condensed combined financial information.
During the preparation of the unaudited pro forma condensed combined financial information, the Company performed a preliminary analysis of IRHO’s accounting policies and is not aware of any material differences between IRHO’s accounting policies and those of the Company, and accordingly, this unaudited pro forma condensed combined financial information assumes no material differences in accounting policies.
No adjustments have been made to reflect the income tax effects of the pro forma adjustments. Electra has historically recorded a full valuation allowance against its net deferred tax assets, and IRHO was a Cayman Islands exempted company that was not subject to income tax prior to the Domestication; accordingly, the pro forma adjustments are not expected to result in a material income tax effect. Nonrecurring items reflected in the unaudited pro forma condensed combined statement of operations for the year ended November 30, 2025 consist of the $1,681,250 loss on issuance of the Senior Secured Convertible Notes at Closing and the $1,286,607 of additional transaction costs expected to be incurred by IRHO through Closing; these items are not expected to recur in the combined company’s results beyond 12 months after the Closing. Transaction costs incurred by Electra that are directly attributable to the Business Combination are reflected as a reduction of additional paid-in capital and are not reflected in the unaudited pro forma condensed combined statements of operations.
The unaudited pro forma condensed combined balance sheet as of August 31, 2026 gives effect to the Business Combination and related transactions as if they had occurred on August 31, 2026. The unaudited pro forma condensed combined statements of operations for the year ended November 30, 2025 and nine months ended August 31, 2026 give effect to the Business Combination and related transactions as if they had occurred on December 1, 2024, the beginning of the earliest period presented.
The unaudited pro forma condensed combined financial information has been derived from, and should be read in conjunction with, the historical financial statements and related notes of IRHO and Electra included elsewhere in this registration statement. The historical financial statements of IRHO and Electra have been prepared in accordance with U.S. GAAP.
The unaudited pro forma condensed combined financial information is presented for illustrative purposes only and does not necessarily reflect what the combined company’s financial position or results of operations would have been had the Business Combination occurred on the dates assumed, nor does it project the future financial position or results of operations of Electra Pubco.
The unaudited pro forma condensed combined financial information is presented under two redemption scenarios with respect to the redemption of Public Shares for cash:
• Assuming No Redemptions: This presentation assumes that no Public Shareholders exercise redemption rights with respect to their Public Shares upon consummation of the Business Combination.
129
Table of Contents
• Assuming Maximum Redemptions: This presentation assumes that Public Shareholders holding 19,317,220 Public Shares, or approximately 84.0% of the outstanding Public Shares, exercise their redemption rights for aggregate redemption payments of approximately $197,914,002 upon consummation of the Business Combination, based on a redemption price of approximately $10.25 per share as of August 31, 2026. The maximum redemptions amount reflects the maximum number of Public Shares that can be redeemed while still satisfying the condition that Parent Closing Cash equal or exceed $30,000,000 (the “Minimum Cash Condition”). This scenario includes all adjustments reflected in the “Assuming No Redemptions” scenario and presents additional adjustments to reflect the impact of the maximum redemptions scenario.
Note 3 — Accounting for the Business Combination
The Business Combination is expected to be accounted for as a reverse recapitalization. Under this method of accounting, although IRHO will issue shares as consideration for the outstanding equity interests of Electra in the Business Combination, IRHO will be treated as the “acquired” company for financial reporting purposes, and Electra, as the surviving corporation of the Merger, will be treated as the accounting acquirer. Accordingly, the Business Combination will be treated as the equivalent of Electra issuing shares for the net assets of IRHO, accompanied by a recapitalization. The net assets of IRHO will be stated at historical cost, with no goodwill or other intangible assets recorded.
Electra has been determined to be the accounting acquirer based on the evaluation of the following facts and circumstances under both the no redemptions and the maximum redemptions scenarios:
• The former owners of Electra hold the majority of the voting interests in Electra Pubco;
• Electra has the right to appoint a majority of the directors in Electra Pubco;
• Electra’s existing senior management team will comprise senior management of Electra Pubco;
• The operations of Electra Pubco will represent the operations of Electra;
• Electra Pubco will assume Electra’s headquarters.
Note 4 — Pro Forma Share Ownership
The following table summarizes the pro forma outstanding shares and ownership of Electra Pubco upon consummation of the Business Combination and related transactions under each redemption scenario. The pro forma share ownership information is presented for illustrative purposes only and does not necessarily reflect the actual share ownership following the Closing.
| Assuming | Assuming | |||||||||
| Shares | Percentage | Shares | Percentage | |||||||
| Public Shareholders | 25,300,000 | 31.5 | % | 5,982,780 | 15.9 | % | ||||
| Sponsor | 6,157,000 | 7.7 | % | 5,357,000 | 14.2 | % | ||||
| Cantor | 220,000 | 0.3 | % | 220,000 | 0.6 | % | ||||
| Electra Shareholders | 41,995,572 | 52.3 | % | 25,051,931 | 66.5 | % | ||||
| Others | 6,625,333 | 8.2 | % | 1,083,741 | 2.8 | % | ||||
| Total | 80,297,905 | 100.0 | % | 37,695,452 | 100.0 | % | ||||
____________
(1) The Maximum Redemptions scenario assumes redemptions of 19,317,220 Public Shares (representing approximately 84.0% of the outstanding Public Shares) for aggregate redemption payments of approximately $197,914,002, based on an estimated per-share redemption price of approximately $10.25. This reflects the maximum number of Public Shares that can be redeemed while still satisfying the Minimum Cash Condition.
130
Table of Contents
Note 5 — Adjustments to Unaudited Pro Forma Condensed Combined Balance Sheet as of August 31, 2026
The pro forma adjustments, based on preliminary estimates that could change materially as additional information is obtained, are as follows:
A. Reflects the net cash proceeds from the Business Combination and related transactions as follows:
| Release of Trust Account | 235,645,815 |
| (i) | ||
| Proceeds from Senior Secured Convertible Notes | 3,350,000 |
| (ii) | ||
| Repayment of Senior Secured Convertible Notes | (5,031,250 | ) | (ii) | ||
| Proceeds from additional Bridge Loan and convertible notes | 918,254 |
| (iii) | ||
| Payment of IRHO deferred underwriting fees | (10,950,000 | ) | (iv) | ||
| Payment of IRHO transaction expenses | (1,700,074 | ) | (v) | ||
| Payment of Electra transaction expenses | (13,119,861 | ) | (vi) | ||
| Repayment of Short-term borrowings | (105,624 | ) | (vii) | ||
| Cash and cash equivalents | 209,007,260 |
|
(i) the release of $235,645,815 of cash and investments held in the Trust Account (see adjustment D);
(ii) the receipt of $3,350,000 of net proceeds from the issuance of the Senior Secured Convertible Notes and their repayment at Closing at 115% of principal for $5,031,250 (see adjustment L);
(iii) the receipt of $918,254 of cash proceeds after June 30, 2026, consisting of an additional $25,000 advance from a Bridge Loan investor in July 2026, $793,254 from the issuance of convertible notes to related parties from July through November 2026, and $100,000 from the issuance of a convertible note to an investor in July 2026 (see adjustment L);
(iv) the payment of IRHO’s deferred underwriting fees of $10,950,000 (see adjustment I);
(v) the payment of IRHO’s transaction expenses of $1,700,074, consisting of accrued deferred legal fees of $413,467 (see adjustment H) and estimated additional costs to be incurred through Closing of $1,286,607 (see adjustment L);
(vi) the payment of Electra’s transaction expenses of $13,119,861, consisting of accrued costs of $1,367,000 (see adjustment E) and estimated additional costs to be incurred through Closing of $11,752,861 (see adjustment L); and
(vii) the repayment of short-term borrowings and accrued interest of $105,624 (see adjustment G).
B. Reflects the reclassification to additional paid-in capital of $1,367,000 of deferred offering costs incurred by Electra that are directly attributable to the Business Combination, which will be charged against the proceeds of the Business Combination upon Closing (see adjustment L).
C. Reflects the elimination of IRHO’s notes receivable of $255,000 from Electra against the corresponding promissory notes payable by Electra to IRHO included in Electra’s short-term borrowings, which become intercompany balances upon Closing (see adjustment G).
D. Reflects the release of $235,645,815 of cash and investments held in the Trust Account, including interest earned through August 31, 2026, which becomes available to the combined company upon Closing, assuming no Public Shareholders exercise their redemption rights (see adjustment A).
E. Reflects the payment at Closing of $1,367,000 of transaction costs accrued by Electra as of June 30, 2026 (see adjustment A).
F. Reflects the conversion at Closing of the advances from investors received on the Bridge Loans of $514,250 as of June 30, 2026 (principal of $500,010 and accrued interest of $14,240) (see adjustment L).
G. Reflects the settlement of Electra’s short-term borrowings of $360,624, consisting of (i) the elimination of the $255,000 of promissory notes payable to IRHO against IRHO’s notes receivable (see adjustment C) and (ii) the repayment in cash of the remaining borrowings of $105,624 at the Closing (see adjustment A).
131
Table of Contents
H. Reflects the payment at Closing of $413,467 of deferred legal fee transaction costs accrued by IRHO as of August 31, 2026 (see adjustment A).
I. Reflects the payment at Closing of IRHO’s deferred underwriting fees of $10,950,000 incurred in connection with its initial public offering (see adjustment A).
J. Reflects the estimated fair value of the Earnout Shares which vest upon the achievement of certain triggering events. The estimated fair value of these shares was determined using a Monte Carlo simulation valuation model, and these shares are classified as a liability because they are not indexed to the company’s own stock under ASC 815-40, as the ARR-based vesting triggers and acceleration upon a Change of Control (each as described above) cause settlement to vary based on factors other than inputs to a fixed-for-fixed equity option. The significant assumptions utilized in estimating the fair value of these shares include the following: (1) IRHO’s common stock price of $10.05, assuming the Closing of the Business Combination occurred on August 31, 2026; (2) the volatility of IRHO’s common stock of 89.0% over the length of the earnout period; and (3) a drift rate equal to the risk-free rate of 4.1% over the length of the earnout period. After the Closing, the earnout liability will be remeasured to its fair value at the end of each reporting period, and subsequent changes in the fair value will be recognized in earnings.
K. Assuming no Public Shares are redeemed, the IRHO Ordinary Shares subject to possible redemption will be reclassified to permanent equity at Closing (see adjustment L).
L. To reflect the recapitalization of the combined company through the following equity transactions:
| Reclassification of IRHO Ordinary shares subject to possible redemption | 235,645,815 |
| (i) | ||
| Payment of additional Electra transaction expenses | (11,752,861 | ) | (ii) | ||
| Payment of additional IRHO transaction expenses | (1,286,607 | ) | (iii) | ||
| Conversion of Bridge Loans | 1,432,504 |
| (iv) | ||
| Reclass Deferred Offering Costs to APIC | (1,367,000 | ) | (v) | ||
| Loss on issuance of Senior Secured Convertible Notes | (1,681,250 | ) | (vi) | ||
| Earnout liability | (144,979,841 | ) | (vii) | ||
| Total Shareholders’ Deficit | 76,010,760 |
|
(i) the reclassification of the IRHO Ordinary Shares subject to possible redemption to permanent equity assuming no Public Shares are redeemed (see adjustment K);
(ii) the charge to additional paid-in capital for the payment of $11,752,861 of additional transaction expenses expected to be incurred by Electra through Closing (see adjustment A). As Electra is the accounting acquirer, these costs are direct and incremental costs of issuing equity in the reverse recapitalization and are charged against the proceeds of the Business Combination rather than expensed;
(iii) the charge to additional paid-in capital for the payment of $1,286,607 of additional transaction expenses expected to be incurred by IRHO through Closing (see adjustment A). These costs are expensed by IRHO prior to Closing rather than treated as offering costs and, because IRHO’s historical equity is eliminated in the reverse recapitalization, reduce the net assets of IRHO acquired;
(iv) the conversion of the Bridge Loans and convertible notes into 243,741 shares of Electra Pubco Class A Common Stock for an aggregate of $1,432,504 (see adjustments A and F);
(v) the reclassification of $1,367,000 of deferred offering costs incurred by Electra that are directly attributable to the Business Combination (see adjustment B);
(vi) the loss of $1,681,250 on issuance of the Senior Secured Convertible Notes at Closing, charged to accumulated deficit (see adjustment A); and
(vii) the recognition of the earnout liability of $144,979,841 (see adjustment J).
M. Assuming Public Shareholders holding 19,317,220 Public Shares (representing approximately 84.0% of the outstanding Public Shares) exercise their right to have such Public Shares redeemed for their pro rata share of the Trust Account, the net cash proceeds from the Business Combination would be reduced by
132
Table of Contents
approximately $197,914,002. This reflects the maximum number of Public Shares that can be redeemed while still satisfying the Minimum Cash Condition. Additionally, Electra’s transaction expenses would be reduced by $8,906,130 as a result of the reduction in proceeds.
N. Reflects the effect on shareholders’ equity of the maximum redemptions scenario, consisting of: (i) the redemption of 19,317,220 Public Shares for $197,914,002; and (ii) the $8,906,130 reduction in Electra’s transaction expenses (see adjustment M).
Note 6 — Adjustments to Unaudited Pro Forma Condensed Combined Statement of Operations for the Year Ended November 30, 2025
The pro forma adjustments, based on preliminary estimates that could change materially as additional information is obtained, are as follows:
A. Reflects the expected additional transaction costs of $1,286,607 to be incurred by IRHO in connection with the Business Combination (see Note 5, adjustment L). This is a nonrecurring item that is not expected to recur in the combined company’s results beyond 12 months after the Closing.
B. Reflects the loss of $1,681,250 on the repayment at Closing of the Senior Secured Convertible Notes at 115% of their principal amount ($5,031,250) compared with the net proceeds received of $3,350,000. This is a nonrecurring item that is not expected to recur in the combined company’s results beyond 12 months after the Closing.
C. The pro forma basic and diluted earnings per share amounts presented in the unaudited pro forma condensed combined statement of operations are based upon the number of shares outstanding at the Closing assuming the Closing occurred on December 1, 2024. For the year ended November 30, 2025, anti-dilutive instruments were not included in the calculation of diluted weighted average number of common shares outstanding as the unaudited pro forma condensed combined statement of operations is in a loss position. The pro forma basic and diluted earnings per share for the year ended November 30, 2025, is calculated as follows:
| Year ended | ||||||||
| Assuming | Assuming | |||||||
| Net income (loss) | $ | (8,462,170 | ) | $ | (8,462,170 | ) | ||
| Class A Common Stock |
|
|
|
| ||||
| Net income (loss) attributable to Class A Common Stock | $ | (6,839,458 | ) | $ | (6,400,142 | ) | ||
| Weighted average shares outstanding, basic and diluted |
| 64,899,922 |
|
| 28,509,976 |
| ||
| Earnings per share, basic and diluted | $ | (0.11 | ) | $ | (0.22 | ) | ||
| Class B Common Stock |
|
|
|
| ||||
| Net income (loss) attributable to Class B Common Stock | $ | (1,622,712 | ) | $ | (2,062,028 | ) | ||
| Weighted average shares outstanding, basic and diluted |
| 15,397,983 |
|
| 9,185,476 |
| ||
| Earnings per share, basic and diluted | $ | (0.11 | ) | $ | (0.22 | ) | ||
133
Table of Contents
Note 7 — Adjustments to Unaudited Pro Forma Condensed Combined Statement of Operations for the Nine Months Ended August 31, 2026
The pro forma adjustments, based on preliminary estimates that could change materially as additional information is obtained, are as follows:
A. Reflects the elimination of interest income of $5,820,815 earned on cash and investments held in the Trust Account for the nine months ended August 31, 2026, as the funds held in the Trust Account would have been released upon Closing, which is assumed to have occurred on December 1, 2024.
B. The pro forma basic and diluted earnings per share amounts presented in the unaudited pro forma condensed combined statement of operations are based upon the number of shares outstanding at the Closing assuming the Closing occurred on December 1, 2024. For the nine months ended August 31, 2026, anti-dilutive instruments were not included in the calculation of diluted weighted average number of common shares outstanding as the unaudited pro forma condensed combined statement of operations is in a loss position. The pro forma basic and diluted earnings per share for the nine months ended August 31, 2026, is calculated as follows:
| Nine months ended | ||||||||
| Assuming | Assuming | |||||||
| Net income (loss) | $ | (6,401,972 | ) | $ | (6,401,972 | ) | ||
| Class A Common Stock |
|
|
|
| ||||
| Net income (loss) attributable to Class A Common Stock | $ | (5,174,325 | ) | $ | (4,841,965 | ) | ||
| Weighted average shares outstanding, basic and diluted |
| 64,899,922 |
|
| 28,509,976 |
| ||
| Earnings per share, basic and diluted | $ | (0.08 | ) | $ | (0.17 | ) | ||
| Class B Common Stock |
|
|
|
| ||||
| Net income (loss) attributable to Class B Common Stock | $ | (1,227,647 | ) | $ | (1,560,007 | ) | ||
| Weighted average shares outstanding, basic and diluted |
| 15,397,983 |
|
| 9,185,476 |
| ||
| Earnings per share, basic and diluted | $ | (0.08 | ) | $ | (0.17 | ) | ||
134
Table of Contents
Information About IRHO
Unless the context otherwise requires, all references in this section to “we,” “us” or “our” refer to IRHO prior to the consummation of the Business Combination.
General
Iron Horse Acquisition II Corp. is a blank check company incorporated in the Cayman Islands as an exempted company whose business purpose is to effect a merger, share exchange, asset acquisition, share purchase, reorganization or similar business combination with one or more businesses. On November 26, 2024, IRHO was initially incorporated in Delaware as Iron Horse Acquisitions Corp. II. On July 25, 2025, Iron Horse Acquisitions Corp. II migrated, by way of continuation, to the Cayman Islands and became a Cayman Islands exempted company, and elected to liquidate for U.S. federal income tax purposes via the making of an entity classification election effective as of July 25, 2025. On September 12, 2025, Iron Horse Acquisition II Corp. was incorporated in the Cayman Islands. On September 30, 2025, Iron Horse Acquisitions Corp. II was merged with and into Iron Horse Acquisition II Corp, which is the surviving entity and the continuing company. Based on IRHO’s business activities, it is a “shell company” as defined under the Exchange Act because it has no operations and nominal assets consisting almost entirely of cash.
Significant Activities Since Inception
Our registration statement for our initial public offering was declared effective on December 16, 2025. On December 18, 2025, we consummated our IPO of 23,000,000 IRHO Units, at $10.00 per IRHO Unit, including 3,000,000 units with the full exercise of the over-allotment option, generating gross proceeds of $230.0 million, and incurring offering costs of approximately $15,590,100, inclusive of approximately $10,950,000 in deferred underwriting commissions.
Simultaneously with the closing of the IPO, we consummated the private placement of 570,000 Private Placement Units at a price of $10.00 per Private Placement Unit, generating total gross proceeds of $5.7 million.
Upon the closing of the IPO (including the full exercise of the over-allotment option) and the Private Placement, $230 million ($10.00 per Unit) of the net proceeds of the sale of the IRHO Units in the IPO and certain of proceeds of the Private Placement were placed in the Trust Account with Continental Stock Transfer & Trust Company acting as trustee. The Trust Account was initially invested in United States “government securities” within the meaning of Section 2(a)(16) of the Investment Company Act having a maturity of 185 days or less or in money market funds meeting certain conditions under Rule 2a-7 promulgated under the Investment Company Act which invest only in direct U.S. government treasury obligations.
IRHO initially has until December 18, 2027 to consummate an initial business combination.
On April 21, 2026, IRHO entered into the Merger Agreement with Electra and Merger Sub.
The IRHO Units, IRHO Ordinary Shares and Public Rights are currently listed on Nasdaq under the symbols “IRHOU,” “IRHO” and “IRHOR,” respectively.
Prior SPAC Experience
Iron Horse Acquisition Corp. (Nasdaq: “IROH” and referred to herein as “Iron Horse I”) Mr. Bengochea, our CEO, founded Iron Horse Acquisitions Corp., a SPAC formed for substantially similar purposes as our Company. Several members of our management team and advisors served as an officer or director of Iron Horse I, a special purpose acquisition company. Mr. Bengochea, our CEO served as the CEO of and a director of Iron Horse I, and Mr. Caragol, our CFO, and, alongside Mr. Bengochea, the co-Founder of Iron Horse II, served as both CFO and COO of Iron Horse I. Mr. Hertz, Mr. Turner and Mr. Morris, our financial advisors, all serve as the independent directors on the board of directors of Iron Horse I. Iron Horse I closed its IPO on December 29, 2023 after its registration statement was declared effective on December 27, 2023. In September 2024, Iron Horse I entered into a business combination agreement (the “Business Combination Agreement”), dated as of September 27, 2024, with Rosey Sea Holdings Limited, a company incorporated and existing under the laws of the British Virgin Islands (“Seller”) and the owner of 100% of the issued and outstanding capital stock of Zhong Guo Liang Tou Group Limited, a company incorporated and existing under the laws of the British Virgin Islands (the “Target”). At a
135
Table of Contents
special meeting of stockholders held on June 25, 2025, the stockholders approved a resolution to allow the Company to extend the date by which the Company must consummate a business combination up to twelve (12) times, each such extension for an additional one (1) month period, until June 29, 2026 (the “Extension Special Meeting”). On June 20, 2025, at another special meeting, the stockholders approved the business combination (“Business Combination Special Meeting”). As of June 30, 2025, an aggregate of 6,477,975 shares of Common Stock were redeemed at a redemption price of $10.60 per share, for an aggregate redemption amount of $68.65 million. In connection with the stockholders’ vote at the Business Combination Special Meeting, an additional 223,374 shares were tendered for redemption at a price of $10.80 per share for a total redemption of 97% of public shares. On September 30, 2025, the company announced the completion of the business combination with Rosey Sea Holdings Limited. The combined company now operates under the name CN Healthy Food Tech Group Corp. and began trading on Nasdaq under the ticker symbol “UCFI” and “UCFIW” on October 1, 2025 for the ordinary shares and warrants respectively. The price of the shares on October 3, 2025 was $5.51. The trading has been indefinitely suspended pending China Securities Regulatory Commission review.
Effecting IRHO’s Initial Business Combination
General
IRHO is not presently engaged in and IRHO will not engage in, any substantive commercial business until it completes the Business Combination with Electra or another target business.
Fair Market Value of Target Business
The rules of Nasdaq require that IRHO must consummate an initial business combination with one or more operating businesses or assets with a fair market value equal to at least 80% of the net assets held in the Trust Account (excluding the amount of any deferred underwriting discount held in trust) at the time of IRHO’s signing a definitive agreement in connection with its initial business combination. The IRHO Board determined that this test was met in connection with the proposed Business Combination.
Shareholder Approval of Business Combination
IRHO is seeking shareholder approval of the Business Combination at the extraordinary general meeting, at which shareholders may elect to redeem their Public Shares, regardless of if or how they vote in respect of the Business Combination Proposal and regardless of whether they hold such Public Shares on the Record Date, into their pro rata portion of the Trust Account, calculated as of two business days prior to the consummation of the Business Combination including interest earned on the funds held in the Trust Account and not previously released to us (net of taxes payable). Notwithstanding the foregoing, a Public Shareholder, together with any affiliate of such Public Shareholder or any other person with whom such public shareholder is acting in concert or as a “group” (as defined in Section 13(d)(3) of the Exchange Act), will be restricted from redeeming its Public Shares with respect to more than an aggregate of 15% of the Public Shares. Accordingly, if a Public Shareholder, alone or acting in concert or as a group, seeks to redeem more than 15% of the Public Shares, then any such shares in excess of that 15% limit would not be redeemed for cash.
The Sponsor and the officers and directors of IRHO have agreed to, among other things, vote in favor of the Merger Agreement and the transactions contemplated thereby, in the case of the Sponsor, subject also to the terms and conditions contemplated by the Parent Support Agreement, and waive its Redemption Rights in connection with the consummation of the Business Combination with respect to any ordinary shares held by them.
The Sponsor, which includes among its members each of the directors and officers of IRHO, owns 5,750,000 Founder Shares, 370,000 Private Placement Units, and Cantor owing 200,000 Private Placement Units. As a result, as of the date of this proxy statement/prospectus, the Initial Shareholders own approximately 21% of the issued and outstanding IRHO Ordinary Shares and have the right to vote approximately 21% of the issued and outstanding IRHO Ordinary Shares.
Accordingly, assuming all issued and outstanding IRHO Ordinary Shares are voted, in addition to the shares held by the Insiders, we would need the affirmative vote of holders of 8,540,001 public Ordinary Shares (or approximately 29%) to approve each proposal requiring an ordinary resolution, including the Business Combination Proposal,
136
Table of Contents
the Stock Issuance Proposal, the Electra Pubco Equity Incentive Plan Proposal and, if presented, the Adjournment Proposal, and the affirmative vote of holders of 13,426,667 public Ordinary Shares (or approximately 46%) to approve each proposal requiring a special resolution.
Potential Purchases of Public Shares or Public Rights
Additionally, at any time at or prior to the Business Combination, subject to applicable securities laws (including with respect to material non-public information), the Sponsor, the existing equity holders of Electra or IRHO or our or their respective directors, officers, advisors or respective affiliates may (a) purchase Public Shares from institutional and other investors who elect to redeem, or indicate an intention to redeem, Public Shares, (b) execute agreements to purchase such shares from such investors in the future, or (c) enter into transactions with such investors and others to provide them with incentives to acquire Public Shares or not redeem their Public Shares. Such a purchase may include a contractual acknowledgement that such shareholder, although still the record holder of IRHO Ordinary Shares, is no longer the beneficial owner thereof and therefore agrees not to exercise its Redemption Rights. In the event that the Sponsor, the existing equity holders of Electra or IRHO or our or their respective directors, officers, advisors or respective affiliates purchase shares in privately negotiated transactions from Public Shareholders, such shares that are purchased by the Sponsor, the Electra Shareholders or our or their respective directors, officers, advisors or respective affiliates would not be voted in favor of the Business Combination Proposal, and the Sponsor, the existing equity holders of Electra or IRHO or our or their respective directors, officers, advisors or respective affiliates would waive their Redemption Rights. In the event that the Sponsor, the existing equity holders of Electra or IRHO or our or their respective directors, officers, advisors, or respective affiliates purchase shares in privately negotiated transactions from Public Shareholders who have already elected to exercise their Redemption Rights, such selling shareholders would be required to revoke their prior elections to redeem their Public Shares.
The purpose of such share purchases and other transactions would be to reduce the number of Public Shares electing to redeem.
Entering into any such arrangements may have a depressive effect on the price of IRHO Ordinary Shares (e.g., by giving an investor or holder the ability to effectively purchase shares at a price lower than market, such investor or holder may therefore become more likely to sell the shares he, she or it owns, either at or prior to the Proposed Transaction). If such transactions are effected, the consequence could be to cause the Proposed Transaction to be consummated in circumstances where such consummation could not otherwise occur.
Liquidation if No Business Combination
If IRHO has not completed the Business Combination with Electra Pubco by December 18, 2027 and has not completed another business combination by such date, in each case, as such date may be extended pursuant to the Cayman Constitutional Documents, IRHO will: (1) cease all operations except for the purpose of winding up; (2) as promptly as reasonably possible but not more than 10 business days thereafter, redeem 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 interest (less up to $100,000 of interest to pay dissolution expenses and which interest will be net of taxes payable), divided by the number of then issued and outstanding Public Shares, which redemption will completely extinguish Public Shareholders’ Rights as shareholders (including the right to receive further liquidating distributions, if any), subject to applicable law; and (3) as promptly as reasonably possible following such redemption, subject to the approval of IRHO’s remaining shareholders and the IRHO Board, liquidate and dissolve, subject in each case to its obligations under Cayman Islands law to provide for claims of creditors and the requirements of other applicable law.
The Sponsor has entered into a letter agreement with IRHO, pursuant to which it waived its Rights to liquidating distributions from the Trust Account with respect to the Founder Shares if IRHO fails to complete its business combination within the required time period. However, if the Sponsor owns any Public Shares, the Sponsor will be entitled to liquidating distributions from the Trust Account with respect to such Public Shares if IRHO fails to complete its business combination within the allotted time period.
The Sponsor and IRHO’s directors and officers have agreed, pursuant to a written agreement with IRHO, that they will not propose any amendment to the Cayman Constitutional Documents (A) to modify the substance or timing of IRHO’s obligation to allow for redemption in connection with IRHO’s initial business combination or to redeem
137
Table of Contents
100% of its Public Shares if it does not complete its business combination by December 18, 2027 or (B) with respect to any other provision relating to shareholders’ rights or pre-initial business combination activity, unless IRHO provides its Public Shareholders with the opportunity to redeem their Public Shares upon approval of any such amendment at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the Trust Account, including interest (which interest will be net of taxes payable), divided by the number of then outstanding Public Shares.
IRHO expects that all costs and expenses associated with implementing its plan of dissolution, as well as payments to any creditors, will be funded from amounts held outside the Trust Account, although it cannot assure you that there will be sufficient funds for such purpose. However, if those funds are not sufficient to cover the costs and expenses associated with implementing IRHO’s plan of dissolution, to the extent that there is any interest accrued in the Trust Account not required to pay taxes, IRHO may request the trustee to release to us an additional amount of up to $100,000 of such accrued interest to pay those costs and expenses.
The proceeds deposited in the Trust Account could, however, become subject to the claims of IRHO’s creditors which would have higher priority than the claims of IRHO’s Public Shareholders. IRHO cannot assure you that the actual per-share redemption amount received by Public Shareholders will not be substantially less than $10.00. See “Risk Factors — Risks Related to the Business Combination and IRHO — If third parties bring claims against us, the proceeds held in the Trust Account could be reduced and the per share redemption amount received by shareholders may be less than $10.00 per share (which was the offering price in IRHO’s IPO)” and other risk factors contained herein. While IRHO intends to pay such amounts, if any, IRHO cannot assure you that IRHO will have funds sufficient to pay or provide for all creditors’ claims.
Although IRHO will seek to have all vendors, service providers (other than IRHO’s independent auditors), prospective target businesses and other entities with which IRHO does business execute agreements with us waiving any right, title, interest or claim of any kind in or to any monies held in the Trust Account for the benefit of IRHO’s Public Shareholders, there is no guarantee that they will execute such agreements or even if they execute such agreements that they would be prevented from bringing claims against the Trust Account including but not limited to fraudulent inducement, breach of fiduciary responsibility or other similar claims, as well as claims challenging the enforceability of the waiver, in each case in order to gain an advantage with respect to a claim against IRHO’s assets, including the funds held in the Trust Account. If any third party refuses to execute an agreement waiving such claims to the monies held in the Trust Account, IRHO’s management will perform an analysis of the alternatives available to it and will enter into an agreement with a third party that has not executed a waiver only if management believes that such third party’s engagement would be significantly more beneficial to us than any alternative. Examples of possible instances where IRHO may engage a third party that refuses to execute a waiver include the engagement of a third party consultant whose particular expertise or skills are believed by management to be significantly superior to those of other consultants that would agree to execute a waiver or in cases where IRHO is unable to find a service provider willing to execute a waiver. In addition, there is no guarantee that such entities will agree to waive any claims they may have in the future as a result of, or arising out of, any negotiations, contracts or agreements with us and will not seek recourse against the Trust Account for any reason. Upon redemption of IRHO’s Public Shares, if IRHO has not completed IRHO’s initial business combination within the required time period, or upon the exercise of a Redemption Right in connection with IRHO’s initial business combination, IRHO will be required to provide for payment of claims of creditors that were not waived that may be brought against us within the 10 years following redemption. In order to protect the amounts held in the Trust Account, the Sponsor has agreed that it will be liable to us if and to the extent any claims by a third party (other than IRHO’s independent auditors) for services rendered or products sold to us, or a prospective target business with which IRHO has discussed entering into a transaction agreement, reduce the amount of funds in the Trust Account to below (i) $10.00 per Public Share or (ii) such lesser amount per Public Share held in the Trust Account as of the date of the liquidation of the Trust Account, if less than $10.00 per share, due to reductions in value of the trust assets, in each case net of the amount of interest which may be withdrawn to pay taxes, except as to any claims by a third party who executed a waiver of any and all rights to seek access to the Trust Account and except as to any claims under IRHO’s indemnity of the underwriters of IRHO’s IPO against certain liabilities, including liabilities under the Securities Act. In the event that an executed waiver is deemed to be unenforceable against a third party, then the Sponsor will not be responsible to the extent of any liability for such third-party claims. IRHO has not independently verified whether the Sponsor has sufficient funds to satisfy its indemnity obligations and IRHO believes that the Sponsor’s only assets are securities of IRHO and, therefore, the Sponsor may not be able to satisfy those obligations. None of IRHO’s other directors or officers will indemnify us for claims by third parties including, without limitation, claims by vendors and prospective target businesses.
138
Table of Contents
In the event that the proceeds in the Trust Account are reduced below (i) $10.00 per Public Share or (ii) such lesser amount per Public Share held in the Trust Account as of the date of the liquidation of the Trust Account, if less than $10.00 per share, due to reductions in value of the trust assets, in each case net of the amount of interest which may be withdrawn to pay taxes, and the Sponsor asserts that it is unable to satisfy its indemnification obligations or that it has no indemnification obligations related to a particular claim, IRHO’s independent directors would determine whether to take legal action against the Sponsor to enforce its indemnification obligations. While IRHO currently expects that IRHO’s independent directors would take legal action on IRHO’s behalf against the Sponsor to enforce its indemnification obligations to us, it is possible that IRHO’s independent directors in exercising their business judgment may choose not to do so in any particular instance. Accordingly, IRHO cannot assure you that due to claims of creditors the actual value of the per-share redemption price will not be substantially less than $10.00 per share. See “Risk Factors — Risks Related to the Business Combination and IRHO — If third parties bring claims against us, the proceeds held in the Trust Account could be reduced and the per share redemption amount received by shareholders may be less than $10.00 per share (which was the offering price in IRHO’s IPO)” and other risk factors contained herein.
IRHO will seek to reduce the possibility that the Sponsor will have to indemnify the Trust Account due to claims of creditors by endeavoring to have all vendors, service providers (other than IRHO’s independent auditors), prospective target businesses and other entities with which IRHO does business execute agreements with us waiving any right, title, interest or claim of any kind in or to monies held in the Trust Account. The Sponsor will also not be liable as to any claims under IRHO’s indemnity of the underwriters of the IPO against certain liabilities, including liabilities under the Securities Act.
If IRHO files a winding-up or bankruptcy petition or an involuntary winding-up or bankruptcy petition is filed against us that is not dismissed, the proceeds held in the Trust Account could be subject to applicable insolvency or bankruptcy law, and may be included in IRHO’s insolvency estate and subject to the claims of third parties with priority over the claims of IRHO’s shareholders. To the extent any insolvency claims deplete the Trust Account, IRHO cannot assure you IRHO will be able to return $10.00 per share to IRHO’s Public Shareholders. Additionally, if IRHO files a winding-up or bankruptcy petition or an involuntary winding-up or bankruptcy petition is filed against us that is not dismissed, any distributions received by shareholders could be viewed under applicable debtor/creditor and/or insolvency or bankruptcy laws as a voidable performance. As a result, an insolvency or bankruptcy court could seek to recover some or all amounts received by IRHO’s shareholders. Furthermore, the IRHO Board may be viewed as having breached its fiduciary duty to IRHO’s creditors or may have acted in bad faith, and thereby exposing itself and us to claims of punitive damages, by paying Public Shareholders from the Trust Account prior to addressing the claims of creditors. IRHO cannot assure you that claims will not be brought against us for these reasons.
IRHO’s Public Shareholders will be entitled to receive funds from the Trust Account only upon the earliest to occur of: (1) IRHO’s completion of an initial business combination, and then only in connection with those Public Shares that such shareholder properly elected to redeem, subject to the limitations described herein; (2) the redemption of any Public Shares properly submitted in connection with a shareholder vote to amend the Cayman Constitutional Documents (A) to modify the substance or timing of IRHO’s obligation to allow redemption in connection with IRHO’s initial business combination or to redeem 100% of the Public Shares if IRHO does not complete IRHO’s initial business combination by December 18, 2027 or (B) with respect to any other provision relating to shareholders’ rights or pre-initial business combination activity; and (3) the redemption of the Public Shares if IRHO has not completed an initial business combination by December 18, 2027, subject to applicable law. In no other circumstances will a shareholder have any right or interest of any kind to or in the Trust Account. Holders of IRHO Rights will not have any right to the proceeds held in the Trust Account with respect to the IRHO Rights.
Facilities
IRHO currently utilizes office space at 851 Broken Sound Parkway Nw Boca Raton, FL 33487 as its executive offices. IRHO considers its current office space, adequate for IRHO’s current operations.
Employees
IRHO currently has two officers. Members of IRHO’s management team are not obligated to devote any specific number of hours to IRHO’s matters but they intend to devote as much of their time as they deem necessary to IRHO’s affairs until IRHO has completed IRHO’s initial business combination. The amount of time that any members of IRHO’s management team will devote in any time period will vary based on whether a target business has been selected for IRHO’s business combination and the current stage of the Business Combination process.
139
Table of Contents
Competition
If IRHO succeeds in effecting the Business Combination, there will be, in all likelihood, significant competition from Electra’s competitors. IRHO cannot assure you that, subsequent to the Business Combination, Electra Pubco will have the resources or ability to compete effectively. Information regarding Electra Pubco’s competition is set forth in the sections entitled “Information about Electra — Competition.”
Legal Proceedings
There are no legal proceedings pending against IRHO.
140
Table of Contents
Directors, Officers, Executive Compensation and Corporate Governance of IRHO Prior to The Business Combination
Directors and Executive Officers
Our directors and executive officers are as follows:
| Name | Age | Title | ||
| Jose Antonio Bengochea | 35 | Chief Executive Officer and Chairman | ||
| William Caragol, Jr | 59 | Chief Financial Officer and Director | ||
| Tarron Hecox | 35 | Lead Independent Director | ||
| Daniel Becker | 35 | Independent Director | ||
| Thayer Wade | 32 | Independent Director |
Jose Antonio Bengochea is our Company’s Founder, Chief Executive Officer, and Chairman of the Board. Mr. Bengochea served as the Chief Executive Officer and a director of Iron Horse I from November 2021 until the SPAC’s successful close on September 30, 2025, and has served as the managing member of Bengochea SPAC Sponsor I LLC, the sponsor of Iron Horse I since November 2021. Mr. Bengochea is the Founder and Chief Executive Officer of Bengochea Capital LLC (“Bengochea Capital”), an investment firm founded in 2020 to pursue frontier asset classes and, through Mr. Bengochea’s network of connections to various M&E industry executives and celebrities, to examine global opportunities in media and entertainment. Bengochea Capital has been a registered media entity with the Recording Academy for the 2023 and 2024 Grammy Awards, has been present at the Cannes Film Festival, among other prestigious events, and specializes in animation, music, AI, IP, and fashion, with a growing number of business touchpoints across Japan and South Korea. Prior to founding Bengochea Capital, Mr. Bengochea was a part of Sony’s Global Business Development team in Los Angeles and, prior to that, served as a corporate attorney at the law firm of Jenner & Block in New York City. Mr. Bengochea holds an A.B. summa cum laude from Harvard University, where he designed his own degree, entitled Comparative Imperial History, and graduated with a secondary specialization in Archaeology. Mr. Bengochea also holds a J.D. degree from Harvard Law School and an M.B.A. from Harvard Business School.
William Caragol, Jr is our Chief Financial Officer and a director of the Company. Mr. Caragol served as the Chief Financial Officer (since December 2024) and Chief Operating Officer of Iron Horse I from December 2023 to September 30, 2025. Mr. Caragol has over thirty years of experience working with growth stage companies. In 2018, he founded and is the Managing Director of Quidem LLC, a corporate strategic and financial advisory firm. From July 2021 to April 2026 he was the Chief Financial Officer of Quantum Cyber N.V. (f/k/a Mainz Biomed N.V.) (NASDAQ: QUCY), an autonomous defense technology company assembling an AI-powered System-of-Systems platform for drone warfare, counter-UAS, and border security applications. Since July 2021, Mr. Caragol has served on the Board of Directors of Worksport Ltd. (NASDAQ: WKSP), a growth stage technology company, and sits on the Audit Committee, Compensation Committee and the Corporate Governance Committee. Since July 2023, Mr. Caragol has served on the Board of Directors of DeFi Development Corp. (NASDAQ: DFDV), a Solana-focused treasury company, and sits on the Audit Committee, Compensation Committee and the Corporate Governance Committee. From 2021 to 2023, Mr. Caragol served on the Board of Directors and was Chairman of the Audit Committee of Greenbox POS (NASDAQ: GBOX) a financial technology company leveraging proprietary blockchain security to build customized payment solutions. Mr. Caragol earned a B.S. in business administration and accounting from Washington & Lee University and is a member of the American Institute of Certified Public Accountants.
Tarron Hecox has served as an Independent Director for the board of since April, 2026. Mr. Hecox has ample public markets and operational experience. Since 2019, he has held various commercial roles at AGCO Corporation (NYSE: AGCO), a Fortune 500 company. Previously, Mr. Hecox worked with the Howard G. Buffett Foundation, William Blair & Company, and Parnassus Investments, and he also formerly co-founded Spartan Capital L.L.C. in 2017, a private fund formed to pursue technology opportunities. Mr. Hecox is also well versed in SPACs and entertainment through the private fund he co-founded in 2014, Limitless Strategies, LLC, which focuses on creating value through public and private investments in media, entertainment, and AI. Mr. Hecox received his MBA from Harvard Business School in 2016; an undergraduate degree with highest distinction from the University of Nebraska-Lincoln, where he studied economics, finance, and accounting; a master’s degree from the University of Nebraska-Lincoln; and has held a CPA designation.
141
Table of Contents
Daniel Becker has served as an Independent Director for the board since April, 2026. Mr. Becker is an expert in AI machine learning, emerging technologies, and in the interplay between new technologies and consumerism, with particular strategic expertise and networks in AI infrastructure, data systems, and CPG businesses. Since December 2024, Mr. Becker has served as a Data Engineer at Restaurant Brands International (NYSE: QSR) where, from Miami, he leads an international team overseeing finance, data, and analytics across several of their investments, including the Tim Hortons, Popeyes, and Burger King franchises worldwide. Prior to Restaurant Brands, from August 2023 through November 2024, Mr. Becker worked at Lennar Corporation (NYSE: LEN, “Lennar”), building AI-driven software pilots for its Emerging Technology group, in addition to evaluating new technologies and other investment opportunities. Mr. Becker has also worked with several Fortune 100 clients across several industries, including finance/MBS, ad-tech and media, retail, manufacturing, and more, during his prior tenures as a freelance consultant from July 2020 until July 2023. Mr. Becker served as consultant to Iron Horse I from 2024 to the present. Mr. Becker graduated from Princeton University in 2013 where he holds a degree in Mechanical and Aerospace Engineering with a focus on computer vision and autonomous systems.
Thayer Wade has served as an Independent Director for the board since April, 2026. In addition to serving as a director, Mr. Wade is also the co-founder of Epiphany Family Enterprises, a transcontinental firm specializing in US mergers and acquisitions. Prior to co-founding Epiphany, Mr. Wade worked at Morgan Stanley (NYSE: MS) in a strategy and corporate development role, where he was part of the team that launched the firm’s RIA channel, growing to over $100 billion in assets during his tenure. He also previously worked at Maximus (NYSE: MMS), a systems integrator serving government clients, with roles spanning business development, strategy, operations, and emerging technologies. He holds an A.B. cum laude in engineering from Harvard with a secondary in American government and political philosophy.
Number, Terms of Office and Appointment of Directors and Officers
The IRHO Board consists of five members. In accordance with Nasdaq corporate governance requirements, we are not required to hold an annual general meeting until one year after our first fiscal year end following our listing on Nasdaq.
Our officers are appointed by the IRHO Board and serve at the discretion of the IRHO Board, rather than for specific terms of office. The IRHO Board is authorized to appoint officers as it deems appropriate pursuant to the Cayman Constitutional Documents.
Director Independence
The rules of the Nasdaq require that a majority of the IRHO Board be independent within one year of our IPO. An “independent director” is defined generally as a person who, in the opinion of the company’s board of directors, has no material relationship with the listed company (either directly or as a partner, shareholder or officer of an organization that has a relationship with the company). The IRHO Board has determined that each of Messrs. Wade, Hecox and Becker are “independent directors” as defined in the Nasdaq listing standards and applicable SEC rules. Our independent directors will have regularly scheduled meetings at which only independent directors are present.
Executive Officer and Director Compensation
None of our officers or directors have received any cash compensation for services rendered to us. We may elect to make payment of customary fees to members of the IRHO Board for director service. In addition, our Sponsor, officers and directors, or any of their respective affiliates will be reimbursed for any out-of-pocket expenses incurred in connection with activities on our behalf such as identifying potential target businesses and performing due diligence on suitable business combinations. Our audit committee will review on a quarterly basis all payments that were made to our Sponsor, officers or directors, or our or their affiliates. Any such payments prior to an initial business combination will be made from funds held outside the Trust Account. Other than quarterly audit committee review of such reimbursements, we do not expect to have any additional controls in place governing our reimbursement payments to our directors and officers for their out-of-pocket expenses incurred in connection with our activities on our behalf in connection with identifying and consummating an initial business combination. Other than these payments and reimbursements, no compensation of any kind, including finder’s and consulting fees, will be paid by IRHO to our Sponsor, officers and directors, or any of their respective affiliates, prior to completion of our initial business combination.
142
Table of Contents
After the completion of the Business Combination, directors or members of our management team who remain with us may be paid consulting or management fees from Electra Pubco. We have not established any limit on the amount of such fees that may be paid by Electra Pubco to our directors or members of management. It is unlikely the amount of such compensation will be known prior to the Closing, because the directors of Electra Pubco will be responsible for determining officer and director compensation.
Any compensation to be paid to our officers will be determined, or recommended to the IRHO Board for determination, either by a compensation committee constituted solely by independent directors or by a majority of the independent directors on the IRHO Board.
We do not intend to take any action to ensure that members of our management team maintain their positions with us after the consummation of our initial business combination, although it is possible that some or all of our officers and directors may negotiate employment or consulting arrangements to remain with us after our initial business combination. The existence or terms of any such employment or consulting arrangements to retain their positions with us may influence our management’s motivation in identifying or selecting a target business but we do not believe that the ability of our management to remain with us after the consummation of our initial business combination will be a determining factor in our decision to proceed with any potential business combination. We are not party to any agreements with our officers and directors that provide for benefits upon termination of employment.
Committees of the IRHO Board
The IRHO Board currently has three standing committees: an audit committee, a compensation committee and a nominating and corporate governance committee. Each committee operates under a charter that has been approved by the IRHO Board and has the composition and responsibilities described below. Subject to phase-in rules and a limited exception, Nasdaq rules and Rule 10A-3 of the Exchange Act require that the audit committee of a listed company be comprised solely of independent directors, and Nasdaq rules require that the compensation committee of a listed company be comprised solely of independent directors.
Audit Committee
We have established an audit committee of the board of directors. Messrs. Wade, Hecox and Becker serve as the members of the audit committee, and Mr. Hecox chairs the audit committee. All members of our audit committee are independent directors under Nasdaq corporate governance rules and Rule 10A-3 of the Exchange Act.
Each member of the audit committee is financially literate and the IRHO Board has determined that Mr. Hecox qualifies as an “audit committee financial expert” as defined in applicable SEC rules and has accounting or related financial management expertise. The audit committee’s duties, which are specified in our Audit Committee Charter, include, but are not limited to:
• reviewing and discussing with management and the independent auditor the annual audited financial statements, and recommending to the board whether the audited financial statements should be included in our Form 10-K;
• discussing with management and the independent auditor significant financial reporting issues and judgments made in connection with the preparation of our financial statements;
• discussing with management major risk assessment and risk management policies;
• monitoring the independence of the independent auditor;
• verifying the rotation of the lead (or coordinating) audit partner having primary responsibility for the audit and the audit partner responsible for reviewing the audit as required by law;
• reviewing and approving all related-party transactions;
• inquiring and discussing with management our compliance with applicable laws and regulations;
• pre-approving all audit services and permitted non-audit services to be performed by our independent auditor, including the fees and terms of the services to be performed;
143
Table of Contents
• appointing or replacing the independent auditor;
• determining the compensation and oversight of the work of the independent auditor (including resolution of disagreements between management and the independent auditor regarding financial reporting) for the purpose of preparing or issuing an audit report or related work;
• establishing procedures for the receipt, retention and treatment of complaints received by us regarding accounting, internal accounting controls or reports which raise material issues regarding our financial statements or accounting policies; and
• approving reimbursement of expenses incurred by our management team in identifying potential target businesses.
Financial Experts on Audit Committee
The audit committee will at all times be composed exclusively of “independent directors” who are “financially literate” as defined under NASDAQ’s listing standards. NASDAQ’s standards define “financially literate” as being able to read and understand fundamental financial statements, including a company’s balance sheet, income statement and cash flow statement.
In addition, we must certify to NASDAQ that the committee has, and will continue to have, at least one member who has past employment experience in finance or accounting, requisite professional certification in accounting, or other comparable experience or background that results in the individual’s financial sophistication. The Board of Directors has determined that Tarron Hecox qualifies as an “audit committee financial expert,” as defined under rules and regulations of the SEC.
Nominating and Corporate Governance Committee
Effective upon the date of the IPO, we have established a nominating and corporate governance committee of the board of directors. The members of our nominating and corporate governance will be Tarron Hecox, and Daniel Becker. Tarron Hecox serves as chair of the nominating and corporate governance committee.
The primary purposes of our nominating and corporate governance committee will be to assist the board in:
• identifying, screening and reviewing individuals qualified to serve as directors and recommending to the board of directors candidates for nomination for election at the annual meeting of shareholders or to fill vacancies on the board of directors;
• developing, recommending to the board of directors and overseeing implementation of our corporate governance guidelines;
• coordinating and overseeing the annual self-evaluation of the board of directors, its committees, individual directors and management in the governance of the company; and
• reviewing on a regular basis our overall corporate governance and recommending improvements as and when necessary.
The nominating and corporate governance committee will be governed by a charter that complies with the rules of NASDAQ.
Guidelines for Selecting Director Nominees
The guidelines for selecting nominees, which are specified in the Nominating and Corporate Governance Committee charter, generally provide that person to be nominated:
• should have demonstrated notable or significant achievements in business, education or public service;
• should possess the requisite intelligence, education and experience to make a significant contribution to the board of directors and bring a range of skills, diverse perspectives and backgrounds to its deliberations; and
144
Table of Contents
• should have the highest ethical standards, a strong sense of professionalism and intense dedication to serving the interests of the shareholders.
The Nominating and Corporate Governance Committee will consider a number of qualifications relating to management and leadership experience, background and integrity and professionalism in evaluating a person’s candidacy for membership on the board of directors. The Nominating and Corporate Governance Committee may require certain skills or attributes, such as financial or accounting experience, to meet specific board needs that arise from time to time and will also consider the overall experience and makeup of its members to obtain a broad and diverse mix of board members. The Nominating and Corporate Governance Committee does not distinguish among nominees recommended by shareholders and other persons.
Compensation Committee
Effective upon the date of the IPO, we will established a compensation committee of the board of directors, which will consist of Tarron Hecox, and Daniel Becker, each of whom is an independent director under NASDAQ’s listing standards. Mr. Becker serves as chair of the compensation committee. The compensation committee’s duties, which are specified in our Compensation Committee Charter, include, but are not limited to:
• reviewing and approving on an annual basis the corporate goals and objectives relevant to our Chief Executive Officer’s compensation, evaluating our Chief Executive Officer’s performance in light of such goals and objectives and determining and approving the remuneration (if any) of our Chief Executive Officer based on such evaluation;
• reviewing and approving the compensation of all of our other executive officers;
• reviewing our executive compensation policies and plans;
• implementing and administering our incentive compensation equity-based remuneration plans;
• assisting management in complying with our proxy statement and annual report disclosure requirements;
• approving all special perquisites, special cash payments and other special compensation and benefit arrangements for our executive officers and employees;
• if required, producing a report on executive compensation to be included in our annual proxy statement; and
• reviewing, evaluating and recommending changes, if appropriate, to the remuneration for directors.
Code of Ethics
We have adopted a code of ethics applicable to our directors, officers and employees (“Code of Ethics”). A copy of the Code of Ethics will be provided without charge upon request from us. We intend to disclose any amendments to or waivers of certain provisions of our Code of Ethics in a Current Report on Form 8-K.
Insider Trading Policy
We have adopted an insider trading policy.
How to Obtain the Code of Ethics, Insider Trading Policy and Committee Charters
IRHO has filed copies of its code of ethics, Insider Trading Policy, audit committee charter and compensation committee charter as exhibits to its registration statement filed in connection with its IPO. You may review these documents by accessing its public filings at the SEC’s website at www.sec.gov. In addition, a copy of the code of ethics will be provided without charge upon request. See “Where You Can Find More Information”.
Conflicts of Interest
In considering the recommendations of the IRHO Board to vote for the Business Combination, it should be noted that our directors and officers have interests in the Business Combination that are different from, or in addition to, your interests as an IRHO shareholder. See “The Business Combination Proposal — Certain Interests of IRHO’s Directors and Officers and Others in the Business Combination.”
145
Table of Contents
Under Cayman Islands law, directors and officers owe the following fiduciary duties:
• duty to act in good faith in what the director or officer believes to be in the best interests of the company as a whole;
• duty to exercise powers for the purposes for which those powers were conferred and not for a collateral purpose;
• duty to not improperly fetter the exercise of future discretion;
• duty to exercise authority for the purpose for which it is conferred and a duty to exercise powers fairly as between different sections of shareholders;
• duty not to put themselves in a position in which there is a conflict between their duty to the company and their personal interests; and
• duty to exercise independent judgment.
In addition to the above, directors also owe a duty of care which is not fiduciary in nature. This duty has been defined as a requirement to act as a reasonably diligent person having both the general knowledge, skill and experience that may reasonably be expected of a person carrying out the same functions as are carried out by that director in relation to the company and the general knowledge, skill and experience of that director.
As set out above, directors have a duty not to put themselves in a position of conflict and this includes a duty not to engage in self-dealing, or to otherwise benefit as a result of their position at the expense of the company. However, in some instances what would otherwise be a breach of this duty can be forgiven and/or authorized in advance by the shareholders provided that there is full disclosure by the directors. This can be done by way of permission granted in the memorandum and articles of association or alternatively by shareholder approval at general meetings. Each of our officers and directors presently has, and any of them in the future may have additional, fiduciary, contractual or other obligations or duties to one or more other entities pursuant to which such officer or director is or will be required to present a business combination opportunity to such entities. Accordingly, if any of our officers or directors becomes aware of a business combination opportunity which is suitable for an entity to which he or she has then current fiduciary or contractual obligations, he or she will honor his or her fiduciary or contractual obligations to present such business combination opportunity to such other entity, subject to their fiduciary duties under Cayman Islands law. Our amended and restated memorandum and articles of association provide that, to the fullest extent permitted by law: (i) no individual serving as a director or an officer, among other persons, shall have any duty, except and to the extent expressly assumed by contract, to refrain from engaging directly or indirectly in the same or similar business activities or lines of business as us, and (ii) we renounce any interest or expectancy in, or in being offered an opportunity to participate in, any potential transaction or matter which (a) may be a corporate opportunity for any director or officer, on the one hand, and us, on the other or (b) the presentation of which would breach an existing legal obligation of a director or officer to any other entity. However, because the other entities to which our officers and directors currently owe fiduciary duties or contractual obligations are not themselves in the business of engaging in business combinations, we do not believe that any such potential conflicts would materially affect our ability to complete our initial business combination.
The following table summarizes the pre-existing fiduciary or contractual obligations of our officers and directors:
| Name of Individual(s) | Name of Affiliated Company | Position at Affiliated Company | ||
| Jose Antonio Bengochea | Bengochea Capital, LLC | CEO Founder | ||
| William J. Caragol, Jr | Quidem LLC Collab Z, Inc. | Managing Director |
146
Table of Contents
| Name of Individual(s) | Name of Affiliated Company | Position at Affiliated Company | ||
| Daniel Becker | Restaurant Brands International | Data Engineer | ||
| Tarron Hecox | AGCO Corporation Limitless Strategies LLC | Employee | ||
| Thayer Wade | Epiphany Family Enterprises | Co-Founder |
Limitation on Liability and Indemnification of Officers and Directors
Cayman Islands law does not limit the extent to which a company’s memorandum and articles of association may provide for indemnification of officers and directors, except to the extent any such provision may be held by the Cayman Islands courts to be contrary to public policy, such as to provide indemnification against willful default, willful neglect, actual fraud or the consequences of committing a crime. Our amended and restated memorandum and articles of association provides that our officers and directors will be indemnified by us to the fullest extent permitted by law, as it now exists or may in the future be amended, including for any liability incurred in their capacities as such, except through their own actual fraud, willful default or willful neglect. We expect to purchase a policy of directors’ and officers’ liability insurance that insures our officers and directors against the cost of defense, settlement or payment of a judgment in some circumstances and insures us against our obligations to indemnify our officers and directors.
Our officers and directors have agreed, and any persons who may become officers or directors prior to the initial business combination will agree, to waive any right, title, interest or claim of any kind in or to any monies in the trust account, and to waive any right, title, interest or claim of any kind they may have in the future as a result of, or arising out of, any services provided to us and will not seek recourse against the trust account for any reason whatsoever. Accordingly, any indemnification provided will only be able to be satisfied by us if (i) we have sufficient funds outside of the trust account or (ii) we consummate an initial business combination.
Our indemnification obligations may discourage shareholders from bringing a lawsuit against our officers or directors for breach of their fiduciary duty. These provisions also may have the effect of reducing the likelihood of derivative litigation against our officers and directors, even though such an action, if successful, might otherwise benefit us and our shareholders. Furthermore, a shareholder’s investment may be adversely affected to the extent we pay the costs of settlement and damage awards against our officers and directors pursuant to these indemnification provisions.
We believe that these provisions, the insurance and the indemnity agreements are necessary to attract and retain talented and experienced officers and directors.
Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers or persons controlling us pursuant to the foregoing provisions, we have been informed that in the opinion of the SEC such indemnification is against public policy as expressed in the Securities Act and is therefore unenforceable.
147
Table of Contents
Management’s Discussion and Analysis of
Financial Condition and Results of Operations of IRHO
References to “our,” “us” or “we” refer to Iron Horse Acquisition II Corp. The following discussion and analysis of IRHO’s financial condition and results of operations should be read in conjunction with the IRHO financial statements and the notes thereto contained elsewhere in this proxy statement/prospectus. This discussion contains forward-looking statements reflecting our current expectations, estimates and assumptions concerning events and financial trends that may affect our future operating results or financial position. Actual results and the timing of events may differ materially from those contained in these forward-looking statements due to a number of factors, including those discussed in the sections entitled “Risk Factors” and “Cautionary Note Regarding Forward-Looking Statements” appearing elsewhere in this proxy statement/prospectus.
Overview
We are a blank check company initially incorporated as a Delaware corporation on November 26, 2024, formed for the purpose of effecting a merger, share exchange, asset acquisition, share purchase, recapitalization, reorganization or other similar business combination with one or more businesses. On July 25, 2025, we transferred, by way of continuation, to the Cayman Islands. On September 12, 2025, Iron Horse Acquisition II Corp. was incorporated in the Cayman Islands. On September 30, 2025, Iron Horse Acquisitions Corp. II merged with Iron Horse Acquisition II Corp., which is the surviving entity, and we are now incorporated as a Cayman Islands exempted company. We intend to effectuate our business combination using cash derived from the proceeds of the Initial Public Offering and the sale of the Private Placement Units, our shares, debt or a combination of cash, shares and debt.
We expect to continue to incur significant costs in the pursuit of our acquisition plans. We cannot assure you that our plans to complete a Business Combination will be successful.
Although we initially intended to focus on target companies within the media and entertainment industry, on April 21, 2026, we entered into the Business Combination Agreement with Electra Vehicles, Inc., as described herein.
Three and Nine Months Ended August 31, 2026 and 2025
Results of Operations
We have neither engaged in any operations nor generated any revenues to date. Our only activities from November 26, 2024 (inception) through August 31, 2026 were organizational activities, those necessary to prepare for the Initial Public Offering, described below, and, after our Initial Public Offering, identifying a target company for a Business Combination. We do not expect to generate any operating revenues until after the completion of our Business Combination. We generate non-operating income in the form of interest income on cash and investments held in the Trust Account. We incur expenses as a result of being a public company (for legal, financial reporting, accounting and auditing compliance), as well as for due diligence expenses.
For the three months ended August 31, 2026, we had a net income of $1,875,969, which consists of interest earned on cash and investments held in the Trust Account of $2,109,367, offset by general, formation and operational costs of $233,398. For the nine months ended August 31, 2026, we had a net income of $4,535,965, which consists of interest earned on cash and investments held in the Trust Account of $5,820,815, offset by general, formation and operational costs of $1,284,850.
For the three months ended August 31, 2025, we had a net loss of $71,471, which consists of general, formation and operational costs of $71,471.
For the nine months ended August 31, 2025, we had a net loss of $167,328, which consists of general, formation and operational costs of $167,328.
Liquidity and Capital Resources
On December 18, 2025, we consummated the Initial Public Offering of 23,000,000 Units, which includes the full exercise by the underwriters of their over-allotment option in the amount of 3,000,000 Units, at $10.00 per Unit, generating gross proceeds of $230,000,000. Simultaneously with the closing of the Initial Public Offering, we consummated the sale of 570,000 Private Placement Units at a price of $10.00 per Private Placement Unit, in a private placement to the Sponsor and Cantor Fitzgerald & Co., generating gross proceeds of $5,700,000. Of those 570,000 Private Placement Units, the Sponsor purchased 370,000 Private Placement Units, Cantor Fitzgerald & Co. purchased 200,000 Private Placement Units.
148
Table of Contents
Following the Initial Public Offering, the full exercise of the over-allotment option, and the sale of the Private Placement Units, a total of $230,000,000 was placed in the Trust Account. We incurred transaction costs of $15,590,100, consisting of $4,000,000 of cash underwriting fee, $10,950,000 of deferred underwriting fee, and $640,100 of other offering costs.
For the nine months ended August 31, 2026, cash used in operating activities was $934,273. Net income of $4,535,965 was affected by interest earned on cash and investments held in the Trust Account of $5,820,815. Changes in operating assets and liabilities provided $350,577 of cash for operating activities.
For the nine months ended August 31, 2025, cash used in operating activities was $115,011. Net loss of $167,328 was affected by changes in operating assets and liabilities which provided $52,317 of cash for operating activities.
As of August 31, 2026, we had cash and investments held in the Trust Account of $235,645,815 (including $5,645,815 of interest income, net of $175,000 interest withdrawn from the Trust Account for working capital purposes). We intend to use substantially all of the funds held in the Trust Account, including any amounts representing interest earned on the Trust Account (which interest shall be net of any permitted withdrawals and excluding deferred underwriting commissions), to complete our Business Combination. To the extent that our share capital or debt is used, in whole or in part, as consideration to complete our Business Combination, the remaining proceeds held in the Trust Account will be used as working capital to finance the operations of the target business or businesses, make other acquisitions and pursue our growth strategies.
As of August 31, 2026, we had cash of $1,522. We intend to use the funds held outside the Trust Account primarily to identify and evaluate target businesses, perform business due diligence on prospective target businesses, travel to and from the offices, plants or similar locations of prospective target businesses or their representatives or owners, review corporate documents and material agreements of prospective target businesses, and structure, negotiate and complete a Business Combination. In order to finance transaction costs in connection with a Business Combination, the initial shareholders, the Sponsor, or our officers and directors or their affiliates may, but are not obligated to, loan us funds from time to time or at any time, as may be required (“Working Capital Loans”). Each Working Capital Loan would be evidenced by a promissory note. The notes would be paid upon consummation of an initial Business Combination, without interest. In the event that the initial Business Combination does not close, we may use a portion of the working capital held outside the Trust Account to repay such loaned amounts, but no proceeds from the Trust Account would be used for such repayment. These loans would be repaid at completion of the initial Business Combination. As of August 31, 2026, no Working Capital Loans were outstanding.
We may need to obtain additional financing either to complete our Business Combination or because we become obligated to redeem a significant number of our Public Shares upon consummation of our Business Combination, in which case we may issue additional securities or incur debt in connection with such Business Combination. Our officers, directors and our Sponsor may, but are not obligated to, loan us funds as may be required. Accordingly, we may not be able to obtain additional financing. If we are unable to raise additional capital, we may be required to take additional measures to conserve liquidity, which could include, but not necessarily be limited to, curtailing operations, suspending the pursuit of a potential transaction, and reducing overhead expenses. We cannot provide any assurance that new financing will be available to it on commercially acceptable terms, if at all.
As of August 31, 2026, we had $255,000 of notes receivable that were past due. On October 2, 2026, we subsequently collected $150,000 of such notes receivable, with the remaining $105,000 outstanding. We intend to use the proceeds from the collection to fund our working capital needs.
Going Concern
In connection with our assessment of going concern considerations in accordance with FASB ASC 205-40, “Financial Statement Presentation — Going Concern,” our management has determined that we currently lack the liquidity needed to sustain operations for a reasonable period of time, which is considered to be at least one year from the date that the accompanying unaudited consolidated financial statements are issued as we expect to continue to incur significant costs in pursuit of our acquisition plans. In addition, our management has determined that if we are unable to complete an initial Business Combination within the Combination Period, then we will cease all operations except for the purpose of liquidating. These conditions raise substantial doubt about our ability to continue as a going concern. Our management plans to consummate an initial Business Combination prior to the end of the Combination Period. No adjustments have been made to the carrying amounts of assets or liabilities should we be required to liquidate after the end of the Combination Period. There can be no assurance that our plans to raise capital or to consummate an initial Business Combination will be successful.
149
Table of Contents
Off-Balance Sheet Arrangements
We have no obligations, assets or liabilities, which would be considered off-balance sheet arrangements as of August 31, 2026. We do not participate in transactions that create relationships with unconsolidated entities or financial partnerships, often referred to as variable interest entities, which would have been established for the purpose of facilitating off-balance sheet arrangements. We have not entered into any off-balance sheet financing arrangements, established any special purpose entities, guaranteed any debt or commitments of other entities, or purchased any non-financial assets.
Contractual Obligations
Underwriting Agreement
The underwriters were entitled to a deferred underwriting discount of 4.50% of the gross proceeds of the Initial Public Offering held in the Trust Account other than those sold pursuant to the underwriters’ over-allotment option and 6.50% of the gross proceeds sold pursuant to the underwriters’ over-allotment option, or $10,950,000 in the aggregate. The deferred underwriting discount will become payable to the underwriters from the amounts held in the Trust Account solely in the event the Company completes its Initial Business Combination.
Deferred Legal Fee
On March 18, 2026, we entered into an agreement with its legal advisor in connection with services rendered associated with the Business Combination Agreement. As of August 31, 2026, we had a total of $413,467 of deferred legal fee incurred to be paid to our legal advisor upon the earlier to occur of (i) the closing of the Business Combination, (ii) the termination of the Business Combination Agreement, and (iii) our liquidation. As of November 30, 2025, there were no deferred legal fee payable. The deferred fee is classified as a non-current liability in the accompanying unaudited consolidated balance sheets.
Service Provider Agreement
On May 11, 2026, we entered into an agreement with a service provider in connection with regulatory filings associated with the Business Combination Agreement. Upon completion of a successful Business Combination, this service provider will be entitled to a success fee of $100,000.
Critical Accounting Estimates
The preparation of the unaudited consolidated financial statements and related disclosures in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the unaudited consolidated financial statements, and income and expenses during the periods reported. Actual results could materially differ from those estimates. We have not identified any critical accounting estimates as of August 31, 2026.
Recent Accounting Pronouncements
Management does not believe that any recently issued, but not yet effective, accounting standards, if currently adopted, would have a material effect on our unaudited consolidated financial statements.
Year ended November 30, 2025
Results of Operations
We have neither engaged in any operations nor generated any revenues to date. Our only activities from November 26, 2024 (inception) through November 30, 2025 were organizational activities, those necessary to prepare for the Initial Public Offering, described below, and, after our Initial Public Offering, identifying a target company for a business combination. We do not expect to generate any operating revenues until after the completion of our Business Combination. We generate non-operating income in the form of interest income on marketable securities held in the trust account. We incur expenses as a result of being a public company (for legal, financial reporting, accounting and auditing compliance), as well as for due diligence expenses.
150
Table of Contents
For the year ended November 30, 2025 and for the period from November 26, 2024 (inception) through November 30, 2024, we had net loss of $204,391 and $1,275, respectively, which consisted of general and administrative costs.
Liquidity and Capital Resources
Until the consummation of the Initial Public Offering, our only source of liquidity was an initial purchase of shares of ordinary shares, par value $0.0001 per share, by the Sponsor, and loans from the Sponsor, which were repaid at the closing of the Initial Public Offering. As of November 30, 2025, we had cash of $432 and working capital deficit of $512,915.
Subsequent to November 30, 2025, on December 18, 2025, the Company consummated the Initial Public Offering of 23,000,000 Units, which includes the full exercise by the underwriters of their over-allotment option in the amount of 3,000,000 Units, at $10.00 per Unit, generating gross proceeds of $230,000,000. Simultaneously with the closing of the Initial Public Offering, the Company consummated the sale of 570,000 Private Placement Units at a price of $10.00 per Private Placement Unit, in a private placement to the Sponsor and Cantor Fitzgerald & Co., generating gross proceeds of $5,700,000. Of those 570,000 Private Placement Units, the Sponsor purchased 370,000 Private Placement Units, Cantor Fitzgerald & Co. purchased 200,000 Private Placement Units.
Following the closing of the Initial Public Offering and the private placement, a total of $230,000,000 was placed in the Trust Account. The proceeds held in the Trust Account will be held as cash items or invested in United States government treasury bills, bonds or notes, having a maturity of 185 days or less or in money market funds meeting certain conditions under Rule 2a-7 promulgated under the Investment Company Act until the earlier of (i) the consummation of the Company’s initial Business Combination (ii) the redemption of any ordinary shares included in the Units being sold in the Initial Public Offering that have been properly tendered in connection with a shareholder vote to amend the Company’s memorandum and articles of association to modify the substance or timing of its obligation to redeem 100% of such ordinary shares if it does not complete the Initial Business Combination within 24 months from the closing of the Initial Public Offering; and (iii) the Company’s failure to consummate a Business Combination within the prescribed time. To mitigate the risk that the Company might be deemed to be an investment company for purposes of the Investment Company Act, which risk increases the longer that it holds investments in the Trust Account, the Company may, at any time (based on the management team’s ongoing assessment of all factors related to the potential status under the Investment Company Act), instruct the trustee to liquidate the investments held in the Trust Account and instead to hold the funds in the Trust Account in cash or in an interest bearing demand deposit account at a bank. We incurred $15,590,100, consisting of $4,000,000 of cash underwriting fee, $10,950,000 of deferred underwriting fee, and $640,100 of other offering costs.
We intend to use substantially all of the funds held in the Trust Account, including any amounts representing interest earned on the Trust Account (which interest shall be net of any permitted withdrawals and excluding deferred underwriting commissions), to complete our Business Combination. To the extent that our share capital or debt is used, in whole or in part, as consideration to complete our Business Combination, the remaining proceeds held in the Trust Account will be used as working capital to finance the operations of the target business or businesses, make other acquisitions and pursue our growth strategies.
We intend to use the funds held outside the Trust Account primarily to identify and evaluate target businesses, perform business due diligence on prospective target businesses, travel to and from the offices, plants or similar locations of prospective target businesses or their representatives or owners, review corporate documents and material agreements of prospective target businesses, and structure, negotiate and complete a Business Combination.
In order to finance transaction costs in connection with a Business Combination, the Sponsor or an affiliate of the Sponsor or certain of the Company’s officers and directors may, but are not obligated to, loan the Company funds as may be required. If the Company completes a Business Combination, the Company would repay the Working Capital Loans. In the event that a Business Combination does not close, the Company may use a portion of the working capital held outside the Trust Account to repay the Working Capital Loans but no proceeds from the Trust Account would be used to repay the Working Capital Loans. Up to $1,500,000 of such Working Capital Loans may be convertible into private placement units of the post-Business Combination entity at a price of $10.00 per unit at the option of the lender. The units would be identical to the Private Placement Units.
151
Table of Contents
The Company has since completed its Initial Public Offering at which time capital in excess of the funds deposited in Trust Account and/or used to fund offering expenses was released to the Company for general capital purposes. Further, the Company expects to incur significant costs in pursuit to consummate a business combination and the Company’s business plan is dependent on the completion of a business combination within a prescribed period of time and if not completed will cease all operations except for the purpose of liquidating. In connection with the Company’s assessment of going concern considerations in accordance with FASB ASC 205-40, “Financial Statement Presentation — Going Concern,” the Company’s management has since reevaluated the Company’s liquidity and financial condition, and determined that the Company still lacks the liquidity to sustain operations for a reasonable period of time, which is considered to be one year from the date of the issuance of the financial statements. These conditions raise substantial doubt about the Company’s ability to continue as a going concern. Management plans to address this uncertainty with the Business Combination. There is no assurance that the Company’s plans to complete the Business Combination will be successful. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Off-Balance Sheet Arrangements
We have no obligations, assets or liabilities, which would be considered off-balance sheet arrangements as of November 30, 2025. We do not participate in transactions that create relationships with unconsolidated entities or financial partnerships, often referred to as variable interest entities, which would have been established for the purpose of facilitating off-balance sheet arrangements. We have not entered into any off-balance sheet financing arrangements, established any special purpose entities, guaranteed any debt or commitments of other entities, or purchased any non-financial assets.
Contractual Obligations
Underwriting Agreement
The underwriters were entitled to a deferred underwriting discount of 4.50% of the gross proceeds of the Initial Public Offering held in the Trust Account other than those sold pursuant to the underwriters’ over-allotment option and 6.50% of the gross proceeds sold pursuant to the underwriters’ over-allotment option, or $10,950,000 in the aggregate. The deferred underwriting discount will become payable to the underwriter from the amounts held in the Trust Account solely in the event the Company completes its Initial Business Combination.
Critical Accounting Estimates
The preparation of financial statements and related disclosures in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and income and expenses during the periods reported. Actual results could materially differ from those estimates. We have not identified any critical accounting estimates as of November 30, 2025.
Recent Accounting Pronouncements
In November 2023, the FASB issued Accounting Standards Update (“ASU”) 2023-07, “Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures.” The amendments in this ASU require disclosures, on an annual and interim basis, of significant segment expenses that are regularly provided to the chief operating decision maker (“CODM”), as well as the aggregate amount of other segment items included in the reported measure of segment profit or loss. The ASU requires that a public entity disclose the title and position of the CODM and an explanation of how the CODM uses the reported measure(s) of segment profit or loss in assessing segment performance and deciding how to allocate resources. Public entities will be required to provide all annual disclosures currently required by Topic 280 in interim periods, and entities with a single reportable segment are required to provide all the disclosures required by the amendments in this ASU and existing segment disclosures in Topic 280. This ASU is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted. The Company adopted ASU 2023-07 on December 1, 2024.
Management does not believe that any recently issued, but not yet effective, accounting standards if currently adopted would have a material effect on the accompanying financial statements.
152
Table of Contents
INFORMATION ABOUT ELECTRA
Unless the context otherwise requires, references in this “Information About Electra” to “Electra” refer to the business and operations of Electra Vehicles, Inc. and its consolidated subsidiaries prior to the Business Combination and to Electra Pubco and its consolidated subsidiaries following the consummation of the Business Combination.
Overview
Electra is an AI-driven B2B software company focused on accelerating the global transition to electrification by developing technology designed to unlock the full potential of battery systems. Electra provides an “AI Brain for Batteries” platform — a unified intelligence layer that enables battery systems to be monitored, optimized, and controlled across their full lifecycle. By combining AI and physics-informed battery modeling, Electra’s platform is designed to transform batteries from passive hardware into intelligent, adaptive, and increasingly autonomous assets. Electra provides battery intelligence solutions across major battery-powered sectors, including energy storage (BESS) for data centers, grid and renewables, robotics and humanoid systems, drones, space satellites and e-mobility — helping make electrification safer, more resilient, and more economically productive.
Electra has developed what it believes to be one of the most advanced AI-powered platforms for battery management in the world, underpinned by approximately 1.5 billion data points, four million lines of code, over 10,000 parameters, and nine patent families. Electra’s software is currently in pilot phase with several leading companies.
Industry and Market Opportunity
The growth of BESS, robotics, autonomous systems, and other battery-dependent applications has increased demand for AI-driven software-based battery management solutions that can improve performance (including monetization opportunities), extend useful life, and reduce safety risks such as thermal runaway. According to a 2025 report from Meticulous Research,, the AI-driven battery management systems market is projected to reach $18.5 billion by 2032. Electra believes that limitations in conventional battery management, including unplanned maintenance costs, accelerated degradation, and limited fault prediction, represent a significant opportunity for AI-driven solutions.
The increasing complexity of battery systems means that small inefficiencies can lead to large business costs, including through unplanned maintenance (which can increase energy costs by up to 30%) and lost return on investment resulting from inefficient usage and suboptimal charging strategies. As the market for battery optimization grows, the demand for comprehensive AI-driven battery intelligence platforms is expected to increase.
Technology
Electra has built an AI platform for battery intelligence, cloud-based analytics, and embedded edge AI, and intends to continue to develop it for closed-loop autonomous battery control.
Product Offerings
Electra provides two core software product offerings:
1. EVE-Ai | Battery Fleet Analytics (Cloud Solution)
Electra’s cloud-based product, EVE-Ai Battery Fleet Analytics, operates as a software-as-a-service (“SaaS”) platform that enables customers to monitor and optimize battery portfolios at scale. After customer acquisition and subscription setup, Electra handles data ingestion (connecting to BMS and telemetry systems or a customer’s cloud infrastructure), normalizes customer data into Electra’s proprietary data structure, and applies AI models to calculate state of a battery’s health, including its current charge, remaining power and remaining useful life. We use different AI models for each of these metrics that are tuned depending on specific battery chemistry. Analytics and insights are delivered to the customer via dashboards and APIs for full integration into third-party dashboards or tools. Electra is responsible for platform operations, customer and data privacy, model performance, updates, and issue resolution, with all fixes and improvements deployed centrally without burdening the customer.
153
Table of Contents
2. EVE-Ai | 360 Adaptive Controls (Embedded Solution)
Electra’s edge-AI solution, EVE-Ai 360 Adaptive Controls, embeds advanced intelligence directly into the battery management system (BMS), enabling real-time optimization of performance, extending battery lifespan and health, and proactively detecting and preventing potential faults.. In the embedded deployment model, Electra licenses its software and AI models to be deployed directly within the OEM’s system. The embedded AI model operates in real time, processing battery sensor inputs to deliver immediate insights and control capabilities. In parallel, relevant operational data is securely transmitted to Electra’s cloud, where it is used to continuously retrain and improve the models based on real-world conditions and usage patterns. Updated models (within object code) are provided to the OEM, allowing the OEM to redeploy to the edge in a controlled update cycle, creating a closed-loop system where edge intelligence is continuously enhanced by cloud-based learning.
Product Roadmap
Electra’s product roadmap is organized in three phases:
• Phase 1: Foundation Monitoring: Electra has built deep monitoring and diagnostic capabilities across battery fleets, providing foundational visibility into battery health and performance.
• Phase 2: Optimization (Present): Electra is currently embedding AI directly into the BMS to improve and optimize performance, extend lifespan, and deliver value to customers.
• Phase 3: Control (Future): Electra intends to enable closed-loop AI control, where batteries are managed autonomously to maximize value and reduce risk.
154
Table of Contents
Data Collection and AI Training
Electra’s neural networks are trained on a combination of proprietary laboratory data, digital twin-generated data, selected open datasets, and real-world operational data. Laboratory environments ensure high-quality, controlled datasets for accuracy and validation, while digital twins generate large volumes of synthetic data across diverse scenarios and battery chemistries. Open datasets add further breadth, and real-world data, collected from deployments where permitted, bring practical variability and continuous feedback to further train Electra’s neural network. This hybrid approach, combining physical, synthetic, and real-world data, enables continuous data enrichment and model refinement, expanding coverage across use cases, operating conditions, and battery technologies.
Traditional software tools rely on explicit, human-written rules to process data, whereas AI, machine learning (“ML”), and neural networks automatically discover patterns from data to create their own logic. Neither approach in isolation provides the accuracy or the time to market the end market requires. Electra designs and develops its own physics information AI/ML models.
By utilizing physics-based models as a starting point, Electra enables a hybrid approach often called Physics-Informed Machine Learning (“PIML”). This directly solves the biggest weaknesses of using pure traditional software or pure AI in isolation. In traditional software tools, a battery engineer writes deterministic equations to calculate State of Charge (SoC) or State of Health (SoH) based on voltage, temperature, and current. However, as an example, lithium-ion batteries are highly non-linear, and degradation involves chaotic chemical reactions that physics equations cannot perfectly predict over time. Here, the use of AI is particularly helpful.
The physics model handles the heavy lifting of the predictable, macro-level behavior. The AI/ML component only has to learn the residuals, the complex, unmodeled physical phenomena using our structured training data. By providing both the physics-based starting point and structured training data, we keep the models operating within a solution set governed by the boundaries of physics, reduce the computational power and energy and time required to train models.
Platform Architecture and Data
Electra’s training algorithms, data storage, and production infrastructure are hosted on Amazon Web Services (“AWS”). The platform is cloud-based and leverages managed infrastructure, enabling flexibility and scalability. Primary development, production code, and the Electra-owned database are maintained within the United States, with the ability to deploy instances in specific geographic regions based on customer needs, local laws, and data requirements. Electra develops its own training data and uses third-party data sources and open datasets.
Electra’s AI platform is hardware and chemistry-agnostic, meaning it is designed to operate across different battery chemistries and hardware platforms, which Electra believes provides a competitive advantage in a fragmented and evolving battery ecosystem.
Growth Strategy
Industry Verticals. Electra’s growth strategy is centered on expanding its AI battery intelligence platform across multiple industry verticals. Electra’s cloud-based Battery Fleet Analytics product and its embedded Adaptive Controls product are each designed to address different, though in some cases overlapping, consumer markets. Electra’s cloud-based product is primarily directed at energy infrastructure operators, fleet operators, and data centers, while its embedded product is primarily directed at automotive OEMs, advanced robotics companies, and industrial OEMs with embedded BMS architectures. In certain cases, customers may deploy both products. Electra targets the following industries:
• Energy Infrastructure (BESS for Grid, Renewables, Data Centers): Electra targets energy operators, EMS companies, system integrators, and BESS manufacturers with AI-driven monitoring, optimization, and predictive fault detection.
• Robotics and Autonomous Systems (humanoids, industrials, drones, space satellites): Electra targets manufacturers and OEMs, operations and maintenance providers, and system integrators with embedded and cloud-based battery intelligence.
• E-Mobility: Electra targets EV fleet operators, automotive OEMs, and Tier-1 suppliers with both cloud-based fleet analytics and embedded AI-driven BMS solutions.
155
Table of Contents
Introduction of New Products. Electra believes that its initial two products are just the beginning, and is developing other products that it plans to roll out as it gains more customers and its initial products become embedded with existing customers.
Acquisitions. Electra believes that there are opportunities to grow through acquisitions of companies, technologies, customers and personnel. The industry is currently fragmented with many small companies, and Electra believes that it can rapidly achieve scale through the addition of additional complementary businesses.
Customers
Electra currently has approximately 15 software customers who are in pilot mode for current products, primarily analytics. It has provided professional services to many other clients, many of whom are in discussions to become software customers. Electra offers three-year licensing agreements for analytics and eight-year licensing agreements for adaptive controls. Among its key technical engagements, Electra has embedded AI-driven battery insights within a BMS operating in third party laboratories for one of the world’s largest Tier 1 automotive suppliers based in South Korea.
Professional services were related to designing experiments for battery characterization, the performance of battery characterization through third party laboratories, the analysis of battery test results, and provision of the resulting outcome data.
Electra remains focused on growing its customer base which reduce the dependence on any one customer. However, because Electra is in the early stages of revenue growth and is focusing on transitioning from primarily providing services to selling its battery product lines, they expect to continue to depend on a few key customers for the next few months.
Sales and Marketing
Electra’s current sales approach is primarily technology-led, with a focus on demonstrating technical capability and value to prospective customers. Electra employs a direct sales model supplemented by selective indirect channels, including resellers, strategic partners, and platform integrations. Electra’s sales process begins with targeted outreach, followed by a pilot validation program, before deployment of Electra’s technology within a customer’s products or for use by a customer’s operations team. Sales cycles vary depending on deployment type (cloud versus embedded), integration complexity, and customer profile. Electra expects to expand its sales and distribution capabilities as its customer base grows.
Research and Development
Electra’s research and development activities are focused on continuously improving its AI models, expanding the capabilities of its cloud and embedded platforms, and advancing its product roadmap toward autonomous battery control. Key R&D priorities include model compression for edge deployment, real-time optimization and validation under strict safety-critical constraints.
Intellectual Property
Electra relies on a combination of patents, trade secrets, proprietary data, copyrights, and other intellectual property protections to maintain a competitive advantage. Electra believes that its proprietary data assets and trained AI models represent the most significant components of its intellectual property, with patents serving a complementary role. As of the date of this proxy statement/prospectus, Electra’s intellectual property portfolio includes nine patent families. Electra’s core AI and machine learning assets are hosted within a secure AWS environment and isolated inside a private virtual private cloud, ensuring they are not exposed to the public internet. Access is restricted through least-privilege IAM policies, and the SaaS-based architecture ensures that critical models and logic remain server-side, reducing exposure to reverse engineering. Electra also relies on confidentiality agreements, proprietary know-how, and trade secrets to protect its technology. As of June 30, 2026, our intellectual property portfolio included nine patent families, supported by 23 issued and pending patents, covering core algorithms across adaptive cell modeling, performance prediction, degradation, and real-time control technology, and creating durable competitive barriers.
156
Table of Contents
Electra captures a highly differentiated, multi-tiered battery dataset that provides a distinct competitive advantage for predictive modeling. A few qualities which make Electra’s data assets unique, includes:
• Multilevel Granularity: Electra captures high-resolution performance data simultaneously at the cell, module, and pack levels.
• Dual-Environment Validation: Electra’s dataset bridges the gap between reality and theory by pairing unfiltered, real-world operating data (e.g., actual vehicle driving profiles) with highly controlled laboratory testing.
• Proprietary Design of Experiments (DoE): Rather than relying on passive data collection, Electra uses proprietary stress-testing frameworks to systematically isolate how batteries respond to extreme variations in load, temperature, and duty cycles.
This comprehensive, cross-environmental matrix creates the robust foundation for Electra’s advanced models.
Competition
The battery intelligence and battery management system market is competitive, rapidly evolving, and highly fragmented, with a broad range of providers operating across battery analytics, modeling, monitoring, and embedded battery management software. Most participants focus on a specific layer of the battery management stack, typically system visibility, fleet analytics, or component-level modeling, and address a limited range of battery chemistries, hardware configurations, or end markets. Electra’s principal competitors include Twaice, Accure, Elysia, and Eatron. Electra also competes, in certain product areas or end markets, with a broader set of participants including Bosch and Schneider Electric, among others. None of Electra’s principal direct competitors are headquartered in the United States.
Electra believes it is differentiated from these competitors in three respects. First, Electra’s platform spans monitoring, optimization, and control within a single unified solution, whereas most competitors operate in only one or two of these layers and rely on third-party integrations to address the others. Second, Electra combines a physics-based and machine learning approach to battery intelligence, which Electra believes provides a more comprehensive and accurate platform than competitors relying on either methodology alone, and which underpins both its cloud-based fleet analytics and its embedded AI-driven battery management capabilities. Third, Electra’s solution is chemistry-, hardware-, and vertical-agnostic, supporting deployment across electric vehicles, stationary storage, data centers, robotics, drones, and industrial mobility — a breadth Electra believes is greater than that of competitors whose solutions are optimized for narrower configurations, specific battery chemistries, or single end-markets. Furthermore, Electra believes that the combination of its hybrid AI architecture, full-stack platform, breadth of supported applications, and accumulated real-world battery data, which Electra expects to compound as its deployments grow, will continue to differentiate Electra over time.
Government Regulation and Compliance
Electra’s customers are subject to various laws and regulations pertaining to battery safety, the transportation and disposal of batteries, and the use of batteries in vehicles. The regulatory environment applicable to battery technology, AI, energy, and EV-related industries is complex and evolving, and Electra’s operations may be impacted by changes to laws, regulations, and government incentive programs.
Government programs currently in effect in the United States and globally provide various incentives and subsidies that support the growth of the energy storage, data center markets, and EVs, which indirectly support demand for Electra’s products and services. However, the availability, scope, and duration of such incentives and subsidies may change as a result of legislative, regulatory, or executive action.
In addition, as AI technologies become more widely adopted, the regulatory landscape governing AI development, deployment, and transparency continues to evolve. Electra’s use of AI and machine learning in its products and services may be subject to new or modified regulations or standards.
157
Table of Contents
Employees and Human Capital
As of the date of this proxy statement/prospectus, Electra had approximately 22 full-time employees who are physically located across six countries. Electra’s operations are primarily split between the United States and Italy. Approximately 65% of Electra’s workforce holds Ph.D., master’s or equivalent advanced degrees. 14 employees are involved in technology development. The remainder of our employees are in sales, marketing, and executive roles. Employees jointly work across both software and product offerings.
Electra’s ability to attract, retain, and develop highly skilled technical talent, particularly in AI, machine learning, and battery science, is critical to its success. Electra competes for talent with other technology companies, research institutions, and large manufacturers. None of Electra’s employees are represented by labor unions or covered by collective bargaining agreements. Electra considers its relationship with its employees to be good.
Electra’s human capital resources objectives include, as applicable, identifying, recruiting, retaining, incentivizing and integrating existing and additional employees. The principal purposes of Electra’s equity incentive plans are to attract, retain and motivate selected employees, consultants and directors through the granting of stock-based compensation awards and cash-based performance bonus awards.
Facilities
Electra’s principal executive offices are located at 110 K Street, Suite 330, Boston, Massachusetts 02127. Electra also maintains operations in Italy. Electra believes that its existing facilities are adequate for its current operations.
Legal Proceedings
From time to time, Electra may be subject to legal proceedings and claims in the ordinary course of business. Electra is not presently a party to any legal proceedings that, if determined adversely to it, would individually or taken together have a material adverse effect on its business, results of operations, financial condition or cash flows.
Cybersecurity
Electra has implemented a cybersecurity program designed to protect the confidentiality, integrity, and availability of its information systems and the data stored therein. Electra’s cybersecurity measures include, among other things, the use of encryption technologies, access controls, network segmentation, and monitoring and logging tools to detect and respond to potential threats. Electra maintains policies and procedures governing data security, incident response, and secure software development practices. Electra also applies data governance and AI transparency practices to promote traceability and accountability in its use of machine learning models.
As of the date of this proxy statement/prospectus, Electra has not experienced any cybersecurity incidents that have materially affected, or are reasonably likely to materially affect, its business strategy, results of operations, or financial condition.
158
Table of Contents
Management’s Discussion and Analysis of Financial Condition and
Results of Operations of Electra
Unless otherwise indicated or the context otherwise requires, references in this section to “Electra,” “we,” “us,” “our,” and other similar terms refer to Electra Vehicles, Inc. and its subsidiary prior to the Business Combination, and to Electra AI, Inc. and its subsidiaries, after giving effect to the Business Combination. The following discussion and analysis provides information that management believes is relevant to an assessment and understanding of our results of operations and financial condition. This discussion and analysis should be read together with the sections of the proxy statement/prospectus entitled “Information about Electra,” and the Company’s unaudited condensed consolidated financial statements as of and for the six months ended June 30, 2026, and related notes thereto that are included elsewhere in the proxy statement/prospectus. It should also be read in conjunction with our audited consolidated financial statements for the year ended December 31, 2025, and related notes included elsewhere in this proxy statement/prospectus. In addition to historical financial information, this discussion and analysis contains forward-looking statements based upon current expectations that involve risks, uncertainties, and assumptions. See the section entitled “Cautionary Note Regarding Forward-Looking Statements.” Actual results and timing of selected events may differ materially from those anticipated in these forward-looking statements as a result of various factors, including those set forth under “Risk Factors” or elsewhere in the proxy statement/prospectus.
Overview
We are an artificial intelligence and machine learning software company. We develop data analytics and control software for battery systems, designed to accelerate the time to market of new batteries, improve battery performance and health over their operating life, reduce system and operational costs, and enhance the safety of vehicles, battery energy storage systems, and other battery-powered equipment. We were incorporated in Delaware in 2015, are headquartered in Boston, Massachusetts, and operate internationally, including through our wholly owned Italian subsidiary (“our Italian subsidiary”), Electra Vehicles Europe, S.R.L., which conducts research and development and European sales and marketing activities. As of June 30, 2026, we had 22 full-time employees worldwide.
Our principal product is EVE-Ai, an AI-driven battery intelligence platform deployed across cloud and embedded environments. The platform’s cloud product, branded EVE-Ai Battery Fleet Analytics, provides asset-wide monitoring, predictive analytics, and portfolio-level optimization. The platform’s embedded product, branded EVE-Ai Adaptive Controls — Embedded SoXe, executes real-time, AI-based calculations of battery metrics onboard battery systems through integration with battery management system environments. Both products are built on our proprietary technology, which combines a physics-informed battery model with a machine-learning model that continues to learn from operating data over the life of the asset. Our software is hardware-, chemistry-, and cloud-agnostic and is deployed in cloud, embedded, or hybrid configurations, depending on customer requirements. We have historically generated revenue primarily from two sources: subscriptions to our hosted AI/ML platforms and professional services. Our target customers are original equipment manufacturers, tier 1 automotive suppliers, battery energy storage system operators, data center operators, fleet managers, robotics manufacturers, and system integrators. We sell directly and through established go-to-market partners, and we have served customers globally. To date, the significant majority of our revenue has been generated in the form of professional services revenue, with product subscription revenue representing a smaller portion of the mix. Consistent with our shift towards a subscription-based revenue model, we expect our revenue mix to shift toward subscription arrangements over time.
Our software products are currently in pilot phase with several customers. We have not yet achieved significant commercial adoption of our platform and have incurred net losses since inception. Our revenue declined in the six months ended June 30, 2026 and the year ended December 31, 2025, compared to the respective prior-year periods, primarily as a result of the termination of the contract with our former largest customer in the fourth quarter of 2025 and the deliberate shift of our business from a professional services orientation to a subscription-based model. We believe the subscription-based model offers higher margins and is more scalable over time. As of June 30, 2026, we had cash and cash equivalents of $29,782 and a working capital deficit of $5,071,555, and management has concluded that substantial doubt exists about our ability to continue as a going concern. See “Liquidity and Capital Resources.”
159
Table of Contents
Our strategic focus is on the development and commercialization of a software-defined intelligence layer for battery systems. We believe the accelerating deployment of batteries across our target end markets is creating demand for software that enables meaningful improvements in battery performance, longevity, and safety without corresponding increases in cell count, pack size, or hardware cost. As of June 30, 2026, our intellectual property portfolio included nine patent families, supported by 23 issued and pending patents, covering core algorithms across adaptive cell modeling, performance prediction, degradation, and real-time control technology, and creating durable competitive barriers.
Business Combination with Iron Horse Acquisition II Corp.
On April 21, 2026, we entered into a Merger Agreement (as amended and as may be further amended and/or restated from time to time, the “Merger Agreement”) with Iron Horse Acquisition II Corp., a Cayman Islands exempted company (“IRHO”), and IRHO Merger Sub, Inc., a Delaware corporation and wholly owned subsidiary of IRHO (“Merger Sub”). Pursuant to the Merger Agreement, IRHO will domesticate as a Delaware corporation and be renamed “ELECTRA AI, Inc.” (the “Domestication”), after which Merger Sub will merge with and into Electra, with Electra continuing as the surviving corporation and a wholly owned subsidiary of IRHO (the “Merger” and, together with the Domestication, the “Business Combination”). Following the consummation of the Business Combination, the common stock of the combined company is expected to be listed on the Nasdaq Stock Market under the ticker symbol “___”, subject to the satisfaction of applicable listing requirements.
The aggregate merger consideration payable to our equity holders consists of 25,000,000 shares of IRHO common stock (subject to adjustment as set forth in the Merger Agreement), of which not more than a number equal to the conversion ratio set forth in the Merger Agreement multiplied by 3,994,802 will be Class B common stock (entitled to ten votes per share) and the remainder will be Class A common stock (entitled to one vote per share). At the effective time of the Merger, each outstanding share of our common stock and preferred stock, each outstanding Company stock option, and each Convertible Note (as defined in the Merger Agreement) will be converted into IRHO common stock or, in the case of stock options, options to acquire IRHO common stock, in each case based on a conversion ratio set forth in the Merger Agreement. In connection with the Business Combination, holders of our common stock, preferred stock and options, will also have a contingent right to receive, on a pro rata basis, up to 15,000,000 additional shares of IRHO common stock as earnout consideration (the “Earnout Shares”). The Earnout Shares are issuable in three equal tranches upon the achievement of specified share price or annual run rate milestones during the five-year period following the consummation of the Business Combination, subject to the terms and conditions set forth in the Merger Agreement.
The Business Combination is subject to approval by the stockholders of both Electra and IRHO and other customary closing conditions, including a requirement that Parent Closing Cash (as defined in the Merger Agreement) at the Closing shall equal or exceed $30,000,000. As of the date of this proxy statement/prospectus, the Business Combination has not been consummated. For additional information regarding the Business Combination, see the section entitled “The Business Combination Proposal” included elsewhere in this proxy statement/prospectus.
Recent Developments
As of the date of this proxy statement/prospectus, we have entered into three-year licensing agreements with approximately 15 customers including Westbrook Racing, Mooving, Propel Industries, TAPFIN, Sun Mobility, Omega Seiki Mobility, Exicom and Maxwell, and a partner agreement with Naoris Quantum Protocol Inc. As of the date of this proxy statement/prospectus, we have not recognized material revenue under these agreements. The amount and timing of revenue under these agreements will depend on customer deployment schedules and other factors outside our control. See “— Key Factors Affecting Our Results of Operations and Material Trends — Customer concentration and long/variable sales cycles” and “— Liquidity and Capital Resources.”
Key Factors Affecting Our Results of Operations and Material Trends
We believe that our future results of operations will depend on many factors, including those described below. While these areas present significant business opportunities, they also present risks and uncertainties that we must manage to achieve our business objectives. If we are unable to address these challenges, our business, results of operations, and financial condition could be materially and adversely affected. See “Risk Factors” included elsewhere in this proxy statement/prospectus.
160
Table of Contents
Pilot stage and historical operating losses
We have a limited operating history at scale and have not yet achieved significant commercial adoption of our platform. We have incurred net losses in each period since inception, including net losses of $3,938,910 for the six months ended June 30, 2026 and $5,289,922 and $5,603,039 for the years ended December 31, 2025 and 2024, respectively, and we expect to continue to incur net losses for the foreseeable future as we continue to invest in the development and commercialization of our software platform and build out the infrastructure required to operate as a public company following the Business Combination. Our historical results of operations are not necessarily indicative of results that may be achieved in any future period. See “— Liquidity and Capital Resources” below.
Commercial adoption of AI/ML battery analytics software and competitive landscape
Our target verticals include battery energy storage system (“BESS”) owners and operators, energy infrastructure customers, including grid-scale storage operators and data center operators, automotive original equipment manufacturers (“OEMs”) and tier 1 suppliers, commercial and industrial fleet managers, and, increasingly, robotics and autonomous systems manufacturers, including humanoid robotics, industrial automation, drones, and space satellite applications. Our revenue depends on the pace at which customers in these verticals adopt artificial-intelligence- and machine-learning-enabled battery analytics software. While we initially focused our commercial activities primarily on the automotive and e-mobility sectors, we are progressively prioritizing energy infrastructure customers, where we believe the combination of accelerating battery deployment, asset-economics sensitivity, and limited in-house software capabilities is creating a particularly favorable environment for adoption of our platform. Although we have demonstrated the technical capability of our platform through customer deployments and pilot programs, the market for AI-enabled battery analytics software remains in an early stage of development. The rate of adoption depends on a number of factors that are largely outside of our control, including the volume and pace of battery deployments by our target customers, their willingness to procure software on a hosted subscription basis rather than to develop comparable capabilities in-house, the evolution of industry standards for battery data architectures, and the availability and quality of the battery operating data on which our models rely.
The market for battery analytics software is also competitive and evolving. We compete with a number of private specialist providers of battery analytics and battery management software, none of which are publicly traded or headquartered in the United States; with larger, better-resourced companies in certain product areas or end markets; and with the in-house engineering capabilities of certain prospective customers that may elect to develop comparable software internally rather than to procure it from a third party. Unlike most competitors, which rely on either machine-learning-based analytics or physics-based modeling, our platform combines both methodologies in a single unified solution.
Customer concentration and long/variable sales cycles
Our hosted subscription and professional services contracts are typically sold into enterprise procurement environments, and our sales cycles can extend over many months from initial engagement through contract execution. As a result of our limited operating history at scale, we have historically been, and continue to be, highly dependent on a small number of customers, and at times on a single customer, for substantially all of our revenue. Although we have engaged with a broader set of customers and counterparties through pilots, technical evaluations, and early-stage commercial deployments, the timing and amounts at which these engagements convert into recognized revenue can vary materially. For the six months ended June 30, 2026, one customer accounted for approximately 81% of our total revenue (compared to 100% for one customer for the six months ended June 30, 2025), and as of June 30, 2026, a different customer accounted for 100% of our total accounts receivable. For the year ended December 31, 2025, one customer accounted for 94% of our total revenue, and as of December 31, 2025, this same customer represented approximately 98% of our total accounts receivable. For the year ended December 31, 2024, one customer accounted for 93% of our total revenue, and as of December 31, 2024, one customer represented approximately 74% of our total accounts receivable. The contract with the customer that accounted for substantially all of our revenue in the year ended December 31, 2025, was terminated by mutual agreement in the fourth quarter of 2025, and we do not expect to recognize material revenue from this customer in subsequent periods. Consistent with our deliberate shift from a professional services orientation to a subscription-based model, we focus our commercial efforts on our Battery Fleet Analytics and Adaptive Controls solutions, where we believe
161
Table of Contents
the addressable market opportunity is larger. As of the date of this proxy statement/prospectus, we have entered into three-year licensing agreements with approximately 15 customers. As these engagements first begin with a pilot phase, none had generated subscription revenue as of this date. See “— Recent Developments.” We expect to continue to depend on a small number of customers for substantially all of our revenue until such pilots convert to commercial agreements, which we currently do not expect before the end of 2026. We are actively pursuing additional customer engagements and expansion opportunities within our existing customer relationships to replace this revenue with subscription-based revenue, although the timing and pace at which we are able to do so will depend on customer adoption cycles and other factors that are largely outside of our control. The timing of contract execution, the timing of customer onboarding, and the commencement of subscription billing can also cause our reported revenue to vary materially from period to period.
Investments in our technology platform and continued research and development
Continued investment in our AI- and machine-learning-enabled battery intelligence platform — encompassing both our Battery Fleet Analytics (cloud) and Adaptive Controls (embedded) solutions — is central to our growth strategy. Our research and development activities are directed toward expanding our proprietary data set, technical capabilities, broadening the range of battery applications and chemistries our platform supports, and driving greater and faster customer adoption in our target verticals. Our research and development efforts consist primarily of personnel costs for our engineering, product, and research and development teams. We intend to continue to invest in research and development. Although we expect research and development expenses to continue to represent a significant portion of our operating expenses in the near term, we expect them to decline as a percentage of revenue over time as we scale our subscription customer base.
Regulatory environment
The demand for our platform is, and we expect it will continue to be, influenced by the evolving regulatory environment governing battery safety, performance, and lifecycle data. Our customers are subject to various laws and regulations pertaining to battery safety, the transportation and disposal of batteries, and the use of batteries in stationary energy storage (BESS), data centers, electric vehicles, drones, humanoid and industrial robots, and satellites.
The regulatory environment applicable to battery technology, AI, energy, and EV-related industries is complex and evolving, and our operations may be impacted by changes to laws, regulations, and government incentive programs. Government programs currently in effect in the United States and globally provide various incentives and subsidies that support the growth of stationary energy storage (BESS), data centers, electric vehicles, drones, humanoid and industrial robots, and satellites, which indirectly support demand for our platform; however, the availability, scope, and duration of such incentives and subsidies may change as a result of legislative, regulatory, or executive action.
In addition, as AI technologies become more widely adopted, the regulatory landscape governing AI development, deployment, and transparency continues to evolve, and our use of AI and machine learning in our products and services may be subject to new or modified regulations or standards. Our embedded solutions may require ISO certifications and compliance with other industry safety and quality standards, and achieving and maintaining such certifications can be time-consuming and costly. To the extent these regulatory developments require or encourage more granular battery data collection and reporting, we expect they may increase demand for software of the type we provide. Conversely, changes that scale back incentives for battery deployments, or that require us to modify our platform to maintain compliance, could adversely affect our results of operations.
Foreign operations and currency
We conduct a portion of our research and development and European sales and marketing activities through our Italian subsidiary, whose functional currency is the Euro. As a result, a portion of our expenses — and, to a lesser extent, of our revenue — is denominated in Euro, and our consolidated results of operations are affected by fluctuations in the Euro-to-U.S. dollar exchange rate. As our operations outside the United States grow, we expect our exposure to foreign currency translation and transaction effects to increase. See “Quantitative and Qualitative Disclosures About Market Risk — Foreign Currency Risk” below.
162
Table of Contents
Macroeconomic and industry conditions
Unfavorable economic conditions, both in the United States and abroad, may negatively affect the growth of our business and our operating results. Our business and results of operations, as well as those of our customers and prospective customers, may be affected by global and regional macroeconomic conditions and events, including inflation, changes in monetary policy and interest rates, fluctuations in foreign currency exchange rates, geopolitical tensions, and new trade policies. Adverse conditions in the markets in which our customers operate — including the automotive, energy storage, fleet management, and battery manufacturing sectors — have in the past caused, and may in the future cause, customers to delay, reduce, or cancel planned software and analytics investments. Our business is also closely tied to the continued growth and adoption of battery-powered systems across the industries we serve, including battery energy storage systems, data centers, robotics and autonomous systems. The pace of this transition to electrification is subject to significant uncertainty and may be influenced by factors beyond our control, including changes in government policies and incentive programs, fluctuations in the relative cost of fossil fuels and renewable energy, and developments in alternative energy storage technologies.
Components of Results of Operations
The following is a description of the principal line items included in our consolidated statements of operations and comprehensive loss.
Revenue
We have historically generated revenue from two sources: (i) subscriptions to our hosted, artificial-
intelligence-enabled battery analytics and controls software platforms, and (ii) professional services, consisting primarily of battery characterization, data analysis and modeling. We recognize revenue in accordance with ASC 606, Revenue from Contracts with Customers, upon the transfer of control of the promised services to the customer in an amount that reflects the consideration we expect to receive in exchange for those services.
Subscription revenue is generally recognized over the subscription term. For subscription arrangements based on battery-capacity usage, we recognize revenue monthly when we have determined we have a right to consideration from the customer; for subscription arrangements that are not usage-based, we recognize revenue ratably over the subscription term. Professional services are generally priced on a fixed-fee basis and are recognized on a proportional-performance basis as services are provided.
Our contracts with customers frequently contain multiple performance obligations. We allocate the transaction price to each distinct performance obligation on a relative standalone selling price basis. See Note 3 to our audited consolidated financial statements for a further description of our revenue recognition policy.
Cost of revenue
Cost of revenue consists primarily of (i) personnel costs (including salaries and benefits) for employees engaged in customer support, implementation, and platform operations, (ii) costs of third-party service providers engaged to deliver professional services directly or indirectly to our customers and (iii) third-party data storage, hosting, and cloud infrastructure costs incurred to deliver our subscription platforms.
Sales and marketing
Sales and marketing expense consists primarily of personnel-related costs (including salaries, payroll taxes, benefits, bonuses, and sales commissions) for our sales and marketing employees, together with travel, conferences and trade-show participation, advertising and promotional activity, and software costs directly attributable to our sales and marketing functions.
Research and development
Research and development expense consists primarily of personnel-related costs (including salaries, payroll taxes, benefits, and bonuses) for our engineering, product, and research and development employees, together with third-party engineering and consulting services and software costs directly attributable to our research and development functions. Research and development costs are expensed as incurred. In accordance with ASC 350-40, Internal-Use
163
Table of Contents
Software, we expense software development costs incurred during the application development stage as incurred, as we have determined that such costs are managed in a manner that does not lend itself to capitalization. Patent application costs are capitalized as intangible assets and amortized over their estimated useful lives.
General and administrative
General and administrative expense consists primarily of personnel-related costs (including salaries, payroll taxes, benefits, bonuses, and share-based compensation) for our executive, finance, legal, human resources, and other administrative employees; professional fees for legal, accounting, audit, tax, and other consulting and advisory services; insurance, including directors’ and officers’ liability coverage; corporate-level information technology, facilities, and travel costs; and depreciation and amortization.
Other income (expense)
Other income (expense) consists of the following components:
Net gain on digital assets
Prior to their substantial liquidation during 2025, we held digital assets, consisting primarily of bitcoin and, to a lesser extent, ether and solana, which we measured at fair value with changes recognized in earnings in accordance with ASU 2023-08. Net gain on digital assets reflects mark-to-market changes in the fair value of our digital assets during the periods we held them and gains or losses recognized on disposition. We substantially liquidated our digital assets during the year ended December 31, 2025, and held no digital assets with material value as of December 31, 2025.
Interest income
Interest income consists primarily of interest earned on cash and cash equivalents and short-term investments.
Interest expense
Interest expense consists of interest on our Economic Injury Disaster Loan, vehicle loan and line of credit, short-term borrowings and advances from investors.
Other income
Other income consists of miscellaneous income, including grants, sponsorships, and bank rewards received in connection with our operations.
Income tax provision
Income tax provision consists of U.S. federal, state, and foreign income taxes. We have incurred net operating losses since inception and have recorded a full valuation allowance against our net deferred tax assets, as we have concluded that it is more likely than not that those deferred tax assets will not be realized.
Other comprehensive income (loss)
Other comprehensive income (loss) consists of foreign currency translation adjustments arising on the translation of the financial statements of our Italian subsidiary, Electra Vehicles Europe, S.R.L., whose functional currency is the Euro, into U.S. dollars for consolidation purposes.
164
Table of Contents
Results of Operations and Comprehensive Loss
Comparison of the Six Months Ended June 30, 2026 and 2025
The following table sets forth our results of operations for the periods indicated:
| Six Months | Six Months | $ Change | % Change | ||||||||||||
| Revenues | $ | 80,000 |
| $ | 718,871 |
| $ | (638,871 | ) | -88.87 | % | ||||
| Operating expenses |
|
|
|
|
|
|
| ||||||||
| Cost of revenue |
| 24,129 |
|
| 581,204 |
|
| (557,075 | ) | -95.85 | % | ||||
| Sales and marketing |
| 395,281 |
|
| 385,444 |
|
| 9,837 |
| 2.55 | % | ||||
| Research and development |
| 1,155,633 |
|
| 1,327,209 |
|
| (171,576 | ) | -12.93 | % | ||||
| General and administrative |
| 2,390,724 |
|
| 1,112,093 |
|
| 1,278,631 |
| 114.98 | % | ||||
| Total operating expenses |
| 3,965,767 |
|
| 3,405,950 |
|
| 559,817 |
| 16.44 | % | ||||
| Loss from operations |
| (3,885,767 | ) |
| (2,687,079 | ) |
| (1,198,688 | ) | 44.61 | % | ||||
| Other income (expense) |
|
|
|
|
|
|
| ||||||||
| Net gain on digital assets |
| — |
|
| 102,366 |
|
| (102,366 | ) | -100.00 | % | ||||
| Interest income |
| 61 |
|
| 5,994 |
|
| (5,933 | ) | -98.98 | % | ||||
| Interest expense |
| (57,411 | ) |
| (6,297 | ) |
| (51,114 | ) | NM |
| ||||
| Other income |
| 4,207 |
|
| 15,240 |
|
| (11,033 | ) | -72.40 | % | ||||
| Total other income (expense), net |
| (53,143 | ) |
| 117,303 |
|
| (170,446 | ) | -145.30 | % | ||||
| Net loss before income taxes |
| (3,938,910 | ) |
| (2,569,776 | ) |
| (1,369,134 | ) | 53.28 | % | ||||
| Income tax provision |
| — |
|
| — |
|
| — |
| NM |
| ||||
| Net loss | $ | (3,938,910 | ) | $ | (2,569,776 | ) | $ | (1,369,134 | ) | 53.28 | % | ||||
| Other comprehensive income (loss) |
|
|
|
|
|
|
| ||||||||
| Foreign currency translation adjustment |
| 12,560 |
|
| (16,968 | ) |
| 29,528 |
| NM |
| ||||
| Total other comprehensive income (loss) |
| 12,560 |
|
| (16,968 | ) |
| 29,528 |
| NM |
| ||||
| Comprehensive loss | $ | (3,926,350 | ) | $ | (2,586,744 | ) | $ | (1,339,606 | ) | 51.79 | % | ||||
____________
NM — Not meaningful.
Revenue
Revenue consists of subscription revenue from our hosted AI/ML battery analytics platforms and professional services revenue. We have deliberately shifted our business from a professional services orientation to a subscription-based model, which we believe offers higher margins and is more scalable over time. As part of this shift, we no longer market professional services as a standalone offering and do not expect to generate material standalone professional services revenue in future periods.
The following table presents revenue disaggregated by type for the periods indicated:
| Six Months | Six Months | $ Change | % Change | ||||||||||
| Professional services | $ | 80,000 | $ | 642,296 | $ | (562,296 | ) | -87.54 | % | ||||
| Subscriptions |
| — |
| 76,575 |
| (76,575 | ) | -100.00 | % | ||||
| Total Revenue | $ | 80,000 | $ | 718,871 | $ | (638,871 | ) | -88.87 | % | ||||
165
Table of Contents
Professional services revenue
Professional services revenue decreased $562,296, or 87.5%, to $80,000 for the six months ended June 30, 2026, compared to $642,296 for the six months ended June 30, 2025. The decrease was primarily attributable to the termination of the contract with our former largest customer described above and our deliberate shift from a professional services orientation to a subscription-based model. Professional services revenue for the six months ended June 30, 2026 consisted primarily of the recognition of revenue that was deferred as of December 31, 2025 under a contract with one customer other than our former largest customer.
Subscription revenue
We did not recognize subscription revenue for the six months ended June 30, 2026, compared to $76,575 for the six months ended June 30, 2025. The decrease reflects the termination of the contract with our former largest customer, which generated all of our subscription revenue in the prior-year period.
Cost of revenue
Cost of revenue decreased $557,075, or 95.8%, to $24,129 for the six months ended June 30, 2026, compared to $581,204 for the six months ended June 30, 2025. The decrease was primarily attributable to (i) a $461,993 decrease in third-party characterization services and (ii) a $98,585 decrease in third-party data storage and hosting costs, in each case reflecting the reduction in revenue following the termination of our largest customer contract described above.
Sales and marketing
Sales and marketing expense was $395,281 for the six months ended June 30, 2026, compared to $385,444 for the six months ended June 30, 2025, and remained relatively consistent between periods, as higher conference, trade-show and marketing personnel costs of $114,671 were largely offset by lower sales personnel costs of $101,575, reflecting a reduction in sales headcount.
Research and development
Research and development expense decreased $171,576, or 12.9%, to $1,155,633 for the six months ended June 30, 2026, compared to $1,327,209 for the six months ended June 30, 2025. The decrease was primarily attributable to (i) a $160,799 decrease in engineering and research and development personnel costs, including salaries, payroll taxes, bonuses and employee benefits, reflecting a reduction in research and development headcount, and (ii) a $31,999 decrease in miscellaneous engineering costs, partially offset by (iii) a $30,601 increase in third-party professional services supporting research and development activities.
General and administrative
General and administrative expense increased $1,278,631, or 115.0%, to $2,390,724 for the six months ended June 30, 2026, compared to $1,112,093 for the six months ended June 30, 2025. The increase was primarily attributable to (i) a $1,231,340 increase in professional fees, principally accounting and advisory services, including costs incurred prior to the execution of the Merger Agreement and to prepare for operating as a public company, which did not qualify for deferral as transaction costs, (ii) a $57,062 increase in base personnel costs, and (iii) a $46,427 increase in stock-based compensation expense, partially offset by (iv) a $63,983 decrease in personnel bonuses.
Other income (expense), net
Other income (expense), net changed by $170,446, from net other income of $117,303 for the six months ended June 30, 2025 to net other expense of $53,143 for the six months ended June 30, 2026. The change was primarily attributable to (i) the absence of the $102,366 net gain on digital assets recognized in the prior-year period, as we liquidated our digital assets during 2025, and (ii) a $51,114 increase in interest expense, principally on our line of credit, advances from investors and short-term borrowings entered into in 2026.
166
Table of Contents
Comparison of the Years ended December 31, 2025 and 2024
The following table sets forth our results of operations for the periods indicated:
| Year Ended | Year Ended | $ Change | % Change | ||||||||||||
| Revenues | $ | 1,088,497 |
| $ | 1,713,654 |
| $ | (625,157 | ) | -36.48 | % | ||||
| Operating expenses |
|
|
|
|
|
|
| ||||||||
| Cost of revenue |
| 1,405,035 |
|
| 1,115,196 |
|
| 289,839 |
| 25.99 | % | ||||
| Sales and marketing |
| 676,297 |
|
| 1,429,765 |
|
| (753,468 | ) | -52.70 | % | ||||
| Research and development |
| 2,522,658 |
|
| 3,789,408 |
|
| (1,266,750 | ) | -33.43 | % | ||||
| General and administrative |
| 2,159,183 |
|
| 2,408,351 |
|
| (249,168 | ) | -10.35 | % | ||||
| Total operating expenses |
| 6,763,173 |
|
| 8,742,720 |
|
| (1,979,547 | ) | -22.64 | % | ||||
| Loss from operations |
| (5,674,676 | ) |
| (7,029,066 | ) |
| 1,354,390 |
| -19.27 | % | ||||
|
|
|
|
|
|
|
| |||||||||
| Other income (expense) |
|
|
|
|
|
|
| ||||||||
| Net gain on digital assets |
| 358,390 |
|
| 1,194,748 |
|
| (836,358 | ) | -70.00 | % | ||||
| Interest income |
| 6,085 |
|
| 165,886 |
|
| (159,801 | ) | -96.33 | % | ||||
| Interest expense |
| (11,926 | ) |
| (3,001 | ) |
| (8,925 | ) | NM |
| ||||
| Other income |
| 32,661 |
|
| 68,394 |
|
| (35,733 | ) | -52.25 | % | ||||
| Total other income (expense), net |
| 385,210 |
|
| 1,426,027 |
|
| (1,040,817 | ) | -72.99 | % | ||||
|
|
|
|
|
|
|
| |||||||||
| Net loss before income taxes |
| (5,289,466 | ) |
| (5,603,039 | ) |
| 313,573 |
| -5.60 | % | ||||
| Income tax provision |
| (456 | ) |
| — |
|
| (456 | ) | NM |
| ||||
| Net loss | $ | (5,289,922 | ) | $ | (5,603,039 | ) | $ | 313,117 |
| -5.59 | % | ||||
|
|
|
|
|
|
|
| |||||||||
| Other comprehensive income (loss) |
|
|
|
|
|
|
| ||||||||
| Foreign currency translation adjustment |
| 20,437 |
|
| (139,850 | ) |
| 160,287 |
| NM |
| ||||
| Total other comprehensive income (loss) |
| 20,437 |
|
| (139,850 | ) |
| 160,287 |
| NM |
| ||||
| Comprehensive loss | $ | (5,269,485 | ) | $ | (5,742,889 | ) | $ | 473,404 |
| -8.24 | % | ||||
____________
NM — Not meaningful.
| Year Ended | Year Ended | $ Change | % Change | ||||||||||
| Professional services | $ | 973,634 | $ | 1,675,366 | $ | (701,732 | ) | -41.89 | % | ||||
| Subscriptions |
| 114,863 |
| 38,288 |
| 76,575 |
| 200.00 | % | ||||
| Total Revenue | $ | 1,088,497 | $ | 1,713,654 | $ | (625,157 | ) | -36.48 | % | ||||
Professional services revenue
Professional services revenue decreased $701,732, or 41.9%, to $973,634 for the year ended December 31, 2025, compared to $1,675,366 for the year ended December 31, 2024. The decrease was primarily attributable to a reduction in revenue recognized under our largest customer contract, performance of which was suspended during the second quarter of 2025 and which was terminated by mutual agreement during the fourth quarter of 2025 in exchange for consideration of $300,000, as further described in Note 15 to our consolidated financial statements. The decrease also reflected our deliberate shift from a professional services orientation to a subscription-based model. Professional services revenue is recognized on a proportional performance basis as services are delivered.
Subscription revenue
Subscription revenue increased $76,575, or 200.0%, to $114,863 for the year ended December 31, 2025, compared to $38,288 for the year ended December 31, 2024. The increase was primarily attributable to revenue recognized under the platform access component of our contract with our former largest customer, which commenced in the fourth quarter of 2024 and increased subscription revenue from 2.2% of total revenue for the year ended December 31, 2024 to 10.6% for the year ended December 31, 2025.
167
Table of Contents
Cost of revenue
Cost of revenue increased $289,839, or 26.0%, to $1,405,035 for the year ended December 31, 2025, compared to $1,115,196 for the year ended December 31, 2024. The increase was primarily attributable to (i) a $343,919 increase in costs of third-party characterization services incurred in connection with a single customer contract performed during the year ended December 31, 2025, and (ii) a $134,221 increase in third-party data storage and hosting costs to support the expansion of our subscription platform, offset by a $200,000 decrease in personnel costs, including salaries, payroll taxes, bonuses and employee benefits reflecting a reduction in hours allocated to servicing customers following the decrease in professional services revenue.
Sales and marketing
Sales and marketing expense decreased $753,468, or 52.7%, to $676,297 for the year ended December 31, 2025, compared to $1,429,765 for the year ended December 31, 2024. The decrease was primarily attributable to (i) a $466,953 decrease in sales personnel costs, including salaries, payroll taxes, bonuses and employee benefits, reflecting a reduction in sales headcount during the year; (ii) a $212,583 net decrease in marketing programs spending, including reductions in advertising, other marketing programs, publications, and website-related expenditures, partially offset by an increase in conference and trade-show spending; (iii) a $48,691 decrease in sales commissions, consistent with the decline in revenue; and (iv) a $32,570 decrease in sales-related travel expenses.
Research and development
Research and development expense decreased $1,266,750, or 33.4%, to $2,522,658 for the year ended December 31, 2025, compared to $3,789,408 for the year ended December 31, 2024. The decrease was primarily attributable to (i) a $1,027,410 decrease in engineering and research and development personnel costs, including salaries, payroll taxes, bonuses and employee benefits, reflecting a reduction in research and development headcount during the year; (ii) a $173,843 decrease in third-party battery modeling services, which were used during FY2024 but not in FY2025; (iii) a $112,438 decrease in expensed software costs supporting the engineering function; and (iv) a $28,686 decrease in travel expenses. These decreases were partially offset by a $53,443 increase in third-party professional services supporting research and development and product development activities.
General and administrative
General and administrative expense decreased $249,168, or 10.4%, to $2,159,183 for the year ended December 31, 2025, compared to $2,408,351 for the year ended December 31, 2024. The decrease was primarily attributable to (i) a $531,782 decrease in base personnel costs, including salaries, payroll taxes, and employee benefits, reflecting a reduction in general and administrative headcount during the year; and (ii) a $270,346 decrease in travel expenses. These decreases were partially offset by (iii) a $299,479 increase in personnel bonuses, reflecting retention and transaction-related bonuses paid in connection with our series B financing; (iv) a $135,393 increase in legal and professional fees, reflecting legal expenses incurred in connection with our series B financing; and (v) a $118,088 net increase in other general and administrative expenses, primarily reflecting a $57,000 swing in foreign exchange gains and losses (from a net gain of $35,000 in FY2024 to a net loss of $22,000 in FY2025) and a $39,269 increase in stock-based compensation expense.
Other Income (Expense), Net
Other income (expense), net decreased $1,040,817, or 73.0%, to $385,210 for the year ended December 31, 2025, compared to $1,426,027 for the year ended December 31, 2024. The components are discussed below.
Net gain on digital assets
Net gain on digital assets was $358,390 for the year ended December 31, 2025, compared to $1,194,748 for the year ended December 31, 2024. The FY2025 amount represents the gain on the sale of our digital assets, reflecting the excess of sale proceeds over their carrying value at the time of the sale under ASU 2023-08. The FY2024 amount represents an unrealized mark-to-market gain on digital assets, which were carried at fair value through earnings in accordance with ASU 2023-08.
168
Table of Contents
Interest income
Interest income decreased $159,801, or 96.3%, to $6,085 for the year ended December 31, 2025, compared to $165,886 for the year ended December 31, 2024. The decrease was primarily attributable to lower average cash, cash equivalent, and short-term investment balances during the year, reflecting (i) the use of cash to fund operating losses and (ii) the maturity of the Company’s certificate of deposit holdings during the year, as further described in Note 6 to our consolidated financial statements.
Interest expense
Interest expense increased $8,925 to $11,926 for the year ended December 31, 2025, compared to $3,001 for the year ended December 31, 2024. Interest expense relates to our outstanding Economic Injury Disaster Loan and vehicle loan, as further described in Note 11 to our consolidated financial statements.
Other income
Other income decreased $35,733, or 52.2%, to $32,661 for the year ended December 31, 2025, compared to $68,394 for the year ended December 31, 2024. Other income consists of miscellaneous income, including grants, sponsorships, and bank rewards received in connection with our operations.
Income tax provision
We recorded an income tax provision of $456 for the year ended December 31, 2025, attributable solely to state and local taxes. No income tax provision was recorded for the year ended December 31, 2024.
Foreign currency translation adjustment
We recorded a foreign currency translation gain of $20,437 for the year ended December 31, 2025, compared to a foreign currency translation loss of $139,850 for the year ended December 31, 2024, a change of $160,287. The change was primarily attributable to the movement in the Euro-to-U.S. dollar exchange rate, with the Euro appreciating against the U.S. dollar during 2025 compared to depreciating during 2024.
Liquidity and Capital Resources
Since inception, we have financed our operations principally through the issuance of convertible preferred stock to private investors, supplemented by revenue from our subscription and professional services arrangements, debt financing, and proceeds from maturities of short-term investments, and sales of digital assets, which were substantially liquidated in 2025. In 2026, we also funded our operations through short-term borrowings, advances from investors and, subsequent to June 30, 2026, the issuance of senior secured convertible notes. As of June 30, 2026, we had cash and cash equivalents of $29,782 and a working capital deficit of $5,071,555.
Our primary uses of cash are personnel-related expenditures across our engineering, product, sales and administrative functions; third-party professional services costs incurred to deliver customer engagements, including third-party characterization services performed in connection with specific customer contracts; cloud hosting, data storage, and other software infrastructure costs that support our subscription platform; and general and administrative costs, including legal, accounting, insurance, and other compliance costs. We expect general and administrative costs to increase materially upon and following the consummation of the Business Combination as a result of operating as a public company. Our future capital requirements will depend on a number of factors, including the rate at which we acquire new customers and expand within our existing customer base, the timing and magnitude of investments in product development and engineering headcount, the pace of our geographic expansion, the costs of operating as a public company, whether and when the Business Combination is consummated, and the impact of macroeconomic conditions on our customers and end markets. We expect that our cash requirements will increase in absolute dollars in future periods.
We have incurred net losses from and negative cash flows from operations since inception, and we expect to continue to do so for the foreseeable future. As of June 30, 2026, we had a working capital deficit of $5,071,555 ($6,438,555 excluding $1,367,000 of deferred transaction costs related to the Business Combination), compared to a working capital deficit of $1,974,720 as of December 31, 2025. In order to continue our planned operations, we will need to raise additional financing beyond the proceeds received through the senior secured convertible notes described
169
Table of Contents
below, and we have no committed sources of additional financing as of the date of this proxy statement/prospectus. As of September 30, 2026, we estimate that our existing cash, including the remaining net proceeds of the senior secured convertible notes, will be sufficient to fund our operations into February 2027 and that we will require approximately $9.5 million of additional financing to fund our operations over the next twelve months, excluding the repayment of the senior secured convertible notes upon the closing of the Business Combination. In accordance with ASC 205-40, Presentation of Financial Statements — Going Concern, management has evaluated whether conditions and events, considered in the aggregate, raise substantial doubt about our ability to continue as a going concern for a period of twelve months from the date these unaudited condensed consolidated financial statements are available to be issued. As a result of the conditions described above, management concluded that substantial doubt exists about our ability to continue as a going concern. Management’s plans to address these conditions include the consummation of the Business Combination and the issuance of additional equity and debt securities, although there can be no assurance that these plans will be successfully implemented. Our condensed consolidated financial statements have been prepared on a going-concern basis and do not include any adjustments to the carrying amounts and classification of assets and liabilities that might be necessary should we be unable to continue as a going concern. See Note 2 to our unaudited condensed consolidated financial statements included elsewhere in this proxy statement/prospectus.
The following table summarizes our cash flows for the six months ended June 30, 2026 and 2025:
| Six Months | Six Months | $ Change | % Change | ||||||||||||
| Net cash used in operating activities | $ | (1,772,905 | ) | $ | (3,019,345 | ) | $ | 1,246,440 |
| -41.28 | % | ||||
| Net cash (used in) provided by investing activities |
| (3,087 | ) |
| 1,847,089 |
|
| (1,850,176 | ) | -100.17 | % | ||||
| Net cash provided by (used in) financing activities |
| 1,641,222 |
|
| (45,390 | ) |
| 1,686,612 |
| NM |
| ||||
| Effect of foreign exchange rate changes on cash and cash equivalents |
| (5,417 | ) |
| (26,195 | ) |
| 20,778 |
| -79.32 | % | ||||
| Net change in cash and cash equivalents | $ | (140,187 | ) | $ | (1,243,841 | ) | $ | 1,103,654 |
| -88.73 | % | ||||
____________
NM — Not meaningful.
Operating activities
Our main uses of operating cash are employee compensation and benefits and professional and legal fees. Following the termination of the contract with our former largest customer in the fourth quarter of 2025, third-party characterization and testing services were not a significant use of operating cash for the six months ended June 30, 2026. Net cash used in operating activities for the six months ended June 30, 2026 was $1,772,905. This consisted of a net loss of $3,938,910, adjusted for non-cash items of $145,146 and net cash provided by changes in operating assets and liabilities of $2,020,859. Non-cash items consisted of share-based compensation of $87,401, depreciation and amortization of $37,801, and non-cash interest expense of $19,944. The net cash provided by changes in operating assets and liabilities primarily reflected increases in accounts payable of $975,187 and accrued expenses of $683,743, a decrease in accounts receivable of $292,117, and a decrease in prepaid expenses of $155,918.
The increase in accounts payable and accrued expenses reflected professional fees, principally accounting and advisory services incurred in connection with the Business Combination and in preparation for operating as a public company, higher accrued compensation, and extended payment timing to our vendors. The decrease in accounts receivable reflected the collection of amounts due from our former largest customer.
Net cash used in operating activities for the six months ended June 30, 2025 was $3,019,345, consisting of a net loss of $2,569,776 adjusted for non-cash items of $(23,856) and net cash used in changes in operating assets and liabilities of $425,713. Non-cash items consisted of a $102,366 net gain on digital assets, partially offset by share-based compensation of $40,974 and depreciation and amortization of $37,536. The net cash used in changes in operating assets and liabilities of $425,713 primarily reflected a decrease in deferred revenue of $718,871, which reflected the recognition of previously deferred customer billings as revenue as we delivered services under the contract with our former largest customer. This outflow was partially offset by increases in accounts payable of $112,028 and accrued expenses of $97,434, reflecting normal operating cost accruals.
170
Table of Contents
Net cash used in operating activities decreased by $1,246,440 for the six months ended June 30, 2026 compared to the six months ended June 30, 2025, despite a $1,369,134 increase in net loss, primarily because we deferred payment of professional fees and other costs, resulting in a combined $1,658,930 increase in accounts payable and accrued expenses in 2026 compared to $209,462 in 2025, and because operating cash flow in 2025 was reduced by a $718,871 decrease in deferred revenue on amounts billed in prior periods. This improvement reflects the timing of vendor payments rather than improved operating results, and we expect operating cash outflows to increase as we settle these obligations.
Investing activities
Net cash used in investing activities for the six months ended June 30, 2026 was $3,087, consisting of additions to property and equipment. We did not receive any proceeds from digital assets or short-term investments during the period, as we no longer held these assets following their liquidation in 2025.
Net cash provided by investing activities for the six months ended June 30, 2025 was $1,847,089. The principal driver was $1,146,230 of proceeds from the sale of digital assets, as part of our strategic decision to convert those holdings into operating liquidity. The remaining $700,859 represents proceeds from the maturity of short-term investments that were not reinvested in order to preserve near-term liquidity in light of our operating cash requirements. We did not make any additions to property and equipment during the six months ended June 30, 2025.
The $1,850,176 decrease in net cash provided by investing activities from the six months ended June 30, 2025 to the six months ended June 30, 2026 primarily reflects the absence in 2026 of the $1,146,230 of proceeds from the sale of digital assets and the $700,859 of proceeds from the maturity of short-term investments received in 2025.
Financing activities
Net cash provided by financing activities for the six months ended June 30, 2026 was $1,641,222. The primary source was proceeds from additional closings of our Series B Convertible Preferred Stock offering in January and February 2026, which generated $701,755 of gross proceeds less $1,073 of issuance costs, for net proceeds of $700,682, raised to fund operations and support working capital requirements. We also received $500,010 of advances from investors under bridge investment term sheets entered into in connection with the Business Combination; $355,000 of short-term borrowings, used to fund payroll obligations; $110,000 of borrowings under our line of credit; and $4,995 of proceeds from the exercise of stock options. These inflows were partially offset by $29,465 of principal repayments, consisting of $14,381 on our line of credit and $15,084 of scheduled principal payments on our GM Financial vehicle loan.
Net cash used in financing activities for the six months ended June 30, 2025 was $45,390, consisting of $32,368 of payments of deferred transaction costs and $13,022 of scheduled principal payments on our GM Financial vehicle loan, incurred in the ordinary course.
The $1,686,612 increase in net cash provided by financing activities from the six months ended June 30, 2025 to the six months ended June 30, 2026 primarily reflects the $700,682 of net proceeds from our Series B Convertible Preferred Stock offering, $500,010 of advances from investors, $355,000 of short-term borrowings and $110,000 of line of credit borrowings received in 2026, with no comparable financing inflows in 2025.
The following table summarizes our cash flows for the years ended December 31, 2025 and 2024:
| Year Ended | Year Ended | $ Change | % Change | |||||||||||
| Net cash used in operating activities | $ | (4,940,103 | ) | $ | (7,139,228 | ) | $ | 2,199,125 | -30.80 | % | ||||
| Net cash provided by investing activities |
| 3,287,554 |
|
| 76,297 |
|
| 3,211,257 | NM |
| ||||
| Net cash provided by financing activities |
| 419,476 |
|
| 121,689 |
|
| 297,787 | 244.71 | % | ||||
| Effect of foreign exchange rate changes on cash and cash equivalents |
| (2,485 | ) |
| (124,891 | ) |
| 122,406 | -98.01 | % | ||||
| Net change in cash and cash equivalents | $ | (1,235,558 | ) | $ | (7,066,133 | ) | $ | 5,830,575 | -82.51 | % | ||||
____________
NM — Not meaningful.
171
Table of Contents
Operating activities
Our main uses of operating cash are employee compensation and benefits, third-party characterization and testing services supporting our customer contracts, and professional and legal fees. Net cash used in operating activities for the year ended December 31, 2025 was $4,940,103, consisting of a net loss of $5,289,922 adjusted for non-cash items of $(184,040) and net cash provided by changes in operating assets and liabilities of $533,859. Non-cash items consisted of a $358,390 change in fair value recognized on digital assets, partially offset by share-based compensation of $98,778, and depreciation and amortization of $75,572. The net cash provided by changes in operating assets and liabilities of $533,859 primarily reflected increases in accounts payable of $994,013 and accrued expenses of $532,834, partially offset by a decrease in deferred revenue of $717,846 and an increase in accounts receivable of $276,394.
The increase in accounts payable and accrued expenses reflected additional professional and legal fees incurred in connection with the issuance of Series B Preferred Stock as well as extended payment timing to our vendors. The decrease in deferred revenue reflected the recognition of previously deferred customer billings as revenue under our subscription and professional services arrangements.
Net cash used in operating activities for the year ended December 31, 2024 was $7,139,228, consisting of a net loss of $5,603,039, adjusted for non-cash items of $(1,058,636) and net cash used in changes in operating assets and liabilities of $477,553. Non-cash items consisted of a $1,194,748 unrealized gain on digital assets, partially offset by share-based compensation of $59,509, depreciation and amortization of $39,603, and an allowance for credit losses of $37,000. The net cash used in changes in operating assets and liabilities of $477,553 primarily reflected a decrease in deferred revenue of $685,154 reflecting the recognition of deferred customer billings as revenue as the Company delivered services under its principal customer contracts during the year. Revenue recognized from the deferred revenue balance ($1,713,654) outpaced new billings added during the year ended December 31, 2024 ($1,028,500), reducing the deferred revenue balance from $1,603,000 to $917,846 by December 31, 2024. This outflow was partially offset by increases in accounts payable of $105,931 and accrued expenses of $142,585, reflecting normal operating cost accruals at year-end. The outflow was further increased by an increase in accounts receivable of $36,040.
Net cash used in operating activities decreased by $2,199,125 for the year ended December 31, 2025 compared to the year ended December 31, 2024. Excluding non-cash gains on digital assets of $358,390 in 2025 and $1,194,748 in 2024, our net loss decreased by $1,149,475, primarily reflecting lower operating expenses. In addition, accounts payable and accrued expenses increased by a combined $1,526,847 in 2025, compared to $248,516 in 2024, reflecting professional and legal fees incurred in connection with the issuance of Series B Preferred Stock and extended payment timing to our vendors.
Investing Activities
Net cash provided by investing activities for the year ended December 31, 2025 was $3,287,554. The principal driver was $2,562,474 of proceeds from the sale of digital assets, which were substantially liquidated during the year as part of a strategic decision to convert those holdings into operating liquidity. The remaining $725,080 represents proceeds from maturities of short-term investments that were not reinvested in order to preserve near-term liquidity in light of our operating cash requirements. We did not make any additions to property and equipment during the year ended December 31, 2025.
Net cash provided by investing activities for the year ended December 31, 2024 was $76,297, reflecting a near-breakeven net investing position. Gross proceeds of $1,000,000 from the maturity of certificates of deposit were largely offset by $694,423 of reinvestment into new short-term instruments, in order to preserve yield on excess cash balances. The remaining outflows comprised $167,949 of additions to property and equipment, principally for the acquisition of a company demonstration vehicle (our principal capital expenditure during the year), $58,333 of website costs, and $2,998 of digital asset purchases.
The $3,211,257 increase in net cash provided by investing activities from 2024 to 2025 primarily reflects: (i) $2,562,474 of proceeds from the liquidation of our digital asset portfolio in 2025, with no comparable transaction in 2024; (ii) the absence in 2025 of $694,423 of short-term investment purchases made in 2024; and (iii) the absence in 2025 of $167,949 of capital expenditures incurred in 2024. These were partially offset by (iv) a $274,920 decrease in proceeds from short-term investment maturities ($725,080 in 2025 vs. $1,000,000 in 2024).
172
Table of Contents
Financing Activities
Net cash provided by financing activities for the year ended December 31, 2025 was $419,476. The primary source was proceeds from a partial closing of our Series B Convertible Preferred Stock offering, which generated $511,032 of gross proceeds less $64,240 of issuance costs, for net proceeds of $446,792, raised to fund operations and support working capital requirements. The remaining cash outflow of $27,316 represents scheduled principal payments on our GM Financial vehicle loan, incurred in the ordinary course.
Net cash provided by financing activities for the year ended December 31, 2024 was $121,689, consisting primarily of $133,234 of proceeds from a secured vehicle loan with GM Financial, which we incurred in September 2024 in connection with the acquisition of a company vehicle for business operations, and $2,660 of proceeds from the exercise of employee stock options. These inflows were partially offset by $14,205 of scheduled principal payments on the same vehicle loan.
The $297,787 increase in net cash provided by financing activities from 2024 to 2025 primarily reflects $446,792 of net proceeds from the partial close of our Series B Convertible Preferred Stock offering in 2025, a non-recurring financing event with no comparable transaction in 2024, partially offset by the $133,234 of vehicle loan proceeds received in 2024 that did not recur in 2025.
Outstanding Debt
As of June 30, 2026, our outstanding long-term debt of $190,409 ($109,071 current and $81,338 non-current) consisted of $18,161 under an Economic Injury Disaster Loan administered by the U.S. Small Business Administration, $76,629 under a secured vehicle loan with GM Financial, and $95,619 under a revolving line of credit with Celtic Bank, as described in Note 10 to our unaudited condensed consolidated financial statements. The Economic Injury Disaster Loan bears interest at a fixed rate of 3.75% per annum, matures in 2050, and is serviced through monthly interest-only payments. The vehicle loan bears interest at a fixed rate of 9.99% per annum, matures in September 2028, and is secured by the vehicle financed. The line of credit bears interest at 66.0% per annum, is repayable in 18 monthly installments, and is personally guaranteed by our Chief Executive Officer.
As of June 30, 2026, we also had $360,624 of past-due short-term borrowings used to fund payroll-related obligations, including $5,624 of accrued interest. The principal of $355,000 consisted of $100,000 of loans from an individual lender and Park Avenue Capital Advisors Ltd., which matured on May 30, 2026 and accrue interest at 20% per annum on any unpaid balance thereafter, and $255,000 of promissory notes issued to IRHO, which matured on May 15, 2026 ($150,000) and June 15, 2026 ($105,000) and accrue interest at 18% per annum on any unpaid balance thereafter.
In addition, we had $514,250 of advances from investors, including $14,240 of accrued interest, under bridge investment term sheets, which were repayable on demand pending execution of definitive agreements. The term sheets contemplate the issuance of senior unsecured convertible notes bearing interest at 15% or 25% per annum, convertible into shares of the combined company at $6.00 per share upon the closing of the Business Combination, together with warrants and, for two investors, commitment shares. Their conversion and exercise will result in dilution to our existing equity holders.
Recent financing activities
Short-term loans. In October 2026, we repaid the loans from the individual lender and Park Avenue Capital Advisors Ltd. and $150,000 of the IRHO notes. The remaining $105,000 owed to IRHO remains outstanding and is payable on demand. IRHO has not demanded repayment. In July 2026, we issued a $55,344 promissory note to our President and Chief Operating Officer, which matured on August 2, 2026 and remains outstanding.
Advances from investors. In July 2026, we received an additional advance of $25,000. In October 2026, we executed a convertible note with one investor for $50,000 in respect of an advance received in March 2026.
Related party convertible notes. From July through November 2026, the Company issued convertible promissory notes with an aggregate principal amount of $793,254 to six related parties. The notes bear payable-in-kind interest at 15% per annum, mature in August 2028 or, if earlier, upon the closing of the Business Combination, and convert into shares of the combined company at $6.00 per share in connection with the Business Combination. The holders are also entitled to warrants exercisable at $11.50 and $12.50 per share.
173
Table of Contents
Convertible note. In July 2026, the Company issued a $100,000 convertible promissory note to an investor for cash. The note has the same terms as the related party convertible notes, except that it bears interest at 20% per annum.
Senior secured convertible notes. On September 29, 2026, we issued senior secured convertible notes with an aggregate principal amount of $4,375,000, together with warrants to purchase 700,000 shares of common stock at $12.50 per share, for cash proceeds of $3,500,000 ($3,350,000 net of lender’s legal fees). The notes bear no interest (15% upon an event of default), mature in March 2028, are secured by substantially all of our assets, and are guaranteed by our Italian subsidiary. Upon the closing of the Business Combination, the notes are repayable in cash at 115% of principal, or $5,031,250, which will reduce the cash available to the combined company. The combined company will also issue 500,000 shares of common stock to two of the investors. If the Business Combination does not close before maturity, the holders may convert the notes into our common stock based on a $150 million or $75 million pre-money valuation.
Vendor repayment agreement. In September 2026, we entered into a repayment agreement with a vendor for €407,875 of accounts payable, payable in monthly installments through August 2027, with unpaid installments accruing interest at 10.40% per annum.
Critical Accounting Estimates
Our unaudited condensed consolidated financial statements and our audited consolidated financial statements and the accompanying notes thereto included elsewhere in this proxy statement/prospectus are prepared in accordance with U.S. GAAP. The preparation of financial statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, costs and expenses, and related disclosures. We base our estimates on historical experience and on other assumptions that we believe are reasonable under the circumstances, and we evaluate our estimates on an ongoing basis. Actual results may differ from these estimates. We did not identify any critical accounting estimates for the periods presented. A summary of our significant accounting policies is included in Note 3 to our audited consolidated financial statements included elsewhere in this proxy statement/prospectus.
Off-Balance Sheet Arrangements
We do not have any off-balance sheet arrangements that have, or are reasonably likely to have, a material current or future effect on our financial condition, changes in financial condition, revenues, expenses, results of operations, liquidity, capital expenditures, or capital resources.
Recent Accounting Pronouncements
See “Recent Accounting Pronouncements” described in Note 3 of our unaudited condensed consolidated financial statements and Note 3 of our audited consolidated financial statements included elsewhere in this proxy statement/prospectus.
Quantitative and Qualitative Disclosures About Market Risk
We are exposed to certain market risks in the ordinary course of our business, principally foreign currency exchange rate risk arising from the operations of our Italian subsidiary, Electra Vehicles Europe, S.R.L. and our global customers and supplier base, and, to a lesser extent, interest rate risk. We do not use derivative financial instruments to hedge market risk. The following discussion should be read in conjunction with the section entitled “Risk Factors” included elsewhere in this proxy statement/prospectus.
Foreign currency risk
The functional currency of our Italian subsidiary, Electra Vehicles Europe, S.R.L., is the Euro. Its assets and liabilities are translated into U.S. dollars at the exchange rates in effect at the balance sheet date, and its revenues and expenses are translated at the average exchange rates during the reporting period. Translation adjustments are recorded in accumulated other comprehensive income (loss). Transaction gains and losses on balances denominated in currencies other than the functional currency of the transacting entity, including intercompany balances expected to be settled in the foreseeable future, are recognized in the consolidated statements of operations as incurred.
174
Table of Contents
Because the operations of our Italian subsidiary represent a limited portion of our consolidated operations, we do not currently believe that a hypothetical 10% change in the Euro/U.S. dollar exchange rate would have a material effect on our consolidated financial statements.
We also sell to customers and purchase from vendors located outside the United States. Foreign currency transaction gains and losses arising from these transactions were not material for the periods presented.
Interest rate risk
As of June 30, 2026, we had outstanding indebtedness consisting of $190,409 of long-term debt under our Economic Injury Disaster Loan, vehicle loan and line of credit, $360,624 of past-due short-term borrowings and $514,250 of advances from investors. Each of these instruments bears interest at a fixed contractual rate, ranging from 3.75% to 66.0% per annum, and our cash balances are held in non-interest-bearing or low-yield deposit accounts. Because our outstanding debt bears fixed interest rates and we do not hold a portfolio of interest-bearing investments, changes in market interest rates do not have a material effect on our financial position or results of operations.
175
Table of Contents
Management of Electra Pubco Following The Business Combination
Board of Directors and Executive Officers
The following sets forth certain information, as of [•], 2026, concerning the persons who are expected to serve as Electra Pubco’s executive officers and directors following the Business Combination. As of the date of this proxy statement/prospectus, other than Mr. Martini [and Mr. Chakalos], the individuals who will serve as directors of Electra Pubco following the Closing have not been identified. Pursuant to the Merger Agreement, immediately following the Closing, the Electra Pubco Board will consist of seven directors, of whom Electra has the right to designate five directors and the remaining two directors will be jointly designated by Electra and the Sponsor, and at least a majority of the Electra Pubco Board will qualify as independent directors under Nasdaq rules.
| Name | Age | Position | ||
| Fabrizio Martini | [•] | Chief Executive Officer [and Director] | ||
| Nicholas Chakalos | [•] | President and Chief Financial Officer |
Executive Officers
Fabrizio Martini
[ • ]
Nicholas Chakalos
[ • ]
Director Nominees
[ • ]
Family Relationships
There are no family relationships among any of the persons expected to serve as executive officers or directors of Electra Pubco following the Business Combination.
Involvement in Certain Legal Proceedings
During the past ten years, none of the persons expected to serve as executive officers or directors of Electra Pubco following the Business Combination has been involved in any of the legal proceedings described in Item 401(f) of Regulation S-K.
Arrangements Regarding Selection
Other than the Merger Agreement, which provides that Mr. Martini and Mr. Chakalos are expected to be appointed as Chief Executive Officer and President & Chief Financial Officer, respectively, of Electra Pubco at the Closing and sets forth the designation rights described above, there is no arrangement or understanding between any of the persons named above and any other person pursuant to which such person was selected as an executive officer or director.
176
Table of Contents
EXECUTIVE COMPENSATION OF ELECTRA
Unless the context requires otherwise, references to “Electra,” “we,” “us,” “our” and “the Company” in this section are to the business and operations of Electra prior to the Business Combination and the business and operations of Electra Pubco as directly or indirectly affected by Electra by virtue of Electra Pubco’s ownership of the business of Electra following the Business Combination.
This section discusses the material components of the executive compensation program for (i) the individual who served as our principal executive officer during fiscal year 2025. We refer to these individuals as our “named executive officers.” In 2025, our “named executive officers” and their positions were as follows:
• Fabrizio Martini, Chief Executive Officer;
• Nicholas Chakalos, President and Chief Financial Officer; and
This discussion may contain forward-looking statements that are based on our current plans, considerations, expectations and determinations regarding future compensation programs. Actual compensation programs that we adopt following the Business Combination may differ materially from the currently planned programs summarized in this discussion. As an “emerging growth company” as defined in the JOBS Act, we are not required to include a Compensation Discussion and Analysis section and have elected to comply with the scaled disclosure requirements applicable to emerging growth companies.
Summary Compensation Table
The following table sets forth information concerning the compensation of our named executive officers for the year ended December 31, 2025:
| Name and Principal Position | Year | Salary | Bonus | Option | Non-Equity | All Other | Total | |||||||
| Fabrizio Martini | ||||||||||||||
| Chief Executive Officer | 2025 | [___] | [___] | [___] | [___] | [___] | [___] | |||||||
| Nicholas Chakalos | ||||||||||||||
| President and | 2025 | [___] | [___] | [___] | [___] | [___] | [___] |
Narrative to Summary Compensation Table
2025 Base Salaries
The named executive officers receive a base salary to compensate them for services rendered to us. The base salary payable to each named executive officer is intended to provide a fixed component of compensation reflecting the executive’s skill set, experience, role and responsibilities.
The “Salary” column of the 2025 Summary Compensation Table above shows the actual base salaries earned by each named executive officer in 2025.
Quarterly Bonus Program
We maintain a quarterly bonus plan for the benefit of eligible employees, including both of our named executive officers. The quarterly bonus plan is designed to correlate bonus payouts with company performance, with a particular focus on revenue and achievement of predetermined corporate goals.
177
Table of Contents
Each quarter, employees are eligible to earn a portion of their base salary based on the Company’s achievement of revenue targets and corporate goals established for the applicable quarter. At the beginning of each quarter, the Company establishes quarterly revenue targets and a bonus pool is funded based on actual quarterly revenue relative to those targets. A minimum threshold of 50% of the quarterly revenue target must be achieved for the bonus pool to be funded. The bonus pool ranges from 7.5% to 15% of eligible employees’ quarterly salaries, depending on the percentage of the revenue target achieved:
| Percentage of Revenue Target Achieved | Bonus Pool Funding(1) | |
| 100% | 15% | |
| 90% | 13.5% | |
| 75% | 11.25% | |
| 50% | 7.5% |
____________
(1) Represents percentage of eligible employees’ quarterly salaries.
Once the bonus pool is funded, the actual bonus payout amounts are determined by the percentage completion of the quarterly corporate goals established at the beginning of the applicable quarter. The final goal completion percentage is applied to the funded bonus pool to calculate each individual’s bonus payout. Bonuses are capped at 100% of the target amount, or 15% of salary, per quarter.
If the revenue target is not achieved in a given quarter, a credit equal to the bonus that would have been earned is carried forward to one of the next two subsequent quarters in which the revenue target is met. If applied in the immediately following quarter, 50% of the prior quarter’s bonus is added to the current quarter’s calculation; if applied in the second following quarter, 25% is added, in each case subject to the quarterly cap. Credits expire if not utilized within the two-quarter window.
In 2025, no bonuses were paid under the quarterly bonus plan, including to our named executive officers.
Equity Compensation
2016 Stock Incentive Plan
We currently maintain the 2016 Stock Incentive Plan of Electra Vehicles, Inc. (the “2016 Plan”) in order to provide our service providers the opportunity to acquire a proprietary interest in our success. Historically we offered awards of stock options to purchase shares of our common stock to eligible service providers pursuant to the 2016 Plan, including our named executive officers. Options typically vest and become exercisable over a four-year period, subject to the grantee’s continued employment through the applicable vesting date, as follows: (i) 25% of the shares underlying the option vest on the first annual anniversary of the vesting commencement date and (ii) 75% of the shares underlying the option vest in 36 substantially equal installments on each monthly anniversary of the vesting commencement date thereafter. For additional information about the 2016 Plan, please see the section titled “— 2016 Stock Incentive Plan” below. As mentioned below, in connection with the completion of the Business Combination and the adoption of the 2026 Incentive Award Plan, no further awards will be granted under the 2016 Plan.
2026 Incentive Award Plan
In connection with the Business Combination, IRHO’s board of directors intends to adopt, and its shareholders will be asked to approve, the 2026 Incentive Award Plan, referred to in this proxy statement/prospectus as the Electra Pubco Equity Incentive Plan, in order to facilitate the grant of cash and equity incentives to our directors, employees (including our named executive officers) and consultants and certain of our affiliates and to enable us to obtain and retain services of these individuals, which is essential to our long-term success. The Electra Pubco Equity Incentive Plan will become effective on the date on which it is approved by IRHO’s shareholders. For additional information about the Electra Pubco Equity Incentive Plan, please see “Electra Pubco Equity Incentive Plan Proposal” in this proxy statement/prospectus.
178
Table of Contents
Other Elements of Compensation
Retirement Plans
We currently maintain a 401(k) retirement savings plan for our employees, including our named executive officers, who satisfy certain eligibility requirements. Our named executive officers are eligible to participate in the 401(k) plan on the same terms as other full-time employees. The Internal Revenue Code allows eligible employees to defer a portion of their compensation, within prescribed limits, on a pre-tax basis through contributions to the 401(k) plan. Currently, we make matching contributions equal to 100% of an employee’s contributions up to 3% of his or her eligible compensation, plus an additional 50% on the next 2% of such employee’s eligible compensation. We believe that providing a vehicle for tax-deferred retirement savings through our 401(k) plan, and making matching contributions, adds to the overall desirability of our executive compensation package and further incentivizes our employees, including our named executive officers, in accordance with our compensation policies.
Health and Welfare Benefits
In 2025, the named executive officers also participated in standard health and welfare plans maintained by us including medical, dental and vision benefits; short-term and long-term disability insurance; life insurance; and an employee assistance plan.
No Tax Gross-Ups
We do not make gross-up payments to cover our named executive officers’ personal income taxes that may pertain to any of the compensation or perquisites paid or provided by us.
Outstanding Equity Awards as of the Year Ended December 31, 2025
The following table presents information regarding the outstanding stock options held by each of our named executive officers as of December 31, 2025.
| Option Awards | ||||||||||||
| Name | Grant Date | Vesting | Number of | Number of | Option | Option | ||||||
| Fabrizio Martini | [___] | [___] | [___] | [___] | [___] | [___] | ||||||
| Nicholas Chakalos | [___] | [___] | [___] | [___] | [___] | [___] | ||||||
Executive Compensation Arrangements
Retention Letter Agreements
In connection with our Series B financing, we entered into retention letters with each of Messrs. Martini and Chakalos on December 31, 2025 and January 1, 2026, respectively. Pursuant to the retention letters, Mr. Chakalos’s title was changed to President and Chief Operating Officer, effective as of January 1, 2026, and each of Messrs. Martini and Chakalos was to be granted an option to purchase 50,000 shares and 90,000 shares of our common stock, respectively. The options vest over a period of four years, with 25% of the shares subject to the options vesting on the first anniversary of the vesting commencement date, and the remaining shares vesting in substantially equal monthly installments thereafter, subject to continued service as of each applicable vesting date. In February 2026, we granted Mr. Chakalos the options set forth in his retention letter. As of the date hereof, Mr. Martini has not been granted the options set forth in his retention letter. In addition, in the event that the Company consummated a Series B financing that resulted in proceeds of at least $1,000,000, each of Messrs. Martini and Chakalos were entitled to a cash bonus of $3,500, and in the event that such financing resulted in proceeds of at least $3,500,000, each of Messrs. Martini and Chakalos’s annual base salary would be increased to $270,000 and $260,000, respectively. In early 2026, the Company
179
Table of Contents
consummated its Series B financing, which resulted in proceeds in excess of $1,000,000 but less than $3,500,000. As a result, Messrs. Martini and Chakalos each received the $3,500 cash bonus but did not receive the base salary increases described in this paragraph.
Other than as described above, the Company has no other executive compensation, change in control or similar agreements or arrangements.
Equity Incentive Plans
2016 Stock Incentive Plan
We maintain the 2016 Plan, which became effective on May 18, 2016. The material terms of the 2016 Plan are summarized below.
Termination
Following the effectiveness of the Electra Pubco Equity Incentive Plan, the 2016 Plan will terminate and we will not make any further awards under the 2016 Plan. However, any outstanding awards granted under the 2016 Plan will remain outstanding, subject to the terms of the 2016 Plan and applicable award agreements. Shares of our common stock subject to awards granted under the 2016 Plan that expire unexercised or are cancelled, terminated, or forfeited in any manner without issuance of shares thereunder following the effective date of the Electra Pubco Equity Incentive Plan will become available for issuance under the Electra Pubco Equity Incentive Plan.
Eligibility and Administration
All of our employees, officers, and directors, as well as our consultants and advisors, are eligible to be granted awards under the 2016 Plan. The 2016 Plan is administered by our board of directors, which has the authority to grant awards, adopt, amend, and repeal administrative rules, guidelines, and practices relating to the 2016 Plan, and to construe and interpret the terms of the 2016 Plan and any award agreements entered into thereunder. The board of directors may delegate any or all of its powers under the 2016 Plan to one or more committees or subcommittees of the board of directors, to the extent permitted by applicable law.
Limitations on Awards and Shares Available
Subject to adjustment, awards may be made under the 2016 Plan for up to 1,999,925 shares of common stock (with 781,258 shares of our common stock available at December 31, 2025), any or all of which may be in the form of incentive stock options. If any award expires, is terminated, surrendered, or canceled without having been fully exercised, is forfeited in whole or in part (including as the result of shares being repurchased by us at the original issuance price pursuant to a contractual repurchase right), or results in any common stock not being issued, the unused common stock covered by such award shall again be available for the grant of awards under the 2016 Plan. Shares of common stock tendered to us by a participant to exercise an award or to satisfy tax withholding obligations shall be added to the number of shares available for the grant of awards. Shares issued under the 2016 Plan may consist in whole or in part of authorized but unissued shares or treasury shares. In connection with a merger, consolidation, or acquisition, the plan administrator may grant substitute awards on such terms as it deems appropriate, notwithstanding any limitations on awards contained in the 2016 Plan, and such substitute awards shall not count against the overall share limit.
Awards
The 2016 Plan provides for the grant of options (including incentive stock options and nonstatutory stock options), stock appreciation rights (“SARs”), restricted stock, restricted stock units (“RSUs”), and other stock-based awards. All awards are evidenced in such form (written, electronic, or otherwise) as the plan administrator shall determine, and each award may contain terms and conditions in addition to those set forth in the 2016 Plan. A brief description of each award type follows:
• Stock Options. The plan administrator may grant options to purchase shares of common stock and determine the number of shares to be covered by each option, the exercise price, and the conditions and limitations applicable to exercise. An option intended to be an “incentive stock option” under Section 422
180
Table of Contents
of the Code shall only be granted to our employees or any of its present or future parent or subsidiary corporations. An option not intended to be an incentive stock option shall be designated a nonstatutory stock option. The exercise price of each option shall not be less than 100% of the fair market value per share of our common stock on the date the option is granted. No option will be granted with a term in excess of 10 years. Options may be exercised by delivery of a notice of exercise together with payment in full of the exercise price, which may be made by cash or check, broker-assisted cashless exercise, delivery of shares of common stock, net exercise (for nonstatutory stock options), promissory note, or any combination thereof.
• Stock Appreciation Rights. The plan administrator may grant SARs entitling the holder, upon exercise, to receive an amount of common stock, cash, or a combination thereof determined by reference to the appreciation in the fair market value of a share of common stock over the measurement price from and after the date of grant. The measurement price shall not be less than 100% of the fair market value on the date the SAR is granted. No SAR will be granted with a term in excess of 10 years.
• Restricted Stock and Restricted Stock Units. The plan administrator may grant restricted stock, subject to our right to repurchase all or part of such shares at their issue price or other stated price (or to require forfeiture if issued at no cost) if conditions specified by the plan administrator are not satisfied prior to the end of the applicable restriction period. The plan administrator may also grant RSUs entitling the recipient to receive shares of common stock or cash to be delivered at the time such award vests. Unless otherwise provided in the applicable award agreement, any dividends declared and paid with respect to shares of restricted stock shall be paid to the participant only if and when such shares become free from restrictions on transferability and forfeitability. Upon vesting and/or lapsing of restrictions, each RSU entitles the participant to receive one share of common stock or, if so provided, an amount of cash equal to the fair market value of one share. The plan administrator may provide that settlement of RSUs shall be deferred on a mandatory basis or at the election of the participant. Participants have no voting rights with respect to RSUs. The award agreement for RSUs may provide participants with dividend equivalents, which may be paid currently or credited to an account for the participant, settled in cash and/or shares, and subject to the same restrictions as the RSUs.
• Other Stock-Based Awards. Other awards of shares of common stock, and other awards valued in whole or in part by reference to or otherwise based on shares of common stock or other property, may be granted to participants. Such other stock-based awards are also available as a form of payment in the settlement of other awards granted under the 2016 Plan or as payment in lieu of compensation to which a participant is otherwise entitled, and may be paid in shares of common stock or cash as the plan administrator determines.
Certain Transactions
In the event of any stock split, reverse stock split, stock dividend, recapitalization, combination of shares, reclassification of shares, spin-off, or other similar change in capitalization, the number and class of securities available under the 2016 Plan, the number and class of securities and exercise price of each outstanding option, the share and per-share provisions of each outstanding SAR, the number of shares subject to each outstanding restricted stock award, and the share and per-share-related provisions of each outstanding other stock-based award shall be equitably adjusted by the company in the manner determined by the plan administrator.
A “reorganization event” means any merger or consolidation of the company with or into another entity as a result of which all common stock is converted into or exchanged for cash, securities, or other property or is cancelled, any transfer or disposition of all of the common stock for cash, securities, or other property, or any liquidation or dissolution of the company. In connection with a reorganization event, the plan administrator may take any one or more of the following actions as to all or any outstanding awards other than restricted stock: (i) provide that awards shall be assumed, or substantially equivalent awards shall be substituted, by the acquiring or succeeding corporation, (ii) upon written notice, provide that unexercised awards will terminate immediately prior to consummation unless exercised within a specified period, (iii) provide that outstanding awards shall become exercisable, realizable, or deliverable, or restrictions shall lapse, in whole or in part prior to or upon such reorganization event, (iv) make or provide for a cash payment to participants equal to the number of vested shares (after giving effect to any acceleration of vesting that occurs upon or immediately prior to the reorganization event) multiplied by the excess of the acquisition price over the exercise, measurement, or purchase price, in exchange for termination of such award and any applicable tax
181
Table of Contents
withholdings, (v) provide that awards shall convert into the right to receive liquidation proceeds (net of exercise price and applicable withholdings), or (vi) any combination of the foregoing. The plan administrator is not obligated to treat all awards or all participants identically.
Upon a reorganization event other than a liquidation or dissolution, the repurchase and other rights of the company with respect to outstanding restricted stock shall inure to the benefit of the company’s successor and shall apply to the cash, securities, or other property into which the common stock was converted or exchanged, unless the plan administrator determines otherwise. Upon a reorganization event involving liquidation or dissolution, all restrictions and conditions on all restricted stock then outstanding shall automatically be deemed terminated or satisfied, except to the extent specifically provided to the contrary in the applicable instrument or agreement.
Transferability of Awards
Awards shall not be sold, assigned, transferred, pledged, hypothecated, or otherwise encumbered by the participant, either voluntarily or by operation of law, and during the life of the participant shall be exercisable only by the participant. However, awards (other than awards subject to Section 409A of the Code) may be transferred to family members through gifts or (other than incentive stock options) domestic relations orders, or to an executor or guardian upon the death or disability of the participant.
Term of Plan
The 2016 Plan became effective on the date it was adopted by the plan administrator and will expire in May 2036.
Amendment of Plan
The plan administrator may amend, suspend, or terminate the 2016 Plan or any portion thereof at any time, provided that if stockholder approval is required as to any modification or amendment under Section 422 of the Code with respect to incentive stock options, the plan administrator may not effect such modification or amendment without such approval. Unless otherwise specified, any amendment adopted in accordance with the 2016 Plan shall apply to, and be binding on, the holders of all awards outstanding at the time the amendment is adopted, provided the plan administrator determines that such amendment does not materially and adversely affect the rights of participants. The plan administrator may also, without stockholder approval, amend any outstanding award to provide a lower exercise price or cancel any outstanding award and grant substitute awards with a lower exercise price.
Director Compensation
In 2025, we did not pay any cash retainers or fees or grant any equity incentive plan awards to our non-employee directors for their service on our board.
As of December 31, 2025, none of our non-employee directors held any outstanding equity incentive plan awards.
In connection with the Business Combination, we intend to approve and implement a compensation program for our non-employee directors that consists of annual cash retainer fees and long-term equity awards. The details of this program have not yet been determined, but compensation under the program will be subject to the annual limits on non-employee director compensation set forth in the Electra Pubco Equity Incentive Plan.
182
Table of Contents
Certain Interests of Electra’s Directors and Officers
in the Business Combination
Electra’s directors and executive officers have interests in the Business Combination that are different from, or in addition to, those of IRHO’s stockholders generally. These interests include, among other things, the interests listed below:
Treatment of Equity Awards in Business Combination
As described further below, each of our executive officers holds outstanding Company options under the 2016 Plan. The Merger Agreement provides that each Company Option that is outstanding as of immediately prior to the Effective Time, whether vested or unvested, will be assumed by IRHO and converted into a comparable option to purchase shares of Electra Pubco Class A Common shares (each, a “Converted Option”), based upon the Conversion Ratio. Each Converted Option will otherwise be subject to the same terms and conditions as applied to the underlying Company Option immediately prior to the Effective Time.
Option Awards Under the 2016 Plan
The following table sets forth for Messrs. Martini and Chakalos the number of shares of Company Common Stock subject to vested and unvested Company Options held by each of them as of [_____], 2026, the latest practicable date to determine such amounts before the filing of this proxy statement/prospectus. None of Electra’s directors hold Company Options.
| Name | Vested | Unvested | ||
| Executive Officers | ||||
| Fabrizio Martini | [____] | [____] | ||
| Nicholas Chakalos | [____] | [____] |
Post-Closing Director Compensation
As described above, in connection with the Business Combination, we intend to approve and implement a compensation program for our non-employee directors that consists of annual cash retainer fees and long-term equity awards. The details of this program have not yet been determined, but compensation under the program will be subject to the annual limits on non-employee director compensation set forth in the Electra Pubco Equity Incentive Plan.
183
Table of Contents
Beneficial Ownership of Securities
The following table sets forth information regarding (i) the beneficial ownership of IRHO Ordinary Shares as of _, 2026, which is prior to the consummation of the Business Combination and (ii) the expected beneficial ownership of shares of Electra Pubco Common Stock immediately following consummation of the Business Combination (assuming a “no redemptions” scenario and assuming a “maximum redemptions” scenario as described below) by:
• each person who is known to be the beneficial owner of more than 5% of IRHO Ordinary Shares and is expected to be the beneficial owner of more than 5% of shares of Electra Pubco Common Stock post-Business Combination;
• each of IRHO’s current executive officers and directors;
• each person who will become an executive officer or director of Electra Pubco post-Business Combination; and
• all executive officers and directors of IRHO as a group pre-Business Combination, and all executive officers and directors of Electra Pubco as a group post-Business Combination.
Beneficial ownership is determined according to the rules of the SEC, which generally provide that a person has beneficial ownership of a security if he, she or it possesses sole or shared voting or investment power over that security, including options and warrants that are currently exercisable or exercisable within 60 days. In computing the number of shares beneficially owned by a person or entity and the percentage ownership of that person or entity in the table below, all shares subject to options, held by such person or entity were deemed outstanding prior to the Business Combination if such securities are currently exercisable, or exercisable within 60 days of _________, 2026 and were deemed outstanding post-Business Combination if such securities are exercisable within 60 days of the closing of the Business Combination. These shares were not deemed outstanding, however, for the purpose of computing the percentage ownership of any other person or entity.
The beneficial ownership of IRHO Ordinary Shares pre-Business Combination is based on 29,320,000 IRHO Ordinary Shares issued and outstanding as of ______________, which includes ________ IRHO Ordinary Shares.
The expected beneficial ownership of shares of Electra Pubco Common Stock post-Business Combination assumes two scenarios:
• a “no redemptions” scenario where (i) no IRHO Ordinary Shares are redeemed in connection with the Business Combination and (ii) based on Electra’s balance of capital stock as of _________________, Electra Pubco issues _____________ shares of Electra Pubco Common Stock to Electra Securityholders in the Merger (excluding the shares of Electra Pubco Common Stock reserved for issuance upon the exercise of Converted Stock Options, which will not be outstanding immediately following the Closing); and
• a “maximum redemptions” scenario where (i) ____________Public Shares, or approximately ____________% of the outstanding Public Shares and 100% of all Public Shares that are not subject to Non-Redemption Agreements, are redeemed in connection with the Business Combination for an aggregate payment of approximately $_________ million from the Trust Account at a redemption price of approximately $[*] per share and (ii) based on Electra’s balance of capital stock as of ________, 2026, Electra Pubco issues _____________ shares of Electra Pubco Common Stock to Electra Securityholders in the Merger (excluding the shares of Electra Pubco Common Stock reserved for issuance upon the exercise of Converted Stock Options, which will not be outstanding immediately following the Closing). The maximum redemptions amount reflects the maximum number of Public Shares that can be redeemed.
Based on the foregoing assumptions and Electra’s balance of capital stock as of ______________, we estimate that there would be ____________ shares of Electra Pubco Common Stock issued and outstanding immediately following the consummation of the Business Combination in the “no redemptions” scenario, and ______________ shares of Electra Pubco Common Stock issued and outstanding immediately following the consummation of the Business Combination in the “maximum redemptions” scenario. If the actual facts are different from the foregoing assumptions, ownership figures in the combined company and the columns under Post-Business Combination in the table that follows will be different.
184
Table of Contents
Unless otherwise indicated, IRHO believes that all persons named in the table below have sole voting and investment power with respect to the voting securities beneficially owned by them.
| Pre-Business Combination | Post-Business Combination | |||||||||||
| Assuming | Assuming | |||||||||||
| Name and Address of Beneficial | Number of | % of | Number of | % | Number of | % | ||||||
| All Electra Pubco directors and executive officers as a group ( individuals) | — | — | % | |||||||||
____________
* Less than one percent
185
Table of Contents
Certain Relationships and Related Party Transactions
Iron Horse Acquisition II Corp.
Founder Shares
On September 12, 2025, Iron Horse Acquisition II Corp. was incorporated in the Cayman Islands. On September 18, 2025, IRHO SPAC Sponsor LLC (the “Sponsor”), contributed $32,000 for the issuance of 5,750,000 ordinary shares, $0.0001 par value per share (the “ordinary shares”) at approximately $0.0056 per share.
At the time of the IPO, the Sponsor agreed, subject to limited exceptions, not to transfer, assign or sell any of its Founder Shares until the earlier to occur of: (A) 180 days after the completion of a Business Combination; and (B) subsequent to a Business Combination, (x) if the closing price of the ordinary shares equals or exceeds $12.00 per share (as adjusted for share sub-divisions, share capitalizations, reorganizations, recapitalizations and the like) for any 20 trading days within any 30-trading day period commencing at least 120 days after a Business Combination, or (y) the date on which the Company completes a liquidation, merger, amalgamation, share exchange, reorganization or other similar transaction that results in all of the Company’s shareholders having the right to exchange their ordinary shares for cash, securities or other property.
In connection with the Business Combination, the Sponsor has entered into the Parent Support Agreement, a copy of which is attached to this proxy statement/prospectus as Annex F. The Parent Support Agreement also provides that the Sponsor Shares will be subject to a lock-up for a period of 180 days following the Closing.
Related Party Loans
In order to finance transaction costs in connection with a Business Combination, the Sponsor or an affiliate of the Sponsor, or certain of the Company’s officers and directors may, but are not obligated to, loan the Company funds as may be required (“Working Capital Loans”). Such Working Capital Loans would be evidenced by promissory notes. The notes may be repaid upon completion of a Business Combination, without interest, or, at the lender’s discretion, up to $1,500,000 of the notes may be converted upon completion of a Business Combination into private placement-equivalent units at a price of $10.00 per unit. Such units would be identical to the IRHO Private Placement Units. In the event that a Business Combination does not close, the Company may use a portion of proceeds held outside the Trust Account to repay the Working Capital Loans, but no proceeds held in the Trust Account would be used to repay the Working Capital Loans. Except for the foregoing, the terms of such Working Capital Loans, if any, have not been determined and no written agreements exist with respect to such loans. As of the date of this proxy statement/prospectus, the Company had $_______ borrowings under the Working Capital Loans.
On May 1, 2026 and May 15, 2026, the Company entered into unsecured promissory notes with Electra in connection with a short-term financing arrangement for $150,000 and $105,000, respectively. The notes are non-interest bearing through their maturity dates of May 15, 2026 and June 15, 2026, respectively. After the maturity date, the notes bear interest at a rate of 18% per annum. As of August 31, 2026, the outstanding principal balance of the notes receivable amounted to $255,000, both notes were past their stated maturity dates, and the balance is presented in the accompanying unaudited consolidated balance sheets. The Company received payment of $150,000 on October 2, 2026 while the remaining $105,000 remains uncollected.
Registration Rights
The holders of the Founder Shares, Private Placement Units and the Ordinary Shares underlying such Private Placement Units and any Private Placement Units that may be issued upon conversion of Working Capital Loans have registration Rights to require IRHO to register a sale of any of IRHO’s securities held by them pursuant to a registration Rights agreement. The holders of these securities are entitled to make up to two demands, excluding short form demands, that IRHO register such securities. In addition, the holders have certain “piggy-back” registration Rights with respect to registration statements filed subsequent to IRHO’s completion of its initial business combination. IRHO will bear the expenses incurred in connection with the filing of any such registration statements.
In connection with the Business Combination, the registration Rights agreement will be amended and restated. For additional information, see “Business Combination Proposal — Related Agreements — Amended and Restated Registration Rights Agreement.”
186
Table of Contents
ELECTRA AI, Inc.
Electra’s articles of incorporation and bylaws provide that Electra will indemnify its directors and officers to the fullest extent permitted by Delaware state law.
Electra Related Party Transactions
The following is a description of each transaction since January 1, 2024, and each currently proposed transaction, in which Electra was or is to be a participant, the amount involved exceeded or will exceed the lesser of $120,000 and 1% of the average of Electra’s total assets at year-end for the last two completed fiscal years, and in which any of Electra’s directors, executive officers or holders of more than 5% of any class of Electra’s capital stock, or any immediate family member of, or person sharing the household with, any of the foregoing persons, had or will have a direct or indirect material interest, other than compensation and other arrangements described under “Executive Compensation of Electra.”
Guarantee of Line of Credit.
Fabrizio Martini, Electra’s Chief Executive Officer, has personally guaranteed Electra’s revolving line of credit with Celtic Bank. The line of credit bears interest at 66.0% per annum and is repayable in 18 monthly installments, with any new draw restarting the 18-month repayment period for the total outstanding balance. During the six months ended June 30, 2026, Electra drew the full $110,000 available under the line of credit and repaid $14,381 of principal, and as of June 30, 2026, $95,619 was outstanding. Interest expense on the line of credit was $20,397 for the six months ended June 30, 2026. Mr. Martini did not receive any compensation for providing the guarantee.
Professional Services Vendor.
Electra has engaged a vendor owned by [•], a member of the Electra Board, to provide professional services to Electra. During the years ended December 31, 2025 and 2024, Electra incurred expenses related to these services of $102,060 and $116,510, respectively, and during the six months ended June 30, 2026 and 2025, Electra incurred expenses related to these services of $222,060 and $48,000, respectively. As of June 30, 2026, December 31, 2025 and December 31, 2024, amounts due to this vendor included in accounts payable and accrued expenses were $154,402, $126,198 and $24,138, respectively.
Related Party Note Payable.
In July 2026, Electra issued a $55,344 promissory note to Nicholas Chakalos, its President and Chief Financial Officer. The note was non-interest bearing through its contractual maturity date of August 2, 2026, accrues interest at 18% per annum on any unpaid balance thereafter, and remains outstanding as of the date of this proxy statement/prospectus. In connection with the note, Electra agreed to grant the officer an option to purchase 27,672 shares of Electra common stock, subject to approval by the Electra Board.
Related Party Convertible Notes.
From July 2026 through November 2026, Electra issued convertible promissory notes with an aggregate principal amount of $793,254 to six related parties. The notes bear payable-in-kind interest at 15% per annum, mature in August 2028 or, if earlier, upon the Closing, and convert into shares of Electra Pubco Class A Common Stock at $6.00 per share in connection with the Business Combination. The holders are also entitled to warrants exercisable at $11.50 and $12.50 per share. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations of Electra — Liquidity and Capital Resources” and “Unaudited Pro Forma Condensed Combined Financial Information.”
Short-Term Loans from IRHO.
On May 1, 2026 and May 15, 2026, Electra issued unsecured promissory notes to IRHO in principal amounts of $150,000 and $105,000, respectively, to fund payroll obligations. The notes were non-interest bearing through their maturity dates of May 15, 2026 and June 15, 2026, respectively, and accrue interest at 18% per annum on
187
Table of Contents
any unpaid balance thereafter. In October 2026, Electra repaid the $150,000 note. The remaining $105,000 remains outstanding. Electra plans to repay the outstanding loans at or prior to the Closing. See “— Iron Horse Acquisition II Corp. — Related Party Loans.”
Policies and Procedures for Related Persons Transactions
Effective upon the consummation of the Business Combination, the Electra Pubco Board will adopt a written related person transaction policy that will set forth the following policies and procedures for the review and approval or ratification of related person transactions. A “related person transaction” is a transaction, arrangement or relationship in which the post-combination company or any of its subsidiaries was, is or will be a participant, the amount of which involved exceeds $120,000 (or, for so long as we remain a “smaller reporting company” the lesser of (i) $120,000 and (ii) 1% of our average total assets of the two completed fiscal years), and in which any related person had, has or will have a direct or indirect material interest. A “related person” means:
• any person who is, or at any time during the applicable period was, one of Electra Pubco’s executive officers or directors;
• any person who is known by the post-combination company to be the beneficial owner of more than 5% of Electra Pubco voting stock;
• any immediate family member of any of the foregoing persons, which means any child, stepchild, parent, stepparent, spouse, sibling, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law or sister-in-law of a director, executive officer or a beneficial owner of more than 5% of Electra Pubco’s voting stock, and any person (other than a tenant or employee) sharing the household of such director, executive officer or beneficial owner of more than 5% of Electra Pubco’s voting stock; and
• any firm, corporation or other entity in which any of the foregoing persons is a partner or principal, or in a similar position, or in which such person has a 10% or greater beneficial ownership interest.
Electra Pubco will have policies and procedures designed to minimize potential conflicts of interest arising from any dealings it may have with its affiliates and to provide appropriate procedures for the disclosure of any real or potential conflicts of interest that may exist from time to time. Specifically, pursuant to its audit committee charter, the audit committee will have the responsibility to review related party transactions.
188
Table of Contents
Comparison of Corporate Governance and Shareholder Rights
IRHO is an exempted company incorporated under the laws of the Cayman Islands. The Companies Act and the Cayman Constitutional Documents govern the Rights of its shareholders. The Companies Act differs in some material respects from laws generally applicable to United States corporations and their stockholders. In addition, the Cayman Constitutional Documents will differ in certain material respects from the Proposed Organizational Documents. As a result, when you become a stockholder of Electra Pubco, your Rights will differ in some regards as compared to when you were a shareholder of IRHO.
Below is a summary chart outlining important similarities and differences in the corporate governance and stockholder/shareholder Rights associated with each of IRHO and Electra Pubco according to applicable law or the organizational documents of IRHO and Electra Pubco.
This summary is qualified by reference to the complete text of the Cayman Constitutional Documents of IRHO, attached to this proxy statement/prospectus as Annex G, the complete text of the Proposed Charter, a copy of which is attached to this proxy statement/prospectus as Annex B-1, and the complete text of the Proposed Bylaws, a copy of which is attached to this proxy statement/prospectus as Annex B-2. You should review each of the Proposed Organizational Documents, as well as the Delaware corporate law and corporate laws of the Cayman Islands, including the Companies Act, to understand how these laws apply to Electra Pubco and IRHO, respectively.
| Provision | Delaware | Cayman Islands | ||
| Applicable Legislation | General Corporation Law of the State of Delaware | The Companies Act (As Revised) of the Cayman Islands | ||
| Stockholder/Shareholder Approval of Business Combinations | Mergers generally require approval of a majority of all outstanding shares. Mergers in which less than 20% of the acquirer’s stock is issued generally do not require acquirer stockholder approval. Mergers in which one corporation owns 90% or more of a second corporation may be completed without the vote of the second corporation’s board of directors or stockholders. | Mergers require a special resolution, and any other authorization as may be specified in the relevant articles of association. Parties holding certain security interests in the constituent companies must also consent. All mergers (other than parent/subsidiary mergers) require shareholder approval-there is no exception for smaller mergers. Where a bidder has acquired 90% or more of the shares in a Cayman Islands company, it can compel the acquisition of the shares of the remaining shareholders and thereby become the sole shareholder. A Cayman Islands company may also be acquired through a “scheme of arrangement” sanctioned by a Cayman Islands court and approved by 50%+1 in number and 75% in value of shareholders in attendance and voting at a shareholders’ meeting. | ||
| Stockholder/Shareholder Votes for Routine Matters | Generally, approval of routine corporate matters that are put to a stockholder vote require the affirmative vote of the majority of shares present in person or represented by proxy at the meeting and entitled to vote on the subject matter. | Under the Companies Act and IRHO’s amended and restated memorandum and articles of association, routine corporate matters may be approved by an ordinary resolution (being a resolution passed by a simple majority of the shareholders as being entitled to do so). |
189
Table of Contents
| Provision | Delaware | Cayman Islands | ||
| General Vote Required for Combinations with Interested Stockholders/Shareholders | Generally, a corporation may not engage in a business combination with an interested stockholder for a period of three years after the time of the transaction in which the person became an interested stockholder, unless the corporation opts out of the statutory provision. | No similar provision | ||
| Requirement for Quorum | Quorum is a majority of shares entitled to vote at the meeting unless otherwise set in the constitutional documents, but cannot be less than one-third of shares entitled to vote at the meeting. | Quorum is set in the company’s memorandum and articles of association. | ||
| Stockholder/Shareholder Consent to Action Without Meeting | Unless otherwise provided in the certificate of incorporation, stockholders may act by written consent. | Shareholder action by written resolutions (whether unanimous or otherwise) may be permitted by the articles of association. The articles of association may provide that shareholders may not act by written resolutions. | ||
| Appraisal Rights | Generally, a stockholder of a publicly traded corporation does not have appraisal Rights in connection with a merger. Stockholders of a publicly traded corporation do, however, generally have appraisal Rights in connection with a merger if they are required by the terms of a merger agreement to accept for their shares anything except: (a) shares or depository receipts of the corporation surviving or resulting from such merger; (b) shares of stock or depository receipts that will be either listed on a national securities exchange or held of record by more than 2,000 holders; (c) cash in lieu of fractional shares or fractional depository receipts described in (a) and (b) above; or (d) any combination of the shares of stock, depository receipts and cash in lieu of fractional shares or fractional depository receipts described in (a), (b) and (c) above. | Minority shareholders that dissent from a merger are entitled to be paid the fair market value of their shares, which if necessary may ultimately be determined by the court. | ||
| Inspection of Books and Records | Any stockholder may inspect the corporation’s books and records for a proper purpose during the usual hours for business. | Shareholders generally do not have any Rights to inspect or obtain copies of the register of shareholders or other corporate records of a company. | ||
| Stockholder/Shareholder Lawsuits | A stockholder may bring a derivative suit subject to procedural requirements (including adopting Delaware as the exclusive forum as per Advisory Organizational Documents Proposal 5B). | In the Cayman Islands, the decision to institute proceedings on behalf of a company is generally taken by the company’s board of directors. A shareholder may be entitled to bring a derivative action on behalf of the company, but only in certain limited circumstances. |
190
Table of Contents
| Provision | Delaware | Cayman Islands | ||
| Number of Directors | The number of directors is fixed by the bylaws, unless the certificate of incorporation fixes the number of directors, in which case a change in the number of directors shall be made only by amendment of the certificate of incorporation. The bylaws may provide that the board may increase the size of the board and fill any vacancies. | Subject to the memorandum and articles of association, the board may increase the size of the board and fill any vacancies. | ||
| Removal of Directors | Any director or the entire board may be removed, with or without cause, by the holders of a majority of the shares then entitled to vote at an election of directors, except as follows: (1) unless the certificate of incorporation otherwise provides, in the case of a corporation with a classified board, stockholders may effect such removal only for cause; or (2) in the case of a corporation having cumulative voting, if less than the entire board is to be removed, no director may be removed without cause if the votes cast against such director’s removal would be sufficient to elect such director if then cumulatively voted at an election of the entire board. | In the Cayman Islands, the decision to institute proceedings on behalf of a company is generally taken by the company’s board of directors. A shareholder may be entitled to bring a derivative action on behalf of the company only in certain limited circumstances. A company’s memorandum and articles of association may provide that a director may be removed for any or no reason and that, in addition to shareholders, boards may be granted the power to remove a director. | ||
| Classified or Staggered Boards | Classified boards are permitted. | Classified boards are permitted. | ||
| Fiduciary Duties of Directors | Directors must exercise a duty of care and duty of loyalty and good faith to the company and its stockholders. In addition to fiduciary duties, directors owe a duty of care, diligence and skill. | A director owes fiduciary duties to a company, including to exercise loyalty, honesty and good faith to the company as a whole. In addition to fiduciary duties, directors of IRHO owe a duty of care, diligence and skill. Such duties are owed to the company but may be owed direct to creditors or shareholders in certain limited circumstances. | ||
| Indemnification of Directors and Officers | A corporation is generally permitted to indemnify its directors and officers acting in good faith and in a manner the person reasonably believed to be in or not opposed to the best interests of the corporation. | A Cayman Islands company generally may indemnify its directors or officers except with regard to fraud or willful default. | ||
| Limited Liability of Directors | Permits limiting or eliminating the monetary liability of a director to a corporation or its stockholders, except with regard to breaches of duty of loyalty, intentional misconduct, unlawful repurchases or dividends, or improper personal benefit. | Liability of directors may be unlimited, except with regard to their own fraud or willful default. |
191
Table of Contents
Description of ELECTRA PUBCO Securities
The following summary sets forth the material terms of Electra Pubco’s securities following the completion of the Proposed Transaction. The following summary is not intended to be a complete summary of the Rights and preferences of such securities and is qualified by reference to the Proposed Charter, a form of which is attached as Annex B-1 to this proxy statement/prospectus, and the Proposed Bylaws, a form of which is attached as Annex B-2 to this proxy statement/prospectus. Electra Pubco urges you to read the Proposed Charter and Proposed Bylaws in their entirety for a complete description of the Rights and preferences of Electra Pubco’s securities following the Business Combination.
Authorized and Outstanding Stock
The Proposed Charter will authorize the issuance of ____ shares, consisting of:
• _________ shares of Electra Pubco Class A Common Stock; and
• _________ shares of Electra Pubco Class B Common Stock; and
• __________ shares of preferred stock, par value $0.0001 per share (“Electra Pubco Preferred Stock”).
Common Stock
Upon completion of the Business Combination, Electra Pubco expects that there will be 37,695,452 shares of Electra Pubco Common Stock outstanding, assuming that the Maximum Scenario of IRHO Ordinary Shares are redeemed in connection with the Business Combination, and not including shares reserved for issuance upon the exercise of Electra Options being assumed by IRHO in the Proposed Transaction. All shares of Electra Pubco Common Stock are fully paid and non-assessable. In connection with the Business Combination, the IRHO Ordinary Share held by the Sponsor will be surrendered to IRHO and cancelled for no consideration.
Voting rights. Each holder of Electra Pubco Class A Common Stock is entitled to one vote for each share of Electra Pubco Class A Common Stock held of record by such holder on all matters on which stockholders generally are entitled to vote. Each holder of Electra Pubco Class B Common Stock is entitled to ten votes for each share of Electra Pubco Class B Common Stock held of record by such holder on all matters on which stockholders generally are entitled to vote. The holders of Electra Pubco Common Stock do not have cumulative voting rights in the election of directors. Generally, all matters to be voted on by stockholders must be approved by a majority (or, in the case of election of directors, by a plurality) of the votes entitled to be cast by all stockholders present in person or represented by proxy, voting together as a single class.
Dividend Rights. Subject to preferences that may be applicable to any outstanding Electra Pubco Preferred Stock, the holders of shares of Electra Pubco Common Stock are entitled to receive ratably such dividends, if any, as may be declared from time to time by the Electra Pubco Board out of funds legally available for such purposes.
Liquidation Rights. In the event of any voluntary or involuntary liquidation, dissolution or winding up of Electra Pubco’s affairs, the holders of Electra Pubco Common Stock are entitled to share ratably in all assets remaining after payment of Electra Pubco’s debts and other liabilities, subject to prior distribution rights of Electra Pubco Preferred Stock or any class or series of stock having a preference over the Electra Pubco Common Stock, then outstanding, if any.
Other rights. The holders of Electra Pubco Common Stock have no pre-emptive or conversion rights or other subscription rights. There are no redemption or sinking fund provisions applicable to the Electra Pubco Common Stock. The rights, preferences and privileges of holders of the Electra Pubco Common Stock will be subject to those of the holders of any shares of the Electra Pubco Preferred Stock that Electra Pubco may issue in the future.
Preferred Stock
No shares of Electra Pubco Preferred Stock will be issued or outstanding immediately after the completion of the Proposed Transaction. The Proposed Charter will authorize the Electra Pubco Board to establish one or more series of Electra Pubco Preferred Stock. Unless required by law or any stock exchange, the authorized shares of Electra Pubco Preferred Stock will be available for issuance without further action by the holders of Electra Pubco Common Stock.
192
Table of Contents
The Electra Pubco Board has the discretion to determine the powers, preferences and relative, participating, optional and other special rights, including voting rights, dividend rights, conversion rights, redemption privileges and liquidation preferences, of each series of Electra Pubco Preferred Stock. The issuance of Electra Pubco Preferred Stock may have the effect of delaying, deferring or preventing a change in control of Electra Pubco without further action by the stockholders. Additionally, the issuance of Electra Pubco Preferred Stock may adversely affect the holders of Electra Pubco Common Stock by restricting dividends on the Electra Pubco Common Stock, diluting the voting power of the Electra Pubco Common Stock or subordinating the liquidation rights of the Electra Pubco Common Stock. As a result of these or other factors, the issuance of Electra Pubco Preferred Stock could have an adverse impact on the market price of the Electra Pubco Common Stock, restricting dividends on Electra Pubco’s capital stock, diluting the voting power of Electra Pubco Common Stock, impairing the liquidation rights of Electra Pubco’s capital stock, or delaying or preventing a change in control of Electra Pubco. At present, there are no plans to issue any Electra Pubco Preferred Stock.
Rights included as part of units
Except in cases where we are not the surviving company in a business combination, each holder of a right will automatically receive one-tenth (1/10) of one ordinary share upon consummation of our initial business combination, even if the holder of a public right converted all shares held by such holder in connection with the initial business combination. In the event we will not be the surviving company upon completion of our initial business combination, each holder of a right will be required to affirmatively convert such holder’s rights in order to receive the one-tenth (1/10) of one ordinary share underlying each right upon consummation of the business combination. No additional consideration will be required to be paid by a holder of rights in order to receive such holder’s additional shares upon consummation of an initial business combination. The shares issuable upon exchange of the rights will be freely tradable (except to the extent held by affiliates of ours). If we enter into a definitive agreement for a business combination in which we will not be the surviving entity, the definitive agreement will provide for the holders of rights to receive the same per share consideration the holders of our ordinary shares will receive in the transaction on an as-converted basis into ordinary shares.
We will not issue fractional shares in connection with an exchange of rights. Fractional shares will either be rounded down to the nearest whole share or otherwise addressed in accordance with applicable provisions of Cayman Islands law. As a result, you must hold rights in multiples of ten in order to receive shares for all of your rights upon closing of a business combination. If we are unable to complete an initial business combination within the required time period and we liquidate the funds held in the trust account, holders of rights will not receive any of such funds with respect to their rights, nor will they receive any distribution from our assets held outside of the trust account with respect to such rights, and the rights will expire worthless. Further, there are no contractual penalties for failure to deliver securities to the holders of the rights upon consummation of an initial business combination. Additionally, in no event will we be required to net cash settle the rights. Accordingly, the rights may expire worthless.
Dividends
Electra Pubco does not intend to pay cash dividends after the completion of the Business Combination. The payment of cash dividends in the future will be dependent upon our revenues and earnings, if any, capital requirements and general financial condition subsequent to completion of the Business Combination. The payment of any cash dividends subsequent to the Business Combination will be within the discretion of the Electra Pubco Board at such time. If we incur any indebtedness, our ability to declare dividends may be limited by restrictive covenants we may agree to in connection therewith.
Our Transfer Agent and Warrant Agent
The transfer agent for the Electra Pubco Common Stock and rights agent for the Electra Pubco Rights is Continental Stock Transfer & Trust Company. We have agreed to indemnify Continental Stock Transfer & Trust Company in its roles as transfer agent and rights agent, its agents and each of its shareholders, directors, officers and employees against all claims and losses that may arise out of acts performed or omitted for its activities in that capacity, except for any liability due to any gross negligence or intentional misconduct of the indemnified person or entity. Continental Stock Transfer & Trust Company has agreed that it has no right of set-off or any right, title, interest or claim of any kind to, or to any monies in, the Trust Account, and has irrevocably waived any right, title, interest or claim of any kind to, or to any monies in, the Trust Account that it may have now or in the future. Accordingly, any indemnification provided will only be able to be satisfied, or a claim will only be able to be pursued, solely against us and our assets outside the Trust Account and not against the any monies in the Trust Account or interest earned thereon.
193
Table of Contents
Certain Anti-Takeover Provisions of the Proposed Charter, the Proposed Bylaws and Certain Provisions of Delaware Law
The Proposed Charter, the Proposed Bylaws and the DGCL contain provisions, which are summarized in the following paragraphs, which are intended to enhance the likelihood of continuity and stability in the composition of the Electra Pubco Board and to discourage certain types of transactions that may involve an actual or threatened acquisition of Electra Pubco. These provisions are intended to avoid costly takeover battles, reduce Electra Pubco’s vulnerability to a hostile change of control or other unsolicited acquisition proposal, and enhance the ability of the Electra Pubco Board to maximize stockholder value in connection with any unsolicited offer to acquire Electra Pubco. However, these provisions may have the effect of delaying, deterring or preventing a merger or acquisition of Electra Pubco by means of a tender offer, a proxy contest or other takeover attempt that a stockholder might consider in its best interest, including attempts that might result in a premium over the prevailing market price for the shares of Electra Pubco Common Stock. The Proposed Charter will provide that, from and after the date Electra Pubco ceases to qualify as a “controlled company” within the meaning of Nasdaq listing standards, any action required or permitted to be taken by Electra Pubco’s stockholders must be effected at a duly called annual or extraordinary general meeting of stockholders and may not be effected by any consent in writing by such holders, except that any action required or permitted to be taken by holders of any series of Electra Pubco Preferred Stock, voting separately as a series or separately as a class with one or more other such series, may be taken without a meeting, without prior notice and without a vote, to the extent expressly permitted to do so by the certificate of designation relating to one or more series of Electra Pubco Preferred Stock, if a consent or consents, setting forth the action so taken, are signed by the holders of outstanding shares of the relevant class or series having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares entitled to vote thereon were present and voted and are delivered to Electra Pubco in accordance with the applicable provisions of the DGCL. See also “Risk Factors — Risks Related to the Consummation of the Domestication — Delaware law and Electra Pubco’s Proposed Organizational Documents contain certain provisions, including anti-takeover provisions that limit the ability of stockholders to take certain actions and could delay or discourage takeover attempts that stockholders may consider favorable”.
Authorized but Unissued Capital Stock
Delaware law does not require stockholder approval for any issuance of authorized shares. However, the listing requirements of Nasdaq, which would apply if and so long as the Electra Pubco Common Stock remains listed on Nasdaq, require stockholder approval of certain issuances equal to or exceeding 20% of the then outstanding voting power or then outstanding number of shares of Electra Pubco Common Stock. Additional shares that may be issued in the future may be used for a variety of corporate purposes, including future public offerings, to raise additional capital or to facilitate acquisitions. One of the effects of the existence of unissued and unreserved Electra Pubco capital stock may be to enable the Electra Pubco Board to issue shares to persons friendly to current management, which issuance could render more difficult or discourage an attempt to obtain control of Electra Pubco by means of a merger, tender offer, proxy contest or otherwise and thereby protect the continuity of management and possibly deprive stockholders of opportunities to sell their shares of Electra Pubco Common Stock at prices higher than prevailing market prices.
Election of Directors and Vacancies
The Proposed Charter will provide that the Electra Pubco Board will determine the number of directors who will serve on the board. Subject to the Merger Agreement, the exact number of directors will be fixed from time to time by a majority of the Electra Pubco Board. Upon adoption of the Proposed Charter, the Electra Pubco Board will be declassified and will consist of one class of directors only, whose term will continue to the first annual meeting of stockholders following the date of the Closing, and, thereafter, all directors will be elected annually and will be elected for one year terms expiring at the next annual meeting of Electra Pubco stockholders. There will be no limit on the number of terms a director may serve on the Electra Pubco Board.
In addition, the Proposed Charter will provide that any vacancy on the Electra Pubco Board, including a vacancy that results from an increase in the number of directors or a vacancy that results from the removal of a director with cause, may be filled only by a majority of the directors then in office, subject to any Rights of the holders of Electra Pubco Preferred Stock.
194
Table of Contents
Quorum
The Proposed Bylaws will provide that at any meeting of the Electra Pubco Board, a majority of the total number of directors then in office constitutes a quorum for the transaction of business.
No Cumulative Voting
Under Delaware law, the right to vote cumulatively does not exist unless the certificate of incorporation expressly authorizes cumulative voting. The Proposed Charter does not authorize cumulative voting.
Special Meetings of Stockholders
The Proposed Charter will provide that special meetings of stockholders may be called only by or at the direction of the Electra Pubco Board, the Chairperson of the Board of Directors, the Chief Executive Officer or President, in each case, in accordance with the Proposed Bylaws.
Requirements for Advance Notification of Stockholder Meetings, Nominations and Proposals
The Proposed Bylaws establish advance notice procedures with respect to stockholder proposals and the nomination of candidates for election as directors, other than nominations made by or at the direction of the Electra Pubco Board or a committee of the Electra Pubco Board. For any matter to be “properly brought” before a meeting, a stockholder will have to comply with advance notice requirements and provide Electra Pubco with certain information. Generally, to be timely, a stockholder’s notice must be received at Electra Pubco’s principal executive offices not less than 90 days nor more than 120 days prior to the first anniversary date of the immediately preceding annual meeting of stockholders (for the purposes of the first annual meeting of the stockholders of Electra Pubco following the adoption of the Proposed Bylaws, the date of the preceding annual meeting will be deemed to be [•]). The Proposed Bylaws allow the Electra Pubco Board to adopt rules and regulations for the conduct of a meeting of the stockholders as it deems appropriate, which may have the effect of precluding the conduct of certain business at a meeting if the rules and regulations are not followed. These provisions may also defer, delay or discourage a potential acquirer from conducting a solicitation of proxies to elect the acquirer’s own slate of directors or otherwise attempting to influence or obtain control of the Electra Pubco.
Supermajority Provisions
The Proposed Charter and the Proposed Bylaws will provide that the Electra Pubco Board is expressly authorized to adopt, amend or repeal, in whole or in part, the Proposed Bylaws without a stockholder vote in any matter not inconsistent with the laws of the State of Delaware or the Proposed Charter. The stockholders of Electra Pubco also will have the power to adopt, amend or repeal the Proposed Bylaws by the affirmative vote of the holders of at least a majority of the voting power of all of the then outstanding shares of stock of Electra Pubco entitled to vote generally in an election of directors, voting together as a single class, subject to any vote of the holders of any class or series of stock of Electra Pubco required by applicable law or by the Proposed Charter (including any certificate of designation in respect of any series of Electra Pubco Preferred Stock) or the Proposed Bylaws.
The DGCL provides generally that the affirmative vote of a majority of the outstanding shares entitled to vote thereon, voting together as a single class, is required to amend a corporation’s certificate of incorporation, unless the certificate of incorporation requires a greater percentage. The Proposed Charter will provide that the following provisions therein may be amended, altered, repealed or rescinded only by the affirmative vote of the holders of at least 66 and 2/3% in voting power all the then outstanding shares of Electra Pubco’s stock entitled to vote thereon, voting together as a single class:
• the provision regarding the Electra Pubco Board being authorized to establish one or more series of Electra Pubco Preferred Stock with such powers, preferences and relative, participating, optional and other special rights, including voting rights, dividend rights, conversion rights, redemption privileges and liquidation preferences as the Electra Pubco Board may determine;
• the provisions regarding removal of directors;
195
Table of Contents
• the provisions regarding filling vacancies on the Electra Pubco Board and newly created directorships;
• the provision regarding the Electra Pubco Board being authorized to amend the Proposed Bylaws without a stockholder vote;
• the provisions regarding stockholder action by written consent;
• the provisions regarding calling special meetings of stockholders;
• the provisions regarding stockholder nominations for the election of directors and of other business proposed to be brought by stockholders before any meeting of the stockholders;
• the provisions regarding limitation on liability and indemnification of Electra Pubco’s directors and officers;
• the provisions regarding Electra Pubco electing not to be governed by Section 203 of the DGCL;
• the provisions adopting Delaware as the exclusive forum for certain stockholder litigation and adopting the federal district courts of the United States as the exclusive forum for resolving complaints asserting a cause of action under the Securities Act;
• the provisions regarding Electra Pubco renouncing its interest or expectancy in any corporate opportunity offered to any of its non-employee directors or principal stockholders and their affiliates; and
• the amendment provision requiring that the above provisions be amended only with a 66 and 2/3% supermajority vote.
These provisions may have the effect of deterring hostile takeovers or delaying or preventing changes in control of Electra Pubco or its management, such as a merger, reorganization or tender offer. These provisions are intended to enhance the likelihood of continued stability in the composition of the Electra Pubco Board and its policies and to discourage certain types of transactions that may involve an actual or threatened acquisition of Electra Pubco. These provisions are designed to reduce Electra Pubco’s vulnerability to an unsolicited acquisition proposal. The provisions are also intended to discourage certain tactics that may be used in proxy fights. However, such provisions could have the effect of discouraging others from making tender offers for Electra Pubco Common Stock and, as a consequence, may inhibit fluctuations in the market price of Electra Pubco Common Stock that could result from actual or rumored takeover attempts. Such provisions may also have the effect of preventing changes in management.
Exclusive Forum
The Proposed Charter will provide that, unless Electra Pubco consents in writing to the selection of an alternative forum, (a) the Court of Chancery of the State of Delaware (the “Chancery Court”) (or, in the event that the Chancery Court does not have jurisdiction, the federal district court for the District of Delaware or other state courts of the State of Delaware) will, to the fullest extent permitted by law, be the sole and exclusive forum for (i) any derivative action, suit or proceeding brought on behalf of Electra Pubco, (ii) any action, suit or proceeding asserting a claim of breach of a fiduciary duty owed by any director, officer or stockholder of Electra Pubco to Electra Pubco or to Electra Pubco’s stockholders, (iii) any action, suit or proceeding arising pursuant to any provision of the DGCL, the Proposed Bylaws or the Proposed Charter (as either may be amended from time to time) or (iv) any action, suit or proceeding asserting a claim against Electra Pubco governed by the internal affairs doctrine; and (b) subject to the foregoing, the federal district courts of the United States will be the exclusive forum for the resolution of any complaint asserting a cause or causes of action arising under the Securities Act, including all causes of action asserted against any defendant to such complaint.
If any action within the scope of clause (a) above is filed in a court other than the courts in the State of Delaware (a “Foreign Action”) in the name of any stockholder, such stockholder will be deemed to have consented to (x) the personal jurisdiction of the state and federal courts in the State of Delaware in connection with any action brought in any such court to enforce clause (a) and (y) service of process upon such stockholder by service upon such stockholder’s counsel in the Foreign Action as agent for such stockholder. Any person or entity purchasing or otherwise acquiring any interest in any security of Electra Pubco will be deemed to have notice of and consented to these provisions. The federal forum provision is intended to benefit and may be enforced by Electra Pubco, its officers and directors, the
196
Table of Contents
underwriters to any offering giving rise to such complaint and any other professional or entity whose profession gives authority to a statement made by that person or entity and who has prepared or certified any part of the documents underlying the offering.
The exclusive forum provisions of the Proposed Charter and the Proposed Bylaws will not apply to suits brought to enforce any liability or duty created by the Exchange Act or any other claim for which the federal courts of the United States have exclusive jurisdiction. Section 27 of the Exchange Act creates exclusive federal jurisdiction over all suits brought to enforce any duty or liability created by the Exchange Act or the rules and regulations thereunder. Section 22 of the Securities Act creates concurrent jurisdiction for federal and state courts over all suits brought to enforce any duty or liability created by the Securities Act or the rules and regulations thereunder, and there is uncertainty as to whether a court would enforce the federal forum provision. Investors cannot waive compliance with the federal securities laws and the rules and regulations thereunder.
The Proposed Bylaws contain a substantially similar exclusive forum provision in Article XI, covering the same four categories of claims, the federal forum for Securities Act claims, the deemed consent provisions for Foreign Actions, the beneficiaries of the federal forum provision and the carve-out for Exchange Act claims and claims of exclusive federal jurisdiction.
Although Electra Pubco believes these provisions will benefit it by providing increased consistency in the application of Delaware law and federal securities laws in the types of lawsuits to which they apply, the provisions may limit a stockholder’s ability to bring a claim in a judicial forum that it finds favorable for disputes with Electra Pubco or its directors, officers or other employees, which may discourage such lawsuits. The enforceability of similar choice of forum provisions in other companies’ certificates of incorporation has been challenged in legal proceedings, and it is possible that a court could find these provisions to be inapplicable or unenforceable. If a court were to find either provision inapplicable or unenforceable in an action, Electra Pubco may incur additional costs associated with resolving such action in other jurisdictions.
Conflicts of Interest
Delaware law permits corporations to adopt provisions renouncing any interest or expectancy in certain opportunities that are presented to the corporation or its officers, directors or stockholders. The Proposed Charter, to the maximum extent permitted from time to time by Delaware law, renounces any interest or expectancy that Electra Pubco has in, or right to be offered an opportunity to participate in, specified business opportunities that are from time to time presented to a member of the Electra Pubco Board who is not an employee of Electra Pubco or its subsidiaries, or the principal stockholders of Electra Pubco and their affiliates. The Proposed Charter does not renounce Electra Pubco’s interest in any business opportunity that is expressly offered to a non-employee director solely in his or her capacity as a director or officer of Electra Pubco.
Limitations on Liability and Indemnification of Officers and Directors
The DGCL authorizes corporations to limit or eliminate the personal liability of directors to corporations and their stockholders for monetary damages for breaches of directors’ fiduciary duties, subject to certain exceptions. The Proposed Charter includes a provision that eliminates the personal liability of directors and officers for monetary damages for any breach of fiduciary duty as a director or officer, except to the extent such exemption from liability or limitation thereof is not permitted under the DGCL. The effect of these provisions is to eliminate the rights of Electra Pubco and its stockholders, through stockholders’ derivative suits on Electra Pubco’s behalf, to recover monetary damages from a director or officer for breach of fiduciary duty as a director or officer, including breaches resulting from grossly negligent behavior. However, exculpation does not apply to any director or officer if the director or officer has acted in bad faith, knowingly or intentionally violated the law, authorized illegal dividends or redemptions or derived an improper benefit from his or her actions as a director or officer.
The limitation of liability provision in the Proposed Charter and the Proposed Bylaws may discourage stockholders from bringing a lawsuit against directors or officers for breach of their fiduciary duty. These provisions also may have the effect of reducing the likelihood of derivative litigation against directors and officers, even though such an action, if successful, might otherwise benefit Electra Pubco and its stockholders. In addition, your investment may be adversely affected to the extent Electra Pubco pays the costs of settlement and damage awards against directors
197
Table of Contents
and officers pursuant to any indemnity agreements that may be entered into. IRHO believes that this provision, liability insurance and any indemnity agreements that may be entered into are necessary to attract and retain talented and experienced directors and officers.
Insofar as indemnification for liabilities arising under the Securities Act may be permitted to Electra Pubco’s directors, officers and controlling persons pursuant to the foregoing provisions, or otherwise, IRHO has been advised that in the opinion of the SEC such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable.
There is currently no pending material litigation or proceeding involving any of the IRHO’s or Electra’s respective directors, officers or employees for which indemnification is sought.
Listing of Securities
IRHO has applied to list the Electra Pubco Common Stock on Nasdaq under the proposed symbol “___” upon the Closing.
Pursuant to the terms of the Merger Agreement, as a closing condition, IRHO is required to cause the Electra Pubco Common Stock to be issued in connection with the Business Combination to be approved for listing on Nasdaq or another national securities exchange, but there can be no assurance that such listing condition will be met. If such listing condition is not met, the Business Combination will not be consummated unless the listing condition is waived by the parties to the Merger Agreement. It is important for you to know that, at the time of the extraordinary general meeting, IRHO may not have received from Nasdaq either confirmation of the listing of the Electra Pubco Common Stock or that approval will be obtained prior to the consummation of the Business Combination. As a result, you may be asked to vote to approve the Business Combination and the other proposals included in this proxy statement/prospectus without such confirmation, and, further, it is possible that such confirmation may never be received and the Business Combination could still be consummated if such condition is waived and therefore the Electra Pubco Common Stock would not be listed on any nationally recognized securities exchange.
198
Table of Contents
Securities Act Restrictions on Resale of Electra Pubco Securities
Pursuant to Rule 144 under the Securities Act (“Rule 144”), a person who has beneficially owned restricted Electra Pubco Common Stock for at least six months would be entitled to sell their securities provided that (i) such person is not deemed to have been an affiliate of Electra Pubco at the time of, or at any time during the three months preceding, a sale and (ii) Electra Pubco is subject to the Exchange Act periodic reporting requirements for at least three months before the sale, has filed all required reports under Section 13 or 15(d) of the Exchange Act during the 12 months (or such shorter period as Electra Pubco was required to file reports) preceding the sale, and has submitted electronically every interactive data file required to be submitted pursuant to Rule 405 of the Securities Act during the 12 months (or such shorter period as Electra Pubco was required to file reports) preceding the sale.
Persons who have beneficially owned restricted shares of Electra Pubco Common Stock for at least six months but who are affiliates of Electra Pubco at the time of, or at any time during the three months preceding, a sale, would be subject to additional restrictions, by which such person would be entitled to sell within any three-month period only a number of securities that does not exceed the greater of:
• 1% of the total number of shares of Electra Pubco Common Stock then outstanding; or
• the average weekly reported trading volume of Electra Pubco Common Stock during the four calendar weeks preceding the filing of a notice on Form 144 with respect to the sale.
Sales by affiliates of Electra Pubco under Rule 144 are also limited by manner of sale provisions and notice requirements and to the availability of current public information about Electra Pubco.
Restrictions on the Use of Rule 144 by Shell Companies or Former Shell Companies
Rule 144 is not available for the resale of securities initially issued by shell companies (other than business combination related shell companies) or issuers that have been at any time previously a shell company. However, Rule 144 also includes an important exception to this prohibition if the following conditions are met:
• the issuer of the securities that was formerly a shell company has ceased to be a shell company;
• the issuer of the securities is subject to the reporting requirements of Section 13 or 15(d) of the Exchange Act;
• the issuer of the securities has filed all Exchange Act reports and material required to be filed, as applicable, during the preceding 12 months (or such shorter period that the issuer was required to file such reports and materials), other than Form 8-K reports; and
• at least one year has elapsed from the time that the issuer filed current Form 10 type information with the SEC reflecting its status as an entity that is not a shell company.
As a result, the Sponsor will be able to sell their Founder Shares and Private Placement Units, as applicable, pursuant to Rule 144 without registration once Rule 144 becomes available for resale of Electra Pubco, subject to the provisions of the Parent Support Agreement.
IRHO anticipates that following the consummation of the Business Combination, Electra Pubco will no longer be a shell company, and so, once the conditions set forth in the exceptions listed above are satisfied, Rule 144 will become available for the resale of the above noted restricted securities.
199
Table of Contents
STOCKholder Proposals and DIRECTOR Nominations
Stockholder Proposals
The Proposed Bylaws establish an advance notice procedure for stockholders who wish to present a proposal before an annual meeting of stockholders. The Proposed Bylaws provide that the only business that may be conducted at an annual meeting of stockholders is business that is (a) specified in the notice of such meeting (or any supplement or amendment thereto) given by or at the direction of the Electra Pubco Board, (b) otherwise properly brought before such meeting by or at the direction of the Electra Pubco Board or the Chairperson of the Electra Pubco Board, or (c) otherwise properly brought before such meeting by a stockholder present in person who (A) (1) was a record owner of shares of Electra Pubco both at the time of giving the notice and at the time of the meeting, (2) is entitled to vote at such meeting, and (3) has complied with notice procedures specified in the Proposed Bylaws in all applicable respects or (B) properly made such proposal in accordance with Rule 14a-8 under the Exchange Act. To be timely for the Electra Pubco’s annual meeting of stockholders, a stockholder’s notice must be delivered to Electra Pubco’s secretary at Electra Pubco’s principal executive offices not less than 90 days nor more than 120 days prior to the one-year anniversary of the preceding year’s annual meeting.
In the event that no annual meeting was held in the previous year or Electra Pubco holds its annual meeting of stockholders more than 30 days before or more than 70 days after the one-year anniversary of a preceding year’s annual meeting, to be timely, notice of a stockholder proposal must be delivered not later than the 90th day prior to such annual meeting or, if later, the 10th day following the day on which public disclosure of the date of such annual meeting was first made.
Notice of a nomination or proposal must be delivered to Electra Pubco no later than the 10th day following the earlier of the day on which such notice of the date of such meeting was mailed and the day the public disclosure of the date of the 2024 annual meeting is made. Nominations and proposals also must satisfy other requirements set forth in the Proposed Bylaws.
Under Rule 14a-8 of the Exchange Act, a stockholder proposal (other than nominations) to be included in the proxy statement and proxy card for the 2024 annual general meeting pursuant to Rule 14a-8 must be received at Electra Pubco’s principal office at a reasonable time before Electra Pubco begins to print and send its proxy materials and must comply with Rule 14a-8.
A stockholder will update and supplement its notice to Electra Pubco’s secretary, if necessary, so that the information provided or required to be provided in such notice as described above will be true and correct as of the record date for notice of the annual meeting and as of the date that is 10 business days prior to the annual meeting or any adjournment or postponement thereof, and such update and supplement will be delivered to, or mailed and received by, Electra Pubco’s secretary not later than five business days after the record date for stockholders entitled to vote at the meeting `(in the case of the update and supplement required to be made as of such record date), and not later than eight business days prior to the date for the meeting or, if practicable, any adjournment or postponement thereof (and, if not practicable, on the first practicable date prior to the date to which the meeting has been adjourned or postponed) (in the case of the update and supplement required to be made as of 10 business days prior to the meeting or any adjournment or postponement thereof).
Stockholder Director Nominees
The Proposed Bylaws permit stockholders to nominate directors for election at an annual meeting or at a special meeting (but only if the election of directors is a matter specified in the notice of meeting given by or at the direction of the person calling such special meeting) of stockholders, subject to the provisions of the Proposed Charter. To nominate a director, the stockholder must provide the information required by the Proposed Bylaws. In addition, the stockholder must give timely notice to Electra Pubco’s secretary in accordance with the Proposed Bylaws, which, in general, require that the notice be received by Electra Pubco’s secretary within the time periods described above under the section “— Stockholder Proposals”.
200
Table of Contents
Shareholder Communications
Shareholders and interested parties may communicate with the IRHO Board, any committee chairperson or the non-management directors as a group by writing to the IRHO Board or committee chairperson in care of Iron Horse Acquisition II Corp., ________________________________. Following the Closing, such communications should be sent to ELECTRA AI, Inc., ____________________________________. Each communication will be forwarded, depending on the subject matter, to the Electra Pubco Board, the appropriate committee chairperson or all non-management directors.
Legal Matters
Loeb & Loeb LLP will pass upon the validity of the securities of IRHO to be issued in connection with the Domestication and Merger. Latham & Watkins LLP is counsel to Electra in connection with the Merger.
Other Matters
As of the date of this proxy statement/prospectus, the IRHO Board does not know of any matters that will be presented for consideration at the extraordinary general meeting other than as described in this proxy statement/prospectus. If any other matters properly come before the extraordinary general meeting, or any adjournment or postponement thereof, and are voted upon, the enclosed proxy will be deemed to confer discretionary authority on the individuals that it names as proxies to vote the shares represented by the proxy as to any of these matters.
Experts
The financial statements of Iron Horse Acquisition II Corp. as of November 30, 2025 and 2024 and for the year ended November 30, 2025 and for the period from November 26, 2024 (inception) through November 30, 2024 included in this prospectus have been so included in reliance on the report (which contains an explanatory paragraph regarding the company’s ability to continue as a going concern) of MaloneBailey, LLP, an independent registered public accounting firm, given on the authority of said firm as experts in auditing and accounting.
The financial statements of Electra Vehicles, Inc. as of December 31, 2025 and 2024 and for the years then ended included in this prospectus have been so included in reliance on the report (which contains an explanatory paragraph regarding the company’s ability to continue as a going concern) of MaloneBailey, LLP, an independent registered public accounting firm, given on the authority of said firm as experts in auditing and accounting.
201
Table of Contents
Delivery of Documents to Shareholders
Pursuant to the rules of the SEC, IRHO and services that it employs to deliver communications to its shareholders are permitted to deliver to two or more shareholders sharing the same address a single copy of each of IRHO’s annual report to shareholders and IRHO’s proxy statement. Upon written or oral request, IRHO will deliver a separate copy of the annual report to shareholders and/or proxy statement to any shareholder at a shared address to which a single copy of each document was delivered and who wishes to receive separate copies of such documents. Shareholders receiving multiple copies of such documents may likewise request that IRHO deliver single copies of such documents in the future. Shareholders receiving multiple copies of such documents may request that IRHO deliver single copies of such documents in the future. Shareholders may notify IRHO of their requests by calling or writing IRHO at its principal executive offices at 851 Broken Sound Parkway NW, Suite 230, Boca Raton, FL 33487.
Enforceability of Civil Liability
IRHO is a Cayman Islands exempted company. If IRHO does not change its jurisdiction of incorporation from the Cayman Islands to Delaware by effecting the Domestication, you may have difficulty serving legal process within the United States upon IRHO. You may also have difficulty enforcing, both in and outside the United States, judgments you may obtain in U.S. courts against IRHO in any action, including actions based upon the civil liability provisions of U.S. federal or state securities laws. Furthermore, there is doubt that the courts of the Cayman Islands would enter judgments in original actions brought in those courts predicated on U.S. federal or state securities laws. However, IRHO may be served with process in the United States with respect to actions against IRHO arising out of or in connection with violation of U.S. federal securities laws relating to offers and sales of IRHO’s securities by serving IRHO’s U.S. agent irrevocably appointed for that purpose.
202
Table of Contents
Where you can Find More Information
IRHO has filed a registration statement on Form S-4 to register the issuance and resale of securities described elsewhere in this proxy statement/prospectus. This proxy statement/prospectus is a part of that registration statement.
Information and statements contained in this proxy statement/prospectus or any Annex to this proxy statement/prospectus are qualified in all respects by reference to the copy of the relevant contract or other Annex filed as an exhibit to the registration statement of which this proxy statement/prospectus forms a part.
All information contained in this proxy statement/prospectus relating to IRHO has been supplied by IRHO, and all such information relating to Electra has been supplied by Electra, respectively. Information provided by one another does not constitute any representation, estimate or projection of the other.
This document is a (i) prospectus of Electra Pubco with respect to the Electra Pubco Common Stock to be issued to IRHO shareholders and rightsholders and Electra equityholders if the Business Combination described herein is consummated, (ii) prospectus of Electra Pubco with respect to the sale by the selling stockholders identified herein of Electra Pubco Common Stock received by them in the Business Combination, and (iii) proxy statement of IRHO for the extraordinary general meeting. IRHO and Electra have not authorized anyone to give any information or make any representation about the Business Combination, IRHO or Electra that is different from, or in addition to, that contained in this proxy statement/prospectus. Therefore, if anyone does give you information of this sort, you should not rely on it. The information contained in this proxy statement/prospectus speaks only as of the date of this proxy statement/prospectus unless the information specifically indicates that another date applies.
If you would like additional copies of this proxy statement/prospectus, or if you have questions about the business combination, you should contact via phone or in writing:
Iron Horse Acquisition II Corp.
_________________________
Attention: Jose Bengochea, Chief Executive Officer
E-mail:._______________
You may also obtain these documents by requesting them in writing or by telephone from IRHO’s proxy solicitation agent at the following address and telephone number:
TBD
If you are a shareholder of IRHO and would like to request documents, please do so no later than five business days before the extraordinary general meeting in order to receive them before the extraordinary general meeting. If you request any documents from IRHO, IRHO will mail them to you by first class mail, or another equally prompt means. Information and statements contained in this proxy statement/prospectus or any Annex to this proxy statement/prospectus are qualified in all respects by reference to the copy of the relevant contract or other Annex filed as an exhibit to the registration statement of which this proxy statement/prospectus forms a part, which includes exhibits incorporated by reference from other documents that are not included with this proxy statement/prospectus.
203
Table of Contents
INDEX TO FINANCIAL STATEMENTS
| Page | ||
| Iron Horse Acquisition II Corp. Unaudited Financial Statements | ||
| Balance Sheets as of August 31, 2026 and November 30, 2025 (Unaudited) | F-2 | |
| Statements of Operations for the three and nine months ended August 31, 2026 and 2025 (Unaudited) | F-3 | |
| Statements of Changes in Shareholders’ Deficit for the three and nine months ended August 31, | F-4 | |
| Statements of Cash Flows for the nine months ended August 31, 2026 and 2025 (Unaudited) | F-5 | |
| Notes to Financial Statements (Unaudited) | F-6 |
| Page | ||
| Iron Horse Acquisition II Corp. Audited Financial Statements | ||
| Report of Independent Registered Public Accounting Firm (PCAOB ID Number 206) | F-26 | |
| Balance Sheets as of November 30, 2025 and 2024 | F-27 | |
| Statements of Operations for the year ended November 30, 2025 and for the period from November 26, 2024 (Inception) through November 30, 2024 | F-28 | |
| Statements of Changes in Shareholder’s Deficit for the year ended November 30, 2025 and for the period from November 26, 2024 (Inception) through November 30, 2024 | F-29 | |
| Statements of Cash Flows for the year ended November 30, 2025 and for the period from November 26, 2024 (Inception) through November 30, 2024 | F-30 | |
| Notes to Financial Statements | F-31 |
| Page | ||
| Electra Vehicles, Inc. | ||
| Condensed Consolidated Balance Sheets (Unaudited) | F-42 | |
| Condensed Consolidated Statements of Operations and Comprehensive Loss (Unaudited) | F-44 | |
| Condensed Consolidated Statements of Changes in Stockholders’ Equity (Deficit) (Unaudited) | F-45 | |
| Condensed Consolidated Statements of Cash Flows (Unaudited) | F-47 | |
| Notes to the Unaudited Condensed Consolidated Financial Statements | F-48 |
| Page | ||
| Electra Vehicles, Inc. | ||
| Report of Independent Registered Public Accounting Firm | F-62 | |
| Consolidated Balance Sheets | F-63 | |
| Consolidated Statements of Operations and Comprehensive Loss | F-64 | |
| Consolidated Statements of Changes in Stockholders’ Equity (Deficit) for the years ended December 31, 2025 and 2024 | F-65 | |
| Consolidated Statements of Cash Flows | F-66 | |
| Notes to the Consolidated Financial Statements | F-67 |
F-1
Table of Contents
IRON HORSE ACQUISITION II CORP.
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
| August 31, |
November 30, |
|||||||
| ASSETS |
|
|
|
|
||||
| Current assets |
|
|
|
|
||||
| Cash | $ | |
| $ | |
| ||
| Notes receivable |
| |
|
|
|
| ||
| Prepaid expenses |
| |
|
| |
| ||
| Total current assets |
| |
|
| |
| ||
| Long-term prepaid insurance |
| |
|
|
|
| ||
| Deferred offering costs |
|
|
|
| |
| ||
| Cash and investments held in Trust Account |
| |
|
|
|
| ||
| TOTAL ASSETS | $ | |
| $ | |
| ||
|
|
|
|
|
|||||
| LIABILITIES, ORDINARY SHARES SUBJECT TO POSSIBLE REDEMPTION, AND SHAREHOLDERS’ DEFICIT |
|
|
|
|
||||
| Current liabilities |
|
|
|
|
||||
| Accrued expenses | $ | |
| $ | |
| ||
| Accrued expenses – related party |
| |
|
|
|
| ||
| Accrued offering costs |
| |
|
| |
| ||
| Due to Sponsor |
| |
|
| |
| ||
| Promissory note – related party |
|
|
|
| |
| ||
| Total current liabilities |
| |
|
| |
| ||
| Deferred legal fees |
| |
|
|
|
| ||
| Deferred underwriting fee |
| |
|
|
|
| ||
| Total Liabilities |
| |
|
| |
| ||
|
|
|
|
|
|||||
| Commitments and Contingencies (Note 5) |
|
|
|
| ||||
| Ordinary shares subject to possible redemption, $ |
| |
|
|
|
| ||
|
|
|
|
|
|||||
| Shareholders’ Deficit |
|
|
|
|
||||
| Preference shares, $ |
|
|
|
|
|
| ||
| Ordinary shares, $ |
| |
|
| |
| ||
| Additional paid-in capital |
|
|
|
| |
| ||
| Accumulated deficit |
| ( | ) |
| ( | ) | ||
| Total Shareholders’ Deficit |
| ( | ) |
| ( | ) | ||
| TOTAL LIABILITIES, ORDINARY SHARES SUBJECT TO POSSIBLE REDEMPTION, AND SHAREHOLDERS’ DEFICIT | $ | |
| $ | |
| ||
____________
(1)
(2)
The accompanying notes are an integral part of the unaudited consolidated financial statements.
F-2
Table of Contents
IRON HORSE ACQUISITION II CORP.
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
| For the Three Months Ended |
For the Nine Months Ended |
|||||||||||||||
| 2026 |
2025 |
2026 |
2025 |
|||||||||||||
| General, formation and operational costs | $ | |
| $ | |
| $ | |
| $ | |
| ||||
| Loss from operations |
| ( | ) |
| ( | ) |
| ( | ) |
| ( | ) | ||||
|
|
|
|
|
|
|
|
|
|||||||||
| Other income: |
|
|
|
|
|
|
|
|
||||||||
| Interest earned on cash and investments held in Trust Account |
| |
|
|
|
|
| |
|
|
|
| ||||
| Total other income |
| |
|
|
|
|
| |
|
|
|
| ||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net income (loss) | $ | |
| $ | ( | ) | $ | |
| $ | ( | ) | ||||
|
|
|
|
|
|
|
|
|
|||||||||
| Basic weighted average ordinary shares outstanding, subject to possible redemption |
| |
|
|
|
|
| |
|
|
|
| ||||
| Basic net income per ordinary share, subject to possible redemption | $ | |
| $ |
|
| $ | |
| $ |
|
| ||||
| Diluted weighted average ordinary shares outstanding, subject to possible redemption |
| |
|
|
|
|
| |
|
|
|
| ||||
| Diluted net income per ordinary share, subject to possible redemption | $ | |
| $ |
|
| $ | |
| $ |
|
| ||||
| Basic weighted average ordinary shares outstanding, not subject to possible redemption(1)(2) |
| |
|
| |
|
| |
|
| |
| ||||
| Basic net income (loss) per ordinary share, not subject to possible redemption | $ | |
| $ | ( | ) | $ | |
| $ | ( | ) | ||||
| Diluted weighted average ordinary shares outstanding, not subject to possible redemption(1)(2) |
| |
|
| |
|
| |
|
| |
| ||||
| Diluted net income (loss) per ordinary share, not subject to possible redemption | $ | |
| $ | ( | ) | $ | |
| $ | ( | ) | ||||
____________
(1) Includes up to
Such shares were excluded for the three and nine months ended August 31, 2025.
(2)
The accompanying notes are an integral part of the unaudited consolidated financial statements.
F-3
Table of Contents
IRON HORSE ACQUISITION II CORP.
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ DEFICIT
(UNAUDITED)
FOR THE THREE AND NINE MONTHS ENDED AUGUST 31, 2026
| Ordinary Shares – |
Additional |
Accumulated |
Total |
||||||||||||||
| Shares(1)(2) |
Amount |
||||||||||||||||
| Balance – December 1, 2025 | | $ | | $ | |
| $ | ( | ) | $ | ( | ) | |||||
| Sale of | |
| |
| |
|
|
|
|
| |
| |||||
| Fair value of rights included in Public Shares | — |
|
|
| |
|
|
|
|
| |
| |||||
| Allocated value of transaction costs to Public Rights and Private Placement Units | — |
|
|
| ( | ) |
|
|
|
| ( | ) | |||||
| Accretion for ordinary shares, subject to possible redemption to redemption value | — |
|
|
| ( | ) |
| ( | ) |
| ( | ) | |||||
| Net income | — |
|
|
|
|
|
| |
|
| |
| |||||
| Balance – February 28, 2026 | |
| |
|
|
|
| ( | ) |
| ( | ) | |||||
| Accretion for ordinary shares, subject to possible redemption to redemption value | — |
|
|
|
|
|
| ( | ) |
| ( | ) | |||||
| Net income | — |
|
|
|
|
|
| |
|
| |
| |||||
| Balance – May 31, 2026 | |
| |
|
|
|
| ( | ) |
| ( | ) | |||||
| Accretion for ordinary shares, subject to possible redemption to redemption value | — |
|
|
|
|
|
| ( | ) |
| ( | ) | |||||
| Net income | — |
|
|
|
|
|
| |
|
| |
| |||||
| Balance – August 31, 2026 | | $ | | $ |
|
| $ | ( | ) | $ | ( | ) | |||||
FOR THE THREE AND NINE MONTHS ENDED AUGUST 31, 2025
|
|
Share |
Additional |
Accumulated |
Total |
||||||||||||||||
| Shares(1)(2) |
Amount |
|||||||||||||||||||
| Balance – December 1, 2024 | | $ | | $ | ( | ) | $ | | $ | ( | ) | $ | ( | ) | ||||||
| Collection of share subscription receivable | — |
|
|
| |
|
|
|
|
|
|
| |
| ||||||
| Net loss | — |
|
|
|
|
|
|
|
| ( | ) |
| ( | ) | ||||||
| Balance – February 28, 2025 | |
| |
|
|
|
| |
| ( | ) |
| ( | ) | ||||||
| Net loss | — |
|
|
|
|
|
|
|
| ( | ) |
| ( | ) | ||||||
| Balance – May 31, 2025 | |
| |
|
|
|
| |
| ( | ) |
| ( | ) | ||||||
| Net loss | — |
|
|
|
|
|
|
|
| ( | ) |
| ( | ) | ||||||
| Balance – August 31, 2025 | | $ | | $ |
|
| $ | | $ | ( | ) | $ | ( | ) | ||||||
____________
(1)
(2)
The accompanying notes are an integral part of the unaudited consolidated financial statements.
F-4
Table of Contents
IRON HORSE ACQUISITION II CORP.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
| For the Nine Months Ended |
||||||||
| 2026 |
2025 |
|||||||
| Cash Flows from Operating Activities: |
|
|
|
|
||||
| Net income (loss) | $ | |
| $ | ( | ) | ||
| Adjustments to reconcile net income (loss) to net cash used in operating activities: |
|
|
|
|
||||
| Interest earned on cash and investments held in Trust Account |
| ( | ) |
|
|
| ||
| Changes in operating assets and liabilities: |
|
|
|
|
||||
| Prepaid expenses |
| ( | ) |
|
|
| ||
| Long-term prepaid insurance |
| ( | ) |
|
|
| ||
| Accrued expenses |
| ( | ) |
| |
| ||
| Accrued expenses – related party |
| |
|
|
|
| ||
| Due to Sponsor |
| |
|
|
|
| ||
| Deferred legal fees |
| |
|
|
|
| ||
| Net cash used in operating activities |
| ( | ) |
| ( | ) | ||
|
|
|
|
|
|||||
| Cash Flows from Investing Activities: |
|
|
|
|
||||
| Investment of cash in Trust Account |
| ( | ) |
|
|
| ||
| Notes receivable |
| ( | ) |
|
|
| ||
| Cash withdrawn from Trust Account for working capital purposes |
| |
|
|
|
| ||
| Net cash used in investing activities |
| ( | ) |
|
|
| ||
|
|
|
|
|
|||||
| Cash Flows from Financing Activities: |
|
|
|
|
||||
| Proceeds from issuance of ordinary shares to Sponsor |
|
|
|
| |
| ||
| Proceeds from sale of Units, net of underwriting discounts paid |
| |
|
|
|
| ||
| Proceeds from sale of Private Placement Units |
| |
|
|
|
| ||
| Proceeds from promissory note – related party |
|
|
|
| |
| ||
| Repayment of promissory note – related party |
| ( | ) |
|
|
| ||
| Repayment of advances from related party |
| ( | ) |
|
|
| ||
| Due to Sponsor |
|
|
|
| |
| ||
| Payment of offering costs |
| ( | ) |
| ( | ) | ||
| Net cash provided by financing activities |
| |
|
| |
| ||
|
|
|
|
|
|||||
| Net Change in Cash |
| |
|
| |
| ||
| Cash – Beginning of period |
| |
|
|
|
| ||
| Cash – End of period | $ | |
| $ | |
| ||
|
|
|
|
|
|||||
| Non-cash investing and financing activities: |
|
|
|
|
||||
| Offering costs included in accrued offering costs | $ | |
| $ | |
| ||
| Offering cost paid through advances from Sponsor | $ | |
| $ |
|
| ||
| Offering cost paid by Sponsor | $ | |
| $ |
|
| ||
| Prepaid expenses applied to offering costs | $ | |
| $ |
|
| ||
| Accretion of ordinary shares, subject to possible redemption to redemption value | $ | |
| $ |
|
| ||
| Deferred underwriting fee payable | $ | |
| $ |
|
| ||
The accompanying notes are an integral part of the unaudited consolidated financial statements.
F-5
Table of Contents
IRON HORSE ACQUISITION II CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
AUGUST 31, 2026
(Unaudited)
Note 1 — Organization, Plan of Business Operations and Going Concern Consideration
Iron Horse Acquisitions Corp. II was incorporated in Delaware on
As noted above, on September 12, 2025, Iron Horse Acquisition II Corp. was incorporated in the Cayman Islands. On September 18, 2025, IRHO SPAC Sponsor LLC (the “Sponsor”), contributed $
Accounting Standards Codification (“ASC”) 805-50, Business Combinations, provides specific guidance on accounting for certain transactions related to business combinations, including asset acquisitions (transactions not meeting the business definition) and pushdown accounting (an optional method to reflect a parent’s acquisition in a subsidiary’s financial statements), and addresses transactions between entities under common control. This transaction is being accounted for as a common control transaction whereby the assets and liabilities are recorded at their historical cost rather than fair value and net assets received are reported retrospectively.
Although the Company initially intended to focus on target companies within the media and entertainment industry, on April 21, 2026, it entered into the Business Combination Agreement with Electra Vehicles, Inc., as described below.
As of August 31, 2026, the Company had not yet commenced any operations. All activity from November 26, 2024 (inception) through August 31, 2026 relates to the Company’s formation, initial public offering (the “Initial Public Offering”), which is described below, and subsequent to the Initial Public Offering, identifying a target company for a Business Combination. The Company has selected November 30 as its fiscal year-end.
The Initial Public Offering
The registration statement for the Company’s Initial Public Offering was declared effective on December 16, 2025. On December 18, 2025, the Company consummated the Initial Public Offering of
Simultaneously with the closing of the Initial Public Offering, the Company consummated the sale of
F-6
Table of Contents
IRON HORSE ACQUISITION II CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
AUGUST 31, 2026
(Unaudited)
Note 1 — Organization, Plan of Business Operations and Going Concern Consideration (cont.)
Transaction costs amounted to $
The Company listed the Units on the Nasdaq Global Market (“NASDAQ”). Pursuant to the NASDAQ listing rules, the Company’s initial Business Combination must be with a target business or businesses whose collective fair market value is at least equal to
Following the closing of the Initial Public Offering, on December 18, 2025, an amount of $
The remaining net proceeds (not held in the Trust Account) may be used to pay for business, legal and accounting due diligence on prospective acquisitions and continuing general and administrative expenses. Additionally, certain interest earned on the Trust Account balance may be released to the Company to pay the Company’s tax obligations.
The Company, after signing a definitive agreement for the acquisition of a target business, is required to provide shareholders who acquired ordinary shares sold as part of the units in the Initial Public Offering (“Public Shareholders”) with the opportunity to redeem their Public Shares for a pro rata share of the Trust Account. The holders of the Founder Shares (as defined in Note 6) agreed to vote any shares they then hold in favor of any proposed Business Combination and waived any redemption rights with respect to these shares pursuant to letter agreements executed prior to the Initial Public Offering.
In connection with any proposed Business Combination, the Company will seek shareholder approval of an initial Business Combination at a meeting called for such purpose at which Public Shareholders may seek to redeem their Public Shares, regardless of whether they vote for or against the proposed Business Combination. Alternatively, the Company may conduct a tender offer and allow redemptions in connection therewith. If the Company seeks shareholder approval of an initial Business Combination, any Public Shareholder voting either for or against such proposed Business Combination or not voting at all will be entitled to demand that his Public Shares be redeemed for a full pro rata portion of the amount then in the Trust Account (initially $
F-7
Table of Contents
IRON HORSE ACQUISITION II CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
AUGUST 31, 2026
(Unaudited)
Note 1 — Organization, Plan of Business Operations and Going Concern Consideration (cont.)
earned on the funds held in the Trust Account and not previously released to the Company or necessary to pay its taxes). Holders of rights sold as part of the Units will not be entitled to vote on the proposed Business Combination and will have no redemption or liquidation rights with respect to the ordinary shares underlying such rights.
If the Company is unable to complete its initial Business Combination and expends all of the net proceeds from the sale of the Private Placement Units not deposited in the Trust Account, without taking into account any interest earned on the Trust Account, the initial per-share redemption price for ordinary shares is $
Business Combination Agreement
On April 21, 2026, the Company, entered into a merger agreement (“Business Combination Agreement”), by and among the Company, IRHO Merger Sub Inc., a Delaware corporation and a direct, wholly owned subsidiary of the Company (“Merger Sub”), and Electra Vehicles, Inc., a Delaware corporation (“Electra”). Electra is dedicated to enhancing battery performance through AI-powered battery intelligence, providing solutions for electric vehicles, battery energy storage systems (BESS), and fleet operators. The Business Combination Agreement was amended on May 14, 2026 to revise the definition of some terms, calculation of aggregate merger consideration and conversion ratio, treatment of Electra’s convertible notes, minimum ownership threshold provisions and earnout share provisions. Capitalized terms used but not defined in this section have the meanings given to them in the Business Combination Agreement.
Pursuant to the Business Combination Agreement, (a) the Company will domesticate from the Cayman Islands to Delaware (the “Domestication”), and (b) at least one business day following the Domestication, Merger Sub will merge with and into Electra (the “Merger”), after which Electra will be the surviving corporation (the “Surviving Corporation”) and a wholly-owned subsidiary of the Company. In connection with the Merger, the Surviving Corporation will change its name to a name to be mutually agreed by the parties and the Company will change its name to “Electra AI, Inc.”
The Domestication and Merger
In accordance with the Business Combination Agreement, and subject to the satisfaction or waiver of the conditions set forth therein, on the day that is at least one business day prior to the effective time, the Company shall de-register from the Register of Companies in the Cayman Islands and transfer by way of continuation out of the Cayman Islands and into the State of Delaware so as to migrate to and domesticate as a Delaware entity.
In connection with the Domestication, the Company will (i) file a certificate of incorporation with the Secretary of State of the State of Delaware, whereby the Company shall have a dual class common stock consisting of Class A common stock, par value $
In connection with the Domestication, (i) each then issued and outstanding ordinary share of the Company, par value $
F-8
Table of Contents
IRON HORSE ACQUISITION II CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
AUGUST 31, 2026
(Unaudited)
Note 1 — Organization, Plan of Business Operations and Going Concern Consideration (cont.)
IRHO Class A Common Share at the closing, pursuant to the Company’s rights agreement dated as of December 16, 2025, by and between the Company and Continental Stock Transfer & Trust Company, as rights agent; and (iii) each then issued and outstanding unit of the Company shall separate and convert automatically into
The Merger will become effective upon the filing of a certificate of merger with the Secretary of State of the State of Delaware or at such later time as is agreed to by the parties to the Business Combination Agreement and specified in the certificate of merger (the “Effective Time”). The Domestication, the Merger, and other transactions contemplated by the Business Combination Agreement are collectively referred to herein as the “Proposed Business Combination,” the consummation of the Merger is referred to as the “Closing” and the date of the Closing is referred to as the “Closing Date.”
Merger Consideration and Structure
Pursuant to the Business Combination Agreement, the Company has agreed to acquire all of the equity interests of Electra for the sum of $
The Base Purchase Price shall be automatically adjusted upwards in increments of $
Effect of the Merger
At the Effective Time (i) each share of Electra Capital Stock (as defined below), if any, that is owned by the Company or Merger Sub or Electra (as treasury stock or otherwise), will automatically be cancelled; (ii) each share of Electra Preferred Stock (as defined below) issued and outstanding immediately prior to the Effective Time will be converted into the right to receive a number of IRHO Common Shares equal to: (a) (x) the Conversion Ratio multiplied by (y) the number of shares of Electra Common Stock issuable upon conversion of such share of Electra Preferred Stock as of immediately prior to the Effective Time plus (b) a number of earnout shares equal to the earnout pro rata share in accordance with, and subject to the contingencies set forth in the Business Combination Agreement; (iii) each share of Electra Class A Common Stock issued and outstanding immediately prior to the Effective Time will be converted into the right to receive: (x) a number of IRHO Class A Common Shares equal to the Conversion Ratio plus (y) a number of earnout shares equal to the earnout pro rata share in accordance with, and subject to the contingencies set forth in the Business Combination Agreement; and (iv) each share of Electra Class B Common Stock issued and outstanding immediately prior to the Effective Time will be converted into the right to receive: (x) a number of IRHO Class B Common Shares equal to the Conversion Ratio plus (y) a number of earnout shares equal to the earnout pro rata share in accordance with, and subject to the contingencies set forth in the Business Combination Agreement. At the Effective Time, all shares of Electra Capital Stock shall no longer be outstanding and shall automatically be
F-9
Table of Contents
IRON HORSE ACQUISITION II CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
AUGUST 31, 2026
(Unaudited)
Note 1 — Organization, Plan of Business Operations and Going Concern Consideration (cont.)
canceled and shall cease to exist, and each holder of Electra Capital Stock shall thereafter cease to have any rights with respect to such securities, except the right to receive a portion of the Aggregate Merger Consideration plus the contingent right to receive their applicable portion of earnout shares in accordance with their earnout pro rata share.
“Electra Capital Stock” means “Electra Common Stock,” consisting of the Class A common stock of Electra, $
“Conversion Ratio” as defined in the amended Business Combination Agreement, means the quotient obtained by dividing (a) the number of IRHO Common Shares constituting the Aggregate Merger Consideration, by (b) the number of shares constituting the Aggregate Fully Diluted Electra Common Stock (without regard to the shares described in clause (c) of the Business Combination Agreement thereof).
“Aggregate Fully Diluted Electra Common Stock” as defined in the amended Business Combination Agreement, means the sum, without duplication, of (a) all shares of Electra Common Stock that are issued and outstanding immediately prior to the Effective Time; plus (b) the aggregate number of shares of Electra Common Stock issuable upon full conversion of all Electra Preferred Stock outstanding as of immediately prior to the Effective Time; plus (c) the aggregate number of shares of Electra Common Stock issuable upon exercise of all Electra options that are vested as of immediately prior to the Effective Time; plus (d) the aggregate number of shares of Electra Common Stock issuable upon full conversion, exercise or exchange of any other securities of Electra (other than Electra options and the Electra convertible notes issued or to be issued by Electra in connection with the bridge financing) outstanding immediately prior to the Effective Time directly or indirectly convertible into or exchangeable or exercisable for shares of Electra Common Stock.
Conversion of Merger Sub Capital Stock.
Each share of common stock, par value $
Treatment of Options and Convertible Notes.
At the Effective Time, each Electra option shall be converted into (i) an option to acquire, subject to substantially the same terms and conditions as were applicable under such Electra option (including expiration date, vesting conditions, and exercise provisions), the number of IRHO Class A Common Shares (rounded down to the nearest whole share), determined by multiplying the number of shares of Electra Class A Common Stock subject to such Electra option as of immediately prior to the Effective Time by the Conversion Ratio, at an exercise price per IRHO Class A Common Share (rounded up to the nearest whole cent) equal to (A) the exercise price per share of Electra Class A Common Stock of such Electra option divided by (B) the Conversion Ratio, and (ii) the right to receive a number of earnout shares in accordance with, and subject to the contingencies, set forth in the Business Combination Agreement.
At the Effective Time, each Electra convertible note shall be converted into the right to receive a number of IRHO Common Shares equal to (a) (i) the Conversion Ratio multiplied by (ii) the number of shares of Electra Common Stock issuable upon conversion of such Electra convertible note as of immediately prior to the Effective Time.
The Earnout Shares
From the period commencing on the Closing Date and until such date which is the five-year anniversary of the Closing Date (the “Earnout Period”), as additional consideration in the Merger, the holders of Electra Common Stock (but excluding holders of dissenting shares), Electra Preferred Stock, Electra options (whether vested or unvested) (the
F-10
Table of Contents
IRON HORSE ACQUISITION II CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
AUGUST 31, 2026
(Unaudited)
Note 1 — Organization, Plan of Business Operations and Going Concern Consideration (cont.)
“Electra Earnout Holders”, as defined in the amended Business Combination Agreement) shall be entitled to earn, in accordance with their respective earnout pro rata share, up to an aggregate amount of
A. Subject to the Earnout Cap, one-third (1/3) of the Earnout Shares if, at any time during the Earnout Period, (1) over any ten (
B. Subject to the Earnout Cap, one-third (1/3) of the Earnout Shares if, at any time during the Earnout Period, (1) over any ten (
C. Subject to the Earnout Cap, one-third (1/3) of the Earnout Shares if, at any time during the Earnout Period, (1) over any ten (
The applicable Earnout Shares will be delivered to the Electra Earnout Holders promptly (within 10 business days) following the date in which any such earnout milestone is achieved. Each earnout milestone shall only occur once, if at all.
Conditions to Closing
The Closing of the Proposed Business Combination is subject to certain customary conditions of the respective parties, including, among other things: (i) approval of the Proposed Business Combination and related agreements and transactions by the respective shareholders of the Company and Electra; (ii) effectiveness of the Registration Statement; (iii) the Company’s initial listing application shall have been conditionally approved for listing on NASDAQ or another national stock exchange; (iv) there shall not have occurred a respective Material Adverse Effect in respect of Electra and the Company that is continuing; (v) that the respective fundamental representations shall be true and correct in all respects; (vi) the Company’s Certificate of Incorporation shall have been filed with, and declared effective by, the Secretary of State of the State of Delaware; (vii) that all respective officer certificates of Electra and the Company are delivered; (viii) all parties shall have executed and delivered to each other a copy of each ancillary agreement to which they are a party; (ix) accrued but unpaid fees, costs and expenses, including fees of outside legal counsel (but excluding the deferred underwriting commission), of the Company parties as of immediately prior to the Closing shall collectively not exceed $
Company Support Agreement
In connection with the execution of the Business Combination Agreement, the Company entered into a support agreement (the “Company Support Agreement”) with the Sponsor and Electra, pursuant to which the Sponsor agreed to, among other things, (i) vote all of its IRHO Common Shares in favor of the various proposals related to the
F-11
Table of Contents
IRON HORSE ACQUISITION II CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
AUGUST 31, 2026
(Unaudited)
Note 1 — Organization, Plan of Business Operations and Going Concern Consideration (cont.)
Proposed Business Combination and the Business Combination Agreement and any other matters requested by the Company for consummation of the Proposed Business Combination, (ii) vote against any alternative proposal or alternative transaction or any proposal relating to a Proposed Business Combination transaction (other than the Business Combination Agreement, the Merger or any of the transactions contemplated thereby), (iii) vote against any merger agreement or merger, consolidation, combination, sale of substantial assets, reorganization, recapitalization, dissolution, liquidation or winding up of or by the Company (other than the Business Combination Agreement or the ancillary agreements and the Merger and the other transactions contemplated thereby), (iv) vote against any change in the business, management or board of directors of the Company (other than in connection with the Business Combination Agreement, the Merger or any of the transactions contemplated thereby), (v) vote against any proposal, action or agreement that would (A) impede, interfere with, delay, postpone, frustrate, prevent or nullify any provision of the Company Support Agreement, the Business Combination Agreement, the ancillary agreements or the Merger or any of the transactions contemplated thereby, (B) result in a breach in any respect of any covenant, representation, warranty or any other obligation or agreement of the Company or the Merger Sub or the Sponsor under the Business Combination Agreement or the Company Support Agreement, as applicable, (C) result in any of the conditions set forth in Article IX of the Business Combination Agreement not being fulfilled or (D) change in any manner the dividend policy or capitalization of, including the voting rights of any class of capital stock of the Company and (vi) vote in favor of any proposal to extend the period of time the Company is afforded under its organizational documents to consummate an initial Business Combination, in each case, subject to the terms and conditions of the Company Support Agreement.
During the period commencing on the date hereof and ending on the earliest of (a) the Effective Time, (b) such date and time as the Business Combination Agreement shall be validly terminated in accordance with its terms and (c) the liquidation of the Company, the Sponsor shall not, without the prior written consent of Electra, directly or indirectly, (i) sell, offer to sell, contract or agree to sell, hypothecate, pledge, grant any option to purchase or otherwise dispose of or agree to dispose of, file (or participate in the filing of) a registration statement with the SEC (other than the proxy statement/prospectus) or establish or increase a put equivalent position or liquidate or decrease a call equivalent position within the meaning of Section 16 of the Exchange Act, with respect to any IRHO Common Shares owned by the Sponsor, (ii) enter into any swap or other arrangement that transfers to another, in whole or in part, any of the economic consequences of ownership of any IRHO Common Shares owned by the Sponsor or (iii) publicly announce any intention to effect any transaction; provided, however, that the foregoing restrictions shall not apply to any permitted transfer (as defined in the Company Support Agreement).
Electra Support Agreement
In connection with the execution of the Business Combination Agreement, the Company entered into a support agreement (the “Electra Support Agreement”) with Electra and certain stockholders of Electra (the “Electra Supporting Shareholders”) pursuant to which the Electra Supporting Shareholders agreed to, among other things, (i) vote to adopt and approve, the Business Combination Agreement and the transactions contemplated thereby, (ii) vote against any merger agreement or merger, consolidation, combination, sale of substantial assets, reorganization, recapitalization, dissolution, liquidation or winding up of or by Electra (other than the Business Combination Agreement or the ancillary agreements and the Merger and the other transactions contemplated thereby), (iii) vote against any change in the business (to the extent in violation of the Business Combination Agreement), management or board of directors of Electra (other than in connection with the Business Combination Agreement and the transactions contemplated thereby, including the Merger), and (iv) vote against any proposal, action or agreement that would (A) impede, interfere with, delay, postpone, frustrate, prevent or nullify any provision of the Electra Support Agreement, the Business Combination Agreement, the ancillary agreements or the Merger or any of the transactions contemplated thereby, (B) result in a breach in any respect of any covenant, representation, warranty or any other obligation or agreement of Electra or the Electra Stockholders under the Business Combination Agreement or the Electra Support Agreement, as applicable, (C) result in any of the conditions set forth in Article IX of the Business Combination Agreement not being fulfilled, or (D) change in any manner the dividend policy or capitalization of Electra, including the voting rights of any share capital of Electra.
F-12
Table of Contents
IRON HORSE ACQUISITION II CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
AUGUST 31, 2026
(Unaudited)
Note 1 — Organization, Plan of Business Operations and Going Concern Consideration (cont.)
In addition, the Electra Supporting Shareholders agreed that during the period commencing on the date of entry into the Electra Support Agreement until the earliest of (a) the Effective Time, (b) such date and time as the Business Combination Agreement shall be validly terminated in accordance with its terms, each Electra Supporting Stockholder agrees to not, without the prior written consent of the Company, directly or indirectly, (i) sell, offer to sell, contract or agree to sell, hypothecate, transfer, pledge, grant any option to purchase or otherwise dispose of or agree to dispose of or transfer, each with respect to any Electra shares owned by such Electra Supporting Stockholder, (ii) enter into any swap or other arrangement that transfers to another, in whole or in part, any of the economic consequences of ownership of any Electra shares owned by such Electra Supporting Stockholder, or (iii) publicly announce any intention to effect any such transaction; provided, however, that the foregoing restrictions shall not apply to any permitted transfer (as defined in the Electra Support Agreement).
Lock-Up Agreement
On or before the Closing Date, the Company and Electra will enter into a lock-up agreement with certain stockholders of Electra and the Sponsor, pursuant to which the IRHO Common Shares and any other equity securities convertible into or exchangeable for or representing the rights to receive IRHO Common Shares, if any, held by such holders immediately following the Closing shall be subject to a lock-up for the lock-up period. The lock-up period means the period beginning on the Closing Date and ending in four consecutive equal quarterly installments following the Closing Date, in accordance with the following schedule:
(a) one-fourth of the securities subject to the lock-up shall be released from the lock-up upon Electra issuing its first quarterly earnings release that occurs at least
(b) one-fourth of the securities subject to the lock-up shall be released from the lock-up upon Electra issuing its second quarterly earnings release that occurs at least
(c) one-fourth of the securities subject to the lock-up shall be released from the lock-up upon Electra issuing its third quarterly earnings release that occurs at least
(d) one-fourth of the securities subject to the lock-up shall be released from the lock-up upon Electra issuing its fourth quarterly earnings release that occurs at least
Amended and Restated Registration Rights Agreement
The Business Combination Agreement contemplates that, at the Closing, the Company, Electra, the Sponsor and certain stockholders of Electra (collectively, the “Holders”) will enter into an amended and restated registration rights agreement (the “Registration Rights Agreement”), pursuant to which the Company will agree to register for resale, pursuant to Rule 415 under the Securities Act, certain IRHO Common Shares that are held by the Holders from time to time, including (a) any outstanding IRHO Common Shares and IRHO Common Shares issued or issuable upon the exercise of any other equity security and any IRHO Common Shares issued or issuable upon the exercise of any equity awards of the Company held by a Holder immediately following the Closing (including any securities distributable pursuant to the Business Combination Agreement); (b) any outstanding IRHO Common Shares, equity awards, Earnout Shares, IRHO Common Shares issued or issuable upon the exercise of any other equity security of the Company acquired by a Holder following the Closing Date to the extent that such securities are “restricted securities” (as defined in Rule 144) or are otherwise held by an “affiliate” (as defined in Rule 144) of the Company; (c) any Additional Holder Common Stock (as defined in the Registration Rights Agreement); and (d) any other equity security of the Company or any of its subsidiaries issued or issuable with respect to any securities referenced in clause (a), (b) or (c) above by way of a stock dividend or stock split or in connection with a recapitalization, merger, consolidation, spin-off, reorganization or similar transaction.
F-13
Table of Contents
IRON HORSE ACQUISITION II CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
AUGUST 31, 2026
(Unaudited)
Note 1 — Organization, Plan of Business Operations and Going Concern Consideration (cont.)
The Registration Rights Agreement amends and restates the registration rights agreement that was entered into by the Company, the Sponsor and the other parties thereto in connection with the Company’s Initial Public Offering. The Registration Rights Agreement will terminate on the earlier of (a) the five year anniversary of the date of the Registration Rights Agreement or (b) with respect to any Holder, on the date that such Holder no longer holds any Registrable Securities (as defined therein).
On May 14, 2026, the Company entered into an Amendment (the “Amendment”) to the Business Combination Agreement. Among other things, the Amendment revised certain provisions of the Business Combination Agreement including:
• the definitions of Aggregate Merger Consideration, Company Earnout Holders, Conversion Ratio;
• the calculation of the Aggregate Merger Consideration and Conversion Ratio;
• the treatment of the Company Convertible Notes to be issued in connection with Electra’s bridge financing;
• Minimum Ownership Threshold provisions; and
• the earnout share provisions applicable following the closing of the Business Combination.
Going Concern Consideration
As of August 31, 2026, the Company had cash of $
In connection with the Company’s assessment of going concern considerations in accordance with FASB ASC 205-40, “Financial Statement Presentation — Going Concern,” the Company’s management has determined that the Company currently lacks the liquidity it needs to sustain operations for a reasonable period of time, which is considered to be at least one year from the date that the accompanying unaudited consolidated financial statements are issued as it expects to continue to incur significant costs in pursuit of its acquisition plans. In addition, management has determined that if the Company is unable to complete an initial Business Combination within the Combination Period, then the Company will cease all operations except for the purpose of liquidating. These conditions raise substantial doubt about the Company’s ability to continue as a going concern. Management plans to consummate an initial Business Combination prior to the end of the Combination Period. No adjustments have been made to the carrying amounts of assets or liabilities should the Company be required to liquidate after the end of the Combination Period. There can be no assurance that the Company’s plans to raise capital or to consummate an initial Business Combination will be successful.
Risks and Uncertainties
The United States and global markets are experiencing volatility and disruption following the geopolitical instability resulting from the military escalations between the United States and Iran, the ongoing Russia-Ukraine conflict and other similar geopolitical conflicts. Ongoing military escalation between the United States and Iran has heightened risks to critical infrastructure, shipping routes, and energy supplies. Any further deterioration could drive sustained increases in oil prices, disrupt global trade, contribute to macroeconomic instability, and materially heighten the risk of a global recession. In response to the ongoing Russia-Ukraine conflict, the North Atlantic Treaty Organization (“NATO”) deployed additional military forces to eastern Europe, and the United States, the United Kingdom, the European Union and other countries have announced various sanctions and restrictive actions against Russia, Belarus and related individuals and entities, including the removal of certain financial institutions from the Society for Worldwide Interbank Financial Telecommunication payment system. Certain countries, including the
F-14
Table of Contents
IRON HORSE ACQUISITION II CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
AUGUST 31, 2026
(Unaudited)
Note 1 — Organization, Plan of Business Operations and Going Concern Consideration (cont.)
United States, have also provided and may continue to provide military aid or other assistance to Ukraine and to Israel, increasing geopolitical tensions among a number of nations. The invasion of Ukraine by Russia and the Israel-Hamas conflict and the resulting measures that have been taken, and could be taken in the future, by NATO, the United States, the United Kingdom, the European Union, Israel and its neighboring states and other countries have created global security concerns that could have a lasting impact on regional and global economies. Although the length and impact of the ongoing conflicts are highly unpredictable, they could lead to market disruptions, including significant volatility in commodity prices, credit and capital markets, as well as supply chain interruptions and increased cyberattacks against U.S. companies. Additionally, any resulting sanctions could adversely affect the global economy and financial markets and lead to instability and lack of liquidity in capital markets.
Any of the above mentioned factors, or any other negative impact on the global economy, capital markets or other geopolitical conditions resulting from these geopolitical conditions could reduce the pool of viable attractive target candidates for an initial Business Combination, the military escalations between the United States and Iran, the Russian invasion of Ukraine, the Israel-Hamas conflict and subsequent sanctions or related actions, could adversely affect the Company’s search for an initial Business Combination and any target business with which the Company may ultimately consummate an initial Business Combination.
Note 2 — Significant Accounting Policies
Basis of Presentation
The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information and in accordance with the instructions to Form 10-Q and Article 8 of Regulation S-X of the U.S. Securities and Exchange Commission (“SEC”). Certain information or footnote disclosures normally included in financial statements prepared in accordance with U.S. GAAP have been omitted, pursuant to the rules and regulations of the SEC for interim financial reporting. Accordingly, they do not include all the information and footnotes necessary for a complete presentation of financial position, results of operations, or cash flows. In the opinion of management, the accompanying unaudited consolidated financial statements include all adjustments, consisting of a normal recurring nature, which are necessary for a fair presentation of the financial position, operating results and cash flows for the periods presented.
The accompanying unaudited consolidated financial statements should be read in conjunction with the Company’s prospectus for its Initial Public Offering as filed with the SEC on December 18, 2025, the Company’s Current Report on Form 8-K, as filed with the SEC on December 23, 2025, as well as the Company’s Annual Report on Form 10-K for the period ended November 30, 2025, as filed with the SEC on February 13, 2026. The interim results for the three and nine months ended August 31, 2026 are not necessarily indicative of the results to be expected for the year ending November 30, 2026 or for any future periods.
Principles of Consolidation
Merger Sub, a direct, wholly owned subsidiary of the Company, was incorporated on April 17, 2026 and was formed for the purpose of merging with Electra prior to the transactions contemplated in the Business Combination Agreement to facilitate the consummation of the Proposed Business Combination.
The accompanying consolidated financial statements include the accounts of the Company and Merger Sub. All significant intercompany balances and transactions have been eliminated in the consolidation.
Emerging Growth Company
The Company is an “emerging growth company,” as defined in Section 2(a) of the Securities Act of 1933, as amended, (the “Securities Act”), as modified by the Jumpstart our Business Startups Act of 2012, (the “JOBS Act”), and it may take advantage of certain exemptions from various reporting requirements that are applicable to other
F-15
Table of Contents
IRON HORSE ACQUISITION II CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
AUGUST 31, 2026
(Unaudited)
Note 2 — Significant Accounting Policies (cont.)
public companies that are not emerging growth companies including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in its periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously approved.
Further, section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered under the Exchange Act) are required to comply with the new or revised financial accounting standards. The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies but any such election to opt out is irrevocable. The Company has elected not to opt out of such extended transition period which means that when a standard is issued or revised and it has different application dates for public or private companies, the Company, as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard. This may make comparison of the Company’s unaudited consolidated financial statements with another public company which is neither an emerging growth company nor an emerging growth company which has opted out of using the extended transition period difficult or impossible because of the potential differences in accounting standards used.
Use of Estimates
The preparation of the unaudited consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the unaudited consolidated financial statements and the reported amounts of revenues and expenses during the reporting period.
Making estimates requires management to exercise significant judgment. It is at least reasonably possible that the estimate of the effect of a condition, situation or set of circumstances that existed at the date of the unaudited consolidated financial statements, which management considered in formulating its estimate, could change in the near term due to one or more future confirming events. Accordingly, the actual results could differ significantly from those estimates.
Cash and Cash Equivalents
The Company considers all short-term investments with an original maturity of three months or less when purchased to be cash equivalents. The Company had $
Notes Receivable
Notes receivable are stated at the outstanding principal balance, plus accrued interest, if any, net of an allowance for expected credit losses. In accordance with ASC Topic 326, “Financial Instruments — Credit Losses,” the Company measures expected credit losses over the contractual life of the notes on an ongoing basis, considering past-due status, the absence of collateral, the financial condition of the counterparty and reasonable and supportable forecasts. As of August 31, 2026, the entire outstanding principal balance of $
On May 1, 2026 and May 15, 2026, the Company entered into unsecured promissory notes with Electra in connection with a short-term financing arrangement for $
F-16
Table of Contents
IRON HORSE ACQUISITION II CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
AUGUST 31, 2026
(Unaudited)
Note 2 — Significant Accounting Policies (cont.)
notes bear interest at a rate of
Cash and Investments Held in Trust Account
As of August 31, 2026 and November 30, 2025, the assets held in the Trust Account, amounted to $
Concentration of Credit Risk
Financial instruments that potentially subject the Company to concentrations of credit risk consist of a cash account in a financial institution, which, at times, may exceed the Federal Deposit Insurance Corporation coverage limit of $
Fair Value of Financial Instruments
The fair value of the Company’s assets and liabilities, which qualify as financial instruments under ASC Topic 820, “Fair Value Measurements and Disclosures,” approximates the carrying amounts represented in the accompanying unaudited consolidated balance sheets, primarily due to their short-term nature.
Income Taxes
The Company accounts for income taxes under ASC Topic 740, “Income Taxes,” which requires an asset and liability approach to financial accounting and reporting for income taxes. Deferred income tax assets and liabilities are computed for differences between the financial statements and tax bases of assets and liabilities that will result in future taxable or deductible amounts, based on enacted tax laws and rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized.
ASC Topic 740 prescribes a recognition threshold and a measurement attribute for the financial statements recognition and measurement of tax positions taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must be more likely than not to be sustained upon examination by taxing authorities. The Company’s management determined that the Cayman Islands is the Company’s major tax jurisdiction. The Company recognizes accrued interest and penalties related to unrecognized tax benefits as income tax expense. As of August 31, 2026 and November 30, 2025, there were no unrecognized tax benefits and no amounts accrued for interest and penalties. The Company is currently not aware of any issues under review that could result in significant payments, accruals or material deviation from its position.
F-17
Table of Contents
IRON HORSE ACQUISITION II CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
AUGUST 31, 2026
(Unaudited)
Note 2 — Significant Accounting Policies (cont.)
Effective July 25, 2025, the Company is considered to be an exempted Cayman Islands company with no connection to any other taxable jurisdiction and is presently not subject to income taxes or income tax filing requirements in the Cayman Islands or the United States. Prior to such date, the Company was a Delaware entity and the provision for income taxes was deemed to be de minimis from November 26, 2024 (inception) through July 25, 2025.
Offering Costs
The Company complies with the requirements of the ASC 340-10-S99 and SEC Staff Accounting Bulletin Topic 5A, “Expenses of Offering.” Offering costs consist principally of professional and registration fees that are related to the Initial Public Offering. FASB ASC 470-20, “Debt with Conversion and Other Options,” addresses the allocation of proceeds from the issuance of convertible debt into its equity and debt components. The Company applies this guidance to allocate Initial Public Offering proceeds from the Units between ordinary shares and Share Rights, using the residual method by allocating Initial Public Offering proceeds first to the fair value of the Public Rights and then to the ordinary shares. Offering costs allocated to the Public Shares were charged to temporary equity, and offering costs allocated to Public Rights and Private Placement Units were charged to shareholders’ deficit, as the Share Rights, after management’s evaluation, were accounted for under equity treatment.
Share Rights
The Company accounted for the Public and Private Placement Rights issued in connection with the Initial Public Offering and the private placement in accordance with the guidance contained in FASB ASC Topic 480, “Distinguishing Liabilities from Equity,” and FASB ASC Topic 815, “Derivatives and Hedging,” including ASC 815-40-15 and ASC 815-40-25. Accordingly, the Company determined that the Share Rights are not within the scope of ASC 480, are indexed to the Company’s own ordinary shares and meet the conditions for equity classification; the Share Rights are therefore classified within shareholders’ deficit at their fair value at issuance.
Ordinary Shares Subject to Possible Redemption
The Public Shares contain a redemption feature which allows for the redemption of such Public Shares in connection with the Company’s liquidation, or if there is a shareholder vote or tender offer in connection with the Company’s initial Business Combination. In accordance with ASC 480-10-S99, the Company classifies Public Shares subject to redemption outside of permanent equity as the redemption provisions are not solely within the control of the Company. The Company recognizes changes in redemption value immediately as they occur and will adjust the carrying value of redeemable shares to equal the redemption value at the end of each reporting period. Immediately upon the closing of the Initial Public Offering, the Company recognized the accretion from initial book value to redemption value. The change in the carrying value of redeemable shares will result in charges against additional paid-in capital (to the extent available) and accumulated deficit. Accordingly, as of August 31, 2026, ordinary shares subject to possible redemption are presented at redemption value as temporary equity, outside of the shareholders’ deficit section of the Company’s unaudited consolidated balance sheets.
| Gross proceeds | $ | |
| |
| Less: |
|
| ||
| Proceeds allocated to Public Rights |
| ( | ) | |
| Allocated value of transaction costs to ordinary shares subject to possible redemption |
| ( | ) | |
| Plus: |
|
| ||
| Remeasurement of carrying value to redemption value |
| |
| |
| Ordinary shares subject to possible redemption, August 31, 2026 | $ | |
|
F-18
Table of Contents
IRON HORSE ACQUISITION II CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
AUGUST 31, 2026
(Unaudited)
Note 2 — Significant Accounting Policies (cont.)
Net Income (Loss) Per Ordinary Share
The Company complies with the accounting and disclosure requirements of FASB ASC Topic 260, “Earnings Per Share.” Net income (loss) per ordinary share is computed by dividing net income (loss) by the weighted average number of ordinary shares outstanding for the period. Remeasurement associated with the redeemable ordinary shares is excluded from earnings per share as the redemption value approximates fair value.
The calculation of diluted net income (loss) per ordinary share does not consider the effect of the
For the nine months ended August 31, 2026, basic net income per non-redeemable ordinary share includes the Founder Shares beginning on December 18, 2025, the date the over-allotment option was fully exercised. Diluted net income per non-redeemable ordinary share treats the Founder Shares as outstanding as of the beginning of the period in which the contingent condition was satisfied. Accordingly, upon the exercise of the over-allotment option on December 18, 2025, the Founder Shares are included in the calculation of diluted net income per non-redeemable ordinary share as if outstanding from the beginning of the period on December 1, 2025.
The following table reflects the calculation of basic and diluted net income(loss) per ordinary share (in dollars, except per share amounts):
| For the Three Months Ended August 31, | For the Nine Months Ended August 31, | |||||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||||||||||||
| Redeemable | Non- | Redeemable | Non- | Redeemable | Non- | Redeemable | Non- | |||||||||||||||||||
| Basic net income (loss) per ordinary share |
|
|
|
|
|
|
|
|
|
| ||||||||||||||||
| Numerator: |
|
|
|
|
|
|
|
|
|
| ||||||||||||||||
| Allocation of net income (loss) | $ | | $ | | $ |
| $ | ( | ) | $ | | $ | | $ |
| $ | ( | ) | ||||||||
| Denominator: |
|
|
|
|
|
|
|
|
|
| ||||||||||||||||
| Basic weighted-average shares outstanding |
| |
| |
|
|
| |
|
| |
| |
|
|
| |
| ||||||||
| Basic net income (loss) per ordinary share | $ | | $ | | $ |
| $ | ( | ) | $ | | $ | | $ |
| $ | ( | ) | ||||||||
| For the Three Months Ended August 31, | For the Nine Months Ended August 31, | |||||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||||||||||||
| Redeemable | Non- | Redeemable | Non- | Redeemable | Non- | Redeemable | Non- | |||||||||||||||||||
| Diluted net income (loss) per ordinary share |
|
|
|
|
|
|
|
|
|
| ||||||||||||||||
| Numerator: |
|
|
|
|
|
|
|
|
|
| ||||||||||||||||
| Allocation of net income (loss) | $ | | $ | | $ |
| $ | ( | ) | $ | | $ | | $ |
| $ | ( | ) | ||||||||
| Denominator: |
|
|
|
|
|
|
|
|
|
| ||||||||||||||||
| Diluted weighted-average shares outstanding |
| |
| |
|
|
| |
|
| |
| |
|
|
| |
| ||||||||
| Diluted net income (loss) per ordinary share | $ | | $ | | $ |
| $ | ( | ) | $ | | $ | | $ |
| $ | ( | ) | ||||||||
Recent Accounting Pronouncements
Management does not believe that any recently issued, but not yet effective, accounting standards if currently adopted would have a material effect on the accompanying unaudited consolidated financial statements.
F-19
Table of Contents
IRON HORSE ACQUISITION II CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
AUGUST 31, 2026
(Unaudited)
Note 3 — Initial Public Offering
In the Initial Public Offering on December 18, 2025, the Company sold
Note 4 — Private Placement
Simultaneously with the closing of the Initial Public Offering, the Sponsor and Cantor Fitzgerald & Co. purchased an aggregate of
Note 5 — Commitments and Contingencies
Registration Rights
The holders of the Founders Shares issued and outstanding, as well as the holders of the Private Placement Units, including those to be issued upon conversion of the rights, and any rights the initial shareholders, officers, directors or their affiliates may be issued in payment of working capital loans made to the Company (and all underlying securities), will be entitled to registration rights pursuant to an agreement signed on December 16, 2025. The holders of a majority of these securities are entitled to make up to two demands that the Company register such securities. The holders of the majority of the Founders Shares can elect to exercise these registration rights at any time commencing three months prior to the date on which these ordinary shares are to be released from escrow. The holders of a majority of the public and private rights issued to our initial shareholders, officers, directors or their affiliates in payment of working capital loans made to the Company (or underlying securities) can elect to exercise these registration rights at any time after the Company consummates a Business Combination. Notwithstanding anything to the contrary, the underwriter may only make a demand on one occasion and only during the five-year period beginning on the effective date of the registration statement relating to the Company’s Initial Public Offering. In addition, the holders have certain “piggy-back” registration rights with respect to registration statements filed subsequent to our consummation of a Business Combination; provided, however, that the underwriter may participate in a “piggy-back” registration only during the seven-year period beginning on the effective date of the Initial Public Offering. The Company will bear the expenses incurred in connection with the filing of any such registration statements.
Underwriting Agreement
The Company granted the underwriters a
The underwriters were entitled to a cash underwriting discount of
F-20
Table of Contents
IRON HORSE ACQUISITION II CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
AUGUST 31, 2026
(Unaudited)
Note 5 — Commitments and Contingencies (cont.)
Additionally, the underwriters were entitled to a deferred underwriting discount of
Deferred Legal Fee
On March 18, 2026, the Company entered into an agreement with its legal advisor in connection with services rendered associated with the Business Combination Agreement. As of August 31, 2026, the Company had a total of $
Service Provider Agreement
On May 11, 2026, the Company entered into an agreement with a service provider in connection with regulatory filings associated with the Business Combination Agreement. Upon completion of a successful Business Combination, this service provider will be entitled to a success fee of $
Note 6 — Related Party Transactions
Founder’s Shares
On November 29, 2024, Iron Horse Acquisitions Corp. II issued an aggregate of
F-21
Table of Contents
IRON HORSE ACQUISITION II CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
AUGUST 31, 2026
(Unaudited)
Note 6 — Related Party Transactions (cont.)
The Company had initially engaged D. Boral Capital LLC (“D. Boral”) to act as the lead underwriter in connection with the Initial Public Offering. In May 2025, D. Boral and the Company agreed to terminate such engagement, and in consideration therefore, the Sponsor has agreed to transfer
On September 18, 2025, after the Company migrated, by way of continuation, to the Cayman Islands, as more fully described above and in Note 1, the Sponsor contributed $
Promissory Note — Related Party
On October 1, 2025, the Company entered into a promissory note agreement with the Sponsor for $
Due from Sponsor
The Company paid the Sponsor an aggregate amount of $
Due to Sponsor
The Sponsor has paid certain offering and operating expenses on behalf of the Company. As of August 31, 2026 and November 30, 2025, the balance due to the Sponsor amounted to $
Reimbursement to Officers
For the three and nine months ended August 31, 2026, the Company incurred $
Working Capital Loans
In order to finance transaction costs in connection with a Business Combination, the initial shareholders, the Sponsor, the Company’s officers and directors or their affiliates may, but are t obligated to, loan the Company funds from time to time or at any time, as may be required (“Working Capital Loans”). Each Working Capital Loan would be evidenced by a promissory note. The notes would be paid upon consummation of an initial Business Combination,
F-22
Table of Contents
IRON HORSE ACQUISITION II CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
AUGUST 31, 2026
(Unaudited)
Note 6 — Related Party Transactions (cont.)
without interest. In the event that the initial Business Combination does not close, the Company may use a portion of the working capital held outside the Trust Account to repay such loaned amounts, but no proceeds from the Trust Account would be used for such repayment. These loans would be repaid at completion of the initial Business Combination. As of August 31, 2026 and November 30, 2025, Working Capital Loans were outstanding.
Note 7 — Shareholders’ Deficit
Preference Shares
The Company is authorized to issue
Ordinary Shares
The Company is authorized to issue
Rights
Each holder of a right will receive one-tenth (1/10) of
Additionally, in no event will the Company be required to net cash settle the rights. If the Company is unable to complete a Business Combination within the Combination Period and the Company liquidates the funds held in the Trust Account, holders of rights will not receive any of such funds with respect to their rights, nor will they receive any distribution from the Company’s assets held outside of the Trust Account with respect to such rights. Accordingly, the rights may expire worthless.
Note 8 — Fair Value Measurements
The fair value of the Company’s financial assets and liabilities reflects management’s estimate of amounts that the Company would have received in connection with the sale of the assets or paid in connection with the transfer of the liabilities in an orderly transaction between market participants at the measurement date. In connection with measuring the fair value of its assets and liabilities, the Company seeks to maximize the use of observable inputs (market data
F-23
Table of Contents
IRON HORSE ACQUISITION II CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
AUGUST 31, 2026
(Unaudited)
Note 8 — Fair Value Measurements (cont.)
obtained from independent sources) and to minimize the use of unobservable inputs (internal assumptions about how market participants would price assets and liabilities). The following fair value hierarchy is used to classify assets and liabilities based on the observable inputs and unobservable inputs used in order to value the assets and liabilities:
| Level 1: | Quoted prices in active markets for identical assets or liabilities. An active market for an asset or liability is a market in which transactions for the asset or liability occur with sufficient frequency and volume to provide pricing information on an ongoing basis. | |||
| Level 2: | Observable inputs other than Level 1 inputs. Examples of Level 2 inputs include quoted prices in active markets for similar assets or liabilities and quoted prices for identical assets or liabilities in markets that are not active. | |||
| Level 3: | Unobservable inputs based on assessment of the assumptions that market participants would use in pricing the asset or liability. |
At August 31, 2026, cash and investments held in the Trust Account were comprised of $
The following table presents information about the Company’s assets that are measured at fair value on a recurring basis at August 31, 2026 and November 30, 2025 and indicates the fair value hierarchy of the valuation inputs the Company utilized to determine such fair value:
| Description | Level | August 31, | November 30, | |||||
| Assets: |
|
| ||||||
| Investments held in Trust Account – money market funds | 1 | $ | | $ |
| |||
The fair value of the Public Rights issued in the Initial Public Offering is $
| December 18, | ||||
| Unit price | $ | |
| |
| Stock price | $ | |
| |
| Pre-adjusted value per right | $ | |
| |
| Market adjustment(1) |
| | % | |
____________
(1)
Note 9 — Segment Information
ASC Topic 280, “Segment Reporting,” establishes standards for companies to report in their financial statements information about operating segments, products, services, geographic areas, and major customers. Operating segments are defined as components of an enterprise for which separate financial information is available that is regularly evaluated by the Company’s chief operating decision maker (“CODM”), or group, in deciding how to allocate resources and assess performance.
F-24
Table of Contents
IRON HORSE ACQUISITION II CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
AUGUST 31, 2026
(Unaudited)
Note 9 — Segment Information (cont.)
The Company’s CODM has been identified as the , who reviews the assets, operating results, and financial metrics for the Company as a whole to make decisions about allocating resources and assessing financial performance. Accordingly, management has determined that the Company only has
The
| August 31, | November 30, | |||||
| Cash | $ | | $ | | ||
| Cash and investments held in Trust Account | $ | | $ |
| ||
| For the Three Months Ended | For the Nine Months Ended | |||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||
| General, formation and operational costs | $ | | $ | | $ | | $ | | ||||
| Interest earned on cash and investments held in Trust Account | $ | | $ |
| $ | | $ |
| ||||
The CODM reviews the position of total assets available with the Company to assess if the Company has sufficient resources available to discharge its liabilities. The CODM is provided with details of cash and liquid resources available with the Company. The CODM reviews the interest earned on the Trust Account to measure and monitor shareholder value and determine the most effective strategy of investment with the Trust Account funds while maintaining compliance with the trust agreement.
General, formation and operational costs and interest earned on investments held in Trust Account are reviewed and monitored by the CODM to manage and forecast cash to ensure enough capital is available to complete a Business Combination or similar transaction within the Combination Period. The CODM also reviews general, formation and operational costs to manage, maintain and enforce all contractual agreements to ensure costs are aligned with all agreements and budget. General, formation and operational costs, as reported on the unaudited consolidated statements of operations, are the significant segment expenses provided to the CODM on a regular basis.
Note 10 — Subsequent Events
The Company evaluated subsequent events and transactions that occurred after the balance sheet date up to the date that the unaudited consolidated financial statements were issued. Based upon this review, other than as described below, the Company did not identify any subsequent events that would have required adjustment or disclosure in the unaudited consolidated financial statements.
On October 2, 2026, the Company collected $
F-25
Table of Contents
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Shareholders and Board of Directors of
Iron Horse Acquisition II Corp.
Opinion on the Financial Statements
We have audited the accompanying balance sheet of Iron Horse Acquisition II Corp. (the “Company”) as of November 30, 2025 and 2024, and the related statements of operations, stockholders’ deficit, and cash flows for the year ended November 30, 2025 and for the period from November 26, 2024 (inception) through November 30, 2024, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of November 30, 2025 and 2024, and the results of its operations and its cash flows for the year ended November 30, 2025 and for the period from November 26, 2024 (inception) through November 30, 2024, in conformity with accounting principles generally accepted in the United States of America.
Going Concern Matter
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1 to the financial statements, the Company has suffered recurring losses from operations and has a net capital deficiency that raises substantial doubt about its ability to continue as a going concern. Management’s plans in regard to these matters are also described in Note 1. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Basis for Opinion
These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
/s/ MaloneBailey, LLP
www.malonebailey.com
We have served as the Company’s auditor since 2024.
Houston, Texas
February 12, 2026
PCAOB ID Number 206
F-26
Table of Contents
IRON HORSE ACQUISITION II CORP.
BALANCE SHEETS
| November 30, |
November 30, |
|||||||
| ASSETS |
|
|
|
|
||||
| Current assets |
|
|
|
|
||||
| Cash | $ | |
| $ |
|
| ||
| Prepaid expenses |
| |
|
|
|
| ||
| Total current assets |
| |
|
|
|
| ||
| Deferred offering costs |
| |
|
| |
| ||
| TOTAL ASSETS | $ | |
| $ | |
| ||
|
|
|
|
|
|||||
| LIABILITIES AND SHAREHOLDER’S DEFICIT |
|
|
|
|
||||
| Current liabilities |
|
|
|
|
||||
| Accrued expenses | $ | |
| $ | |
| ||
| Accrued offering costs |
| |
|
|
|
| ||
| Due to Sponsor |
| |
|
|
|
| ||
| Promissory note – related party |
| |
|
| |
| ||
| TOTAL LIABILITIES |
| |
|
| |
| ||
|
|
|
|
|
|||||
| Commitments and contingencies (Note 5) |
|
|
|
| ||||
|
|
|
|
|
|||||
| SHAREHOLDER’S DEFICIT |
|
|
|
|
||||
| Preference shares, $ |
|
|
|
|
|
| ||
| Ordinary shares, $ |
| |
|
| |
| ||
| Stock subscription receivable |
|
|
|
| ( | ) | ||
| Additional paid-in capital |
| |
|
| |
| ||
| Accumulated deficit |
| ( | ) |
| ( | ) | ||
| TOTAL SHAREHOLDER’S DEFICIT |
| ( | ) |
| ( | ) | ||
| TOTAL LIABILITIES AND SHAREHOLDER’S DEFICIT | $ | |
| $ | |
| ||
____________
(1) On May 8, 2025, through a share recapitalization, the Company surrendered
(2) Includes up to
The accompanying notes are an integral part of the financial statements.
F-27
Table of Contents
IRON HORSE ACQUISITION II CORP.
STATEMENTS OF OPERATIONS
| For the |
For the |
|||||||
| General and administrative costs | $ | |
| $ | |
| ||
| Loss from operations |
| ( | ) |
| ( | ) | ||
|
|
|
|
|
|||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
|
|
|
|
|
|||||
| Basic and diluted weighted average ordinary shares outstanding(1)(2) |
| |
|
| |
| ||
| Basic and diluted net loss per ordinary share | $ | ( | ) | $ | ( | ) | ||
____________
(1) On May 8, 2025, through a share recapitalization, the Company surrendered
(2) Excludes up to
The accompanying notes are an integral part of the financial statements.
F-28
Table of Contents
IRON HORSE ACQUISITION II CORP.
STATEMENTS OF CHANGES IN SHAREHOLDER’S DEFICIT
FOR THE YEAR ENDED NOVEMBER 30, 2025 AND
FOR THE PERIOD FROM NOVEMBER 26, 2024 (INCEPTION) THROUGH NOVEMBER 30, 2024
| Class A |
Class B |
Share |
Additional |
Accumulated |
Total |
||||||||||||||||||||
| Shares |
Amount |
Shares(1) (2) |
Amount |
||||||||||||||||||||||
| Balance – November 26, 2024 (Inception) |
| $ |
|
| $ |
| $ |
|
| $ |
| $ |
|
| $ |
|
| ||||||||
| Issuance of ordinary shares to Sponsor |
|
|
| |
| |
| ( | ) |
| |
|
|
|
|
|
| ||||||||
| Net loss | — |
|
| — |
|
|
|
|
|
|
|
| ( | ) |
| ( | ) | ||||||||
| Balance – November 30, 2024 |
|
|
| |
| |
| ( | ) |
| |
| ( | ) |
| ( | ) | ||||||||
| Collection of share subscription receivable | — |
|
| — |
|
|
| |
|
|
|
|
|
|
| |
| ||||||||
| Additional Sponsor contribution in relation to the issuance of ordinary shares | — |
|
| — |
|
|
|
|
|
| |
|
|
|
| |
| ||||||||
| Net loss | — |
|
| — |
|
|
|
|
|
|
|
| ( | ) |
| ( | ) | ||||||||
| Balance – November 30, 2025 |
| $ |
| | $ | | $ |
|
| $ | | $ | ( | ) | $ | ( | ) | ||||||||
____________
(1) On May 8, 2025, through a share recapitalization, the Company surrendered
(2) Includes up to
The accompanying notes are an integral part of the financial statements.
F-29
Table of Contents
IRON HORSE ACQUISITION II CORP.
STATEMENTS OF CASH FLOWS
| For the |
For the |
|||||||
| Cash flow from operating activities: |
|
|
|
|
||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Adjustments to reconcile net loss to net cash used in operating activities: |
|
|
|
|
||||
| Payment of general and administrative costs through advances from Sponsor |
| |
|
|
|
| ||
| Payment of general and administrative costs by Sponsor in exchange for issuance of ordinary shares |
| |
|
|
|
| ||
| Changes in current assets and liabilities: |
|
|
|
|
||||
| Prepaid expenses |
| ( | ) |
|
|
| ||
| Accrued expenses |
| |
|
| |
| ||
| Net cash used in operating activities |
| ( | ) |
|
|
| ||
|
|
|
|
|
|||||
| Cash flow from financing activities: |
|
|
|
|
||||
| Collection of share subscription receivable |
| |
|
|
|
| ||
| Proceeds from promissory note – related party |
| |
|
|
|
| ||
| Repayment of advances from related party |
| ( | ) |
|
|
| ||
| Payment of offering costs |
| ( | ) |
|
|
| ||
| Net cash provided by financing activities |
| |
|
|
|
| ||
|
|
|
|
|
|||||
| Net Change in Cash |
| |
|
|
|
| ||
| Cash at beginning of period |
|
|
|
|
|
| ||
| Cash at end of period | $ | |
| $ |
|
| ||
|
|
|
|
|
|||||
| Supplemental disclosure of non-cash financing activities: |
|
|
|
|
||||
| Offering costs included in accrued offering costs | $ | |
| $ |
|
| ||
| Offering costs paid through promissory note – related party | $ |
|
| $ | |
| ||
| Ordinary shares issued in exchange for share subscription receivable | $ |
|
| $ | |
| ||
The accompanying notes are an integral part of the financial statements.
F-30
Table of Contents
IRON HORSE ACQUISITION II CORP.
NOTES TO THE FINANCIAL STATEMENTS
NOVEMBER 30, 2025
Note 1 — Organization, Plan of Business Operations and Going Concern Consideration
Iron Horse Acquisitions Corp. II (the “Company”) was incorporated in Delaware on
As noted above, on September 12, 2025, Iron Horse Acquisition II Corp. was incorporated in the Cayman Islands. On September 18, 2025, IRHO SPAC Sponsor LLC (the” Sponsor”), contributed $
Accounting Standards Codification (“ASC”) 805-50, Business Combinations, provides specific guidance on accounting for certain transactions related to business combinations, including asset acquisitions (transactions not meeting the business definition) and pushdown accounting (an optional method to reflect a parent’s acquisition in a subsidiary’s financial statements), and addresses transactions between entities under common control. This transaction is being accounted for as a common control transaction whereby the assets and liabilities are recorded at their historical cost rather than fair value and net assets received are reported retrospectively presented.
The Company’s efforts to identify a prospective target business will not be limited to a particular industry or geographic region although it intends to initially focus on target companies within the media and 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.
As of November 30, 2025, the Company had not yet commenced any operations. All activity from November 26, 2024 (inception) through November 30, 2025 relates to the Company’s formation and the initial public offering (the “Initial Public Offering”), which is described below. The Company has selected November 30 as its fiscal year-end.
The registration statement for the Company’s Initial Public Offering was declared effective on December 16, 2025. On December 18, 2025, the Company consummated the Initial Public Offering of
Simultaneously with the closing of the Initial Public Offering, the Company consummated the sale of
F-31
Table of Contents
IRON HORSE ACQUISITION II CORP.
NOTES TO THE FINANCIAL STATEMENTS
NOVEMBER 30, 2025
Note 1 — Organization, Plan of Business Operations and Going Concern Consideration (cont.)
Transaction costs amounted to $
The Company listed the Units on the Nasdaq Global Market (“NASDAQ”). Pursuant to the NASDAQ listing rules, the Company’s initial Business Combination must be with a target business or businesses whose collective fair market value is at least equal to
Following the closing of the Initial Public Offering, on December 18, 2025, an amount of $
The remaining net proceeds (not held in the Trust Account) may be used to pay for business, legal and accounting due diligence on prospective acquisitions and continuing general and administrative expenses. Additionally, certain interest earned on the Trust Account balance may be released to the Company to pay the Company’s tax obligations.
The Company, after signing a definitive agreement for the acquisition of a target business, is required to provide shareholders who acquired ordinary shares sold as part of the units in this offering (“Public Shares”) in the Initial Public Offering (“Public Shareholders”) with the opportunity to redeem their Public Shares for a pro rata share of the Trust Account. The holders of the Founder Shares will agree to vote any shares they then hold in favor of any proposed Business Combination and will waive any redemption rights with respect to these shares pursuant to letter agreements to be executed prior to the Initial Public Offering.
In connection with any proposed Business Combination, the Company will seek shareholder approval of an initial Business Combination at a meeting called for such purpose at which Public Shareholders may seek to redeem their Public Shares, regardless of whether they vote for or against the proposed Business Combination. Alternatively, the Company may conduct a tender offer and allow redemptions in connection therewith. If the Company seeks shareholder approval of an initial Business Combination, any Public Shareholder voting either for or against such proposed Business Combination or not voting at all will be entitled to demand that his Public Shares be redeemed for a full pro rata portion of the amount then in the Trust Account (initially $
F-32
Table of Contents
IRON HORSE ACQUISITION II CORP.
NOTES TO THE FINANCIAL STATEMENTS
NOVEMBER 30, 2025
Note 1 — Organization, Plan of Business Operations and Going Concern Consideration (cont.)
earned on the funds held in the Trust Account and not previously released to the Company or necessary to pay its taxes). Holders of rights sold as part of the Units will not be entitled to vote on the proposed Business Combination and will have no redemption or liquidation rights with respect to the ordinary shares underlying such rights.
If the Company is unable to complete its initial Business Combination and expends all of the net proceeds from the sale of the Private Placement Units not deposited in the Trust Account, without taking into account any interest earned on the Trust Account, the initial per-share redemption price for ordinary shares is $
Going Concern Consideration
As of November 30, 2025, the Company had cash of $
Risks and Uncertainties
The United States and global markets are experiencing volatility and disruption following the geopolitical instability resulting from the ongoing Russia-Ukraine conflict and the Israel-Hamas conflict. In response to the ongoing Russia-Ukraine conflict, the North Atlantic Treaty Organization (“NATO”) deployed additional military forces to eastern Europe, and the United States, the United Kingdom, the European Union and other countries have announced various sanctions and restrictive actions against Russia, Belarus and related individuals and entities, including the removal of certain financial institutions from the Society for Worldwide Interbank Financial Telecommunication (SWIFT) payment system. Certain countries, including the United States, have also provided and may continue to provide military aid or other assistance to Ukraine and to Israel, increasing geopolitical tensions among a number of nations. The invasion of Ukraine by Russia and the Israel-Hamas conflict and the resulting measures that have been taken, and could be taken in the future, by NATO, the United States, the United Kingdom, the European Union, Israel and its neighboring states and other countries have created global security concerns that could have a lasting impact on regional and global economies. Although the length and impact of the ongoing conflicts are highly unpredictable, they could lead to market disruptions, including significant volatility in commodity prices, credit and capital markets, as well as supply chain interruptions and increased cyber-attacks against U.S. companies. Additionally, any resulting sanctions could adversely affect the global economy and financial markets and lead to instability and lack of liquidity in capital markets.
F-33
Table of Contents
IRON HORSE ACQUISITION II CORP.
NOTES TO THE FINANCIAL STATEMENTS
NOVEMBER 30, 2025
Note 1 — Organization, Plan of Business Operations and Going Concern Consideration (cont.)
Any of the above-mentioned factors, or any other negative impact on the global economy, capital markets or other geopolitical conditions resulting from the Russian invasion of Ukraine, the Israel-Hamas conflict and subsequent sanctions or related actions, could adversely affect the Company’s search for an initial Business Combination and any target business with which the Company may ultimately consummate an initial Business Combination.
Note 2 — Significant Accounting Policies
Basis of Presentation
The accompanying financial statements are presented in conformity with accounting principles generally accepted in the United States of America (the “US GAAP”) and pursuant to the rules and regulations of the U.S. Securities and Exchange Commission (the “SEC”).
Emerging Growth Company
The Company is an “emerging growth company,” as defined in Section 2(a) of the Securities Act of 1933, as amended, (the “Securities Act”), as modified by the Jumpstart our Business Startups Act of 2012, (the “JOBS Act”), and it may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in its periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously approved.
Further, section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered under the Exchange Act) are required to comply with the new or revised financial accounting standards. The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies but any such election to opt out is irrevocable. The Company has elected not to opt out of such extended transition period which means that when a standard is issued or revised and it has different application dates for public or private companies, the Company, as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard. This may make comparison of the Company’s financial statements with another public company which is neither an emerging growth company nor an emerging growth company which has opted out of using the extended transition period difficult or impossible because of the potential differences in accountant standards used.
Use of Estimates
The preparation of the financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.
Making estimates requires management to exercise significant judgment. It is at least reasonably possible that the estimate of the effect of a condition, situation or set of circumstances that existed at the date of the financial statements, which management considered in formulating its estimate, could change in the near term due to one or more future confirming events. Accordingly, the actual results could differ significantly from those estimates.
F-34
Table of Contents
IRON HORSE ACQUISITION II CORP.
NOTES TO THE FINANCIAL STATEMENTS
NOVEMBER 30, 2025
Note 2 — Significant Accounting Policies (cont.)
Cash and Cash Equivalents
The Company considers all short-term investments with an original maturity of three months or less when purchased to be cash equivalents. The Company had $
Concentration of Credit Risk
Financial instruments that potentially subject the Company to concentration of credit risk consist of a cash account in a financial institution that, at times, may exceed the Federal Deposit Insurance Corporation coverage limit of $
Fair Value of Financial Instruments
The fair value of the Company’s assets and liabilities, which qualify as financial instruments under ASC Topic 820, “Fair Value Measurements and Disclosures,” approximates the carrying amounts represented in the accompanying balance sheets, primarily due to their short-term nature.
Income Taxes
The Company accounts for income taxes under ASC Topic 740, “Income Taxes,” which requires an asset and liability approach to financial accounting and reporting for income taxes. Deferred income tax assets and liabilities are computed for differences between the financial statement and tax bases of assets and liabilities that will result in future taxable or deductible amounts, based on enacted tax laws and rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized.
ASC Topic 740 prescribes a recognition threshold and a measurement attribute for the financial statement recognition and measurement of tax positions taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must be more likely than not to be sustained upon examination by taxing authorities. The Company’s management determined that the Cayman Islands is the Company’s major tax jurisdiction. The Company recognizes accrued interest and penalties related to unrecognized tax benefits as income tax expense. As of November 30, 2025 and 2024, there were no unrecognized tax benefits and no amounts accrued for interest and penalties. The Company is currently not aware of any issues under review that could result in significant payments, accruals or material deviation from its position.
Effective July 25, 2025, the Company is considered to be an exempted Cayman Islands company with no connection to any other taxable jurisdiction and is presently not subject to income taxes or income tax filing requirements in the Cayman Islands or the United States. Prior to such date the Company was a Delaware entity and the provision for income taxes was deemed to be de minimis from November 26, 2024 (inception) through July 25, 2025.
Deferred Offering Costs
The Company complies with the requirements of the ASC 340-10-S99 and SEC Staff Accounting Bulletin Topic 5A, “Expenses of Offering”. Offering costs consist principally of professional and registration fees that are related to the Initial Public Offering. FASB ASC 470-20, “Debt with Conversion and Other Options,” addresses the allocation of proceeds from the issuance of convertible debt into its equity and debt components. The Company applies this guidance to allocate Initial Public Offering proceeds from the Units between ordinary shares and Share Rights, using the residual method by allocating Initial Public Offering proceeds first to the assigned value of the Public Rights and then to the ordinary shares. On December 18, 2025, offering costs allocated to the Public Shares were charged to temporary equity, and offering costs allocated to Public Rights and Private Placement Units were charged to shareholders’ deficit, as the Share Rights, after management’s evaluation, were accounted for under equity treatment.
F-35
Table of Contents
IRON HORSE ACQUISITION II CORP.
NOTES TO THE FINANCIAL STATEMENTS
NOVEMBER 30, 2025
Note 2 — Significant Accounting Policies (cont.)
Net Loss per Ordinary Share
Net loss per ordinary share is computed by dividing net loss by the weighted average number of ordinary shares outstanding during the period, excluding ordinary shares subject to forfeiture. Weighted average shares were reduced for the effect of an aggregate of
Share Rights
The Company accounted for the Public and Private Placement Rights issued in connection with the Initial Public Offering and the private placement in accordance with the guidance contained in FASB ASC Topic 815, “Derivatives and Hedging”. Accordingly, the Company evaluated and classified the Share Rights under equity treatment at their assigned value.
Derivative Financial Instruments
The Company evaluates its financial instruments to determine if such instruments are derivatives or contain features that qualify as embedded derivatives in accordance with ASC Topic 815, “Derivatives and Hedging.” For derivative financial instruments that are accounted for as liabilities, the derivative instrument is initially recorded at its fair value on the grant date and is then re-valued at each reporting date, with changes in the fair value reported in the statement of 4operations. The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is evaluated at the end of each reporting period. Derivative liabilities are classified in the balance sheets as current or non-current based on whether or not net cash settlement or conversion of the instrument could be required within 12 months of the balance sheet date. The underwriters’ over-allotment option is deemed to be a freestanding financial instrument indexed on the contingently redeemable shares and will be accounted for as a liability pursuant to ASC 480 if not fully exercised at the time of the Initial Public Offering. Subsequently on December 18, 2025, the Company consummated the Initial Public Offering of
Recent Accounting Pronouncements
In November 2023, the FASB issued Accounting Standards Update (“ASU”) 2023-07, “Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures.” The amendments in this ASU require disclosures, on an annual and interim basis, of significant segment expenses that are regularly provided to the chief operating decision maker (“CODM”), as well as the aggregate amount of other segment items included in the reported measure of segment profit or loss. The ASU requires that a public entity disclose the title and position of the CODM and an explanation of how the CODM uses the reported measure(s) of segment profit or loss in assessing segment performance and deciding how to allocate resources. Public entities will be required to provide all annual disclosures currently required by Topic 280 in interim periods, and entities with a single reportable segment are required to provide all the disclosures required by the amendments in this ASU and existing segment disclosures in Topic 280. This ASU is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted. The Company adopted ASU 2023-07 on December 1, 2024.
Management does not believe that any recently issued, but not yet effective, accounting standards if currently adopted would have a material effect on the accompanying financial statements.
F-36
Table of Contents
IRON HORSE ACQUISITION II CORP.
NOTES TO THE FINANCIAL STATEMENTS
NOVEMBER 30, 2025
Note 3 — Initial Public Offering
In the Initial Public Offering on December 18, 2025, the Company sold
Note 4 — Private Placement
Simultaneously with the closing of the Initial Public Offering, the Sponsor and Cantor Fitzgerald & Co. purchased an aggregate of
Note 5 — Commitments and Contingencies
Registration Rights
The holders of the Founder Shares issued and outstanding, as well as the holders of the Private Placement Units, including those to be issued upon conversion of the rights, and any rights the initial shareholders, officers, directors or their affiliates may be issued in payment of working capital loans made to the Company (and all underlying securities), will be entitled to registration rights pursuant to an agreement signed on December 16, 2025. The holders of a majority of these securities are entitled to make up to two demands that the Company register such securities. The holders of the majority of the Founder Shares can elect to exercise these registration rights at any time commencing three months prior to the date on which these ordinary shares are to be released from escrow. The holders of a majority of the public and private rights issued to our initial shareholders, officers, directors or their affiliates in payment of working capital loans made to the Company (or underlying securities) can elect to exercise these registration rights at any time after the Company consummates a Business Combination. Notwithstanding anything to the contrary, the underwriter may only make a demand on one occasion and only during the five-year period beginning on the effective date of the registration statement of which this prospectus forms a part. In addition, the holders have certain “piggy-back” registration rights with respect to registration statements filed subsequent to our consummation of a Business Combination; provided, however, that the underwriter may participate in a “piggy-back” registration only during the seven-year period beginning on the effective date of the Initial Public Offering. The Company will bear the expenses incurred in connection with the filing of any such registration statements.
Underwriting Agreement
The Company granted the underwriters a
The underwriters were entitled to a cash underwriting discount of
Additionally, the underwriters were entitled to a deferred underwriting discount of
F-37
Table of Contents
IRON HORSE ACQUISITION II CORP.
NOTES TO THE FINANCIAL STATEMENTS
NOVEMBER 30, 2025
Note 6 — Related Party Transactions
Founder’s Shares
On November 29, 2024, the Company issued an aggregate of
The Company had initially engaged D. Boral Capital LLC (“D. Boral”) to act as the lead underwriter in connection with the Initial Public Offering. In May 2025, D. Boral and the Company agreed to terminate such engagement, and in consideration therefore, the Sponsor has agreed to transfer
On September 18, 2025, the Sponsor contributed $
Promissory Note — Related Party
On October 1, 2025, the Company entered into a promissory note agreement with the Sponsor for $
Working Capital Loans
In order to finance transaction costs in connection with a Business Combination, the Initial Shareholders, the Sponsor, the Company’s officers and directors or their affiliates may, but are t obligated to, loan the Company funds from time to time or at any time, as may be required. Each Working Capital Loan would be evidenced by a promissory note. The notes would either be paid upon consummation of our initial Business Combination, without interest, or, at holder’s discretion, if there are excess proceeds, upon consummation of this offering. In the event that the initial
F-38
Table of Contents
IRON HORSE ACQUISITION II CORP.
NOTES TO THE FINANCIAL STATEMENTS
NOVEMBER 30, 2025
Note 6 — Related Party Transactions (cont.)
Business Combination does not close, we may use a portion of the working capital held outside the Trust Account to repay such loaned amounts, but no proceeds from our Trust Account would be used for such repayment. These loans would be repaid at completion of the initial Business Combination. As of November 30, 2025 and 2024, Working Capital Loans were outstanding.
Note 7 — Shareholders’ Deficit
Preference Shares
The Company is authorized to issue
Ordinary Shares
The Company is authorized to issue
Rights
Each holder of a right will receive one-tenth (1/10) of one ordinary share upon consummation of a Business Combination, even if the holder of such right redeemed all shares held by it in connection with a Business Combination. No fractional shares will be issued upon exchange of the rights. No additional consideration will be required to be paid by a holder of rights in order to receive its additional shares upon consummation of a Business Combination as the consideration related thereto has been included in the unit purchase price paid for by investors in the Initial Public Offering. If the Company enters into a definitive agreement for a Business Combination in which the Company will not be the surviving entity, the definitive agreement will provide for the holders of rights to receive the same per share consideration the holders of the ordinary shares will receive in the transaction on an as-converted into ordinary shares basis and each holder of a right will be required to affirmatively convert its rights in order to receive one-tenth (1/10) of one share underlying each right (without paying additional consideration).
Additionally, in no event will the Company be required to net cash settle the rights. If the Company is unable to complete a Business Combination within the Combination Period and the Company liquidates the funds held in the Trust Account, holders of rights will not receive any of such funds with respect to their rights, nor will they receive any distribution from the Company’s assets held outside of the Trust Account with respect to such rights. Accordingly, the rights may expire worthless.
Note 8 — Segment Information
ASC Topic 280, “Segment Reporting,” establishes standards for companies to report in their financial statement information about operating segments, products, services, geographic areas, and major customers. Operating segments are defined as components of an enterprise for which separate financial information is available that is regularly evaluated by the Company’s CODM, or group, in deciding how to allocate resources and assess performance.
F-39
Table of Contents
IRON HORSE ACQUISITION II CORP.
NOTES TO THE FINANCIAL STATEMENTS
NOVEMBER 30, 2025
Note 8 — Segment Information (cont.)
The Company’s CODM has been identified as the , who reviews the assets, operating results, and financial metrics for the Company as a whole to make decisions about allocating resources and assessing financial performance. Accordingly, management has determined that the Company only has
The
| November 30 | November 30, | |||||
| Cash | $ | | $ |
| ||
| Prepaid expenses | $ | | $ |
| ||
| Deferred offering costs | $ | | $ | | ||
| For the | For the | |||||
| General and administrative costs | $ | | $ | | ||
The CODM reviews the position of total assets available with the Company to assess if the Company has sufficient resources available to discharge its liabilities. The CODM is provided with details of cash and liquid resources available with the Company. Additionally, the CODM regularly reviews the status of deferred costs incurred to assess if these are in line with the planned use of proceeds raised from the Initial Public Offering.
General and administrative costs are reviewed and monitored by the CODM to manage and forecast cash to ensure enough capital is available to complete a Business Combination or similar transaction within the Completion Window. The CODM also reviews general and administrative costs to manage, maintain and enforce all contractual agreements to ensure costs are aligned with all agreements and budget. Formation and general and administrative costs, as reported on the statement of operations, are the significant segment expenses provided to the CODM on a regular basis.
Note 9 — Subsequent Events
The Company has evaluated subsequent events and transactions that occurred after the balance sheet dates up to the date that the financial statements are available to be issued. Based upon this review, other than as noted below, the Company did not identify any subsequent events that would have required adjustment or disclosure in the financial statements.
On December 18, 2025, the Company consummated the Initial Public Offering of
F-40
Table of Contents
IRON HORSE ACQUISITION II CORP.
NOTES TO THE FINANCIAL STATEMENTS
NOVEMBER 30, 2025
Note 9 — Subsequent Events (cont.)
On December 18, 2025, in connection with the closing of the Initial Public Offering, the underwriters were entitled to an underwriting discount of
On December 18, 2025, the Company repaid the total outstanding balance of the Promissory Note amounting to $
On December 22, 2025, the Sponsor wired an aggregate amount of $
F-41
Table of Contents
ELECTRA VEHICLES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
| June 30, | December 31, | |||||
| ASSETS |
|
| ||||
| Current assets |
|
| ||||
| Cash and cash equivalents | $ | 29,782 | $ | 169,969 | ||
| Accounts receivable, net |
| 15,000 |
| 307,165 | ||
| Prepaid expenses |
| 28,188 |
| 184,394 | ||
| Deferred transaction costs |
| 1,367,000 |
| — | ||
| Other current assets |
| 121,688 |
| 100,953 | ||
| Total current assets |
| 1,561,658 |
| 762,481 | ||
|
|
| |||||
| Non-current assets |
|
| ||||
| Property and equipment, net |
| 120,721 |
| 137,220 | ||
| Intangible assets, net |
| 113,203 |
| 131,418 | ||
| Total assets | $ | 1,795,582 | $ | 1,031,119 | ||
|
|
| |||||
| LIABILITIES AND STOCKHOLDERS’ DEFICIT |
|
| ||||
| Current liabilities |
|
| ||||
| Accounts payable | $ | 2,605,026 | $ | 1,447,112 | ||
| Accrued expenses |
| 2,909,242 |
| 1,059,911 | ||
| Deferred revenue |
| 135,000 |
| 200,000 | ||
| Short-term borrowings |
| 360,624 |
| — | ||
| Advances from investors |
| 514,250 |
| — | ||
| Current portion of long-term debt |
| 109,071 |
| 30,178 | ||
| Total current liabilities |
| 6,633,213 |
| 2,737,201 | ||
|
|
| |||||
| Non-current liabilities |
|
| ||||
| Long-term debt, net of current portion |
| 81,338 |
| 79,615 | ||
| Total liabilities |
| 6,714,551 |
| 2,816,816 | ||
|
|
| |||||
| Commitments and contingencies (Note 17) |
|
| ||||
|
|
| |||||
| STOCKHOLDERS’ DEFICIT |
|
| ||||
| Series Seed convertible preferred stock, $0.00001 par value per share; 3,730,391 shares authorized, issued and outstanding as of June 30, 2026, and December 31, 2025; liquidation preference of $4,363,065 as of June 30, 2026, and December 31, 2025 |
| 37 |
| 37 | ||
| Series A convertible preferred stock, $0.00001 par value per share; 2,321,980 shares authorized, issued and outstanding as of June 30, 2026, and December 31, 2025; liquidation preference of $14,999,991 as of June 30, 2026, and December 31, 2025 |
| 23 |
| 23 | ||
| Series B convertible preferred stock, $0.00001 par value per share; 2,321,996 shares authorized, 128,004 and 53,937 shares issued and outstanding as of June 30, 2026, and December 31, 2025; liquidation preference of $1,212,787 and $511,032 as of June 30, 2026, and December 31, 2025, respectively |
| 1 |
| 1 | ||
| Class A Common stock, $0.00001 par value per share; 16,500,000 shares authorized; 2,047,112 shares issued and 720,022 shares outstanding as of June 30, 2026, and December 31, 2025(1) |
| 20 |
| 20 | ||
| Class B Common stock, $0.00001 par value per share; 3,994,802 shares authorized; 3,994,802 and 3,989,264 shares issued and outstanding as of June 30, 2026, and December 31, 2025, respectively(1) |
| 40 |
| 40 | ||
F-42
Table of Contents
ELECTRA VEHICLES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS — (Continued)
(Unaudited)
| June 30, | December 31, | |||||||
| Additional paid-in capital |
| 19,901,488 |
|
| 19,108,410 |
| ||
| Treasury stock, at cost, 1,327,090 shares as of June 30, 2026, and December 31, 2025 |
| (13 | ) |
| (13 | ) | ||
| Accumulated other comprehensive loss |
| (33,356 | ) |
| (45,916 | ) | ||
| Accumulated deficit |
| (24,787,209 | ) |
| (20,848,299 | ) | ||
| Total stockholders’ deficit |
| (4,918,969 | ) |
| (1,785,697 | ) | ||
| Total liabilities and stockholders’ deficit | $ | 1,795,582 |
| $ | 1,031,119 |
| ||
____________
(1) Class A and Class B Common Stock reflects the recapitalization in Note 12.
The accompanying notes are an integral part of these condensed consolidated financial statements.
F-43
Table of Contents
ELECTRA VEHICLES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
(Unaudited)
| For the six months ended | ||||||||
| 2026 | 2025 | |||||||
| Revenues | $ | 80,000 |
| $ | 718,871 |
| ||
|
|
|
|
| |||||
| Operating expenses |
|
|
|
| ||||
| Cost of revenue |
| 24,129 |
|
| 581,204 |
| ||
| Sales and marketing |
| 395,281 |
|
| 385,444 |
| ||
| Research and development |
| 1,155,633 |
|
| 1,327,209 |
| ||
| General and administrative |
| 2,390,724 |
|
| 1,112,093 |
| ||
| Total operating expenses |
| 3,965,767 |
|
| 3,405,950 |
| ||
| Loss from operations |
| (3,885,767 | ) |
| (2,687,079 | ) | ||
|
|
|
|
| |||||
| Other (expense) income |
|
|
|
| ||||
| Net gain on digital assets |
| — |
|
| 102,366 |
| ||
| Interest income |
| 61 |
|
| 5,994 |
| ||
| Interest expense |
| (57,411 | ) |
| (6,297 | ) | ||
| Other income |
| 4,207 |
|
| 15,240 |
| ||
| Total other (expense) income, net |
| (53,143 | ) |
| 117,303 |
| ||
|
|
|
|
| |||||
| Loss before income taxes |
| (3,938,910 | ) |
| (2,569,776 | ) | ||
| Income tax provision |
| — |
|
| — |
| ||
| Net loss | $ | (3,938,910 | ) | $ | (2,569,776 | ) | ||
|
|
|
|
| |||||
| Class A Common Stock |
|
|
|
| ||||
| Weighted average shares outstanding, basic and diluted |
| 720,022 |
|
| 719,689 |
| ||
| Net loss per share, basic and diluted |
| (0.84 | ) |
| (0.55 | ) | ||
|
|
|
|
| |||||
| Class B Common Stock |
|
|
|
| ||||
| Weighted average shares outstanding, basic and diluted |
| 3,992,156 |
|
| 3,989,264 |
| ||
| Net loss per share, basic and diluted |
| (0.84 | ) |
| (0.55 | ) | ||
|
|
|
|
| |||||
| Other comprehensive income (loss) |
|
|
|
| ||||
| Foreign currency translation adjustment |
| 12,560 |
|
| (16,968 | ) | ||
| Total other comprehensive income (loss) |
| 12,560 |
|
| (16,968 | ) | ||
| Comprehensive loss | $ | (3,926,350 | ) | $ | (2,586,744 | ) | ||
The accompanying notes are an integral part of these condensed consolidated financial statements.
F-44
Table of Contents
ELECTRA VEHICLES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (DEFICIT)
(Unaudited)
| Series Seed | Series A | Series B | Class A | Class B | Additional | Treasury | Accumulated | Accumulated | Total | ||||||||||||||||||||||||||||||||||
| Shares | $ | Shares | $ | Shares | $ | Shares | $ | Shares | $ | Shares | $ | ||||||||||||||||||||||||||||||||
| Balance as of December 31, | 3,730,391 | $ | 37 | 2,321,980 | $ | 23 | 53,937 | $ | 1 | 2,047,112 | $ | 20 | 3,989,264 | $ | 40 | $ | 19,108,410 | 1,327,090 | $ | (13 | ) | $ | (45,916) | $ | (20,848,299) | $ | (1,785,697) | ||||||||||||||||
| Issuance of Series B Convertible Preferred Stock | — |
| — | — |
| — | 74,067 |
| — | — |
| — | — |
| — |
| 700,682 | — |
| — |
|
| — |
| — |
| 700,682 | ||||||||||||||||
| Issuance of common stock upon option exercise | — |
| — | — |
| — | — |
| — | — |
| — | 5,538 |
| — |
| 4,995 | — |
| — |
|
| — |
| — |
| 4,995 | ||||||||||||||||
| Share-based compensation expense | — |
| — | — |
| — | — |
| — | — |
| — | — |
| — |
| 87,401 | — |
| — |
|
| — |
| — |
| 87,401 | ||||||||||||||||
| Foreign currency translation adjustment | — |
| — | — |
| — | — |
| — | — |
| — | — |
| — |
| — | — |
| — |
|
| 12,560 |
| — |
| 12,560 | ||||||||||||||||
| Net loss | — |
| — | — |
| — | — |
| — | — |
| — | — |
| — |
| — | — |
| — |
|
| — |
| (3,938,910) |
| (3,938,910) | ||||||||||||||||
| Balance as of June 30, 2026 | 3,730,391 | $ | 37 | 2,321,980 | $ | 23 | 128,004 | $ | 1 | 2,047,112 | $ | 20 | 3,994,802 | $ | 40 | $ | 19,901,488 | 1,327,090 | $ | (13 | ) | $ | (33,356) | $ | (24,787,209) | $ | (4,918,969) | ||||||||||||||||
____________
(1) Class A and Class B Common Stock reflects the recapitalization in Note 12.
The accompanying notes are an integral part of these condensed consolidated financial statements.
F-45
Table of Contents
ELECTRA VEHICLES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (DEFICIT)
(Unaudited)
| Series Seed | Series A | Series B | Class A | Class B | Additional | Treasury | Accumulated | Accumulated | Total | ||||||||||||||||||||||||||||||||||
| Shares | $ | Shares | $ | Shares | $ | Shares | $ | Shares | $ | Shares | $ | ||||||||||||||||||||||||||||||||
| Balance as of December 31, 2024 | 3,730,391 | $ | 37 | 2,321,980 | $ | 23 | — | $ | — | 2,017,112 | $ | 20 | 3,989,264 | $ | 40 | $ | 18,719,088 | 1,327,090 | $ | (13 | ) | $ | (66,353) | $ | (15,558,377) | $ | 3,094,465 | ||||||||||||||||
| Issuance of common stock upon option exercise | — |
| — | — |
| — | — |
| — | 30,000 |
| — | — |
| — |
| — | — |
| — |
|
| — |
| — |
| — | ||||||||||||||||
| Share-based compensation expense | — |
| — | — |
| — | — |
| — | — |
| — | — |
| — |
| 40,974 | — |
| — |
|
| — |
| — |
| 40,974 | ||||||||||||||||
| Foreign currency translation adjustment | — |
| — | — |
| — | — |
| — | — |
| — | — |
| — |
| — | — |
| — |
|
| (16,968) |
| — |
| (16,968) | ||||||||||||||||
| Net loss | — |
| — | — |
| — | — |
| — | — |
| — | — |
| — |
| — | — |
| — |
|
| — |
| (2,569,776) |
| (2,569,776) | ||||||||||||||||
| Balance as of June 30, 2025 | 3,730,391 | $ | 37 | 2,321,980 | $ | 23 | — | $ | — | 2,047,112 | $ | 20 | 3,989,264 | $ | 40 | $ | 18,760,062 | 1,327,090 | $ | (13 | ) | $ | (83,321) | $ | (18,128,153) | $ | 548,695 | ||||||||||||||||
____________
(1) Class A and Class B Common Stock reflects the recapitalization in Note 12.
The accompanying notes are an integral part of these condensed consolidated financial statements.
F-46
Table of Contents
ELECTRA VEHICLES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
| Six months ended | ||||||||
| 2026 | 2025 | |||||||
| CASH FLOWS FROM OPERATING ACTIVITIES |
|
|
|
| ||||
| Net loss | $ | (3,938,910 | ) | $ | (2,569,776 | ) | ||
|
|
|
|
| |||||
| Adjustments to reconcile net loss to net cash used in operating activities |
|
|
|
| ||||
| Depreciation and amortization |
| 37,801 |
|
| 37,536 |
| ||
| Share-based compensation expense |
| 87,401 |
|
| 40,974 |
| ||
| Non-cash interest expense |
| 19,944 |
|
| — |
| ||
| Net gain on digital assets |
| — |
|
| (102,366 | ) | ||
| Changes in operating assets and liabilities: |
|
|
|
| ||||
| Accounts receivable |
| 292,117 |
|
| 30,500 |
| ||
| Prepaid expenses |
| 155,918 |
|
| 24,160 |
| ||
| Other current assets |
| (21,106 | ) |
| 29,036 |
| ||
| Accounts payable |
| 975,187 |
|
| 112,028 |
| ||
| Accrued expenses |
| 683,743 |
|
| 97,434 |
| ||
| Deferred revenue |
| (65,000 | ) |
| (718,871 | ) | ||
| Net cash used in operating activities | $ | (1,772,905 | ) | $ | (3,019,345 | ) | ||
|
|
|
|
| |||||
| CASH FLOWS FROM INVESTING ACTIVITIES |
|
|
|
| ||||
| Additions to property and equipment |
| (3,087 | ) |
| — |
| ||
| Maturity of short-term investments |
| — |
|
| 700,859 |
| ||
| Sales of digital assets |
| — |
|
| 1,146,230 |
| ||
| Net cash (used in) provided by investing activities | $ | (3,087 | ) | $ | 1,847,089 |
| ||
|
|
|
|
| |||||
| CASH FLOWS FROM FINANCING ACTIVITIES |
|
|
|
| ||||
| Proceeds from issuance of Common Stock on stock option exercise |
| 4,995 |
|
| — |
| ||
| Proceeds from issuance of Series B Preferred Stock, net of issuance costs |
| 700,682 |
|
| — |
| ||
| Payment of deferred offering costs |
| — |
|
| (32,368 | ) | ||
| Proceeds from advances from investors |
| 500,010 |
|
| — |
| ||
| Proceeds from short-term borrowings |
| 355,000 |
|
| — |
| ||
| Proceeds from long-term debt |
| 110,000 |
|
| — |
| ||
| Repayment of long-term debt |
| (29,465 | ) |
| (13,022 | ) | ||
| Net cash provided by (used in) financing activities | $ | 1,641,222 |
| $ | (45,390 | ) | ||
|
|
|
|
| |||||
| Effect of foreign exchange rate changes on cash and cash equivalents |
| (5,417 | ) |
| (26,195 | ) | ||
|
|
|
|
| |||||
| NET CHANGE IN CASH AND CASH EQUIVALENTS |
| (140,187 | ) |
| (1,243,841 | ) | ||
| Cash and cash equivalents, at the beginning of the period |
| 169,969 |
|
| 1,405,527 |
| ||
| CASH AND CASH EQUIVALENTS, END OF THE PERIOD | $ | 29,782 |
| $ | 161,686 |
| ||
|
|
|
|
| |||||
| SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION |
|
|
|
| ||||
| Cash paid for interest | $ | 25,143 |
| $ | 6,297 |
| ||
| Cash paid for income taxes | $ |
| $ |
| ||||
|
|
|
|
| |||||
| NON-CASH FINANCING ACTIVITIES |
|
|
|
| ||||
| Deferred transaction costs included in accounts payable and accrued expenses | $ | 1,367,000 |
| $ | — |
| ||
The accompanying notes are an integral part of these condensed consolidated financial statements.
F-47
Table of Contents
ELECTRA VEHICLES, INC.
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 1 — DESCRIPTION OF ORGANIZATION AND BUSINESS OPERATIONS
Electra Vehicles, Inc. (the “Company”) was incorporated in the state of Delaware in 2015. The Company is a business-to-business software company that develops artificial intelligence and machine learning-enabled software and data analytics for monitoring, optimizing, and controlling battery-powered systems. The Company’s solutions are designed to improve battery performance and health-span, reduce system and operational costs, and enhance the safety of vehicles, battery energy storage systems (“BESS”), and other battery-powered systems. The Company serves customers across multiple end markets, including BESS for data centers, grid, and renewables; robotics and autonomous systems, including humanoid systems, drones, and space satellites; and e-mobility, including original equipment manufacturers, tier 1 automotive suppliers, fleet managers, and cell manufacturers. The Company is headquartered in Boston, Massachusetts and sells its electric battery optimization software and services both directly and via established go-to-market partners around the world.
The condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiary, Electra Vehicles Europe, S.R.L., incorporated in Italy (collectively, the “Company”).
NOTE 2 — GOING CONCERN AND CAPITAL RESOURCES
The Company incurred net losses of $3,938,910 and $2,569,776 for the six months ended June 30, 2026, and 2025, respectively, and has an accumulated deficit of $24,787,209 and $20,848,299 as of June 30, 2026, and December 31, 2025, respectively. As of June 30, 2026, and December 31, 2025, the Company had cash and cash equivalents of $29,782 and $169,969, respectively. As of June 30, 2026, the Company had a working capital deficit of $5,071,555, and short-term borrowings of $355,000 were past due (see Note 10). In October 2026, the Company repaid $250,000 of these borrowings. The remaining $105,000, together with a $55,344 related party note that matured in August 2026, remained unpaid as of the date these condensed consolidated financial statements were available to be issued (see Notes 10 and 19). The Company has funded its operations principally through equity and debt financings and customer contracts.
The Company assesses its liquidity in terms of its ability to generate adequate amounts of cash to meet current and future needs. Its expected primary uses of cash on a short and long-term basis are for working capital requirements and other operational needs. The Company’s management expects that future operating losses and negative operating cash flows may continue because of additional costs and expenses related to the development of its technology platform and the expansion of market and strategic relationships with customers and partners.
The Company’s future capital requirements will depend on many factors, including the Company’s timing of the consummation of the Business Combination (see Note 4). In order to finance these opportunities, the Company will need to raise additional financing. While there can be no assurances, the Company intends to raise such capital through issuances of additional equity securities. If additional financing is required from outside sources, the Company may not be able to raise such capital on terms acceptable to the Company or it may be unable to obtain it altogether. If the Company is unable to raise additional capital when desired, the Company’s business, results of operations and financial condition would be materially and adversely affected.
In accordance with FASB ASC 205-40, Presentation of Financial Statements — Going Concern, management has evaluated whether conditions described above, considered in the aggregate, raise substantial doubt about the Company’s ability to continue as a going concern for a period of twelve months from the date these condensed consolidated financial statements are available to be issued. Subsequent to June 30, 2026, the Company received additional advances from investors of $25,000 and a $55,344 related party note, and received proceeds of $3,500,000 from the issuance of senior secured convertible notes (see Note 19). Upon the closing of the Business Combination, the senior secured convertible notes become repayable in cash at 115% of their principal amount, or $5,031,250. Management’s plans to address these conditions include the consummation of the Business Combination and the
F-48
Table of Contents
ELECTRA VEHICLES, INC.
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 2 — GOING CONCERN AND CAPITAL RESOURCES (cont.)
issuance of additional equity and debt securities, although there can be no assurance that these plans will be successfully implemented. As a result, substantial doubt exists about the Company’s ability to continue as a going concern. These condensed consolidated financial statements have been prepared on a going-concern basis and do not include any adjustments relating to the recoverability of recorded assets or the classification of liabilities that might be necessary should the Company be unable to continue as a going concern.
NOTE 3 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The accompanying condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). References to GAAP issued by the Financial Accounting Standards Board (“FASB”) in these accompanying notes are to the FASB Accounting Standards Codification (“ASC”). The condensed consolidated financial statements present the results of operations, financial position, and cash flows of the Company in accordance with consolidation accounting guidance. All intercompany balances and transactions have been eliminated in consolidation. The condensed consolidated balance sheet as of December 31, 2025, included herein was derived from the audited consolidated financial statements as of that date. In management’s opinion, the unaudited condensed consolidated financial statements reflect all normal recurring adjustments necessary to present fairly the balance sheets and statements of operations and comprehensive loss, stockholders’ deficit, and cash flows for the interim periods, but are not necessarily indicative of the results of operations to be anticipated for the full fiscal year or any future period.
These condensed consolidated financial statements have been prepared in accordance with Article 8 of Regulation S-X and ASC 270, Interim Reporting, and certain information and disclosures normally included in annual financial statements have been condensed or omitted. They should be read in conjunction with the audited consolidated financial statements for the year ended December 31, 2025 included elsewhere in this proxy statement/prospectus.
Use of Estimates
The preparation of financial statements in conformity with U.S. GAAP requires the Company to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements, and the reported amounts of revenues and expenses during the reporting period. Significant estimates include, but are not limited to, the determination of standalone prices for performance obligations, the measure of progress towards completion of development performance obligations, the constraints applied to variable consideration, the allowance for credit losses, the fair value of common stock used in share-based compensation measurements, useful life of property and equipment and intangible assets, other contingencies, and the valuation of deferred tax assets. The Company’s estimates and judgments are based on historical experience and other factors that are considered reasonable under the circumstances. Actual results could differ from these estimates.
Income Taxes
The Company accounts for income taxes in accordance with ASC 740, Income Taxes. Deferred tax assets and liabilities are recognized for temporary differences between the financial statement and tax bases of assets and liabilities, measured using enacted tax rates expected to apply in the periods in which those differences are expected to reverse. A valuation allowance is established when it is more likely than not that some portion or all of a deferred tax asset will not be realized. The Company evaluates uncertain tax positions under the more-likely-than-not recognition threshold and recognizes interest and penalties related to income taxes within income tax expense.
F-49
Table of Contents
ELECTRA VEHICLES, INC.
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 3 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.)
Net Loss Per Common Share
Basic net loss per share is computed by dividing the net loss attributable to common stockholders by the weighted-average number of common shares outstanding during the period. Diluted net loss per share is computed by dividing net loss by the weighted-average shares outstanding for the period and includes the dilutive impact of potential new shares issuable upon vesting and exercise of stock options and the conversion of convertible preferred stock. Potentially dilutive securities are excluded from the computation of diluted net loss per share if their effect is anti-dilutive. The Company uses the two-class method of computing net loss per share for its Class A and Class B common stock, allocating undistributed losses to each class based on each class’s weighted-average shares outstanding for the period.
| For the six months ended | ||||||||
| June 30, | June 30, | |||||||
| Net loss | $ | (3,938,910 | ) | $ | (2,569,776 | ) | ||
| Class A Common Stock |
|
|
|
| ||||
| Net loss attributable to Class A Common Stock | $ | (601,866 | ) | $ | (392,749 | ) | ||
| Weighted average shares outstanding, basic and diluted |
| 720,022 |
|
| 719,689 |
| ||
| Net loss per share, basic and diluted | $ | (0.84 | ) | $ | (0.55 | ) | ||
| Class B Common Stock |
|
|
|
| ||||
| Net loss attributable to Class B Common Stock | $ | (3,337,044 | ) | $ | (2,177,027 | ) | ||
| Weighted average shares outstanding, basic and diluted |
| 3,992,156 |
|
| 3,989,264 |
| ||
| Net loss per share, basic and diluted | $ | (0.84 | ) | $ | (0.55 | ) | ||
The following potentially dilutive shares were excluded from the computation of diluted net loss per share for the periods presented because including them would have been anti-dilutive:
| June 30, | June 30, | |||
| Series Seed convertible preferred stock | 3,730,391 | 3,730,391 | ||
| Series A convertible preferred stock | 2,321,980 | 2,321,980 | ||
| Series B convertible preferred stock | 128,004 | — | ||
| Stock options to purchase common stock | 907,243 | 756,501 | ||
| Total | 7,087,618 | 6,808,872 |
Segment Reporting
The Company identifies operating segments as components of the enterprise for which discrete financial information is available and is regularly reviewed by the chief operating decision maker (“CODM”) to allocate resources and assess performance. The Company operates as a single operating and reportable segment. See Note 15 — Segment Reporting for further information.
Deferred Transaction Costs
Deferred transaction costs consist of direct and incremental legal, accounting and consulting fees related to the Business Combination. These costs are capitalized and, upon consummation of the Business Combination, will be charged to additional paid-in capital to the extent of the proceeds received, with any excess expensed. If the Business Combination is abandoned, the deferred transaction costs will be expensed.
F-50
Table of Contents
ELECTRA VEHICLES, INC.
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 3 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.)
Advances from Investors
Cash received under bridge investment term sheets for which definitive agreements have not been executed is recorded as a liability at the amount received plus accrued interest.
Fair Value of Financial Instruments
The carrying amounts of cash and cash equivalents, accounts receivable, accounts payable, accrued expenses, short-term borrowings, and advances from investors approximate fair value due to their short-term nature. The carrying amounts of long-term debt approximates its fair values, based on Level 3 inputs.
Concentrations of Risk and Significant Customers
The Company maintains its cash in bank deposit accounts, which, at times, may exceed federally insured limits. The Company has not experienced any losses in such accounts and believes it is not exposed to significant credit risk on cash.
One customer accounted for 81% of total revenues for the six months ended June 30, 2026, and a different customer represented 100% of the Company’s accounts receivable, net as of June 30, 2026. One customer accounted for 100% of total revenues for the six months ended June 30, 2025 and represented 98% of the Company’s accounts receivable, net as of December 31, 2025.
Recent Accounting Pronouncements
Upon consummation of the Business Combination described in Note 4, the combined company is expected to qualify as an emerging growth company (“EGC”) under the Jumpstart Our Business Startups Act of 2012 and to elect the extended transition period under Section 107(b) thereof. Under this election, new or revised accounting standards are effective for the Company on the dates applicable to entities other than public business entities. The effective dates disclosed below are those applicable to public business entities.
Recent Accounting Standards Adopted by the Company
ASU 2023-09: In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures (“ASU 2023-09”). ASU 2023-09 enhances income tax disclosures, including more detailed requirements related to the rate reconciliation and disaggregation of income taxes paid by jurisdiction, among other items. ASU 2023-09 is effective for public business entities for fiscal years beginning after December 15, 2024. The Company adopted ASU 2023-09 for the year ended December 31, 2025 on a retrospective basis. The adoption did not have a material impact on the Company’s consolidated financial statements and only impacted annual disclosures.
ASU 2024-04: In November 2024, the FASB issued Accounting Standards Update No. 2024-04, Debt — Debt with Conversion and Other Options (Subtopic 470-20): Induced Conversions of Convertible Debt Instruments (“ASU 2024-04”). ASU 2024-04 clarifies the requirements for determining whether certain settlements of convertible debt instruments should be accounted for as an induced conversion. ASU 2024-04 is effective for all entities for fiscal years beginning after December 15, 2025, including interim periods within those fiscal years. The Company adopted ASU 2024-04 prospectively on January 1, 2026. The adoption did not have a material impact on the Company’s condensed consolidated financial statements.
ASU 2025-05: In July 2025, the FASB issued Accounting Standards Update No. 2025-05, Measurement of Credit Losses for Accounts Receivable and Contract Assets (“ASU 2025-05”). ASU 2025-05 provides a practical expedient permitting entities to assume that current conditions as of the balance sheet date do not change for the remaining life of current accounts receivable and contract assets when measuring expected credit losses and requires entities electing the expedient to disclose that election. ASU 2025-05 is effective for all entities for fiscal years
F-51
Table of Contents
ELECTRA VEHICLES, INC.
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 3 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.)
beginning after December 15, 2025, including interim periods within those fiscal years, with early adoption permitted. The adoption of the ASU did not have a material impact on the Company’s condensed consolidated financial statements. The Company elected the practical expedient.
Recent Accounting Pronouncements Not Yet Effective
ASU 2024-03: In November 2024, the FASB issued Accounting Standards Update No. 2024-03, Disaggregation of Income Statement Expenses (“ASU 2024-03”). ASU 2024-03 is intended to provide users of financial statements with more decision-useful information about expenses of a public business entity, primarily through enhanced disclosures of certain components of expenses commonly presented within captions on the statement of operations, such as employee compensation and depreciation and amortization, as well as a qualitative description of the amounts remaining in relevant expense captions that are not separately disaggregated quantitatively. ASU 2024-03 also requires disclosure of the total amount of selling expenses. ASU 2024-03 is effective for public business entities for fiscal years beginning after December 15, 2026 and for interim periods beginning after December 15, 2027, with early adoption permitted. The amendments may be applied prospectively or retrospectively. The Company is currently assessing ASU 2024-03 and its impact on its disclosures.
ASU 2025-04: In May 2025, the FASB issued Accounting Standards Update No. 2025-04, Clarifications to Share-Based Consideration Payable to a Customer (“ASU 2025-04”). ASU 2025-04 clarifies guidance on accounting for share-based payments granted to a customer, that are accounted for as a reduction of revenue, by revising the definition of a performance condition to include conditions based on customer purchases and eliminating a policy election to account for forfeitures of customer awards as they occur. The guidance also clarifies that the variable consideration constraint does not apply to share-based consideration payments to customers. ASU 2025-04 is effective for all entities for fiscal years beginning after December 15, 2026 and for interim periods within those fiscal years, with early adoption permitted. The Company is currently assessing ASU 2025-04 and its impact on its financial statements and disclosures.
ASU 2025-06: In September 2025, the FASB issued Accounting Standards Update No. 2025-06, Targeted Improvements to the Accounting for Internal-Use Software (“ASU 2025-06”). ASU 2025-06 removes all references to software development project stages under the existing standard and states that an entity is required to start capitalizing software costs when (1) management has authorized and committed to fund the software project and (2) it is probable that the project will be completed and the software will be used to perform the function intended (the “probable-to-complete recognition threshold”). ASU 2025-06 is effective for all entities for fiscal years beginning after December 15, 2027 and for interim periods within those fiscal years, with early adoption permitted. The Company is currently assessing ASU 2025-06 and its impact on its financial statements and disclosures.
NOTE 4 — BUSINESS COMBINATION
On April 21, 2026, the Company entered into a Merger Agreement (as amended and as may be further amended and/or restated from time to time, the “Merger Agreement”) with Iron Horse Acquisition II Corp., a Cayman Islands exempted company (“IRHO”), and IRHO Merger Sub, Inc., a Delaware corporation and a direct, wholly-owned subsidiary of IRHO (“Merger Sub”). Pursuant to the Merger Agreement, IRHO will domesticate as a Delaware corporation and be renamed “ELECTRA AI, Inc.” (the “Domestication”), after which Merger Sub will merge with and into the Company, with the Company surviving as a wholly-owned subsidiary of IRHO (the “Merger” and together with the Domestication, the “Business Combination”).
The aggregate merger consideration consists of 25,000,000 shares of IRHO common stock (subject to adjustment as set forth in the Merger Agreement), of which not more than a number of shares equal to the conversion ratio multiplied by 3,994,802 will be Class B common stock (ten votes per share) and the remainder Class A common stock (one vote per share). At the effective time of the Merger, each outstanding share of the Company common stock
F-52
Table of Contents
ELECTRA VEHICLES, INC.
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 4 — BUSINESS COMBINATION (cont.)
and Preferred Stock, each outstanding Company stock option, and each Company convertible note (as defined in the Merger Agreement) will convert into IRHO common stock, or in the case of stock options, options to acquire IRHO common stock, in each case based on a conversion ratio set forth in the Merger Agreement.
Holders of the Company’s common stock, Preferred Stock and options will also have a contingent right to receive, on a pro rata basis, up to 15,000,000 additional shares of IRHO common stock in three equal tranches over the five years following the closing, upon the achievement of specified share price or annual run rate milestones. The Business Combination is subject to approval by the stockholders of both the Company and IRHO and other customary closing conditions, including a minimum cash condition that requires IRHO’s available cash at Closing to equal or exceed $30,000,000, and had not been consummated as of the date these financial statements were available to be issued.
NOTE 5 — ACCOUNTS RECEIVABLE
The following table presents the components of accounts receivable as of June 30, 2026, and December 31, 2025:
| June 30, | December 31, | |||||||
| Accounts receivable, gross | $ | 136,704 |
| $ | 428,869 |
| ||
| Less: Allowance for credit losses |
| (121,704 | ) |
| (121,704 | ) | ||
| Accounts receivable, net | $ | 15,000 |
| $ | 307,165 |
| ||
No amounts were written off against the allowance during the six months ended June 30, 2026 and 2025.
The following table presents the Company’s allowance for credit losses for the six months ended June 30, 2026 and 2025:
| June 30, | June 30, | |||||
| Beginning allowance for credit losses | $ | 121,704 | $ | 121,704 | ||
| Add: Provision for credit losses |
| — |
| — | ||
| Less: Write-offs |
| — |
| — | ||
| Ending allowance for credit losses | $ | 121,704 | $ | 121,704 | ||
NOTE 6 — OTHER CURRENT ASSETS
Other current assets consist of the following as of June 30, 2026, and December 31, 2025:
| June 30, | December 31, | |||||
| Salary deposits | $ | 108,374 | $ | 86,876 | ||
| Other taxes receivable |
| 13,314 |
| 14,077 | ||
| Total other current assets | $ | 121,688 | $ | 100,953 | ||
As of June 30, 2026, and December 31, 2025, salary deposits represent a refundable cash reserve maintained with Deel, Inc., the Company’s payroll processing provider, which is held as security against potential payroll shortfalls.
F-53
Table of Contents
ELECTRA VEHICLES, INC.
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 7 — PROPERTY AND EQUIPMENT, NET
Property and equipment consist of the following as of June 30, 2026, and December 31, 2025:
| June 30, | December 31, | |||||||
| Computer hardware and software | $ | 33,636 |
| $ | 30,549 |
| ||
| Furniture, fixtures and equipment |
| 648 |
|
| 648 |
| ||
| Vehicles |
| 166,365 |
|
| 166,365 |
| ||
| Property and equipment, gross |
| 200,649 |
|
| 197,562 |
| ||
| Less: Accumulated depreciation |
| (79,928 | ) |
| (60,342 | ) | ||
| Property and equipment, net | $ | 120,721 |
| $ | 137,220 |
| ||
Depreciation expense for the six months ended June 30, 2026, and 2025 was $19,586 and $19,316, respectively.
NOTE 8 — INTANGIBLE ASSETS, NET
Identifiable intangible assets subject to amortization consist of the following as of June 30, 2026, and December 31, 2025:
| Estimated | June 30, | December 31, | ||||||||
| Patents | 15 years | $ | 21,467 |
| $ | 21,467 |
| |||
| Website | 5 years |
| 175,000 |
|
| 175,000 |
| |||
| Intangible assets, gross |
| 196,467 |
|
| 196,467 |
| ||||
| Accumulated amortization |
| (83,264 | ) |
| (65,049 | ) | ||||
| Intangible assets, net | $ | 113,203 |
| $ | 131,418 |
| ||||
Amortization expense related to intangible assets for the six months ended June 30, 2026, and 2025 was $18,215 and $18,220, respectively. As of June 30, 2026, estimated future amortization expense was $18,216 for the remainder of 2026, $36,431 for each of 2027 and 2028, $13,097 for 2029, and $9,028 thereafter through 2036.
NOTE 9 — ACCRUED EXPENSES
Accrued expenses consist of the following as of June 30, 2026, and December 31, 2025:
| June 30, | December 31, | |||||
| Accrued compensation and benefits | $ | 1,332,833 | $ | 812,686 | ||
| Accrued legal and professional fees |
| 1,564,913 |
| 235,729 | ||
| Other accrued expenses |
| 11,496 |
| 11,496 | ||
| Total | $ | 2,909,242 | $ | 1,059,911 | ||
F-54
Table of Contents
ELECTRA VEHICLES, INC.
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 10 — DEBT
Long-term debt consists of the following as of June 30, 2026, and December 31, 2025:
| June 30, | December 31, | |||||||
| Economic Injury Disaster Loan | $ | 18,161 |
| $ | 18,080 |
| ||
| Vehicle Loan |
| 76,629 |
|
| 91,713 |
| ||
| Line of Credit |
| 95,619 |
|
| — |
| ||
| Total debt |
| 190,409 |
|
| 109,793 |
| ||
| Less: Current portion of long-term debt |
| (109,071 | ) |
| (30,178 | ) | ||
| Long-term debt, net of current portion | $ | 81,338 |
| $ | 79,615 |
| ||
Short-term borrowings consist of the following as of June 30, 2026, and December 31, 2025:
| June 30, | December 31, | |||||
| Short-term borrowings | $ | 355,000 | $ | — | ||
| Interest accrued |
| 5,624 |
| — | ||
| Total short-term borrowings | $ | 360,624 | $ | — | ||
Economic Injury Disaster Loan
In June 2020, the Company applied for and received an Economic Injury Disaster Loan (“EIDL”) administered by the Small Business Administration (“SBA”) under the CARES Act in the amount of $16,600. The loan bears interest at a fixed rate of 3.75% per annum and has a maturity of 30 years. Per the terms of the agreement, the Company is required to utilize the proceeds for working capital and operating expenses. The Company makes monthly interest-only payments based on the outstanding principal balance. Included within the EIDL balance as of June 30, 2026 and December 31, 2025, is $1,561 and $1,480, respectively, of accrued and unpaid interest. The loan is not subject to forgiveness and, per the terms of the agreement, remains payable at maturity.
Vehicle Loan
On September 19, 2024, the Company entered into a note payable with GM Financial. The note bears interest at a fixed annual rate of 9.99% and matures on September 19, 2028. The note is secured by a Tesla Cybertruck, which serves as collateral under the agreement. During the six months ended June 30, 2026, and 2025, the Company made payments of $19,425 and $18,833, respectively, and did not incur any additional borrowings under the note. Included within the vehicle loan balance above is $253 and $253 of accrued interest as of June 30, 2026, and December 31, 2025, respectively.
Line of Credit
In March 2026, the Company entered into a $110,000 revolving business line of credit agreement with Celtic Bank. Borrowings bear interest at an annual rate of 66.0% and are repayable in 18 monthly installments. Any new draw restarts the 18-month repayment period for the total outstanding balance. The line of credit is personally guaranteed by the Company’s Chief Executive Officer, a related party. See Note 16.
During the six months ended June 30, 2026, the Company drew the full $110,000 and repaid $14,381 of principal. As of June 30, 2026, $95,619 was outstanding, of which $77,355 is due within 12 months and classified as current. Interest expense on the line of credit was $20,397 for the six months ended June 30, 2026.
F-55
Table of Contents
ELECTRA VEHICLES, INC.
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 10 — DEBT (cont.)
Short-term borrowings
The Company entered into various loan arrangements to support working capital requirements, including payroll and other operating expenditures.
On March 30, 2026, the Company entered into a loan agreement with an individual lender under which the Company borrowed $60,000 to fund payroll-related obligations. The loan bore interest at 4.31% per annum through its contractual maturity date of May 30, 2026, and accrues interest at 20% per annum on any unpaid balance thereafter. The agreement also requires the loan to be repaid from the proceeds of specified bridge financings received by the Company.
On March 30, 2026, the Company entered into a loan agreement with Park Avenue Capital Advisors Ltd., under which the Company borrowed $40,000 to fund payroll-related obligations. The loan bore interest at 4.31% per annum through its contractual maturity date of May 30, 2026, and accrues interest at 20% per annum on any unpaid balance thereafter. The agreement also requires the loan to be repaid from the proceeds of specified bridge financings received by the Company.
On May 1, 2026, the Company issued a promissory note to IRHO with a principal amount of $150,000 to fund payroll obligations. The note was non-interest bearing through its contractual maturity date of May 15, 2026, and accrues interest at 18% per annum on any unpaid balance thereafter.
On May 15, 2026, the Company issued an additional promissory note to IRHO with a principal amount of $105,000 to fund payroll obligations. The note was non-interest bearing through its contractual maturity date of June 15, 2026, and accrues interest at 18% per annum on any unpaid balance thereafter.
As of June 30, 2026, short-term borrowings of $355,000 had matured and were past due. In October 2026, the Company repaid the loans from the individual lender and Park Avenue Capital Advisors Ltd. and $150,000 of the IRHO notes. The remaining $105,000 due to IRHO remained outstanding as of the date these condensed consolidated financial statements were available to be issued and accrues interest at 18% per annum. IRHO has not demanded repayment.
Future principal payments
As of June 30, 2026, future minimum principal payments under the Company’s long-term debt obligations are as follows:
| June 30, | |||
| Year ending December 31, 2026 (Remaining 6 months) | $ | 47,990 | |
| Year ending December 31, 2027 |
| 96,428 | |
| Year ending December 31, 2028 |
| 27,577 | |
| Year ending December 31, 2029 |
| — | |
| Year ending December 31, 2030 |
| — | |
| Thereafter |
| 16,600 | |
| Total | $ | 188,595 | |
F-56
Table of Contents
ELECTRA VEHICLES, INC.
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 11 — ADVANCES FROM INVESTORS
Advances from investors consisted of the following as of June 30, 2026, and December 31, 2025:
| June 30, | December 31, | |||||
| Advances received | $ | 500,010 | $ | — | ||
| Add: Accrued interest |
| 14,240 |
| — | ||
| Advances from investors | $ | 514,250 | $ | — | ||
During the six months ended June 30, 2026, the Company received $500,010 from eight investors under bridge investment term sheets. The term sheets contemplate the issuance of senior unsecured convertible notes bearing interest at 15% or 25% per annum from the date of funding, convertible into shares of the combined company at $6.00 per share upon the closing of the Business Combination, together with warrants and, for two investors, commitment shares. As of June 30, 2026, the definitive agreements had not been executed, and the advances are repayable on demand. Subsequent to June 30, 2026, the Company executed a convertible note with one investor in respect of its advance and issued convertible notes to related parties (see Note 19).
NOTE 12 — STOCKHOLDERS’ DEFICIT
Authorized Capital
As of December 31, 2025, the Company’s Amended and Restated Certificate of Incorporation, adopted in November 2025, authorized 16,500,000 shares of common stock ($0.00001 par value per share) and 8,374,367 shares of preferred stock ($0.00001 par value per share), of which 3,730,391 shares are designated as Series Seed Convertible Preferred Stock (“Series Seed”), 2,321,980 shares are designated as Series A Convertible Preferred Stock (“Series A”), and 2,321,996 shares are designated as Series B Convertible Preferred Stock (“Series B”). Series Seed, Series A, and Series B are collectively referred to herein as “Preferred Stock.” Subsequent to December 31, 2025, on April 20, 2026, the Company filed its Fourth Amended and Restated Certificate of Incorporation, which reclassified the Company’s existing common stock into Class A common stock (one vote per share) and Class B common stock (ten votes per share), each with a par value of $0.00001 per share. Shares of common stock beneficially owned by or affiliated with the Company’s Chief Executive Officer were reclassified on a one-for-one basis into Class B common stock, and all other outstanding shares of common stock were reclassified on a one-for-one basis into Class A common stock. The total number of authorized shares of capital stock was increased to 28,869,169 shares, consisting of 16,500,000 shares of Class A common stock, 3,994,802 shares of Class B common stock, and 8,374,367 shares of Preferred Stock. As a result of this amendment, the Company has retroactively adjusted the presentation of common stock in the accompanying condensed consolidated balance sheets and statements of changes in stockholders’ equity (deficit) for all periods presented to reflect the Class A and Class B common stock structure, with all share and per-share information adjusted accordingly.
Common Stock
The voting, dividend and liquidation rights of the holders of the Company’s common stock are subject to and qualified by the rights, powers and preferences of the holders of the Preferred Stock. As retroactively adjusted to reflect the recapitalization described above, each share of Class A common stock is entitled to one vote per share and each share of Class B common stock is entitled to ten votes per share; the two classes are otherwise equal in all respects, including dividend and liquidation rights. No cash dividends have been declared or paid during the periods presented.
F-57
Table of Contents
ELECTRA VEHICLES, INC.
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 12 — STOCKHOLDERS’ DEFICIT (cont.)
Treasury Stock
There were no purchases, sales, or retirements of treasury stock during the six months ended June 30, 2026 or 2025.
Series Seed and Series A Preferred Stock
There were no issuances of Series Seed or Series A Convertible Preferred Stock during the six months ended June 30, 2026, or 2025.
Series B Preferred Stock
From January 2026 through February 2026, the Company issued 74,067 shares of Series B Convertible Preferred Stock, par value $0.00001 per share, at $9.4746 per share (the “Series B Original Issue Price”), for gross proceeds of $701,755. Issuance costs of $1,073 were incurred in connection with this tranche, resulting in net proceeds of $700,682.
Rights and Preferences of the Preferred Stock
The voting, dividend, conversion, liquidation, and protective-provision rights of the Preferred Stock are governed by the Fourth Amended and Restated Certificate of Incorporation filed April 20, 2026 and are unchanged in substance from those in effect as of December 31, 2025.
Classification
The Company has determined that the events that could trigger redemption of the Preferred Stock are solely within the Company’s control, and accordingly, all outstanding shares of Preferred Stock are classified as permanent equity.
NOTE 13 — SHARE-BASED COMPENSATION
The Company maintains the 2016 Stock Incentive Plan (the “2016 Plan”), under which it may grant stock options and other share-based awards to employees, officers, directors, consultants, and advisors. There have been no material changes to the terms of the 2016 Plan since December 31, 2025.
During the six months ended June 30, 2026, the Company granted stock options to purchase 251,631 shares of Class A common stock with an aggregate grant-date fair value of $131,552. These options were granted on February 25, 2026, and their fair value was estimated using the Black-Scholes-Merton option-pricing model with the following assumptions: fair value of common stock of $1.39 per share, exercise prices of $1.39 to $1.53 per share, risk-free interest rates of 3.47% to 3.72%, expected terms of 2.5 to 6.0 years, expected volatility of 35.8% to 39.0% and an expected dividend yield of 0%.
In March 2026, the Company’s Chief Executive Officer exercised stock options to purchase 5,538 shares of Class B common stock for cash consideration of $4,995.
The Company recognized share-based compensation expense of $87,401 and $40,974 for the six months ended June 30, 2026, and 2025, respectively. No related income tax benefit was recognized in either period.
As of June 30, 2026, total unrecognized compensation cost related to unvested stock options was $122,324, which is expected to be recognized over a weighted-average period of 2.6 years.
F-58
Table of Contents
ELECTRA VEHICLES, INC.
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 14 — REVENUE AND DEFERRED REVENUE
Disaggregated revenue
The following table represents the Company’s revenues disaggregated by type for the six months ended June 30, 2026 and 2025. All revenue is recognized over time. The Company operates as a single reportable segment.
| For the six months ended | ||||||
| June 30, | June 30, | |||||
| Professional services | $ | 80,000 | $ | 642,296 | ||
| Subscriptions |
| — |
| 76,575 | ||
| Total revenue | $ | 80,000 | $ | 718,871 | ||
Deferred revenue
Deferred revenue represents payments received from customers or amounts due from customers prior to the Company satisfying the related performance obligations and is recorded as deferred revenue on the condensed consolidated balance sheets. As of June 30, 2026 and December 31, 2025, the Company expected to recognize substantially all deferred revenue as revenue within the following twelve months.
The following table summarizes deferred revenue activities for the periods presented:
| For the six months ended | ||||||||
| June 30, | June 30, | |||||||
| Balance, beginning of period | $ | 200,000 |
| $ | 917,846 |
| ||
| Additions |
| — |
|
| — |
| ||
| Revenue recognized |
| (65,000 | ) |
| (718,871 | ) | ||
| Balance, end of period | $ | 135,000 |
| $ | 198,975 |
| ||
NOTE 15 — SEGMENT REPORTING
The Company operates as a single reportable segment and sells its electric battery optimization software and services both directly and via established go-to-market partners. The Chief Executive Officer is the Company’s Chief Operating Decision Maker (“CODM”).
The CODM reviews only consolidated financial information and no discrete financial information is prepared or reviewed below the consolidated level. The CODM assesses segment performance and makes resource allocation decisions based on consolidated net loss, which is the same measure reported in the condensed consolidated statements of operations and comprehensive loss.
Significant segment expenses that are regularly provided to the CODM and included within the reported measure of segment profit or loss are cost of revenue, sales and marketing, research and development, and general and administrative expenses. Other segment items consist of net gain (loss) on digital assets, interest income, interest expense, and other income (expense). The condensed consolidated statements of operations and comprehensive loss reflect these significant segment expenses and other segment items for the six months ended June 30, 2026 and 2025.
The measure of segment assets is total assets, as reported on the condensed consolidated balance sheets as of June 30, 2026, and December 31, 2025.
For the six months ended June 30, 2026, and 2025, revenues from customers outside of the U.S. were immaterial. As of June 30, 2026, and December 31, 2025, long-lived assets held outside of the U.S. were immaterial.
The Company does not assess the performance of its individual products on measures of profit or loss, asset-based metrics, or geography. Revenues by product offering are presented in Note 14 — Revenue and Deferred Revenue. Information about major customers is presented in Note 3 — Summary of Significant Accounting Policies.
F-59
Table of Contents
ELECTRA VEHICLES, INC.
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 16 — RELATED PARTY TRANSACTIONS
The Company engaged in transactions with a vendor owned by a member of the Company’s Board of Directors. The vendor provides professional services to the Company. During the six months ended June 30, 2026, and 2025, the Company incurred expenses related to these services of $222,060 and $48,000, respectively. As of June 30, 2026, and December 31, 2025, amounts due to this vendor included in accounts payable and accrued expenses were $154,402 and $126,198, respectively.
The Company’s Chief Executive Officer has personally guaranteed the Company’s line of credit (see Note 10).
NOTE 17 — COMMITMENTS AND CONTINGENCIES
The Company may from time to time be involved in legal proceedings, legal actions, and claims arising in the normal course of business, including proceedings relating to intellectual property, safety and health, employment and other matters. Management believes that the outcome of such legal proceedings, legal actions, and claims will not have a significant adverse effect, individually, or in the aggregate, on the Company’s financial position, results of operations or cash flows.
NOTE 18 — INCOME TAXES
The Company did not record a provision for or benefit from income taxes for the six months ended June 30, 2026 and 2025. The resulting 0% effective tax rate differs from the U.S. federal statutory rate of 21% primarily because, based on its history of cumulative operating losses and the uncertainty of future taxable income, the Company maintained a full valuation allowance against its net deferred tax assets as of June 30, 2026 and December 31, 2025.
NOTE 19 — SUBSEQUENT EVENTS
The Company evaluated subsequent events and transactions that occurred after the balance sheet date and through November 10, 2026, the date that the condensed consolidated financial statements were available to be issued. Based upon this review, other than as described below, the Company did not identify any other subsequent events that would have required adjustment or disclosure in the condensed consolidated financial statements.
Related Party Note Payable
In July 2026, the Company issued a $55,344 promissory note to its President and Chief Operating Officer. The note was non-interest bearing through its contractual maturity date of August 2, 2026, accrues interest at 18% per annum on any unpaid balance thereafter, and remained outstanding as of the date these condensed consolidated financial statements were available to be issued. In connection with the note, the Company agreed to grant the officer an option to purchase 27,672 shares of common stock, subject to approval by the Board of Directors.
Related Party Convertible Note
From July through November 2026, the Company issued convertible promissory notes with an aggregate principal amount of $793,254 to six related parties. The notes bear payable-in-kind interest at 15% per annum, mature in August 2028 or, if earlier, upon the closing of the Business Combination, and convert into shares of the combined company at $6.00 per share in connection with the Business Combination. The holders are also entitled to warrants exercisable at $11.50 and $12.50 per share; however, the warrants have not yet been issued.
Convertible Note
In July 2026, the Company issued a $100,000 convertible promissory note to an investor for cash. The note has the same terms as the related party convertible notes, except that it bears interest at 20% per annum.
F-60
Table of Contents
ELECTRA VEHICLES, INC.
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 19 — SUBSEQUENT EVENTS (cont.)
Advances from investors
In July 2026, the Company received an additional advance of $25,000 from an investor (see Note 11). In October 2026, the Company executed a convertible note with one investor for $50,000 in respect of an advance received in March 2026, on the terms described in Note 11. The Company expects to account for the notes at amortized cost, with the warrants classified in equity, and has not yet completed the allocation of proceeds between them.
Short-term Borrowings
In October 2026, the Company repaid $250,000 of short-term borrowings that were past due as of June 30, 2026. The remaining $105,000 due to IRHO remained outstanding as of the date these condensed consolidated financial statements were available to be issued (see Note 10).
Senior Secured Convertible Notes
On September 29, 2026, the Company issued senior secured convertible notes with an aggregate principal amount of $4,375,000 and warrants to purchase 700,000 shares of common stock for cash proceeds of $3,500,000 ($3,350,000 net of lender’s legal fees). The notes bear no interest (15% upon an event of default), mature in March 2028, are secured by substantially all assets of the Company, including its intellectual property, and are guaranteed by its Italian subsidiary. The notes are repayable in cash at 115% upon the closing of the Business Combination; if the Business Combination does not close before maturity, the holders may convert the notes into common stock based on a $150 million pre-money valuation. The warrants are exercisable at $12.50 per share, subject to down-round and price-reset adjustments that may increase the number of shares, only upon a U.S. stock exchange listing, and expire in September 2031. Upon the closing of the Business Combination, the combined company will also issue 500,000 shares of common stock to two of the investors. The Company is evaluating the accounting for the notes, warrants and share issuance commitment and cannot yet estimate their effect on its consolidated financial statements.
Repayment Agreement
In September 2026, the Company entered into a repayment agreement with a vendor for €407,875 of amounts included in accounts payable as of June 30, 2026. The balance is payable in monthly installments through August 2027, and unpaid installments accrue interest at 10.40% per annum.
F-61
Table of Contents
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Shareholders and Board of Directors of
Electra Vehicles, Inc.
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of Electra Vehicles, Inc. and its subsidiary (collectively, the “Company”) as of December 31, 2025 and 2024, and the related Consolidated Statements of Operations and Comprehensive loss, changes in stockholders’ equity (deficit), and cash flows for the years then ended, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2025 and 2024, and the results of its operations and its cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States of America.
Going Concern Matter
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 2 to the financial statements, the Company has suffered recurring losses from operations and has an accumulated deficit that raises substantial doubt about its ability to continue as a going concern. Management’s plans in regard to these matters are also described in Note 2. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Basis for Opinion
These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
/s/ MaloneBailey, LLP
www.malonebailey.com
We have served as the Company’s auditor since 2026.
Houston, Texas
May 14, 2026
F-62
Table of Contents
ELECTRA VEHICLES, INC.
CONSOLIDATED BALANCE SHEETS
| December 31, | December 31, | |||||||
| Assets |
|
|
|
| ||||
| Current assets |
|
|
|
| ||||
| Cash and cash equivalents | $ | 169,969 |
| $ | 1,405,527 |
| ||
| Short-term investments |
| — |
|
| 667,623 |
| ||
| Accounts receivable, net |
| 307,165 |
|
| 30,500 |
| ||
| Prepaid expenses |
| 184,394 |
|
| 159,201 |
| ||
| Other current assets |
| 100,953 |
|
| 123,007 |
| ||
| Total current assets |
| 762,481 |
|
| 2,385,858 |
| ||
| Property and equipment, net |
| 137,220 |
|
| 176,353 |
| ||
| Intangible assets, net |
| 131,418 |
|
| 167,857 |
| ||
| Digital assets |
| — |
|
| 2,204,084 |
| ||
| Total assets | $ | 1,031,119 |
| $ | 4,934,152 |
| ||
| Liabilities and stockholders’ equity (deficit) |
|
|
|
| ||||
| Current liabilities |
|
|
|
| ||||
| Accounts payable | $ | 1,447,112 |
| $ | 453,051 |
| ||
| Accrued expenses |
| 1,059,911 |
|
| 331,681 |
| ||
| Deferred revenue |
| 200,000 |
|
| 917,846 |
| ||
| Current portion of long-term debt |
| 30,178 |
|
| 27,316 |
| ||
| Total current liabilities |
| 2,737,201 |
|
| 1,729,894 |
| ||
| Long-term debt |
| 79,615 |
|
| 109,793 |
| ||
| Total liabilities |
| 2,816,816 |
|
| 1,839,687 |
| ||
|
|
|
|
| |||||
| Commitments and contingencies (Note 18) |
|
|
|
| ||||
|
|
|
|
| |||||
| Stockholders’ equity (deficit) |
|
|
|
| ||||
| Series Seed convertible preferred stock, $0.00001 par value per share; 3,730,391 shares authorized, issued and outstanding as of December 31, 2025 and 2024; liquidation preference of $4,363,065 as of December 31, 2025 and 2024, respectively |
| 37 |
|
| 37 |
| ||
| Series A convertible preferred stock, $0.00001 par value per share; 2,321,980 shares authorized, issued and outstanding as of December 31, 2025 and 2024; liquidation preference of $14,999,991 as of December 31, 2025 and 2024, respectively |
| 23 |
|
| 23 |
| ||
| Series B convertible preferred stock, $0.00001 par value per share; 2,321,996 shares authorized, 53,937 and nil shares issued and outstanding as of December 31, 2025 and 2024; liquidation preference of $511,032 as of December 31, 2025 |
| 1 |
|
| — |
| ||
| Class A Common stock, $0.00001 par value per share; 16,500,000 shares authorized; 2,047,112 shares issued and 720,022 shares outstanding as of December 31, 2025 and 2,017,112 shares issued and 690,022 shares outstanding as of December 31, 2024(1) |
| 20 |
|
| 20 |
| ||
| Class B Common stock, $0.00001 par value per share; 3,994,802 shares authorized; 3,989,264 shares issued and outstanding as of December 31, 2025 and 2024(1) |
| 40 |
|
| 40 |
| ||
| Additional paid-in capital |
| 19,108,410 |
|
| 18,719,088 |
| ||
| Treasury stock, at cost, 1,327,090 shares as of December 31, 2025 and 2024, respectively |
| (13 | ) |
| (13 | ) | ||
| Accumulated other comprehensive loss |
| (45,916 | ) |
| (66,353 | ) | ||
| Accumulated deficit |
| (20,848,299 | ) |
| (15,558,377 | ) | ||
| Total stockholders’ equity (deficit) |
| (1,785,697 | ) |
| 3,094,465 |
| ||
| Total liabilities and stockholders’ equity (deficit) | $ | 1,031,119 |
| $ | 4,934,152 |
| ||
____________
(1) Class A and Class B Common Stock reflects the recapitalization in Note 21.
The accompanying notes are an integral part of these consolidated financial statements.
F-63
Table of Contents
ELECTRA VEHICLES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
| Years ended December 31, | ||||||||
| 2025 | 2024 | |||||||
| Revenues | $ | 1,088,497 |
| $ | 1,713,654 |
| ||
| Operating expenses |
|
|
|
| ||||
| Cost of revenue |
| 1,405,035 |
|
| 1,115,196 |
| ||
| Sales and marketing |
| 676,297 |
|
| 1,429,765 |
| ||
| Research and development |
| 2,522,658 |
|
| 3,789,408 |
| ||
| General and administrative |
| 2,159,183 |
|
| 2,408,351 |
| ||
| Total operating expenses |
| 6,763,173 |
|
| 8,742,720 |
| ||
| Loss from operations |
| (5,674,676 | ) |
| (7,029,066 | ) | ||
| Other income (expense) |
|
|
|
| ||||
| Net gain on digital assets |
| 358,390 |
|
| 1,194,748 |
| ||
| Interest income |
| 6,085 |
|
| 165,886 |
| ||
| Interest expense |
| (11,926 | ) |
| (3,001 | ) | ||
| Other income |
| 32,661 |
|
| 68,394 |
| ||
| Total other income (expense), net |
| 385,210 |
|
| 1,426,027 |
| ||
| Net loss before income taxes |
| (5,289,466 | ) |
| (5,603,039 | ) | ||
| Income tax provision |
| (456 | ) |
| — |
| ||
| Net loss | $ | (5,289,922 | ) | $ | (5,603,039 | ) | ||
| Class A Common Stock |
|
|
|
| ||||
| Weighted average shares outstanding, basic and diluted |
| 693,860 |
|
| 620,597 |
| ||
| Earnings per share, basic and diluted | $ | (1.13 | ) | $ | (1.22 | ) | ||
| Class B Common Stock |
|
|
|
| ||||
| Weighted average shares outstanding, basic and diluted |
| 3,989,264 |
|
| 3,989,264 |
| ||
| Earnings per share, basic and diluted | $ | (1.13 | ) | $ | (1.22 | ) | ||
| Other comprehensive income (loss) |
|
|
|
| ||||
| Foreign currency translation adjustment |
| 20,437 |
|
| (139,850 | ) | ||
| Total other comprehensive income (loss) |
| 20,437 |
|
| (139,850 | ) | ||
| Comprehensive loss | $ | (5,269,485 | ) | $ | (5,742,889 | ) | ||
The accompanying notes are an integral part of these consolidated financial statements.
F-64
Table of Contents
ELECTRA VEHICLES, INC.
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (DEFICIT)
| Series Seed | Series A | Series B | Class A | Class B | Additional | Treasury | Accumulated | Accumulated | Total | |||||||||||||||||||||||||||||||||||||
| Shares | $ | Shares | $ | Shares | $ | Shares | $ | Shares | $ | Shares | $ | |||||||||||||||||||||||||||||||||||
| Balance as of December 31, 2023 | 3,730,391 | $ | 37 | 2,321,980 | $ | 23 | — | $ | — | 2,012,852 | $ | 20 | 3,989,264 | $ | 40 | $ | 18,656,919 | 1,327,090 | $ | (13 | ) | $ | 73,497 |
| $ | (9,955,338 | ) | $ | 8,775,185 |
| ||||||||||||||||
| Foreign currency translation adjustment | — |
| — | — |
| — | — |
| — | — |
| — | — |
| — |
| — | — |
| — |
|
| (139,850 | ) |
| — |
|
| (139,850 | ) | ||||||||||||||||
| Issuance of common stock upon option exercise | — |
| — | — |
| — | — |
| — | 4,260 |
| — | — |
| — |
| 2,660 | — |
| — |
|
| — |
|
| — |
|
| 2,660 |
| ||||||||||||||||
| Share-based compensation expense | — |
| — | — |
| — | — |
| — | — |
| — | — |
| — |
| 59,509 | — |
| — |
|
| — |
|
| — |
|
| 59,509 |
| ||||||||||||||||
| Net loss | — |
| — | — |
| — | — |
| — | — |
| — | — |
| — |
| — | — |
| — |
|
| — |
|
| (5,603,039 | ) |
| (5,603,039 | ) | ||||||||||||||||
| Balance as of December 31, 2024 | 3,730,391 |
| 37 | 2,321,980 |
| 23 | — |
| — | 2,017,112 |
| 20 | 3,989,264 |
| 40 |
| 18,719,088 | 1,327,090 |
| (13 | ) |
| (66,353 | ) |
| (15,558,377 | ) |
| 3,094,465 |
| ||||||||||||||||
| Foreign currency translation adjustment | — |
| — | — |
| — | — |
| — | — |
| — | — |
| — |
| — | — |
| — |
|
| 20,437 |
|
| — |
|
| 20,437 |
| ||||||||||||||||
| Issuance of common stock upon option exercise | — |
| — | — |
| — | — |
| — | 30,000 |
| — | — |
| — |
| — | — |
| — |
|
| — |
|
| — |
|
| — |
| ||||||||||||||||
| Issuance of Series B preferred stock, net of issuance costs of $220,488 | — |
| — | — |
| — | 53,937 |
| 1 | — |
| — | — |
| — |
| 290,544 | — |
| — |
|
| — |
|
| — |
|
| 290,545 |
| ||||||||||||||||
| Share-based compensation expense | — |
| — | — |
| — | — |
| — | — |
| — | — |
| — |
| 98,778 | — |
| — |
|
| — |
|
| — |
|
| 98,778 |
| ||||||||||||||||
| Net loss | — |
| — | — |
| — | — |
| — | — |
| — | — |
| — |
| — | — |
| — |
|
| — |
|
| (5,289,922 | ) |
| (5,289,922 | ) | ||||||||||||||||
| Balance as of December 31, 2025 | 3,730,391 | $ | 37 | 2,321,980 | $ | 23 | 53,937 | $ | 1 | 2,047,112 | $ | 20 | 3,989,264 | $ | 40 | $ | 19,108,410 | 1,327,090 | $ | (13 | ) | $ | (45,916 | ) | $ | (20,848,299 | ) | $ | (1,785,697 | ) | ||||||||||||||||
____________
(1) Class A and Class B Common Stock reflects the recapitalization in Note 21.
The accompanying notes are an integral part of these consolidated financial statements.
F-65
Table of Contents
ELECTRA VEHICLES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
| Years ended December 31, | ||||||||
| 2025 | 2024 | |||||||
| Cash flows from operating activities |
|
|
|
| ||||
| Net loss | $ | (5,289,922 | ) | $ | (5,603,039 | ) | ||
| Adjustments to reconcile net loss to net cash used in operating activities |
|
|
|
| ||||
| Depreciation and amortization |
| 75,572 |
|
| 39,603 |
| ||
| Allowance for credit loss |
| — |
|
| 37,000 |
| ||
| Share-based compensation expense |
| 98,778 |
|
| 59,509 |
| ||
| Net gain on digital assets |
| (358,390 | ) |
| (1,194,748 | ) | ||
| Changes in operating assets and liabilities: |
|
|
|
| ||||
| Accounts receivable |
| (276,394 | ) |
| (36,040 | ) | ||
| Prepaid expenses |
| (23,806 | ) |
| (13,159 | ) | ||
| Other current assets |
| 25,058 |
|
| 8,284 |
| ||
| Accounts payable |
| 994,013 |
|
| 105,931 |
| ||
| Accrued expenses |
| 532,834 |
|
| 142,585 |
| ||
| Deferred revenue |
| (717,846 | ) |
| (685,154 | ) | ||
| Net cash used in operating activities |
| (4,940,103 | ) |
| (7,139,228 | ) | ||
| Cash flows from investing activities |
|
|
|
| ||||
| Additions to property and equipment |
| — |
|
| (167,949 | ) | ||
| Additions to intangible assets |
| — |
|
| (58,333 | ) | ||
| Purchases of short-term investments |
| — |
|
| (694,423 | ) | ||
| Maturities of short-term investments |
| 725,080 |
|
| 1,000,000 |
| ||
| Sales of digital assets |
| 2,562,474 |
|
| — |
| ||
| Purchases of digital assets |
| — |
|
| (2,998 | ) | ||
| Net cash provided by investing activities |
| 3,287,554 |
|
| 76,297 |
| ||
| Cash flows from financing activities |
|
|
|
| ||||
| Proceeds from issuance of Series B Preferred Stock |
| 511,032 |
|
| — |
| ||
| Payment of series B issuance costs |
| (64,240 | ) |
| — |
| ||
| Proceeds from issuance of Common Stock on stock option exercise |
| — |
|
| 2,660 |
| ||
| Proceeds from long-term debt |
| — |
|
| 133,234 |
| ||
| Repayment of long-term debt |
| (27,316 | ) |
| (14,205 | ) | ||
| Net cash provided by financing activities |
| 419,476 |
|
| 121,689 |
| ||
| Effect of foreign exchange rate changes on cash and cash equivalents |
| (2,485 | ) |
| (124,891 | ) | ||
| Net change in cash and cash equivalents |
| (1,235,558 | ) |
| (7,066,133 | ) | ||
| Cash and cash equivalents, at the beginning of the year |
| 1,405,527 |
|
| 8,471,660 |
| ||
| Cash and cash equivalents, at the end of the year | $ | 169,969 |
| $ | 1,405,527 |
| ||
|
|
|
|
| |||||
| SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION |
|
|
|
| ||||
| Cash paid for interest | $ | 10,942 |
| $ | 2,073 |
| ||
| Cash paid for income taxes | $ | — |
| $ | — |
| ||
| NON-CASH FINANCING ACTIVITIES |
|
|
|
| ||||
| Deferred offering costs included in accrued expenses | $ | 156,248 |
| $ | — |
| ||
The accompanying notes are an integral part of these consolidated financial statements.
F-66
Table of Contents
ELECTRA VEHICLES, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 — DESCRIPTION OF ORGANIZATION AND BUSINESS OPERATIONS
Electra Vehicles, Inc. (the “Company”) was incorporated in the state of Delaware in 2015. The Company is a business-to-business software company that develops artificial intelligence and machine learning-enabled software and data analytics for monitoring, optimizing, and controlling battery-powered systems. The Company’s solutions are designed to improve battery performance and health-span, reduce system and operational costs, and enhance the safety of vehicles, battery energy storage systems (“BESS”), and other battery-powered systems. The Company serves customers across multiple end markets, including BESS for data centers, grid, and renewables; robotics and autonomous systems, including humanoid systems, drones, and space satellites; and e-mobility, including original equipment manufacturers, tier 1 automotive suppliers, fleet managers, and cell manufacturers. The Company is headquartered in Boston, Massachusetts and sells its electric battery optimization software and services both directly and via established go-to-market partners around the world.
The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiary, Electra Vehicles Europe, S.R.L., incorporated in Italy (collectively, the “Company”). All intercompany balances and transactions have been eliminated in consolidation.
NOTE 2 — GOING CONCERN AND CAPITAL RESOURCES
The Company incurred net losses of $5,289,922 and $5,603,039 for the years ended December 31, 2025 and 2024, respectively, and has an accumulated deficit of $20,848,299 and $15,558,377 as of December 31, 2025 and 2024, respectively. As of December 31, 2025 and 2024, the Company had cash and cash equivalents of $169,969 and $1,405,527, respectively. The Company has funded its operations principally through equity and debt financings and customer contracts.
The Company assesses its liquidity in terms of its ability to generate adequate amounts of cash to meet current and future needs. Its expected primary uses of cash on a short and long-term basis are for working capital requirements and other operational needs. The Company’s management expects that future operating losses and negative operating cash flows may continue because of additional costs and expenses related to the development of its technology platform and the expansion of market and strategic relationships with customers and partners.
The Company’s future capital requirements will depend on many factors, including the Company’s timing of the consummation of the Business Combination (see Note 21). In order to finance these opportunities, the Company will need to raise additional financing. While there can be no assurances, the Company intends to raise such capital through issuances of additional equity securities. If additional financing is required from outside sources, the Company may not be able to raise such capital on terms acceptable to the Company or it may be unable to obtain it altogether. If the Company is unable to raise additional capital when desired, the Company’s business, results of operations and financial condition would be materially and adversely affected.
In accordance with FASB ASC 205-40, Presentation of Financial Statements — Going Concern, management has evaluated whether conditions described above, considered in the aggregate, raise substantial doubt about the Company’s ability to continue as a going concern for a period of twelve months from the date these consolidated financial statements are issued. Management’s plans to address these conditions include the consummation of the Business Combination and the issuance of additional equity securities; although there can be no assurance that these plans will be successfully implemented. As a result, substantial doubt exists about the Company’s ability to continue as a going concern. These consolidated financial statements have been prepared on a going-concern basis and do not include any adjustments relating to the recoverability of recorded assets or the classification of liabilities that might be necessary should the Company be unable to continue as a going concern.
F-67
Table of Contents
ELECTRA VEHICLES, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTE 3 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). References to GAAP issued by the Financial Accounting Standards Board (“FASB”) in these accompanying notes are to the FASB Accounting Standards Codification (“ASC”).
Use of Estimates
The preparation of financial statements in conformity with U.S. GAAP requires the Company to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements, and the reported amounts of revenues and expenses during the reporting period. Significant estimates include, but are not limited to, the determination of standalone prices for performance obligations, the measure of progress towards completion of development performance obligations, the constraints applied to variable consideration, the allowance for credit losses, the fair values of digital assets, the fair value of common stock used in share-based compensation measurements, useful life of property and equipment and intangible assets, reserves for income tax uncertainties and other contingencies, and the valuation of deferred tax assets. The Company’s estimates and judgments are based on historical experience and other factors that are considered reasonable under the circumstances. Actual results could differ from these estimates.
Translation of foreign currencies
The Company has one foreign subsidiary, Electra Vehicles Europe, S.R.L., incorporated in Italy, whose functional currency is the Euro. Assets and liabilities of the Company’s foreign subsidiary are translated into U.S. dollars. Assets and liabilities are translated at the exchange rates in effect at the balance sheet date. Revenues and expenses are translated at the average exchange rate during the reporting period. The resulting translation adjustments are recorded as a component of accumulated other comprehensive income (loss) within stockholders’ equity (deficit) and are not reclassified to net income (loss) until the sale or liquidation of the subsidiary.
Translation adjustments are recorded as a separate component of the consolidated statements of comprehensive income (loss). There have been no reclassifications from accumulated other comprehensive income (loss) to earnings for the years ended December 31, 2025 and 2024.
Foreign currency transaction gains and losses that arise from transactions denominated in currencies other than the functional currency, including intercompany balances, that are expected to be settled in the foreseeable future, are recognized within the consolidated statements of operations as incurred.
Cash and Cash Equivalents
The Company considers all highly liquid investments with an original maturity of three months or less at the date of the purchase to be cash equivalents.
Short-term investments
The Company classifies investments in certificates of deposit (“CDs”) with original maturities greater than three months, but less than one year, as short-term investments. These investments are classified as held-to-maturity and recorded at amortized cost. The CDs are classified as short-term investments on the consolidated balance sheets based on their maturity dates and the Company’s intention to hold them until maturity. The carrying value of these investments approximates fair value due to their short maturities.
F-68
Table of Contents
ELECTRA VEHICLES, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTE 3 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.)
Accounts receivable
Accounts receivable are stated at the invoiced amount. The Company maintains an allowance for credit losses representing management’s estimate of expected losses on its accounts receivable in accordance with ASC 326, Financial Instruments — Credit Losses. Accounts receivable are pooled based on similar risk characteristics, including aging, current economic conditions, and reasonable and supportable forecasts. The allowance is adjusted each period based on management’s assessment, and balances are written off against the allowance when there is no reasonable expectation of recovery.
Property and Equipment
Property and equipment are recorded at cost, less accumulated depreciation. Depreciation is computed using the straight-line method over the following estimated useful lives:
| Estimated | ||
| Computer hardware and software | 5 years | |
| Furniture, fixtures and equipment | 3 – 5 years | |
| Vehicles | 5 years |
Maintenance and repairs are expensed as incurred. Costs of major improvements that extend the useful life of an asset are capitalized. Upon retirement or disposal, the cost and related accumulated depreciation are removed from the accounts and any resulting gain or loss is recognized in the consolidated statements of operations and comprehensive loss.
Leases
The Company determines if an arrangement is or contains a lease at contract inception in accordance with ASC 842, Leases. A contract is or contains a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. The Company classifies leases at the lease commencement date as operating or finance leases and records a right-of-use (“ROU”) asset and a lease liability on the consolidated balance sheet for all leases with an initial lease term of greater than twelve months. The Company has elected the practical expedient to not recognize right-of-use assets or lease liabilities for leases with an original term of twelve months or less. Payments for such short-term leases are recognized on a straight-line basis over the lease term and are included in general and administrative expenses in the consolidated statements of operations and comprehensive loss. As of December 31, 2025 and 2024, the Company maintained two office leases which are accounted for as short-term leases. A lease qualifies as a finance lease if any of the following criteria are met at the inception of the lease: (i) there is a transfer of ownership of the leased asset to the Company by the end of the lease term, (ii) the Company holds an option to purchase the leased asset that it is reasonably certain to exercise, (iii) the lease term is for a major part of the remaining economic life of the leased asset, (iv) the present value of the sum of lease payments equals or exceeds substantially all of the fair value of the leased asset, or (v) the nature of the leased asset is specialized to the point that it is expected to provide the lessor no alternative use at the end of the lease term. All other leases are recorded as operating leases. As of and for the years ended December 31, 2025, and 2024, the Company does not have any lease arrangements that qualify as a finance lease.
The Company enters into contracts that contain both lease and non-lease components. Non-lease components may include maintenance, utilities, and other operating costs. The Company accounts for lease and non-lease components as a single lease component for its leases. Variable lease payments are recognized in the period in which the obligation for those payments are incurred and are not included in the measurement of the ROU assets or lease liabilities.
Lease liabilities represent the obligation to make lease payments and ROU assets represent the right to use the underlying asset during the lease term. Lease liabilities and ROU assets are recognized at the commencement date of the lease based on the present value of lease payments over the lease term at the commencement date using the
F-69
Table of Contents
ELECTRA VEHICLES, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTE 3 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.)
discount rate implicit in the lease. If the discount rate implicit in the lease is not readily determinable, a collateralized incremental borrowing rate based on the information available at the commencement date is used in determining the present value of the lease payments. Options to extend or terminate the lease are included in the determination of the lease term when it is reasonably certain that the Company will exercise such options.
Digital Assets
The Company accounts for its digital assets (cryptocurrencies) in accordance with ASC 350-60, Intangibles — Goodwill and Other — Crypto Assets. Qualifying crypto assets are measured at fair value at each reporting date, with changes in fair value recognized in the consolidated statements of operations and comprehensive loss. The fair value of digital assets is determined using quoted prices on the active exchange that the Company has determined is the principal market for such assets, which are classified as Level 1 inputs within the fair value hierarchy. The Company determines the cost basis of digital assets using the specific identification method. Realized gains and losses on sales of digital assets are also recognized in the consolidated statements of operations and comprehensive loss. Digital assets are presented separately on the consolidated balance sheets.
Intangible Assets Subject to Amortization
Intangible assets consist of patents and website development costs, which are recorded at cost and amortized on a straight-line basis over the estimated useful lives of 15 years and 5 years, respectively. The Company believes the straight-line method appropriately reflects the pattern in which the economic benefits of these assets are consumed. The Company reviews the estimated useful life and amortization method at the end of each reporting period, with the effect of any changes in estimate accounted for on a prospective basis. Upon retirement or disposal, the cost and related accumulated amortization are removed from the accounts and any resulting gain or loss is recognized in the consolidated statements of operations and comprehensive loss.
Patents are capitalized at cost and represent the legal costs incurred to secure and maintain the Company’s intellectual property rights.
Website development costs are capitalized in accordance with ASC 350-50, Website Development Costs, and primarily include third-party costs related to acquiring domains and developing applications, costs incurred to develop or acquire and customize code for web applications, costs to develop HTML web pages or templates, costs to create original graphics for the website, and costs incurred for website application and infrastructure development.
Internal-Use Software
The Company develops software for internal use in delivering its hosted SaaS platforms to customers. The Company does not distinguish between costs incurred in the application development stage from those incurred in the preliminary project stage or post-implementation stage. Accordingly, all internal-use software development costs are expensed as incurred. Maintenance and training costs are expensed as incurred.
Impairment of Long-Lived Assets
The Company reviews long-lived assets, including property and equipment and finite-lived intangible assets, for impairment in accordance with ASC 360-10, Property, Plant, and Equipment, whenever events or changes in circumstances indicate that the carrying amount of an asset or asset group may not be recoverable. If such indicators are present, the Company first assesses recoverability by comparing the sum of undiscounted future cash flows expected to result from the use and eventual disposition of the asset or asset group to its carrying amount. If the carrying amount exceeds the undiscounted future cash flows, an impairment loss is recognized equal to the excess of the carrying amount over the fair value of the asset or asset group. No impairment charges were recorded during the years ended December 31, 2025, and 2024.
F-70
Table of Contents
ELECTRA VEHICLES, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTE 3 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.)
Fair Value Measurements
The Company accounts for certain assets and liabilities at fair value in accordance with ASC 820, Fair Value Measurement. ASC 820 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.
ASC 820 establishes a three-level hierarchy for fair value measurements based on the transparency of inputs used in the valuation of an asset or liability as of the measurement date. The three levels are defined as follows:
• Level 1 — Quoted prices (unadjusted) in active markets for identical assets or liabilities.
• Level 2 — Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities in active markets or inputs that are observable for substantially the full term of the asset or liability.
• Level 3 — Unobservable inputs supported by little or no market activity and reflecting the Company’s own assumptions about the assumptions market participants would use.
The carrying amounts of cash and cash equivalents, accounts receivable, accounts payable, and accrued expenses approximate fair value due to their short-term nature.
Revenue Recognition and Deferred Revenue
The Company generates revenue primarily from two sources: (1) subscription services related to its hosted artificial intelligence enabled platforms and (2) professional services.
Revenue is recognized upon transfer of control of promised services to customers in an amount that reflects the consideration the Company expects to receive in exchange for those products or services. The Company determines the amount of revenue to be recognized through the application of the following steps:
• identification of the contract, or contracts, with a customer;
• identification of the performance obligations in the contract;
• determination of the transaction price;
• allocation of the transaction price to the performance obligations in the contract; and
• recognition of revenue when or as the Company satisfies the performance obligations.
The Company identifies performance obligations at contract inception and allocates the transaction price based on relative standalone selling prices, determined using the residual method, expected cost-plus-margin approach, or observable standard price lists, depending on the nature of the performance obligation. A performance obligation is a promise in a contract with a customer to transfer products or services that are concluded to be distinct. The Company enters into contracts with its customers that may include promises to transfer multiple performance obligations. Determining whether products and services are distinct performance obligations that should be accounted for separately or combined as one unit of accounting may require significant judgment.
Subscription services are generally concluded to be distinct because such offerings are often sold separately. In determining whether professional services are distinct, the Company considers the following factors for each professional services agreement: availability of the services from other vendors, the nature of the professional services, the timing of when the professional services contract was signed in comparison to the subscription start date and the contractual dependence of the service on the customer’s satisfaction with the professional services work. To date, the Company has concluded that professional services included in contracts with multiple performance obligations are distinct.
F-71
Table of Contents
ELECTRA VEHICLES, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTE 3 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.)
The transaction price may include fixed fees, nonrefundable upfront fees, variable consideration, including usage-based fees, and consideration payable to customers in the form of discounts. Variable consideration is included in the transaction price to the extent it is probable that a significant reversal of revenue will not occur. The Company allocates the transaction price to each performance obligation on a relative standalone selling price (“SSP”) basis. The SSP is the price at which the Company would sell a promised product or service separately to a customer. Judgment is required to determine the SSP for each distinct performance obligation.
The Company determines SSP by considering its overall pricing objectives and market conditions. Significant pricing practices taken into consideration include the Company’s discounting practices, the size and volume of the Company’s transactions, the customer demographic, the geographic area where services are sold, price lists, the Company’s go-to-market strategy, historical and current sales and contract prices. In instances where the Company does not sell or price a product or service separately, the Company maximizes the use of observable inputs by using information that may include market conditions. As the Company’s go-to-market strategies evolve, the Company may modify its pricing practices in the future, which could result in changes to SSP.
The Company evaluates whether it acts as a principal or agent in its arrangements when third parties are involved in providing services to its customers. Where the Company controls the service before transfer to the customer, revenue and the related expense are recognized on a gross basis; where the Company acts as an agent, revenue is recognized net of third-party expenses incurred by the Company.
The Company records deferred revenue when consideration is received or due in advance of performance per the terms of the contract with the customer. Deferred revenue is recognized as revenue when the related performance obligations are satisfied.
The Company typically invoices its customers monthly and its payment terms provide that customers pay within 30 days of invoice. Amounts that have been invoiced are recorded in accounts receivable and in unearned revenue or revenue, depending on whether transfer of control to customers has occurred. As a practical expedient, the Company does not assess significant financing components when the time between receipt of consideration and satisfaction of the performance obligation is one year or less.
Subscription Revenue
Subscription revenue is comprised of fees charged to customers to access to the Company’s artificial-intelligence-enabled software and related support and updates provided during the customer subscription term. Customers can access the Company’s multi-tenant software without taking possession of the software. Revenue is generally recognized over the subscription term. For subscription service contracts based on battery capacity usage, the Company recognizes its revenue monthly when it has determined it has a right to consideration from the customer. For subscription service contracts that are not based on usage, the Company recognizes revenue ratably over the subscription term.
Substantially all of the Company’s subscription service arrangements are noncancellable and do not contain refund-type provisions. Customer subscriptions renew automatically at the end of each subscription term, unless the customer notifies the Company.
Professional Services
Professional services and other revenues include professional and advisory services for process mapping, project management, implementation and training services. The Company prices its professional services contracts on a fixed-price basis. These revenues are recognized on a proportional performance basis as services are provided to the customer.
F-72
Table of Contents
ELECTRA VEHICLES, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTE 3 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.)
Contract Costs
The Company capitalizes incremental costs to obtain contracts with customers, such as sales commission paid to its employees and third parties. As a practical expedient, the Company expenses contract costs to obtain a contract as incurred when the satisfaction of the related performance obligations is determined to be one year or less. When the satisfaction period is greater than one year, incremental costs to obtain contracts are capitalized and amortized over the period of benefit, including anticipated renewal periods.
The Company capitalizes costs to fulfill contracts when they relate directly to a customer contract, generate or enhance resources used in satisfying future performance obligations, and are expected to be recovered. These costs are amortized over the period the related performance obligation is satisfied.
Cost of Revenue
Cost of revenue consists primarily of personnel costs (including salaries and benefits) for employees engaged in customer support, implementation, and platform operations, as well as third-party hosting and infrastructure costs, data costs, and amortization of capitalized contract fulfillment costs directly attributable to delivering the Company’s software platforms and services to customers.
Sales and Marketing
Sales and marketing expenses consist primarily of personnel costs (including salaries, commissions, and benefits) for employees engaged in sales, business development, and marketing activities, as well as costs for marketing programs, trade shows, promotional materials, and partner channel activities. Sales commissions are expensed as incurred under the Company’s practical expedient election for contracts with an amortization period of one year or less.
Research and Development Expense
Research and development costs are expensed as incurred in accordance with ASC 730, Research and Development. These costs consist of personnel costs, fees paid to third parties performing research and development activities on behalf of the Company, and other directly attributable costs.
General and Administrative
General and administrative expenses consist primarily of personnel costs for executive, finance, legal, and administrative functions, as well as professional fees, insurance, and other corporate overhead costs not attributable to other functional expense categories.
Share-Based Compensation
The Company measures all share-based awards granted to employees and directors based on the fair value on the date of the grant and recognizes compensation expense for those awards over the requisite service period, which is generally the vesting period of the respective award. The fair value of each stock option grant is estimated on the date of grant using the Black-Scholes-Merton option-pricing model, which requires inputs based on certain subjective assumptions, including the fair value of the Company’s common stock, expected stock price volatility, the expected term of the option, the risk-free interest rate for a period that approximates the expected term of the option, and the Company’s expected dividend yield. The Company accounts for forfeitures of share-based awards when they occur.
Stock Option Valuation
The fair value of stock option grants is estimated using the Black-Scholes-Merton option-pricing model. The Company historically has been a private company and lacks company-specific historical and implied volatility information. Therefore, it estimates its expected stock volatility based on the historical volatility of a publicly traded
F-73
Table of Contents
ELECTRA VEHICLES, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTE 3 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.)
set of peer companies and expects to continue to do so until such time as it has adequate historical data regarding the volatility of its own traded stock price. For options with service-based vesting conditions, the expected term of the Company’s stock options has been determined utilizing the “simplified” method for awards that qualify as “plain-vanilla” options. The risk-free interest rate is determined by reference to the U.S. Treasury yield curve in effect at the time of grant of the award for time periods approximately equal to the expected term of the award. Expected dividend yield is based on the fact that the Company did not pay cash dividends in any of the periods presented and does not expect to pay any cash dividends in the foreseeable future.
Income Taxes
The Company accounts for income taxes in accordance with ASC 740, Income Taxes. Deferred tax assets and liabilities are recognized for temporary differences between the financial statement and tax bases of assets and liabilities, measured using enacted tax rates expected to apply in the periods in which those differences are expected to reverse. A valuation allowance is established when it is more likely than not that some portion or all of a deferred tax asset will not be realized. The Company evaluates uncertain tax positions under the more-likely-than-not recognition threshold and recognizes interest and penalties related to income taxes within income tax expense.
Net Loss Per Common Share
Basic net loss per share is computed by dividing the net loss attributable to common stockholders by the weighted-average number of common shares outstanding during the period. Diluted net loss per share is computed by dividing net loss by the weighted-average shares outstanding for the period and includes the dilutive impact of potential new shares issuable upon vesting and exercise of stock options and the conversion of convertible preferred stock. Potentially dilutive securities are excluded from the computation of diluted net loss per share if their effect is antidilutive. The Company uses the two-class method of computing net loss per share for its Class A and Class B common stock, allocating undistributed losses to each class based on each class’s weighted-average shares outstanding for the period.
| Year ended | ||||||||
| December 31, | December 31, | |||||||
| Net loss | $ | (5,289,922 | ) | $ | (5,603,039 | ) | ||
| Class A Common Stock |
|
|
|
| ||||
| Net loss attributable to Class A Common Stock | $ | (783,764 | ) | $ | (754,302 | ) | ||
| Weighted average shares outstanding, basic and diluted |
| 693,860 |
|
| 620,597 |
| ||
| Earnings per share, basic and diluted | $ | (1.13 | ) | $ | (1.22 | ) | ||
| Class B Common Stock |
|
|
|
| ||||
| Net loss attributable to Class B Common Stock | $ | (4,506,158 | ) | $ | (4,848,737 | ) | ||
| Weighted average shares outstanding, basic and diluted |
| 3,989,264 |
|
| 3,989,264 |
| ||
| Earnings per share, basic and diluted | $ | (1.13 | ) | $ | (1.22 | ) | ||
The following potentially dilutive shares were excluded from the computation of diluted net loss per share for the periods presented because including them would have been antidilutive:
| December 31, | December 31, | |||
| Series Seed convertible preferred stock | 3,730,391 | 3,730,391 | ||
| Series A convertible preferred stock | 2,321,980 | 2,321,980 | ||
| Series B convertible preferred stock | 53,937 | — | ||
| Stock options to purchase common stock | 782,291 | 585,613 | ||
| Total | 6,888,599 | 6,637,984 |
F-74
Table of Contents
ELECTRA VEHICLES, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTE 3 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.)
Segment Reporting
The Company identifies operating segments as components of the enterprise for which discrete financial information is available and is regularly reviewed by the chief operating decision maker (“CODM”) to allocate resources and assess performance. The Company operates as a single operating and reportable segment. See Note 16 — Segment Reporting for further information.
Concentrations of Risk and Significant Customers
The Company maintains its cash in bank deposit accounts, which, at times, may exceed the financial institutions’ insurance limitations. The Company has not experienced any losses in such accounts and believes it is not exposed to any significant credit risk on cash.
For the year ended December 31, 2025, one customer accounted for 94% of total revenues. As of December 31, 2025, this same customer represented approximately 98% of total accounts receivable. For the year ended December 31, 2024, one customer accounted for 93% of total revenues. As of December 31, 2024, this same customer represented approximately 74% of total accounts receivable.
Recent Accounting Pronouncements
Upon consummation of the Business Combination described in Note 21, the combined company is expected to qualify as an emerging growth company (“EGC”) under the Jumpstart Our Business Startups Act of 2012 and to elect the extended transition period under Section 107(b) thereof. Under this election, new or revised accounting standards are effective for the Company on the dates applicable to entities other than public business entities. The effective dates disclosed below are those applicable to public business entities.
Recent Accounting Standards Adopted by the Company
ASU 2023-09: In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures (“ASU 2023-09”). ASU 2023-09 enhances income tax disclosures, including more detailed requirements related to the rate reconciliation and disaggregation of income taxes paid by jurisdiction, among other items. ASU 2023-09 is effective for public business entities for fiscal years beginning after December 15, 2024. The Company adopted ASU 2023-09 for the year ended December 31, 2025 on a retrospective basis, and comparative disclosures for the year ended December 31, 2024 have been conformed to the requirements of ASU 2023-09. The adoption did not have a material impact on the Company’s consolidated financial statements and only impacted annual disclosures.
ASU 2023-08: In December 2023, the FASB issued ASU 2023-08, Intangibles — Goodwill and Other — Crypto Assets (Subtopic 350-60): Accounting for and Disclosure of Crypto Assets (“ASU 2023-08”). ASU 2023-08 requires entities to measure in-scope crypto assets at fair value each reporting period, with changes in fair value recognized in net income, and requires separate presentation and disclosure of crypto asset holdings. The Company early adopted ASU 2023-08 for the year ended December 31, 2023. The adoption did not have a material impact on the Company’s consolidated financial statements.
ASU 2023-07: In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures (“ASU 2023-07”). ASU 2023-07 requires entities to disclose significant segment expenses that are regularly provided to the chief operating decision maker (“CODM”) and included within each reported measure of segment profit or loss, as well as the CODM’s title and position and an explanation of how the CODM uses the reported measures in assessing segment performance and allocating resources. The Company early adopted ASU 2023-07 for the year ended December 31, 2024. The adoption did not have a material impact on the Company’s consolidated financial statements and only impacted annual disclosures.
F-75
Table of Contents
ELECTRA VEHICLES, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTE 3 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.)
Recent Accounting Pronouncements Not Yet Effective
ASU 2024-03: In November 2024, the FASB issued Accounting Standards Update No. 2024-03, Disaggregation of Income Statement Expenses (“ASU 2024-03”). ASU 2024-03 is intended to provide users of financial statements with more decision-useful information about expenses of a public business entity, primarily through enhanced disclosures of certain components of expenses commonly presented within captions on the statement of operations, such as employee compensation and depreciation and amortization, as well as a qualitative description of the amounts remaining in relevant expense captions that are not separately disaggregated quantitatively. ASU 2024-03 also requires disclosure of the total amount of selling expenses. ASU 2024-03 is effective for public business entities for fiscal years beginning after December 15, 2026 and for interim periods beginning after December 15, 2027, with early adoption permitted. The amendments may be applied prospectively or retrospectively. The Company is currently assessing ASU 2024-03 and its impact on its disclosures.
ASU 2025-04: In May 2025, the FASB issued Accounting Standards Update No. 2025-04, Clarifications to Share-Based Consideration Payable to a Customer (“ASU 2025-04”). ASU 2025-04 clarifies guidance on accounting for share-based payments granted to a customer, that are accounted for as a reduction of revenue, by revising the definition of a performance condition to include conditions based on customer purchases and eliminating a policy election to account for forfeitures of customer awards as they occur. The guidance also clarifies that the variable consideration constraint does not apply to share-based consideration payments to customers. ASU 2025-04 is effective for all entities for fiscal years beginning after December 15, 2026 and for interim periods within those fiscal years, with early adoption permitted. The Company is currently assessing ASU 2025-04 and its impact on its financial statements and disclosures.
ASU 2025-05: In July 2025, the FASB issued Accounting Standards Update No. 2025-05, Measurement of Credit Losses for Accounts Receivable and Contract Assets (“ASU 2025-05”). ASU 2025-05 provides a practical expedient permitting entities to assume that current conditions as of the balance sheet date do not change for the remaining life of current accounts receivable and contract assets when measuring expected credit losses and requires entities electing the expedient to disclose that election. ASU 2025-05 is effective for all entities for fiscal years beginning after December 15, 2025, including interim periods within those fiscal years, with early adoption permitted. The Company is currently assessing ASU 2025-05 and its impact on its financial statements and disclosures.
ASU 2025-06: In September 2025, the FASB issued Accounting Standards Update No. 2025-06, Targeted Improvements to the Accounting for Internal-Use Software (“ASU 2025-06”). ASU 2025-06 removes all references to software development project stages under the existing standard and states that an entity is required to start capitalizing software costs when (1) management has authorized and committed to fund the software project and (2) it is probable that the project will be completed and the software will be used to perform the function intended (the “probable-to-complete recognition threshold”). ASU 2025-06 is effective for all entities for fiscal years beginning after December 15, 2027 and for interim periods within those fiscal years, with early adoption permitted. The Company is currently assessing ASU 2025-06 and its impact on its financial statements and disclosures.
NOTE 4 — ACCOUNTS RECEIVABLE
The following table presents the components of accounts receivable as of December 31, 2025 and 2024:
| December 31, | December 31, | |||||||
| Accounts receivable, gross | $ | 428,869 |
| $ | 152,204 |
| ||
| Less: Allowance for credit losses |
| (121,704 | ) |
| (121,704 | ) | ||
| Accounts receivable, net | $ | 307,165 |
| $ | 30,500 |
| ||
No amounts were written off against the allowance during the years ended December 31, 2025 or 2024.
F-76
Table of Contents
ELECTRA VEHICLES, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTE 4 — ACCOUNTS RECEIVABLE (cont.)
The following table presents the Company’s allowance for credit losses as of December 31, 2025 and 2024:
| December 31, | December 31, | |||||
| Beginning allowance for credit losses | $ | 121,704 | $ | 84,704 | ||
| Add: Provision for credit losses |
| — |
| 37,000 | ||
| Less: Write-offs |
| — |
| — | ||
| Ending allowance for credit losses | $ | 121,704 | $ | 121,704 | ||
NOTE 5 — OTHER CURRENT ASSETS
Other current assets consist of the following as of December 31, 2025 and 2024:
| December 31, | December 31, | |||||
| Salary deposits | $ | 86,876 | $ | 89,459 | ||
| Other taxes receivable |
| 14,077 |
| 33,548 | ||
| Total other current assets | $ | 100,953 | $ | 123,007 | ||
As of December 31, 2025 and 2024, salary deposits represent a refundable cash reserve maintained with Deel, Inc., the Company’s payroll processing provider, which is held as security against potential payroll shortfalls.
NOTE 6 — SHORT-TERM INVESTMENTS
During the year ended December 31, 2025, all short-term investments matured, resulting in a balance of $0 as of December 31, 2025.
The following table presents short-term investment activity for the years ended December 31, 2025 and 2024:
| December 31, | December 31, | |||||||
| Beginning balance | $ | 667,623 |
| $ | 1,000,000 |
| ||
| Purchases |
| — |
|
| 694,423 |
| ||
| Maturities |
| (725,080 | ) |
| (1,000,000 | ) | ||
| Effect of foreign exchange |
| 57,457 |
|
| (26,800 | ) | ||
| Ending balance | $ | — |
| $ | 667,623 |
| ||
No credit losses or impairment charges were recorded on short-term investments during the years ended December 31, 2025 and 2024. The fair value of short-term investments is disclosed in Note 12 — Fair Value Measurements.
NOTE 7 — DIGITAL ASSETS
The following table summarizes the cost basis, units held, and fair value of the Company’s digital assets as of December 31, 2025 and 2024:
| December 31, 2025 | ||||||||
| Units held | Cost basis | Fair value | ||||||
| Solana(1) | 0.0240 | $ | — | $ | — | |||
| Total |
| $ | — | $ | — | |||
____________
(1) As of December 31, 2025, the Company held a residual balance of 0.0240 units of Solana with an aggregate cost basis and fair value of less than $5, each of which rounds to $— in the table above.
F-77
Table of Contents
ELECTRA VEHICLES, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTE 7 — DIGITAL ASSETS (cont.)
| December 31, 2024 | ||||||||
| Units held | Cost basis | Fair value | ||||||
| Bitcoin | 23.00 | $ | 672,455 | $ | 2,149,122 | |||
| Ethereum | 10.32 |
| 37,865 |
| 34,386 | |||
| Solana | 108.72 |
| 16,000 |
| 20,576 | |||
| Total |
| $ | 726,320 | $ | 2,204,084 | |||
The following table presents the roll forward of the digital asset activity for the years ended December 31, 2025 and 2024:
| December 31, | December 31, | ||||||
| Beginning balance at fair value | $ | 2,204,084 |
| $ | 1,006,338 | ||
| Purchases of digital assets |
| — |
|
| 2,998 | ||
| Gross proceeds from sale of digital assets |
| (2,562,474 | ) |
| — | ||
| Realized gains |
| 358,390 |
|
| — | ||
| Unrealized gains |
| — |
|
| 1,194,748 | ||
| Ending balance at fair value | $ | — |
| $ | 2,204,084 | ||
As of December 31, 2025, the Company held no digital assets with material value. Substantially all digital asset holdings were liquidated during the year ended December 31, 2025.
NOTE 8 — PROPERTY AND EQUIPMENT
Property and equipment consist of the following as of December 31, 2025 and 2024:
| December 31, | December 31, | |||||||
| Computer hardware and software | $ | 30,549 |
| $ | 30,549 |
| ||
| Furniture, fixtures and equipment |
| 648 |
|
| 648 |
| ||
| Vehicles |
| 166,365 |
|
| 166,365 |
| ||
| Property and equipment, gross |
| 197,562 |
|
| 197,562 |
| ||
| Less: Accumulated depreciation |
| (60,342 | ) |
| (21,209 | ) | ||
| Property and equipment, net | $ | 137,220 |
| $ | 176,353 |
| ||
Depreciation expense amounted to $39,133 and $14,831 for the years ended December 31, 2025 and 2024, respectively.
NOTE 9 — INTANGIBLE ASSETS
Identifiable intangible assets subject to amortization consist of the following as of December 31, 2025 and 2024:
| Estimated | December 31, | December 31, | ||||||||
| Patents | 15 years | $ | 21,467 |
| $ | 21,467 |
| |||
| Website | 5 years |
| 175,000 |
|
| 175,000 |
| |||
| Intangible assets, gross |
| 196,467 |
|
| 196,467 |
| ||||
| Accumulated amortization |
| (65,049 | ) |
| (28,610 | ) | ||||
| Intangible assets, net | $ | 131,418 |
| $ | 167,857 |
| ||||
During the years ended December 31, 2025 and 2024, amortization expense related to intangible assets amounted to $36,439 and $24,772, respectively. Future amortization expense of $36,439 will be recognized for each of the fiscal years 2026 through 2028, with $22,101 remaining to be amortized through 2036.
F-78
Table of Contents
ELECTRA VEHICLES, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTE 10 — ACCRUED EXPENSES
Accrued expenses consist of the following as of December 31, 2025 and 2024:
| December 31, | December 31, | |||||
| Accrued compensation and benefits | $ | 812,686 | $ | 256,932 | ||
| Accrued legal and professional fees |
| 235,729 |
| 73,709 | ||
| Other accrued expenses |
| 11,496 |
| 1,040 | ||
| Total | $ | 1,059,911 | $ | 331,681 | ||
NOTE 11 — LONG-TERM DEBT
Long-term debt consists of the following as of December 31, 2025 and 2024:
| December 31, | December 31, | |||||||
| Economic Injury Disaster Loan | $ | 18,080 |
| $ | 18,080 |
| ||
| Vehicle Loan |
| 91,713 |
|
| 119,029 |
| ||
| Total debt |
| 109,793 |
|
| 137,109 |
| ||
| Less: Current portion of long-term debt |
| (30,178 | ) |
| (27,316 | ) | ||
| Total long-term debt | $ | 79,615 |
| $ | 109,793 |
| ||
Economic Injury Disaster Loan
In June 2020, the Company applied for and received an Economic Injury Disaster Loan (“EIDL”) administered by the Small Business Administration (“SBA”) under the CARES Act in the amount of $16,600. The loan bears interest at a fixed rate of 3.75% per annum and has a maturity of 30 years. Per the terms of the agreement, the Company is required to utilize the proceeds for working capital and operating expenses. The Company makes monthly interest-only payments based on the outstanding principal balance. Included within the EIDL balance as of December 31, 2025 and 2024, is $1,480 of deferred interest that accrued during the initial 18-month deferment period. The loan is not subject to forgiveness and, per the terms of the agreement, remains payable at maturity.
Vehicle Loan
On September 19, 2024, the Company entered into a note payable with GM Financial. The note bears interest at a fixed annual rate of 9.99% and matures on September 19, 2028. The note is secured by a Tesla Cybertruck, which serves as collateral under the agreement. During the years ended December 31, 2025, and 2024, the Company made payments of $27,316 and $14,205, respectively, and did not incur any additional borrowings under the note. Included within the vehicle loan balance above is $253 and $391 of accrued interest as of December 31, 2025 and 2024, respectively.
Future principal payments
As of December 31, 2025, future minimum principal payments under the Company’s long-term debt obligations are as follows:
| December 31, | |||
| Year ending December 31, 2026 | $ | 30,178 | |
| Year ending December 31, 2027 |
| 33,335 | |
| Year ending December 31, 2028 |
| 28,200 | |
| Year ending December 31, 2029 |
| — | |
| Year ending December 31, 2030 |
| — | |
| Thereafter |
| 18,080 | |
| Total | $ | 109,793 | |
F-79
Table of Contents
ELECTRA VEHICLES, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTE 12 — FAIR VALUE MEASUREMENTS
As of December 31, 2025, the Company held no digital assets and short-term investments with material value. Substantially all digital asset holdings and short-term investments were liquidated during the year ended December 31, 2025.
The following table sets forth the fair value of digital assets and short-term investments held by the Company as of December 31, 2024 and assigned to the applicable fair value hierarchy, which is described further within Note 3 — Summary of Significant Accounting Policies.
| December 31, 2024 | ||||||||||||
| Level 1 | Level 2 | Level 3 | Total | |||||||||
| Bitcoin | $ | 2,149,122 | $ | — | $ | — | $ | 2,149,122 | ||||
| Ethereum |
| 34,386 |
| — |
| — |
| 34,386 | ||||
| Solana |
| 20,576 |
| — |
| — |
| 20,576 | ||||
| Short-term investments |
| 667,623 |
| — |
| — |
| 667,623 | ||||
| Total | $ | 2,871,707 | $ | — | $ | — | $ | 2,871,707 | ||||
NOTE 13 — STOCKHOLDERS’ (DEFICIT) EQUITY
Authorized Capital
As of December 31, 2025, the Company’s Amended and Restated Certificate of Incorporation, adopted in November 2025, authorized 16,500,000 shares of common stock ($0.00001 par value per share) and 8,374,367 shares of preferred stock ($0.00001 par value per share), of which 3,730,391 shares are designated as Series Seed Convertible Preferred Stock (“Series Seed”), 2,321,980 shares are designated as Series A Convertible Preferred Stock (“Series A”), and 2,321,996 shares are designated as Series B Convertible Preferred Stock (“Series B”). Series Seed, Series A, and Series B are collectively referred to herein as “Preferred Stock.” Subsequent to December 31, 2025, on April 20, 2026, the Company filed its Fourth Amended and Restated Certificate of Incorporation, which reclassified the Company’s existing common stock into Class A common stock (one vote per share) and Class B common stock (ten votes per share), each with a par value of $0.00001 per share. Shares of common stock beneficially owned by or affiliated with the Company’s Chief Executive Officer were reclassified on a one-for-one basis into Class B common stock, and all other outstanding shares of common stock were reclassified on a one-for-one basis into Class A common stock. The total number of authorized shares of capital stock was increased to 28,869,169 shares, consisting of 16,500,000 shares of Class A common stock, 3,994,802 shares of Class B common stock, and 8,374,367 shares of Preferred Stock. As a result of this amendment, the Company has retroactively adjusted the presentation of common stock in the accompanying consolidated balance sheets and statements of changes in stockholders’ equity (deficit) for all periods presented to reflect the Class A and Class B common stock structure, with all share and per-share information adjusted accordingly.
Common Stock
The voting, dividend and liquidation rights of the holders of the Company’s common stock are subject to and qualified by the rights, powers and preferences of the holders of the Preferred Stock set forth below. As retroactively adjusted to reflect the amendment described above, each share of Class A common stock is entitled to one vote per share and each share of Class B common stock is entitled to ten votes per share on all matters submitted to a vote of the Company’s stockholders. Class A common stock and Class B common stock are equal in all respects other than voting rights, including with respect to dividends and distributions upon liquidation, dissolution, or winding up of the Company. Holders of the Company’s common stock are entitled to receive dividends as may be declared by the Company’s board of directors, if any, subject to the preferential dividend rights of Preferred Stock. No cash dividends had been declared or paid during the periods presented.
F-80
Table of Contents
ELECTRA VEHICLES, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTE 13 — STOCKHOLDERS’ (DEFICIT) EQUITY (cont.)
Treasury Stock
During the year ended December 31, 2018, the Company repurchased an aggregate of 1,327,090 shares of its common stock at par value of $0.00001 per share. No common stock was repurchased during the years ended December 31, 2025, and 2024.
Series Seed Preferred Stock
In April 2021, the Company issued 3,730,391 shares of Series Seed Convertible Preferred Stock, par value $0.00001 per share, at $1.1696 per share (the “Series Seed Original Issue Price”), for aggregate gross cash proceeds of approximately $2,400,000 and the conversion of approximately $1,418,000 of outstanding convertible promissory notes. The Company incurred approximately $105,000 of issuance costs, recorded as a reduction of proceeds in additional paid-in capital.
Series A Preferred Stock
In January 2023, the Company issued 2,321,980 shares of Series A Convertible Preferred Stock, par value $0.00001 per share, at $6.46 per share (the “Series A Original Issue Price”), for aggregate gross proceeds of $14,999,991. The Company incurred approximately $276,000 of issuance costs, recorded as a reduction of proceeds in additional paid-in capital.
Series B Preferred Stock
From November 2025 through December 31, 2025, the Company issued 53,937 shares of Series B Convertible Preferred Stock, par value $0.00001 per share, at $9.4746 per share (the “Series B Original Issue Price”), for gross proceeds of $511,032. The Company incurred $220,488 of issuance costs, recorded as a reduction of proceeds in additional paid-in capital, of which $64,240 was paid in cash and $156,248 is included in accrued expenses on the consolidated balance sheets.
Rights and Preferences of the Preferred Stock
The rights and preferences of the Preferred Stock are governed by the Fourth Amended and Restated Certificate of Incorporation filed on April 20, 2026.
Classification
The Company has determined that the events that could trigger redemption of the Preferred Stock are solely within the Company’s control, and accordingly, all outstanding shares of Preferred Stock are classified as permanent equity.
Voting
Each holder of Preferred Stock votes on an as-converted basis together with holders of common stock as a single class, except as otherwise required by law or the Amended and Restated Certificate of Incorporation. There is no cumulative voting. The holders of Series Seed, voting exclusively as a separate class, are entitled to elect one director of the Company. The holders of Series A, voting exclusively as a separate class, are entitled to elect one director of the Company. The holders of common stock, voting exclusively as a separate class, are entitled to elect one director of the Company. The remaining directors are elected by all stockholders, voting together as a single class.
Dividends
Holders of Preferred Stock are entitled to non-cumulative dividends on a participation basis, if and when declared by the Board of Directors. No dividends have been declared or paid since inception. Holders of Series A and Series B, on a pari passu basis, are entitled to receive a preferential dividend before any dividend is paid to holders
F-81
Table of Contents
ELECTRA VEHICLES, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTE 13 — STOCKHOLDERS’ (DEFICIT) EQUITY (cont.)
of Series Seed, who are in turn entitled to receive a preferential dividend before any dividend is paid to holders of common stock. Subject to these preferential rights, holders of common stock are entitled to receive dividends if and when declared by the Board of Directors.
Conversion
Each share of Preferred Stock is convertible at the option of the holder at any time into common stock at an initial one-for-one conversion ratio based on the applicable Original Issue Price — $1.1696 per share for Series Seed, $6.46 per share for Series A, and $9.4746 per share for Series B — subject to adjustment as set forth in the Amended and Restated Certificate of Incorporation. All outstanding shares of Preferred Stock will automatically convert into common stock upon the earlier of (a) the closing of a firm-commitment underwritten public offering at a price of at least $18.9492 per share, with the common stock listed on the Nasdaq National Market, the New York Stock Exchange, or another exchange approved by the Board of Directors, or (b) the date or event specified by vote or written consent of the Requisite Holders, as defined below.
Liquidation Preferences
Upon any voluntary or involuntary liquidation, dissolution, or winding up of the Company, or upon the occurrence of a Deemed Liquidation Event, holders of Series A and Series B, on a pari passu basis, are entitled to be paid out of the assets available for distribution before any payment is made to holders of Series Seed or common stock, and holders of Series Seed are entitled to be paid before any payment is made to holders of common stock, in each case an amount per share equal to the greater of (i) the applicable Original Issue Price plus any dividends declared but unpaid thereon, or (ii) the amount per share payable on an as-converted basis immediately prior to such event. After payment in full of all such amounts, remaining assets are distributed to holders of common stock pro rata based on the number of shares held.
A “Deemed Liquidation Event” includes (a) a merger or consolidation in which the Company is a constituent party and the existing stockholders do not retain a majority of the voting power of the surviving entity, or (b) the sale, lease, transfer, exclusive license, or other disposition of all or substantially all of the assets of the Company and its subsidiaries, in each case unless the “Requisite Holders” — the holders of a majority of the outstanding shares of Series A and a majority of the outstanding shares of Series B, each voting separately — elect otherwise by written notice at least ten days prior to the effective date of such event.
Protective Provisions
So long as at least 167,159 shares of Preferred Stock remain outstanding, the Company may not, without the prior written consent of the Requisite Holders, take certain actions including, among others: liquidating, dissolving, or winding up the Company; entering into a merger, consolidation, or Deemed Liquidation Event; amending the Certificate of Incorporation or bylaws in a manner adverse to the Preferred Stock; creating or issuing equity securities senior to or on parity with the Preferred Stock; declaring or paying dividends; incurring indebtedness in excess of $1,000,000; or making capital expenditures in excess of $1,000,000 outside of an approved budget.
NOTE 14 — SHARE-BASED COMPENSATION
The 2016 Plan
In May 2016, the Company’s Board of Directors approved the 2016 Stock Incentive Plan of Electra Vehicles, Inc. (the “2016 Plan”), which authorizes the grant of incentive stock options (“ISOs”) and non-qualified stock options (“NQSOs”), stock appreciation rights, restricted stock, restricted stock units (“RSUs”), and other share-based awards to employees, officers and directors, as well as consultants and advisors to the Company. The 2016 Plan is administered by the Board, a committee appointed by the Board, or any combination thereof, as determined by the Board.
F-82
Table of Contents
ELECTRA VEHICLES, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTE 14 — SHARE-BASED COMPENSATION (cont.)
The aggregate number of shares of the Company’s common stock that may be issued under the Plan, as amended in November 2025, is 1,999,925, subject to adjustment in connection with changes in capitalization, reorganization, and change in control events. Shares that are issued under the 2016 Plan that are forfeited, expired, or are canceled or settled without the issuance of shares return to the pool of shares available for issuance under the 2016 Plan.
As of December 31, 2025 and 2024, 781,258 and 292,679 shares, respectively, remained available for future grants under the 2016 Plan.
All stock options granted under the 2016 Plan are equity-classified and have a contractual life of ten years. Under the 2016 Plan, the stock options generally contain service-based vesting conditions and generally vest ratably over a one- to four-year period. To date, stock options with performance-based vesting conditions granted under the 2016 Plan have not been material. The exercise prices for stock options granted under the 2016 Plan were not less than the fair market value of the common stock of the Company on the date of grant.
Stock Option Valuation
The following table presents, on a weighted-average basis, the assumptions used in the Black-Scholes-Merton option-pricing model to determine the grant date fair value of stock granted under the 2016 Plan during the periods presented:
| Year Ended | Year Ended | |||||
| Risk-free interest rate | 3.98 | % | 4.19 | % | ||
| Expected term (in years) | 4.97 |
| 4.66 |
| ||
| Expected volatility | 53.68 | % | 48.95 | % | ||
| Expected dividend yield | 0.00 | % | 0.00 | % | ||
Stock Option Activity
A summary of stock option activity under the 2016 Plan for the periods presented is as follows:
| Number of | Weighted | Weighted | Aggregate | |||||||
| Outstanding as of January 1, 2024 | 621,980 |
| 0.50 | 6.76 | $ | 430,808 | ||||
| Granted | 127,575 |
| 0.90 |
| ||||||
| Exercised | (4,260 | ) | 0.62 |
| 1,062 | |||||
| Cancelled, forfeited, or expired | (159,682 | ) | 0.64 |
|
|
| ||||
| Outstanding as of December 31, 2024 | 585,613 |
| 0.55 | 5.81 | $ | 210,723 | ||||
| Granted | 306,610 |
| 0.87 |
| ||||||
| Exercised | (30,000 | ) | — |
| 25,780 | |||||
| Cancelled, forfeited, or expired | (79,932 | ) | 0.82 |
|
|
| ||||
| Outstanding as of December 31, 2025 | 782,291 |
| 0.67 | 5.70 | $ | 174,756 | ||||
| Exercisable as of December 31, 2025 | 575,217 |
| 0.59 | 4.77 | $ | 171,917 | ||||
| Vested or expected to vest as of December 31, 2025 | 782,291 |
| 0.67 | 5.70 | $ | 174,756 | ||||
F-83
Table of Contents
ELECTRA VEHICLES, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTE 14 — SHARE-BASED COMPENSATION (cont.)
The aggregate intrinsic value amounts in the table above represent the difference between the estimated per-share fair value of the Company’s common stock and the exercise price, multiplied by the number of in-the-money stock options as of the same date. As of December 31, 2025 and 2024, the estimated per-share fair value of the Company’s common stock was $0.99 and $2.22, respectively.
The number and weighted-average grant date fair value per share of stock options during the most recent period presented is as follows:
| Number of | Weighted- | ||||
| Non-vested as of December 31, 2024 | 185,139 |
| 0.40 | ||
| Granted during the period | 306,610 |
| 0.42 | ||
| Vested during the period | (234,489 | ) | 0.37 | ||
| Forfeited/cancelled during the period | (50,186 | ) | 0.47 | ||
| Non-vested as of December 31, 2025 | 207,074 |
| 0.44 | ||
The fair value of stock options granted during the years ended December 31, 2025 and 2024 was $127,883 and $48,826, respectively. The fair value of stock options vested during the years ended December 31, 2025 and 2024 was $95,804 and $50,457, respectively.
Share-Based Compensation Expense
For the years ended December 31, 2025 and 2024, all share-based compensation expense of $98,778 and $59,509, respectively, was recorded within general and administrative expenses in the consolidated statements of operations and comprehensive loss.
For the years ended December 31, 2025 and 2024, no income tax benefit was recognized related to share-based compensation.
As of December 31, 2025, total unrecognized share-based compensation expense related to unvested stock options was approximately $83,754, which is expected to be recognized over a weighted-average period of 2.3 years.
NOTE 15 — REVENUE AND DEFERRED REVENUE
Disaggregated revenue
The following table represents the Company’s revenues disaggregated by type for the years ended December 31, 2025 and 2024. All revenue is recognized over time. The Company operates as a single reportable segment; accordingly, this disaggregation is consistent with how revenue is presented in the consolidated statements of operations.
| Year ended | Year ended | |||||
| Professional services | $ | 973,634 | $ | 1,675,366 | ||
| Subscriptions |
| 114,863 |
| 38,288 | ||
| Total revenue | $ | 1,088,497 | $ | 1,713,654 | ||
F-84
Table of Contents
ELECTRA VEHICLES, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTE 15 — REVENUE AND DEFERRED REVENUE (cont.)
On December 31, 2025, the Company agreed to terminate a contract with a customer in exchange for consideration of $300,000. The Company recognized the full $300,000 as professional services revenue during the year ended December 31, 2025, as all performance obligations associated with the contract had been satisfied and the consideration was unconditional.
Deferred revenue
Deferred revenue represents payments received from customers or amounts due from customers prior to the Company satisfying the related performance obligations, and is recorded as deferred revenue on the consolidated balance sheets. As of December 31, 2025 and 2024, the Company expected to recognize substantially all deferred revenue as revenue within the following twelve months.
The following table summarizes deferred revenue activities for the years presented:
| Year ended | Year ended | |||||||
| Balance, beginning of year | $ | 917,846 |
| $ | 1,603,000 |
| ||
| Additions |
| 365,000 |
|
| 1,028,500 |
| ||
| Revenue recognized |
| (1,082,846 | ) |
| (1,713,654 | ) | ||
| Balance, end of year | $ | 200,000 |
| $ | 917,846 |
| ||
Revenue recognized during the year ended December 31, 2025 that was included in the deferred revenue balance at the beginning of the year was $917,846. Revenue recognized during the year ended December 31, 2024 that was included in the deferred revenue balance at the beginning of the year was $1,603,000.
NOTE 16 — SEGMENT REPORTING
The Company operates as a single reportable segment and sells its electric battery optimization software and services both directly and via established go-to-market partners. The business is not organized around products/services, geography, regulatory environment, or a combination thereof. The Chief Executive Officer is the Company’s Chief Operating Decision Maker (“CODM”). The CODM reviews only consolidated financial information and no discrete financial information is prepared or reviewed below the consolidated level. The CODM assesses segment performance and makes resource allocation decisions based on consolidated net loss, which is the same measure reported in the consolidated statements of operations and comprehensive loss.
Net loss is also used to monitor budget versus actual results, and actual results compared against budget are used in assessing segment performance and establishing management compensation.
Significant segment expenses that are regularly provided to the CODM and included within the reported measure of segment profit or loss are cost of revenue, sales and marketing, research and development, and general and administrative expenses. Other segment items consist of net gain (loss) on digital assets, interest income, interest expense, and other income (expense). The consolidated statements of operations and comprehensive loss reflect these significant segment expenses and other segment items for the years ended December 31, 2025 and 2024.
The measure of segment assets is total assets, as reported on the consolidated balance sheets as of December 31, 2025 and 2024.
For the years ended December 31, 2025 and 2024, revenues from customers outside of the U.S. were immaterial. As of December 31, 2025 and 2024, long-lived assets held outside of the U.S. were immaterial.
The Company does not assess the performance of its individual products on measures of profit or loss, asset-based metrics, or geography. Revenues by product offering are presented in Note 15 — Revenue and Deferred Revenue. Information about major customers is presented in Note 3 — Summary of Significant Accounting Policies.
F-85
Table of Contents
ELECTRA VEHICLES, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTE 17 — RELATED PARTY TRANSACTIONS
The Company engaged in transactions with a vendor owned by a member of the Company’s Board of Directors. The vendor provides professional services to the Company. During the years ended December 31, 2025 and 2024, the Company incurred expenses related to these services of $102,060 and $116,510, respectively. As of December 31, 2025 and 2024, amounts due to this vendor included in accounts payable and accrued expenses were $126,198 and $24,138, respectively. The Company’s management believes these transactions were conducted on terms no less favorable to the Company than those that could be obtained in arm’s-length transactions with unaffiliated third parties.
NOTE 18 — COMMITMENTS AND CONTINGENCIES
The Company may from time to time be involved in legal proceedings, legal actions, and claims arising in the normal course of business, including proceedings relating to intellectual property, safety and health, employment and other matters. Management believes that the outcome of such legal proceedings, legal actions, and claims will not have a significant adverse effect, individually, or in the aggregate, on the Company’s financial position, results of operations or cash flows.
NOTE 19 — INCOME TAXES
The Company recorded a current income tax provision of $456 and $— for the years ended December 31, 2025 and 2024, respectively, representing state minimum taxes. Based upon the Company’s history of cumulative operating losses and the uncertainty of future taxable income, the Company has provided a full valuation allowance against its net deferred tax assets as of December 31, 2025 and 2024.
Domestic and foreign components of pre-tax loss
The components of loss before income taxes consist of the following for the periods presented:
| Year ended | Year ended | |||||
| U.S. | $ | 4,144,526 | $ | 4,285,463 | ||
| Non-U.S. |
| 1,144,940 |
| 1,317,576 | ||
| Loss before income taxes | $ | 5,289,466 | $ | 5,603,039 | ||
The components of provision for income taxes consist of the following:
| Year ended | Year ended | |||||
| Current provision: |
|
| ||||
| – Federal | $ | — | $ | — | ||
| – State and local |
| 456 |
| — | ||
| – Foreign |
| — |
| — | ||
| Total current tax | $ | 456 | $ | — | ||
|
|
| |||||
| Deferred provision: |
|
| ||||
| – Federal | $ | — | $ | — | ||
| – State and local |
| — |
| — | ||
| – Foreign |
| — |
| — | ||
| Total deferred tax | $ | — | $ | — | ||
|
|
| |||||
| Total tax: |
|
| ||||
| – Federal | $ | — | $ | — | ||
| – State and local |
| 456 |
| — | ||
| – Foreign |
| — |
| — | ||
| Total tax | $ | 456 | $ | — | ||
F-86
Table of Contents
ELECTRA VEHICLES, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTE 19 — INCOME TAXES (cont.)
A reconciliation of the statutory U.S. income tax rate to the effective income tax rate for the years ended December 31, 2025 and 2024 is as follows:
| Year ended December 31, 2025 | Year ended December 31, 2024 | |||||||||||||
| $ | % | $ | % | |||||||||||
| Loss before income taxes | $ | 5,289,466 |
|
| $ | 5,603,039 |
|
| ||||||
| Tax provision calculated at US federal statutory rate |
| (1,110,788 | ) | 21.00 | % |
| (1,176,638 | ) | 21.00 | % | ||||
| Change in valuation allowance |
| 1,212,587 |
| (22.92 | )% |
| 1,050,826 |
| (18.75 | )% | ||||
| State and local tax, net of federal (national) income tax effect |
| (68,686 | ) | 1.30 | % |
| (223,858 | ) | 4.00 | % | ||||
| Foreign tax effects |
| (34,348 | ) | 0.65 | % |
| (39,527 | ) | 0.71 | % | ||||
| Non-taxable or non-deductible items – other |
| 1,691 |
| (0.04 | )% |
| 389,197 |
| (6.96 | )% | ||||
| Total income tax effective rate |
| 456 |
| (0.01 | )% |
| — |
| 0.00 | % | ||||
Significant components of the Company’s deferred taxes as of December 31, 2025 and 2024, were as follows:
| December 31, | December 31, | |||||||
| Stock compensation | $ | 8,935 |
| $ | 4,304 |
| ||
| Accrual to cash conversion |
| — |
|
| 281,079 |
| ||
| Unrealized gains/losses on digital assets |
| — |
|
| (123,304 | ) | ||
| Fixed assets and patents |
| 18,816 |
|
| 6,669 |
| ||
| Deferred revenue |
| 45,314 |
|
| — |
| ||
| Other items |
| 27,575 |
|
| — |
| ||
| Net operating loss carryforwards |
| 4,217,772 |
|
| 2,937,078 |
| ||
| Deferred tax asset |
| 4,318,412 |
|
| 3,105,826 |
| ||
| Valuation allowance |
| (4,318,412 | ) |
| (3,105,826 | ) | ||
| Deferred tax asset, net of valuation allowance | $ | — |
| $ | — |
| ||
The valuation allowance increased by approximately $1,212,587 and $1,050,826 during the years ended December 31, 2025 and 2024, respectively, primarily attributable to net operating losses generated in each year. The Company will continue to assess the realizability of its deferred tax assets and will reduce the valuation allowance if and when sufficient positive evidence supports doing so.
As of December 31, 2025 and 2024, the Company had federal tax net operating loss carryforwards of approximately $16,176,968 and $11,737,295, respectively, and state tax net operating loss carryforwards of $13,854,452 and $9,414,778, respectively. Federal net operating losses incurred prior to 2018 may be carried forward twenty years and begin to expire in 2037. Federal net operating losses incurred in 2018 are carried forward indefinitely; however, utilization of such losses are limited to 80% of taxable income in any given year. State net operating losses begin to expire in 2034. As of December 31, 2025 and 2024, the Company had foreign net operating loss carryforwards of $2,462,517 and $1,317,576, respectively, which begin to expire in 2034.
Under Section 382 of the Internal Revenue Code, certain substantial changes in the Company’s ownership may limit the amount of the net operating loss carryforwards that could be utilized annually to offset future taxable income and taxes payable. As of December 31, 2025, the Company has not performed a Section 382 study.
F-87
Table of Contents
ELECTRA VEHICLES, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTE 19 — INCOME TAXES (cont.)
As of December 31, 2025 and 2024, the Company had no unrecognized tax benefits, and no changes to unrecognized tax benefits are expected within the next twelve months. The Company’s policy is to recognize interest and penalties related to income taxes within income tax expense. No interest or penalties were recognized during the years ended December 31, 2025 and 2024.
The Company’s federal, state, and foreign income tax returns for tax years 2022 through 2025 remain subject to examination by the major taxing jurisdictions to which the Company is subject.
The Company paid no income taxes during the years ended December 31, 2025 and 2024.
NOTE 20 — EMPLOYEE RETIREMENT PLAN
The Company sponsors a defined contribution 401(k) plan covering substantially all employees. Employees may contribute a portion of their compensation to the plan, subject to applicable Internal Revenue Service limitations.
The Company provides employer matching contributions equal to 100% of employee contributions up to 3% of employee compensation and 50% of employee contributions between 3% and 5% of employee compensation. Employer matching contributions vest immediately.
The Company made no discretionary contributions during the years ended December 31, 2025 and 2024. The Company incurred matching contributions expense of $53,732 and $104,327 for the years ended December 31, 2025 and 2024, respectively.
NOTE 21 — SUBSEQUENT EVENTS
The Company evaluated subsequent events and transactions that occurred after the balance sheet date up to the date that the financial statements were issued. Based upon this review, other than as described below, the Company did not identify any other subsequent events that would have required adjustment or disclosure in the consolidated financial statements.
Series B Convertible Preferred Stock
From January 2026 through February 2026, the Company issued 74,067 shares of Series B Convertible Preferred Stock, par value $0.00001 per share, at the Series B Original Issue Price for gross proceeds of $701,755.
Short-term Loans
In March 2026, the Company entered into short-term loan agreements with two lenders for an aggregate principal amount of approximately $80,000, bearing interest at the short-term applicable federal rate of 4.31% per annum and maturing on the earlier of May 30, 2026 or the receipt of future financing proceeds. The proceeds were used to fund the Company’s March 2026 payroll obligations.
Stock options
In March 2026, the CEO exercised outstanding stock options whereby the Company issued 5,538 shares of common stock in exchange for cash consideration of $4,995.
Bridge Financing
Between March and May 2026, in connection with the contemplated Business Combination described below, the Company received aggregate proceeds of approximately $400,000 from accredited investors as bridge financing in anticipation of the issuance of senior unsecured convertible notes (the “Company Convertible Notes”).
F-88
Table of Contents
ELECTRA VEHICLES, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTE 21 — SUBSEQUENT EVENTS (cont.)
Pursuant to the non-binding executed term sheets, the Company Convertible Notes are expected to bear interest at rates ranging from 15% to 25% per annum and to mature upon the earlier of (i) 24 months from the closing date of each Company Convertible Note or (ii) the closing of the Business Combination.
Upon the closing of the Business Combination, the principal and accrued interest on the Company Convertible Notes are expected to convert into shares of common stock of the publicly listed entity at a conversion price of $6.00 per share. Investors will also receive warrants to purchase shares of common stock of the publicly listed entity at exercise price of $11.50 per share, and certain investors will receive warrants exercisable at $12.50 per share, in each case exercisable for 60 months following the closing of the Business Combination.
If the Business Combination is not consummated within 24 months from the closing of any Company Convertible Note, the principal and accrued interest will convert into ordinary shares of the Company at a $150 million pre-money valuation.
Merger Agreement
On April 21, 2026, the Company entered into a Merger Agreement (as amended and as may be further amended and/or restated from time to time, the “Merger Agreement”) with Iron Horse Acquisition II Corp., a Cayman Islands exempted company (“IRHO”), and IRHO Merger Sub, Inc., a Delaware corporation and a direct, wholly-owned subsidiary of IRHO (“Merger Sub”). Pursuant to the Merger Agreement, IRHO will domesticate as a Delaware corporation and be renamed “ELECTRA AI, Inc.” (the “Domestication”), after which Merger Sub will merge with and into the Company, with the Company surviving as a wholly-owned subsidiary of IRHO (the “Merger” and together with the Domestication, the “Business Combination”).
The aggregate merger consideration consists of 25,000,000 shares of IRHO common stock (subject to adjustment as set forth in the Merger Agreement), of which not more than a number of shares equal to the conversion ratio multiplied by 3,994,802 will be Class B common stock (ten votes per share) and the remainder Class A common stock (one vote per share). At the effective time of the Merger, each outstanding share of the Company common stock and Preferred Stock, each outstanding Company stock option, and each Convertible Note will convert into IRHO common stock, or in the case of stock options, options to acquire IRHO common stock, in each case based on a conversion ratio set forth in the Merger Agreement.
Holders of the Company’s common stock, Preferred Stock and options will also have a contingent right to receive, on a pro rata basis, up to 15,000,000 additional shares of IRHO common stock in three equal tranches over the five years following the closing, upon the achievement of specified share price or annual run rate milestones. The Business Combination is subject to approval by the stockholders of both the Company and IRHO and other customary closing conditions, including a minimum cash condition that requires IRHO’s available cash at Closing to equal or exceed $30,000,000, and had not been consummated as of the date these financial statements were issued.
Fourth Amended and Restated Certificate of Incorporation
On April 20, 2026, the Company filed its Fourth Amended and Restated Certificate of Incorporation, which reclassified its existing common stock into Class A common stock and Class B common stock and increased total authorized capital. As a result of this amendment, the Company has retroactively adjusted the presentation of common stock in the accompanying consolidated balance sheets and statements of changes in stockholders’ equity (deficit) for all periods presented. See Note 13.
F-89
Table of Contents
Annex A-1
MERGER AGREEMENT
dated
April 21, 2026
by and among
Electra Vehicles, Inc.,
Iron Horse Acquisition II Corp.
and
IRHO Merger Sub, Inc.
Table of Contents
Table of Contents
| Annex A-1 | ||||||
| ARTICLE I DEFINITIONS | A-1-2 | |||||
| 1.1 | Definitions | A-1-2 | ||||
| 1.2 | Construction | A-1-15 | ||||
| ARTICLE II THE DOMESTICATION AND THE MERGER | A-1-16 | |||||
| 2.1 | Domestication | A-1-16 | ||||
| 2.2 | Merger | A-1-16 | ||||
| 2.3 | Merger Effective Time | A-1-16 | ||||
| 2.4 | Effect of the Merger | A-1-16 | ||||
| 2.5 | U.S. Tax Treatment | A-1-16 | ||||
| 2.6 | Company Charter; Company Bylaws | A-1-17 | ||||
| 2.7 | Closing | A-1-17 | ||||
| 2.8 | Directors and Officers of Surviving Corporation | A-1-18 | ||||
| 2.9 | Directors and Officers of Parent | A-1-18 | ||||
| 2.10 | Taking of Necessary Action; Further Action | A-1-18 | ||||
| 2.11 | No Further Ownership Rights in Company Capital Stock | A-1-18 | ||||
| ARTICLE III EFFECT OF THE MERGER | A-1-18 | |||||
| 3.1 | Effect of the Merger on Company Capital Stock | A-1-18 | ||||
| 3.2 | Treatment of Company Options and Company Convertible Notes | A-1-19 | ||||
| 3.3 | Dissenting Shares | A-1-20 | ||||
| 3.4 | Surrender and Payment | A-1-20 | ||||
| 3.5 | Consideration Spreadsheet | A-1-21 | ||||
| 3.6 | Adjustment | A-1-22 | ||||
| 3.7 | Earnout | A-1-22 | ||||
| 3.8 | No Fractional Shares | A-1-23 | ||||
| 3.9 | Lost or Destroyed Certificates | A-1-23 | ||||
| 3.10 | Withholding | A-1-23 | ||||
| ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE COMPANY | A-1-24 | |||||
| 4.1 | Corporate Existence and Power | A-1-24 | ||||
| 4.2 | Authorization | A-1-24 | ||||
| 4.3 | Governmental Authorization | A-1-25 | ||||
| 4.4 | Non-Contravention | A-1-25 | ||||
| 4.5 | Capitalization | A-1-25 | ||||
| 4.6 | Subsidiaries | A-1-26 | ||||
| 4.7 | Corporate Records | A-1-26 | ||||
| 4.8 | Consents | A-1-26 | ||||
| 4.9 | Financial Statements | A-1-27 | ||||
| 4.10 | Internal Accounting Controls | A-1-27 | ||||
| 4.11 | Absence of Certain Changes | A-1-27 | ||||
| 4.12 | Properties; Title to the Company Group’s Assets | A-1-27 | ||||
| 4.13 | Litigation | A-1-27 | ||||
| 4.14 | Contracts | A-1-28 | ||||
| 4.15 | Licenses and Permits | A-1-29 | ||||
| 4.16 | Compliance with Laws | A-1-30 | ||||
| 4.17 | Intellectual Property | A-1-30 | ||||
Annex A-1-i
Table of Contents
| Annex A-1 | ||||||
| 4.18 | Employees; Employment Matters | A-1-33 | ||||
| 4.19 | Withholding | A-1-35 | ||||
| 4.20 | Employee Benefits | A-1-35 | ||||
| 4.21 | Real Property | A-1-36 | ||||
| 4.22 | Tax Matters | A-1-37 | ||||
| 4.23 | Environmental Laws | A-1-38 | ||||
| 4.24 | Finders’ Fees | A-1-38 | ||||
| 4.25 | Directors and Officers | A-1-39 | ||||
| 4.26 | Certain Business Practices | A-1-39 | ||||
| 4.27 | Insurance | A-1-39 | ||||
| 4.28 | Related Party Transactions | A-1-40 | ||||
| 4.29 | No Trading or Short Position | A-1-40 | ||||
| 4.30 | Exchange Act | A-1-40 | ||||
| 4.31 | Top Customers and Top Suppliers | A-1-40 | ||||
| ARTICLE V REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB | A-1-40 | |||||
| 5.1 | Corporate Existence and Power | A-1-40 | ||||
| 5.2 | Merger Sub | A-1-40 | ||||
| 5.3 | Corporate Authorization | A-1-41 | ||||
| 5.4 | Governmental Authorization | A-1-41 | ||||
| 5.5 | Non-Contravention | A-1-41 | ||||
| 5.6 | Finders’ Fees | A-1-41 | ||||
| 5.7 | Issuance of Shares | A-1-41 | ||||
| 5.8 | Capitalization | A-1-42 | ||||
| 5.9 | Information Supplied | A-1-42 | ||||
| 5.10 | Trust Fund | A-1-42 | ||||
| 5.11 | Listing | A-1-43 | ||||
| 5.12 | Board Approval | A-1-43 | ||||
| 5.13 | Parent SEC Documents and Financial Statements | A-1-43 | ||||
| 5.14 | Certain Business Practices | A-1-44 | ||||
| 5.15 | Anti-Money Laundering Laws | A-1-45 | ||||
| 5.16 | Affiliate Transactions | A-1-45 | ||||
| 5.17 | Litigation | A-1-45 | ||||
| 5.18 | Expenses, Indebtedness and Other Liabilities | A-1-45 | ||||
| 5.19 | Brokers and Other Advisors | A-1-45 | ||||
| 5.20 | Tax Matters | A-1-45 | ||||
| ARTICLE VI COVENANTS OF THE PARTIES PENDING CLOSING | A-1-46 | |||||
| 6.1 | Conduct of the Business | A-1-46 | ||||
| 6.2 | Exclusivity | A-1-49 | ||||
| 6.3 | Access to Information | A-1-50 | ||||
| 6.4 | Notices of Certain Events | A-1-50 | ||||
| 6.5 | Registration Statement/Proxy Statement; Other Filings | A-1-51 | ||||
| 6.6 | Trust Account | A-1-53 | ||||
| 6.7 | Obligations of Merger Sub | A-1-53 | ||||
| 6.8 | Joinders to Parent Support Agreement | A-1-53 | ||||
| 6.9 | PIPE Financing | A-1-53 | ||||
Annex A-1-ii
Table of Contents
| Annex A-1 | ||||||
| ARTICLE VII COVENANTS OF THE COMPANY | A-1-53 | |||||
| 7.1 | Reporting; Compliance with Laws; No Insider Trading | A-1-53 | ||||
| 7.2 | Company’s Shareholders Approval | A-1-54 | ||||
| 7.3 | Additional Financial Information | A-1-54 | ||||
| ARTICLE VIII COVENANTS OF ALL PARTIES HERETO | A-1-54 | |||||
| 8.1 | Reasonable Best Efforts; Further Assurances | A-1-54 | ||||
| 8.2 | Compliance with SPAC Agreements | A-1-55 | ||||
| 8.3 | Confidentiality | A-1-55 | ||||
| 8.4 | Directors’ and Officers’ Indemnification and Liability Insurance | A-1-55 | ||||
| 8.5 | Parent Public Filings; Nasdaq | A-1-56 | ||||
| 8.6 | Certain Tax Matters | A-1-56 | ||||
| 8.7 | Parent Equity Incentive Plan | A-1-56 | ||||
| 8.8 | Section 16 Matters | A-1-57 | ||||
| 8.9 | Employment Agreements | A-1-57 | ||||
| ARTICLE IX CONDITIONS TO CLOSING | A-1-57 | |||||
| 9.1 | Condition to the Obligations of the Parties | A-1-57 | ||||
| 9.2 | Conditions to Obligations of Parent and Merger Sub | A-1-58 | ||||
| 9.3 | Conditions to Obligations of the Company | A-1-58 | ||||
| ARTICLE X TERMINATION | A-1-59 | |||||
| 10.1 | Termination Without Default | A-1-59 | ||||
| 10.2 | Termination Upon Default | A-1-60 | ||||
| 10.3 | Effect of Termination | A-1-60 | ||||
| ARTICLE XI MISCELLANEOUS | A-1-60 | |||||
| 11.1 | Notices | A-1-60 | ||||
| 11.2 | Amendments; No Waivers; Remedies | A-1-61 | ||||
| 11.3 | Arm’s Length Bargaining; No Presumption Against Drafter | A-1-62 | ||||
| 11.4 | Publicity | A-1-62 | ||||
| 11.5 | Expenses | A-1-62 | ||||
| 11.6 | No Assignment or Delegation | A-1-62 | ||||
| 11.7 | Governing Law | A-1-62 | ||||
| 11.8 | Counterparts; Electronic Signatures | A-1-62 | ||||
| 11.9 | Entire Agreement | A-1-62 | ||||
| 11.10 | Severability | A-1-62 | ||||
| 11.11 | Further Assurances | A-1-63 | ||||
| 11.12 | Third Party Beneficiaries | A-1-63 | ||||
| 11.13 | Waiver | A-1-63 | ||||
| 11.14 | No Other Representations; No Reliance | A-1-63 | ||||
| 11.15 | Waiver of Jury Trial | A-1-64 | ||||
| 11.16 | Submission to Jurisdiction | A-1-65 | ||||
| 11.17 | Attorneys’ Fees | A-1-65 | ||||
| 11.18 | Remedies | A-1-65 | ||||
| 11.19 | Non-Recourse | A-1-65 | ||||
| 11.20 | Conflicts and Privilege. | A-1-66 | ||||
Annex A-1-iii
Table of Contents
| Exhibit A | — | Form of Parent Certificate of Incorporation | ||
| Exhibit B | — | Form of Parent Bylaws | ||
| Exhibit C | — | Form of Company Support Agreement | ||
| Exhibit D | — | Form of Parent Support Agreement | ||
| Exhibit E | — | Form of Lock-Up Agreement | ||
| Exhibit F | — | Form of Amended and Restated Registration Rights Agreement | ||
| Exhibit G | — | Form of Parent Equity Incentive Plan |
Annex A-1-iv
Table of Contents
MERGER AGREEMENT
MERGER AGREEMENT, dated as of April 21, 2026 (this “Agreement”), by and among Electra Vehicles, Inc., a Delaware corporation (the “Company”), Iron Horse Acquisition II Corp., a Cayman Islands exempted company limited by shares (which shall de-register from the Register of Companies in the Cayman Islands by way of continuation out of the Cayman Islands and into the State of Delaware so as to migrate to and domesticate as a Delaware corporation prior to the Closing (as defined below)) (“Parent”), and IRHO Merger Sub, Inc., a Delaware corporation (“Merger Sub”).
W I T N E S E T H:
A. The Company is dedicated to enhancing battery performance through the development and commercialization of AI-powered battery intelligence and energy management solutions for battery energy storage systems, data centers, electric and hybrid vehicles, fleet operators, drones, robotics, and other energy-intensive applications (the “Business”);
B. Parent is a blank check company formed for the purpose of effecting a merger, share exchange, asset acquisition, share purchase, recapitalization, reorganization or other similar business combination with one or more businesses or entities, and Merger Sub is a wholly-owned subsidiary of Parent and was formed for the sole purpose of the Merger (as defined below);
C. On the day that is at least one Business Day prior to the Effective Time (as defined below) and subject to the conditions of this Agreement, Parent shall de-register from the Register of Companies in the Cayman Islands by way of continuation out of the Cayman Islands and into the State of Delaware so as to migrate to and domesticate as a Delaware corporation in accordance with the Parent Articles and any other relevant organizational documents of the Parent, Section 388 of the Delaware General Corporation Law, as amended (the “DGCL”), and Part XII of the Companies Act (As Revised) of the Cayman Islands (the “Cayman Companies Act”) (the “Domestication”);
D. Concurrently with the Domestication, Parent shall file a certificate of incorporation with the Secretary of State of the State of Delaware substantially in the form attached as Exhibit A hereto (the “Parent Certificate of Incorporation”) and adopt bylaws substantially in the form attached as Exhibit B (the “Parent Bylaws”) in each case, with such changes as may be agreed in writing by Parent and the Company;
E. Upon the terms and subject to the conditions of this Agreement, and in accordance with the DGCL, (i) Merger Sub will merge with and into the Company (the “Merger”), after which the Company will be the surviving corporation (the “Surviving Corporation”) and a wholly-owned subsidiary of Parent; (ii) contemporaneous with the Merger, the Surviving Corporation will change its name to a name to be mutually agreed by the parties prior to the Closing; and (iii) Parent will change its name to “ELECTRA AI, Inc.”;
F. Contemporaneously with the execution of, and as a condition and an inducement to Parent and the Company entering into this Agreement, certain Company Stockholders are entering into and delivering the Company Support Agreement, substantially in the form attached hereto as Exhibit C (the “Company Support Agreement”), pursuant to which each such Company Stockholder has agreed to vote in favor of this Agreement and the Merger and the other transactions contemplated hereby;
G. Contemporaneously with the execution of, and as a condition and an inducement to Parent and the Company entering into this Agreement, the Sponsor and certain other shareholders of Parent are entering into and delivering the Parent Support Agreement, substantially in the form attached hereto as Exhibit D (the “Parent Support Agreement”), pursuant to which the Sponsor and each such Parent shareholder have agreed (i) not to transfer or redeem any Parent Common Shares held by such Parent shareholder, (ii) to vote in favor of this Agreement and the Merger and the other transactions contemplated hereby at the Parent Shareholder Meeting, and (iii) to subject certain of its founder equity securities of Parent to forfeiture criteria, subject to the terms and conditions set forth therein;
H. As a condition and an inducement to Parent and the Company entering into this Agreement, on or before the Closing Date, certain Company Stockholders and the Sponsor will execute a lock-up agreement, substantially in the form attached hereto as Exhibit E (the “Lock-Up Agreement”), under which the Parent Common Shares beneficially owned such Company Stockholders and the Sponsor will be subject to the Lock-Up Period defined below (the “Lock-Up”);
A-1-1
Table of Contents
I. Each of the parties hereto intends that, for United States federal and applicable state income tax purposes, (i) the Domestication shall qualify as a “reorganization” within the meaning of Section 368(a)(1)(F) of the Code and the Treasury Regulations promulgated thereunder (the “Domestication Intended Tax Treatment”), and (ii) the Merger shall qualify as a “reorganization” within the meaning of Section 368(a) of the Code and the Treasury Regulations promulgated thereunder, to which each of Parent, Merger Sub, and the Company are to be parties under Section 368(b) of the Code (the “Merger Intended Tax Treatment” and, together with the Domestication Intended Tax Treatment, the “Intended Tax Treatment”), and this Agreement is intended to constitute a “plan of reorganization” within the meaning of Section 368 of the Code and Treasury Regulations Sections 1.368-2(g) and 1.368-3(a) for purposes of Sections 354, 361 and 368 of the Code (a “Plan of Reorganization”) with respect to each of the Domestication and the Merger; and
J. The Boards of Directors of each of the Company, Parent and Merger Sub have unanimously (i) approved and declared advisable this Agreement and the transactions contemplated by this Agreement and the Ancillary Agreements to which they are or will be party, including the Merger, and the performance of their respective obligations hereunder or thereunder, on the terms and subject to the conditions set forth herein or therein, (ii) determined that this Agreement and such transactions are fair to, and in the best interests of, them and their respective shareholders, (iii) resolved to recommend that their respective shareholders approve the Merger and such other transactions contemplated hereby and adopt this Agreement and the Ancillary Agreements to which they are or will be a party and the performance of such party of their obligations hereunder and thereunder and (iv) in the case of Parent, resolved to recommend that its shareholders approve each of the Parent Proposals.
In consideration of the mutual covenants and promises set forth in this Agreement, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereby agree as follows:
ARTICLE I
DEFINITIONS
1.1 Definitions.
“Action” means any legal action, litigation, suit, claim, hearing, proceeding or investigation by or before any Authority.
“Additional Parent SEC Documents” has the meaning set forth in Section 5.13(a).
“Adjournment Proposal” has the meaning set forth in Section 6.5(e).
“Affiliate” means, with respect to any Person, any other Person directly or indirectly Controlling, Controlled by or under common Control with such Person, whether through one or more intermediaries or otherwise.
“Aggregate Exercise Price” means the aggregate dollar amount payable to the Company upon the exercise or conversion of all vested in-the money Company Options that are outstanding immediately prior to the Effective Time.
“Aggregate Fully Diluted Company Common Stock” means the sum, without duplication, of (a) all shares of Company Common Stock that are issued and outstanding immediately prior to the Effective Time; plus (b) the aggregate number of shares of Company Common Stock issuable upon full conversion of all Company Preferred Stock outstanding as of immediately prior to the Effective Time; plus (c) the aggregate number of shares of Company Common Stock issuable upon exercise of all Company Options that are vested as of immediately prior to the Effective Time; plus (d) the aggregate number of shares of Company Common Stock issuable upon full conversion, exercise or exchange of any other securities of the Company (other than Company Options) outstanding immediately prior to the Effective Time directly or indirectly convertible into or exchangeable or exercisable for shares of Company Common Stock.
“Aggregate Merger Consideration” means a number of Parent Common Shares equal to the quotient obtained by dividing (a) the Base Purchase Price, by (b) US$10.00, of which not more than 3,994,802 shares shall consist of Parent Class B Common Shares.
A-1-2
Table of Contents
“Aggregate Parent Fully Diluted Shares” means, as of immediately after the Effective Time, the sum, without duplication, of (a) all Parent Common Shares issued and outstanding (after giving effect to the Domestication, the Merger, the conversion of all Parent Rights, any PIPE Financing, and any forfeiture or surrender of Sponsor Shares); plus (b) the aggregate number of Parent Common Shares issuable upon exercise of all outstanding Converted Stock Options.
“Agreement” has the meaning set forth in the preamble.
“AI/ML” means any and all deep learning, machine learning, and other artificial intelligence technologies, including any and all (i) algorithms, heuristics, models, and methodologies, whether in source code, object code, human readable form or other form, proprietary algorithms, software or other IT Systems, in each case, that make use of or employ expert systems, natural language processing, computer vision, automated speech recognition, automated planning and scheduling, neural networks, statistical learning algorithms (like linear and logistic regression, support vector machines, random forests, k-means clustering), or reinforcement learning, and (ii) proprietary embodied artificial intelligence and related hardware or equipment.
“Alternate Exchange” means The Nasdaq Capital Market, The Nasdaq Global Market, The Nasdaq Global Select Market, NYSE, NYSE American, or any successor thereto.
“Alternative Proposal” has the meaning set forth in Section 6.2(b).
“Alternative Transaction” has the meaning set forth in Section 6.2(a).
“Ancillary Agreements” means the Company Support Agreement, the Parent Support Agreement, the Lock-Up Agreement, the Registration Rights Agreement.
“ARR” means (i) the net revenues of Parent following the Closing calculated in accordance with U.S. GAAP for a fiscal quarter multiplied by (ii) 4.0.
“Anti-Money Laundering Laws” has the meaning set forth in Section 4.26(a).
“Authority” means any federal, state, provincial, municipal, local, foreign, multinational or supra-national government, governmental authority or regulatory body thereof, or political subdivision thereof, or any commission, department, board, bureau, authority, agency or instrumentality of such government, governmental authority, regulatory body or political subdivision, or any self-regulated organization or other non-governmental regulatory authority or quasi-governmental authority exercising executive, legislative, judicial, regulatory or administrative functions (to the extent that the rules, regulations or orders of such organization or authority have the force of Law), or any arbitrator, arbitration panel, court, tribunal, mediator or similar judicial body of competent jurisdiction.
“Balance Sheet” means the unaudited consolidated balance sheet of the Company as of December 31, 2025.
“Balance Sheet Date” has the meaning set forth in Section 4.9(a).
“Base Purchase Price” means the sum of $250,000,000 plus the Aggregate Exercise Price, as adjusted pursuant to Section 3.6(b).
“Board Proposal” has the meaning set forth in Section 6.5(e).
“Books and Records” means all books and records, ledgers, employee records, customer lists, files, correspondence, and other records of every kind (whether written, electronic, or otherwise embodied) owned or controlled by a Person in which a Person’s assets, liabilities, operations, the business or its transactions are otherwise reflected, other than stock books and minute books.
“Business” has the meaning set forth in the recitals to this Agreement.
“Business Day” means any day other than a Saturday, Sunday or a legal holiday on which commercial banking institutions in New York, New York are authorized or required by Law to close for business, excluding as a result of “stay at home,” “shelter-in-place,” “non-essential employee” or any other similar orders or restrictions or
A-1-3
Table of Contents
the closure of any physical branch locations at the direction of any Authority so long as the electronic funds transfer systems, including for wire transfers, of commercially banking institutions in New York, New York are generally open for use by customers on such day.
“IRHO Group” has the meaning set forth in Section 11.21(a).
“Cayman Companies Act” has the meaning set forth in the recitals to this Agreement.
“Cayman Registrar” has the meaning specified in Section 2.1(a).
“Certificate of Domestication” has the meaning set forth in Section 2.1(a).
“Certificate of Merger” has the meaning set forth in Section 2.3.
“Change of Control” means (i) any transaction or series of related transactions that results in any Person or “group” (within the meaning of Section 13(d)(3) of the Exchange Act) acquiring equity interests that represent more than 50% of the total voting power of Parent or (ii) a sale or disposition of all or substantially all of the assets of Parent and its Subsidiaries on a consolidated basis, in each case other than a transaction or series of related transactions which results in at least 50% of the combined voting power of the then outstanding voting securities of Parent (or any successor to Parent) immediately following the closing of such transaction (or series of related transactions) being beneficially owned, directly or indirectly, by individuals and entities (or Affiliates of such individuals and entities) who were the beneficial owners, respectively, of at least 50% of the equity interests of Parent (or any successor to Parent) immediately prior to such transaction (or series of related transactions).
“Closing” has the meaning set forth in Section 2.7.
“Closing Consideration Spreadsheet” has the meaning set forth in Section 3.5(a).
“Closing Date” has the meaning set forth in Section 2.7.
“COBRA” means collectively, the requirements of Sections 601 through 606 of ERISA and Section 4980B of the Code.
“Code” means the Internal Revenue Code of 1986, as amended.
“Company” has the meaning set forth in the preamble.
“Company AI Products” means all products and services of the Company Group that employ or make use of any AI/ML technologies.
“Company Charter” means the Amended and Restated Certificate of Incorporation of the Company as filed with the Secretary of State of the State of Delaware on November 26, 2025, as amended and in effect on the date of this Agreement.
“Company Bylaws” means the Bylaws of the Company, as amended and as in effect on the date of this Agreement.
“Company Capital Stock” means Company Common Stock and Company Preferred Stock.
“Company Class A Common Stock” means the Class A common stock of the Company, $0.00001 par value per share.
“Company Class B Common Stock” means the Class B common stock of the Company, $0.00001 par value per share.
“Company Common Stock” means the Company Class A Common Stock and the Company Class B Common Stock.
“Company Preferred Stock” means the Company Series Seed Preferred Stock, the Company Series A Preferred Stock and the Company Series B Preferred Stock.
“Company Consent” has the meaning set forth in Section 4.8.
A-1-4
Table of Contents
“Company Convertible Notes” means each Senior Unsecured Convertible Note between the Company and the holder thereof as set forth on Schedule 4.5.
“Company Earnout Holders” means the holders of Company Common Stock (but excluding holders of Dissenting Shares), Company Preferred Stock, Company Options (whether vested or unvested) and Company Convertible Notes as of immediately prior to the Effective Time.
“Company Exclusively Licensed IP” means any and all Company Licensed IP that is exclusively licensed to a member of the Company Group, and includes Registered Exclusively Licensed IP.
“Company Financial Statements” has the meaning set forth in Section 4.9(a).
“Company Fundamental Representations” means the representations and warranties of the Company set forth in Section 4.1 (Corporate Existence and Power), Section 4.2 (Authorization), the last sentence of Section 4.3 (Government Authorization), Section 4.4 (Non-Contravention), Section 4.5(a) (other than the last sentence of Section 4.5(a)) (Capitalization), Section 4.5(b) (Capitalization), Section 4.6 (Subsidiaries) and Section 4.24 (Finders’ Fees).
“Company Group” has the meaning set forth in Section 4.1.
“Company Information Systems” means any and all IT Systems that are owned, licensed, leased, used or held for use by or for a member of the Company Group.
“Company IP” means, collectively, any and all Company Owned IP and Company Licensed IP and includes any and all Intellectual Property set forth in Schedule 4.17(b).
“Company Licensed IP” means any and all Intellectual Property owned by a third Person and licensed to, in whole or in part, to a member of the Company Group or that a member of the Company Group otherwise has a right to use.
“Company Option” means each option (whether vested or unvested) to purchase Company Class A Common Stock granted, and that remains outstanding, under the Equity Incentive Plan.
“Company Owned IP” means any and all Intellectual Property owned or purported to be owned, in whole or in part, by the Company Group, in each case, whether exclusively, jointly with another Person or otherwise, and includes all Registered Owned IP and Company Software.
“Company Securityholder” means each Person who holds Company Capital Stock and/or Company Options.
“Company Series A Preferred Stock” means the Series A Preferred Stock, par value $0.00001 of the Company.
“Company Series B Preferred Stock” means the Series B Preferred Stock, par value $0.00001 of the Company.
“Company Series Seed Preferred Stock” means the Series Seed Preferred Stock, par value $0.00001 of the Company.
“Company Stockholders” means, at any given time, the holders of Company Capital Stock.
“Company Stockholder Approval” has the meaning set forth in Section 4.2(b).
“Company Stockholder Written Consent” has the meaning set forth in Section 7.2(a).
“Company Stockholder Written Consent Deadline” has the meaning set forth in Section 7.2(a).
“Company Software” means any and all proprietary Software that is owned (or purported to be owned), in whole or in part, by the Company Group and includes all proprietary AI/ML owned (or purported to be owned) by the Company Group.
“Company Support Agreement” has the meaning set forth in the recitals to this Agreement.
A-1-5
Table of Contents
“Confidentiality Agreement” means the Reciprocal Non-Disclosure Agreement, dated as of February 24, 2026, by and between the Company and Parent.
“Contracts” means the Lease and all other contracts, agreements, leases (including equipment leases, car leases and capital leases), licenses, Permits, commitments, client contracts, statements of work (SOWs), sales and purchase orders and similar instruments, oral or written, to which the Company is a party or by which any of its respective properties or assets is bound.
“Control” of a Person means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such Person, whether through the ownership of voting securities, by contract, or otherwise. “Controlled,” “Controlling” and “under common Control with” have correlative meanings.
“Conversion Ratio” means the quotient obtained by dividing (a) the number of Parent Common Shares constituting the Aggregate Merger Consideration, by (b) the number of shares constituting the Aggregate Fully Diluted Company Common Stock.
“Converted Stock Option” has the meaning set forth in Section 3.2(a).
“Copyleft Licenses” means all licenses of Publicly Available Software (including any Software licensed under the GNU General Public License, GNU Lesser General Public License, Mozilla Public License, Affero General Public License, Eclipse Software License, or any other public source code license arrangement) or any similar license, or other Contracts to Software, in each case, that requires as a condition of use or in connection with any use, modification, reproduction, or distribution of any Software licensed thereunder (or any Company Software or other Company IP or other Software or technology that is used by, incorporated into or includes, relies on, is linked to or with, is derived from, or distributed with such Software) any of the following: (i) be disclosed, made available, distributed, offered or delivered in source code form or any information regarding such Company Software, Company IP or other Software or technology for no or minimal charge, (ii) be granted permission or licensed for creating modifications to or making derivative works of such Company Software, Company IP, or other Software or technology; (iii) be granted a royalty-free license, whether express, implied, by virtue of estoppel or otherwise, to any third party under Intellectual Property rights (including patents) regarding such Company Software, Company IP, or other Software or technology (whether alone or in combination with other hardware or Software); or (iv) be imposed of restrictions on future patent licensing terms, or other abridgement or restriction of exercise or enforcement of any Intellectual Property rights through any means.
“Copyrights” has the meaning set forth in the definition of “Intellectual Property.”
“Data” means any and all data and collections of data, whether machine readable or otherwise.
“Data Protection Laws” means all applicable Laws in any applicable jurisdiction governing (a) the privacy, security, confidentiality or Processing of Personal Information, including such information insofar as it applies to employees and contractors, (b) the use or disclosure of Personal Information in connection with online marketing or advertising, or (c) the purposes for which Personal Information may be Processed, and all regulations or binding guidance issued thereunder.
“Deferred Underwriting Commissions” means any and all deferred underwriting commissions payable by the Parent Parties, including the amount set forth in the Underwriting Agreement, dated December 16, 2025, by and between Parent and with Cantor Fitzgerald & Co., as representative of the underwriters thereto.
“DGCL” has the meaning set forth in the recitals to this Agreement.
“Dissenting Shares” has the meaning set forth in Section 3.3.
“Domain Names” has the meaning set forth in the definition of “Intellectual Property.”
“Domestication” has the meaning specified in the recitals to this Agreement.
“Domestication Intended Tax Treatment” has the meaning specified in the recitals to this Agreement.
“Earnout Cap” has the meaning set forth in Section 3.7(b)(i).
A-1-6
Table of Contents
“Earnout Milestone” means, as applicable, (i) the First Earnout Milestone, (ii) the Second Earnout Milestone, and/or (iii) the Third Earnout Milestone.
“Earnout Period” means the period starting on the Closing Date and ending on the fifth anniversary of the Closing Date.
“Earnout Pro Rata Share” means, for each Company Earnout Holder, a percentage determined by the quotient of:
(a) the sum of (i) the total number of shares of Company Common Stock held by such Company Earnout Holder as of immediately prior to the Effective Time; plus (ii) the total number of shares of Company Common Stock issuable assuming full conversion of all Company Preferred Stock that are held by such Company Earnout Holder as of immediately prior to the Effective Time plus (iii) the total number of shares of Company Common Stock issuable assuming full exercise of all Company Options that are held by such Company Earnout Holder as of immediately prior to the Effective Time; plus (iv) the aggregate number of shares of Company Common Stock issuable assuming full conversion, exercise or exchange of any other securities of the Company that are held by such Company Earnout Holder as of immediately prior to the Effective Time divided by
(b) the Aggregate Fully Diluted Company Common Stock (provided, that solely for the purpose of this definition of “Earnout Pro Rata Share”, the term “Aggregate Fully Diluted Company Common Stock” shall include the aggregate number of shares of Company Common Stock issuable upon exercise of all Company Options (both vested and unvested) as of immediately prior to the Effective Time), the “Earnout Denominator”);
provided that, in the event of any forfeiture of Earnout Shares pursuant to Section 3.7(b)(ii), the calculation of a Company Earnout Holder’s Earnout Pro Rata Share shall be adjusted to exclude from clause (a) and clause (b) the total number of shares of Company Common Stock issuable upon full exercise of the Company Options forfeited in accordance with Section 3.7(b)(ii), such that the Earnout Pro Rata Share of each remaining eligible Company Earnout Holder shall be proportionately increased.
“Earnout Shares” has the meaning set forth in Section 3.7(a).
“Effective Time” has the meaning set forth in Section 2.3.
“Electra Group” has the meaning set forth in Section 11.21(b).
“Enforceability Exceptions” has the meaning set forth in Section 4.2(a).
“Environmental Laws” means all applicable Laws that prohibit, regulate or control any Hazardous Material or any Hazardous Material Activity, including the Comprehensive Environmental Response, Compensation, and Liability Act of 1980, the Resource Recovery and Conservation Act of 1976, the Federal Water Pollution Control Act, the Clean Air Act, the Hazardous Materials Transportation Act and the Clean Water Act.
“Equity Incentive Plan” means the Company’s 2016 Equity Incentive Plan.
“ERISA” means the Employee Retirement Income Security Act of 1974.
“ERISA Affiliate” means each entity, trade or business that is, or was at the relevant time, a member of a group described in Section 414(b), (c), (m) or (o) of the Code or Section 4001(b)(1) of ERISA that includes or included the Company, or that is, or was at the relevant time, a member of the same “controlled group” as the Company pursuant to Section 4001(a)(14) of ERISA.
“Exchange Act” means the Securities Exchange Act of 1934, as amended.
“Exchange Agent” has the meaning set forth in the Section 3.4.
“Exchange Agreement” has the meaning set forth in the Section 3.4
“Exchange Fund” has the meaning set forth in the Section 3.4.
“Excluded Matter” means any one or more of the following: (a) any change in general economic or political conditions; (b) conditions generally affecting the industries in which such Person or its Subsidiaries operates; (c) any changes in financial, banking or securities markets in general or any change in prevailing interest rates; (d) acts
A-1-7
Table of Contents
of war (whether or not declared), armed hostilities or terrorism, or the escalation thereof; (e) the taking of any action expressly required by this Agreement or any action taken by the Company at the written request of Parent or any action taken by Parent or Merger Sub at the written request of the Company; (f) any changes in applicable Laws or accounting rules (including U.S. GAAP) or the interpretation thereof following the date of this Agreement; (g) the announcement or completion of the transactions contemplated by this Agreement; (h) any natural disaster, acts of God or epidemic, pandemic or other disease outbreak; or (i) any failure by a party to meet any internal or published projections, forecasts or revenue or earnings predictions (it being understood that the facts or occurrences giving rise or contributing to such failure that are not otherwise excluded from the definition of a “Material Adverse Effect” may be taken into account in determining whether there has been a Material Adverse Effect); provided, however, that the exclusions provided in the foregoing clauses (a) through (d), clause (f) and clause (h) shall not apply to the extent that Parent and Merger Sub, taken as a whole, on the one hand, or the Company, taken as a whole, on the other hand, is disproportionately affected by any such exclusions or any change, event or development to the extent resulting from any such exclusions relative to all other similarly situated companies that participate in the industry in which they operate.
“First Earnout Milestone” has the meaning set forth in Section 3.7(a)(i)(A).
“Hazardous Material” means any material, emission, chemical, substance or waste that has been designated by any Authority to be radioactive, toxic, hazardous, a pollutant or a contaminant.
“Hazardous Material Activity” means the transportation, transfer, recycling, storage, use, treatment, manufacture, removal, remediation, release, exposure of others to, sale, labeling, or distribution of any Hazardous Material or any product or waste containing a Hazardous Material, or product manufactured with ozone depleting substances, including any required labeling, payment of waste fees or charges (including so-called e-waste fees) and compliance with any recycling, product take-back or product content requirements.
“HSR Act” means the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and any rules or regulations promulgated thereunder.
“Indebtedness” means with respect to any Person, (a) all obligations of such Person for borrowed money, including with respect thereto, all interests, fees and costs, (b) all obligations of such Person evidenced by bonds, debentures, notes or similar instruments, (c) all obligations of such Person under conditional sale or other title retention agreements relating to property purchased by such Person, (d) all obligations of such Person issued or assumed as the deferred purchase price of property or services (other than accounts payable to creditors for goods and services incurred in the ordinary course of business consistent with past practices), (e) all Indebtedness of others secured by (or for which the holder of such Indebtedness has an existing right, contingent or otherwise, to be secured by) any lien or security interest on property owned or acquired by such Person, whether or not the obligations secured thereby have been assumed, (f) all obligations of such Person under leases required to be accounted for as capital leases under U.S. GAAP, (g) all guarantees by such Person of the Indebtedness of another Person, (h) all liability of such Person with respect to any hedging obligations, including interest rate or currency exchange swaps, collars, caps or similar hedging obligations, (i) any obligations of the Company Group pursuant to the U.S. Small Business Administration Paycheck Protection Program, (j) any unfunded or underfunded liabilities pursuant to any pension or nonqualified deferred compensation plan or arrangement, and (k) any agreement to incur any of the same.
“Intended Tax Treatment” has the meaning specified in the recitals to this Agreement.
“Intellectual Property” means any and all of the worldwide intellectual property rights and proprietary rights associated with any of the following, whether registered, unregistered or registrable, to the extent recognized in a particular jurisdiction: (a) trade secrets and other confidential or proprietary information, including discoveries, inventions (whether or not patentable), ideas, technology, systems, methods, processes, procedures, practices, algorithms, formulae, techniques, knowledge, results, protocols, models, designs, drawings, specifications, materials, technical data or information, know-how, research, methodologies, customer lists, business plans, databases, collections of data, and other confidential or proprietary information related to the development, marketing, pricing, distribution, cost, sales and manufacturing (collectively, “Trade Secrets”); (b) trade names, trademarks, service marks, trade dress, product configurations, other indications of origin, registrations thereof or applications for registration therefor, together with the goodwill associated with the foregoing (collectively, “Trademarks”); (c) patents, patent applications, invention disclosures, utility models, industrial designs, supplementary protection certificates, and certificates of inventions, including all re-issues, continuations, divisionals, continuations-in-part, re-examinations, renewals, counterparts, extensions, substitutions, counterparts, and validations thereof (collectively, “Patents”);
A-1-8
Table of Contents
(d) works of authorship, copyrights (including copyrights in Software), copyrightable materials, copyright registrations and applications for copyright registration including rights in Software (collectively, “Copyrights”); (e) domain names and URLs (collectively, “Domain Names”), (f) rights of privacy and publicity and rights in social media accounts, and (g) other intellectual property, and (h) all embodiments and fixations thereof and related documentation and registrations and all additions, improvements and accessions thereto.
“IP Contracts” means, collectively, any and all Contracts pursuant to which a member of the Company Group is a party or by which any of its properties or assets are bound (including any settlement, coexistence, co-existence, covenant not to sue or other agreement), in any case under which a member of the Company Group (i) is granted any assignment, license, sublicense, immunity, covenant not to assert or other right (including option rights, rights of first offer, first refusal, first negotiation, etc.) in or to any Intellectual Property of a third Person that is material to a member of the Company Group or the conduct of the Business, (ii) grants any assignment, license, sublicense, immunity, covenant not to assert or other right (including option rights, rights of first offer, first refusal, first negotiation, etc.) to a third Person in or to any Company Owned IP that is material to a member of the Company Group or the conduct of the Business or (iii) is restricted in its right to enforce, use, or otherwise exploit any Company Owned IP that is material to a member of the Company Group or the conduct of the Business.
“IPO” means the initial public offering of Parent pursuant to the Prospectus.
“IRS” means the United States Internal Revenue Service.
“Issuance Proposal” has the meaning set forth in Section 6.5(e).
“IT Systems” means any and all Software, information technology and systems, computers, servers, networks, workstations, routers, hubs, switches, data communication lines, interfaces, platforms, databases, websites, computer hardware and all other information technology rights, assets, or equipment used to process, store, generate, analyze, maintain and operate data or information, including any of the foregoing accessed pursuant to outsourced or cloud computing arrangements.
“Key Employee” means the individuals listed on Schedule 1.1(b).
“Key Executives” means the individuals listed on Schedule 8.9.
“Knowledge of the Company” or “to the Company’s Knowledge” means the actual knowledge after reasonable inquiry of the individuals listed on Schedule 1.1(c).
“Knowledge of Parent” or “to Parent’s Knowledge” means the actual knowledge after reasonable inquiry of the Chief Executive Officer and Chief Financial Officer of Parent as of the date hereof.
“Law” means any domestic or foreign, supranational, national, federal, state, municipality or local law, statute, ordinance, code, rule, or regulation.
“Leases” means, collectively, the leases, subleases, space sharing, licenses or other occupancy agreements described on Schedule 1.1(d) attached hereto, together with all amendments thereto and guarantees thereof, which Schedule includes the parties to such documents and the address for each Real Property subject thereto.
“Lien” means, with respect to any property or asset, any mortgage, lien, license, deed of trust, pledge, charge, claim, security interest or encumbrance of any kind in respect of such property or asset, any option, right of first offer or right of first refusal in respect of such property or asset, and any conditional sale or voting agreement or proxy, including any agreement to give any of the foregoing.
“Lock-Up Period” means the period beginning on the Closing Date and ending in four consecutive equal quarterly installments following the Closing Date, in accordance with the following schedule:
(a) one-fourth of the securities subject to the Lock-Up shall be released from the Lock-Up upon the Company issuing its first quarterly earnings release that occurs at least 120 days after the Closing Date;
(b) one-fourth of the securities subject to the Lock-Up shall be released from the Lock-Up upon the Company issuing its second quarterly earnings release that occurs at least 120 days after the Closing Date;
A-1-9
Table of Contents
(c) one-fourth of the securities subject to the Lock-Up shall be released from the Lock-Up upon the Company issuing its third quarterly earnings release that occurs at least 120 days after the Closing Date; and
(d) one-fourth of the securities subject to the Lock-Up shall be released from the Lock-Up upon the Company issuing its fourth quarterly earnings release that occurs at least 120 days after the Closing Date.
“Loeb” has the meaning set forth in Section 11.21(b).
“LTIP Proposal” has the meaning set forth in Section 6.5(e).
“LW” has the meaning set forth in Section 11.21(b).
“Material Adverse Effect” means any fact, effect, event, development, change, state of facts, condition, circumstance, or occurrence (an “Effect”) that, individually or together with one or more other contemporaneous Effect, (i) has or would reasonably be expected to have a materially adverse effect on the financial condition, assets, liabilities, business or results of operations of the Company Group, on the one hand, or on Parent and Merger Sub, on the other hand, taken as a whole; or (ii) prevents or materially delays or would reasonably be expected to prevent or materially delay the ability of the Company Securityholders and the Company, on the one hand, or on Parent and Merger Sub, on the other hand to consummate the Merger; provided, however, that, solely in the case of the foregoing clause (i), a Material Adverse Effect shall not be deemed to include Effects (and solely to the extent of such Effects) resulting from an Excluded Matter.
“Material Contracts” has the meaning set forth in Section 4.14(a). “Material Contracts” shall not include any Contracts that are also Plans.
“Merger” has the meaning set forth in the recitals to this Agreement.
“Merger Intended Tax Treatment” has the meaning specified in the recitals to this Agreement.
“Merger Sub” has the meaning set forth in the preamble.
“Merger Sub Common Stock” has the meaning set forth in Section 5.8(b).
“Minimum Ownership Threshold” has the meaning set forth in Section 3.6(b).
“Nasdaq” means The Nasdaq Stock Market LLC.
“Non-U.S. Plans” has the meaning set forth in Section 4.20(j).
“Offer Documents” has the meaning set forth in Section 6.5(a).
“Order” means any decree, order, judgment, writ, award, injunction, stipulation, determination, award, rule or consent of or by an Authority.
“Other Filings” means any filings to be made by Parent required under the Exchange Act, Securities Act or any other United States federal, foreign or blue sky laws, other than the Registration Statement and the other Offer Documents.
“Outside Closing Date” has the meaning set forth in Section 10.1(a).
“Parent” has the meaning set forth in the preamble.
“Parent Articles” means the Amended and Restated Memorandum and Articles of Association of Parent, adopted by special resolution dated December 16, 2025 and effective on December 16, 2025, as amended.
“Parent Board Recommendation” has the meaning set forth in Section 5.12(a).
“Parent Bylaws” has the meaning set forth in the recitals to this Agreement.
“Parent Certificate of Incorporation” has the meaning set forth in the recitals to this Agreement.
“Parent Class A Common Share” means from and following the Domestication, a share of Class A common stock, par value $0.00001 per share, of Parent.
A-1-10
Table of Contents
“Parent Class B Common Share” means from and following the Domestication, a share of Class B common stock, par value $0.00001 per share, of Parent.
“Parent Closing Cash” means: (a) the amount of cash available in the Trust Account immediately prior to the Effective Time after deducting the amount required to satisfy the Parent Redemption Amount; plus (b) the amount of any PIPE Financing (as such amounts are finally delivered to Parent at or prior to the Closing by investors in the PIPE Financing); plus (c) the proceeds of any other equity investments or any debt financing facilities that are or will be received by Parent (or the Company) prior to or substantially concurrently with the Closing; minus (d) the accrued but unpaid Parent Transaction Expenses as of the Closing Date.
“Parent Common Shares” means (a) prior to the Domestication, the Parent Ordinary Shares, and (b) from and following the Domestication, the Parent Class A Common Shares and the Parent Class B Common Shares.
“Parent Transaction Expenses” means all fees, costs and expenses of Parent incurred prior to and through the Closing Date in connection with the negotiation, preparation and execution of this Agreement, the Ancillary Agreements, the performance and compliance with this Agreement and the Ancillary Agreements, and the consummation of the transactions contemplated hereby and thereby, including any and all (i) filing fees payable by Parent or any of its Subsidiaries to any Authority in connection with the transactions contemplated hereby and thereby, (ii) fees, costs, expenses and disbursements of counsel, accountants, advisors and consultants of Parent and (iii) deferred IPO fees and Deferred Underwriting Commissions.
“Parent Equity Incentive Plan” has the meaning set forth in Section 8.6.
“Parent Financial Statements” means all of the financial statements of Parent included in the Parent SEC Documents and any amendments to such financial statements.
“Parent Fundamental Representations” means the representations and warranties of Parent set forth in Section 5.1 (Corporate Existence and Power), Section 5.3 (Corporate Authorization), Section 5.4 (Governmental Authorization), Section 5.5 (Non-Contravention), Section 5.6 (Finders’ Fees), Section 5.7 (Issuance of Shares), and Section 5.8 (Capitalization).
“Parent Ordinary Shares” means prior to the Domestication, the ordinary shares, par value $0.0001 per share, of Parent.
“Parent Parties” has the meaning set forth in ARTICLE V.
“Parent Proposals” has the meaning set forth in Section 6.5(e).
“Parent Redemption Amount” has the meaning set forth in Section 6.6.
“Parent Right” means a right to receive 1/10 of a Parent Ordinary Share at the closing of Parent’s initial business combination that was included in the Parent Units sold in the IPO and in a private placement at the time of the consummation of the IPO.
“Parent Rights Agreement” means the Rights Agreement, dated as of December 16, 2025, between Parent and Continental Stock Transfer & Trust Company, as rights agent.
“Parent SEC Documents” has the meaning set forth in Section 5.13(a).
“Parent Shareholder Approval” means the requisite approval under the Parent Articles, the Cayman Companies Act or any other applicable Law, by holders of Parent Common Shares of this Agreement, the Merger and the Domestication.
“Parent Shareholder Meeting” has the meaning set forth in Section 6.5(a).
“Parent Support Agreement” has the meaning set forth in the recitals to this Agreement.
“Parent Unit” means each unit of Parent consisting of one Parent Ordinary Share and one Parent Right, which units were sold in the IPO and in a private placement at the time of the consummation of the IPO.
“Patents” has the meaning set forth in the definition of “Intellectual Property.”
A-1-11
Table of Contents
“Permit” means each license, franchise, permit, order, approval, consent or other similar authorization required to be obtained and maintained by the Company under applicable Law to carry out or otherwise affecting, or relating in any way to, the Business.
“Permitted Liens” means (a) all defects, exceptions, restrictions, easements, rights of way and encumbrances disclosed in policies of title insurance which have been made available to Parent; (b) mechanics’, carriers’, workers’, repairers’ and similar statutory Liens arising or incurred in the ordinary course of business consistent with past practices for amounts (i) that are not delinquent, and (ii) not resulting from a breach, default or violation by the Company of any Contract or Law; (c) liens for Taxes (i) not yet due and delinquent or (ii) which are being contested in good faith by appropriate proceedings (and for which adequate accruals or reserves have been established on the Company Financial Statements in accordance with U.S. GAAP); (d) the Liens set forth on Schedule 1.1(e); and (e) non-exclusive licenses to Intellectual Property entered into in the ordinary course of business.
“Person” means an individual, corporation, partnership (including a general partnership, limited partnership or limited liability partnership), limited liability company, association, trust, Authority or other entity or organization of any other kind.
“Personal Information” means any data or information that relates to, describes, is capable of being associated with, or could reasonably be linked to, directly or indirectly, an identified or identifiable natural person or device, and that constitutes personal data, personal health information, protected health information, personally identifiable information, personal information or similar defined term under any Data Protection Laws.
“Per Convertible Note Merger Consideration” has the meaning set forth in Section 3.2(c).“PIPE Financing” has the meaning set forth in Section 6.9.
“Per Preferred Share Merger Consideration” has the meaning set forth in Section 3.1(b).
“Plan” means each “employee benefit plan” within the meaning of Section 3(3) of ERISA and all other compensation and benefits plans, policies, programs, arrangements or payroll practices, including multiemployer plans within the meaning of Section 3(37) of ERISA, and each other stock purchase, stock option, restricted stock, severance, retention, employment (other than any employment offer letter in such form as previously provided to Parent that is terminable “at will” without any contractual obligation on the part of the Company to make any severance, termination, change of control, or similar payment), consulting, change-of-control, collective bargaining, bonus, incentive, deferred compensation, employee loan, fringe benefit and other benefit plan, agreement, program, policy, commitment or other arrangement, whether or not subject to ERISA, whether formal or informal, oral or written, in each case, that is sponsored, maintained, contributed or required to be contributed to by a member of the Company Group, or under which a member of the Company Group has any current or potential liability, but excluding in each case any statutory plan, program or arrangement that is required under applicable law and maintained by any Authority.
“Plan of Reorganization” has the meaning set forth in the recitals to this Agreement.
“Privacy Obligations” has the meaning set forth in Section 4.17(m).
“Privacy Policies” has the meaning set forth in Section 4.17(m).
“Process,” “Processed” or “Processing” means any operation or set of operations performed upon Personal Information or sets of Personal Information, whether or not by automated means, such as collection, recording, organization, structuring, storage, adaptation or alteration, retrieval, consultation, use, disclosure, dissemination, or otherwise making available, alignment or combination, restriction, securing, erasure, or destruction.
“Prospectus” means the final IPO prospectus of Parent, dated December 16, 2025.
“Proxy Statement” has the meaning set forth in Section 6.5(a).
“Publicly Available Software” means each of any Software that contains, or is derived in any manner (in whole or in part) from, any Software that is distributed as free software, “copyleft,” open source software (e.g. Linux), or under any license meeting the Open Source Definition (as promulgated by the Open Source Initiative) or the Free Software Definition (as promulgated by the Free Software Foundation) or substantially similar licensing and distribution models, including but not limited to any of the following: (A) the GNU General Public License (GPL) or
A-1-12
Table of Contents
Lesser/Library GPL (LGPL), (B) the Artistic License (e.g., PERL), (C) the Mozilla Public License, (D) the Netscape Public License, (E) the Sun Community Source License (SCSL), (F) the Sun Industry Source License (SISL) and (G) the Apache Server License, including for the avoidance of doubt all Software licensed under a Copyleft License.
“Real Property” means, collectively, all real properties and interests therein (including the right to use), together with all buildings, fixtures, trade fixtures, plant and other improvements located thereon or attached thereto; all rights arising out of use thereof (including air, water, oil and mineral rights); and all subleases, franchises, licenses, permits, easements and rights-of-way which are appurtenant thereto.
“Registered Exclusively Licensed IP” means any and all Company Exclusively Licensed IP that is the subject of a registration or an application for registration, including issued patents and patent applications.
“Registered Owned IP” means any and all Intellectual Property constituting Company Owned IP, that in each instance is the subject of a registration or an application for registration, including issued patents and patent applications.
“Registration Rights Agreement” means the amended and restated registration rights agreement, in substantially the form attached hereto as Exhibit F, which shall be effective as of the Closing.
“Registration Statement” has the meaning set forth in Section 6.5(a).
“Representatives” of a Person means the officers, directors, Affiliates, members, partners, managers, attorneys, accountants, consultants, employees, representatives and agents of such Person.
“Sarbanes-Oxley Act” means the Sarbanes-Oxley Act of 2002.
“SEC” means the U.S. Securities and Exchange Commission.
“Second Earnout Milestone” has the meaning set forth in Section 3.7(a)(i)(B).
“Securities Act” means the Securities Act of 1933, as amended.
“Software” means any and all (a) computer software, firmware, middleware, operating systems, applications, computer programs (including any and all algorithms, heuristics, models and methodologies, whether in source code, object code, human readable form or other form), (b) databases and compilations (including any and all data and collections of data), whether machine readable or otherwise, (c) descriptions, flow charts and other documentation used to design, plan, organize and develop any of the foregoing, screens, user interfaces, report formats, firmware, development tools, templates, menus, buttons and icons, (d) AI/ML, (e) all versions, updates, corrections, enhancements and modifications of any of the foregoing, and (f) all related specifications, documentation, developer notes, instructions, comments, annotations, user manuals, and other training documentation relating to any of the foregoing.
“Sponsor” means IRHO SPAC Sponsor LLC, a Cayman Islands limited liability company.
“Sponsor Shares” means 5,750,000 of the Parent Common Shares held by the Sponsor.
“Standard Contracts” means any of the following: (a) licenses for Publicly Available Software or non-exclusive end user in-licenses of commercially available, “off-the-shelf” or “shrink wrap” Software for fees of less than $250,000 annually, (b) non-exclusive licenses of Company IP implied by and ancillary to customer, distributor or channel partner Contracts on Company’s standard forms made available to Parent with no material exclusions or deviations, (c) agreements with the Company’s consultants or contractors on Company’s standard forms made available to Parent with no material exclusions or deviations, (d) invention assignment agreements with the Company’s employees on Company’s standard forms made available to Parent with no material exclusions or deviations, (e) non-exclusive licenses that are not material to the applicable business and merely incidental to the transactions contemplated in such agreement, the commercial purpose of which is primarily for something other than such license (such as (i) sales or marketing or similar contract that includes a non-exclusive license to use the trademarks of the Company for purposes of promoting the Company, (ii) vendor contracts under which Company Owned IP is licensed to a vendor of the Company for the benefit of the Company, or (iii) non-exclusive licenses to Intellectual Property granted by a third party for the purpose of allowing the Company Group to provide services to such third party), and (f) customary non-disclosure agreements entered into in the ordinary course of business consistent with past practices.
A-1-13
Table of Contents
“Subsidiary” means, with respect to any Person, each entity of which at least fifty percent (50%) of the capital stock or other equity or voting securities are Controlled or owned, directly or indirectly, by such Person.
“Surviving Corporation” has the meaning set forth in the recitals to this Agreement.
“Tangible Personal Property” means all tangible personal property and interests therein, including machinery, computers and accessories, furniture, office equipment, communications equipment, automobiles, laboratory equipment and other equipment owned or leased by a member of the Company Group and other tangible property.
“Tax Return” means any return, information return, declaration, claim for refund of Taxes, report or any similar statement, and any amendment thereto, including any attached schedule and supporting information, whether on a separate, consolidated, combined, unitary or other basis, that is filed or required to be filed with any Taxing Authority in connection with the determination, assessment, collection or payment of a Tax or the administration of any Law relating to any Tax.
“Tax(es)” means (a) any U.S. federal, state or local or non-U.S. taxes imposed by any Taxing Authority including any income (net or gross), gross receipts, profits, windfall profit, sales, use, goods and services, ad valorem, franchise, license, withholding, employment, social security, workers compensation, unemployment compensation, employment, payroll, transfer, excise, import, real property, escheat, personal property, intangible property, occupancy, recording, minimum, alternative minimum, and other taxes (including any governmental charge, fee, levy, or custom duty imposed by an Authority that is the nature of a tax), together with any interest, penalty, additions to tax or additional amount imposed with respect thereto.
“Taxing Authority” means the IRS and any other Authority responsible for the collection, assessment or imposition of any Tax or the administration of any Law relating to any Tax.
“Terminating Company Breach” has the meaning specified in Section 10.2(a).
“Terminating Parent Breach” has the meaning specified in Section 10.2(b).
“Third Earnout Milestone” has the meaning set forth in Section 3.7(a)(i)(B).
Top Customer” has the meaning specified in Section 4.32(a).
“Top Supplier” has the meaning specified in Section 4.32(a).
“Trade Secrets” has the meaning set forth in the definition of “Intellectual Property.”
“Trademarks” has the meaning set forth in the definition of “Intellectual Property.”
“Trading Day” means (a) for so long as the Parent Common Shares are listed or admitted for trading on Nasdaq or any other national securities exchange, days on which such securities exchange is open for business; or (b) if the Parent Common Shares are not listed or admitted to trading on any national securities exchange, days on which the Parent Common Shares are traded regular way in the over-the- counter market and for which a closing bid and a closing asked price for the Parent Common Shares are available.
“Transaction Litigation” has the meaning set forth in Section 8.1(c).
“Transfer Taxes” means any and all transfer, documentary, sales, use, real property, stamp, excise, recording, registration, value added and other similar Taxes, fees and costs (including any associated penalties and interest) incurred in connection with the transactions contemplated by this Agreement.
“Trust Account” has the meaning set forth in Section 5.9.
“Trust Agreement” has the meaning set forth in Section 5.9.
“Trustee” has the meaning set forth in Section 5.9.
“U.S. GAAP” means U.S. generally accepted accounting principles, consistently applied.
A-1-14
Table of Contents
“VWAP” means, for any security as of any date(s), the dollar volume-weighted average price for such security on the principal securities exchange or securities market on which such security is then traded during the period beginning at 9:30:01 a.m., New York time, and ending at 4:00:00 p.m., New York time, as reported by Bloomberg through its “HP” function (set to weighted average) or, if the foregoing does not apply, the dollar volume-weighted average price of such security in the over-the-counter market on the electronic bulletin board for such security during the period beginning at 9:30:01 a.m., New York time, and ending at 4:00:00 p.m., New York time, as reported by Bloomberg, or, if no dollar volume-weighted average price is reported for such security by Bloomberg for such hours, the average of the highest closing bid price and the lowest closing ask price of any of the market makers for such security as reported by OTC Markets Group Inc. If the VWAP cannot be calculated for such security on such date(s) on any of the foregoing bases, the VWAP of such security on such date(s) shall be the fair market value per share on such date(s) as reasonably determined by Parent.
1.2 Construction.
(a) References to particular sections and subsections, schedules, and exhibits not otherwise specified are cross-references to sections and subsections, schedules, and exhibits of this Agreement. Captions are not a part of this Agreement, but are included for convenience, only.
(b) The words “herein,” “hereof,” “hereunder,” and words of similar import refer to this Agreement as a whole and not to any particular provision of this Agreement; and, unless the context requires otherwise, “party” means a party signatory hereto.
(c) Any use of the singular or plural, or the masculine, feminine or neuter gender, includes the others, unless the context otherwise requires; the word “including” means “including without limitation”; the word “or” means “and/or”; the word “any” means “any one, more than one, or all”; and, unless otherwise specified, any financial or accounting term has the meaning of the term under United States generally accepted accounting principles as consistently applied heretofore by the Company. Any reference in this Agreement to a Person’s directors shall include any member of such Person’s governing body.
(d) Unless otherwise specified, any reference to any agreement (including this Agreement), instrument, or other document includes all schedules, exhibits, or other attachments referred to therein, and any reference to a statute or other law means such law as amended, restated, supplemented or otherwise modified from time to time and includes any rule, regulation, ordinance or the like promulgated thereunder, in each case, as amended, restated, supplemented or otherwise modified from time to time.
(e) Any reference to a numbered schedule means the same-numbered section of the disclosure schedule. Any reference in a schedule contained in the disclosure schedules delivered by a party hereunder shall be deemed to be an exception to (or, as applicable, a disclosure for purposes of) the applicable representations and warranties (or applicable covenants) that are contained in the section or subsection of this Agreement that corresponds to such schedule and any other representations and warranties of such party that are contained in this Agreement to which the relevance of such item thereto is reasonably apparent on its face. The mere inclusion of an item in a schedule as an exception to (or, as applicable, a disclosure for purposes of) a representation or warranty shall not be deemed an admission that such item represents a material exception or material fact, event or circumstance or that such item would have a Material Adverse Effect or establish any standard of materiality to define further the meaning of such terms for purposes of this Agreement. Nothing in the disclosure schedules constitutes an admission of any liability or obligation of the disclosing party to any third party or an admission to any third party, including any Authority, against the interest of the disclosing party, including any possible breach of violation of any Contract or Law. Summaries of any written document in the disclosure schedules do not purport to be complete and are qualified in their entirety by the written document itself. The disclosures schedules and the information and disclosures contained therein are intended only to qualify and limit the representations and warranties of the parties contained in this Agreement, and shall not be deemed to expand in any way the scope or effect of any of such representations and warranties.
(f) If any action is required to be taken or notice is required to be given within a specified number of days following a specific date or event, the day of such date or event is not counted in determining the last day for such action or notice. If any action is required to be taken or notice is required to be given on or before a particular day which is not a Business Day, such action or notice shall be considered timely if it is taken or given on or before the next Business Day.
A-1-15
Table of Contents
(g) To the extent that any Contract, document, certificate or instrument is represented and warranted to by the Company to be given, delivered, provided or made available by the Company, such Contract, document, certificate or instrument shall be deemed to have been given, delivered, provided and made available to Parent or its Representatives, if such Contract, document, certificate or instrument shall have been posted not later than two days prior to the date of this Agreement to the “MNPI Data Room” electronic data room maintained on behalf of the Company for the benefit of the Parent and its Representatives and the Parent and its Representatives have been given access to the electronic folders containing such information.
ARTICLE II
THE DOMESTICATION AND THE MERGER
2.1 Domestication.
(a) Subject to receipt of the Parent Shareholder Approval, at least one Business Day prior to the date of the Effective Time, Parent shall cause the Domestication to become effective, including by (a) filing with the Secretary of State of the State of Delaware a certificate of domestication with respect to the Domestication, in form and substance reasonably acceptable to Parent and the Company (the “Certificate of Domestication”), together with the Parent Certificate of Incorporation, in each case, in accordance with the provisions thereof and Section 388 of the DGCL, and (b) completing and making and procuring all those filings required to be made with the Registrar of Companies in the Cayman Islands (the “Cayman Registrar”) under the Cayman Companies Act in connection with the Domestication.
(b) In accordance with applicable Law, the Certificate of Domestication shall provide that at the effective time of the Domestication, by virtue of the Domestication, and without any action on the part of any shareholder of Parent: (i) each then issued and outstanding Parent Ordinary Share shall convert automatically into one Parent Class A Common Share; (ii) each then issued and outstanding Parent Right shall convert automatically into a right to receive 1/10 Parent Class A Common Share at the Closing, pursuant to the Parent Rights Agreement; and (iii) each then issued and outstanding Parent Unit shall separate and convert automatically into one Parent Class A Common Share and a right to receive 1/10 s Parent Class A Common Share at the Closing.
2.2 Merger. Upon the terms and subject to the conditions set forth in this Agreement, and in accordance with the DGCL, at the Effective Time, (a) Merger Sub shall be merged with and into the Company, (b) the separate corporate existence of Merger Sub shall thereupon cease, and the Company shall be the Surviving Corporation, and (c) the Surviving Corporation shall become a wholly-owned Subsidiary of Parent and shall change its name to a name to be mutually agreed by the parties prior to the Closing, and Parent shall change its name to “ELECTRA AI, Inc.”.
2.3 Merger Effective Time. Subject to the provisions of this Agreement, at the Closing, which shall be at least one Business Day after the consummation of the Domestication, the Company shall file with the Secretary of State of the State of Delaware a certificate of merger, in form and substance reasonably acceptable to Company and Parent, executed in accordance with the relevant provisions of the DGCL (the “Certificate of Merger”). The Merger shall become effective upon the filing of the Certificate of Merger or at such later time as is agreed to by the parties and specified in the Certificate of Merger (the time at which the Merger becomes effective is herein referred to as the “Effective Time”).
2.4 Effect of the Merger. At the Effective Time, the effect of the Merger shall be as provided in this Agreement, the Certificate of Merger and the applicable provisions of the DGCL. Without limiting the generality of the foregoing, and subject thereto, at the Effective Time, all the assets, property, rights, privileges, immunities, powers and franchises of the Company and Merger Sub shall vest in the Surviving Corporation and all debts, liabilities and duties of the Company and Merger Sub shall become the debts, liabilities and duties of the Surviving Corporation.
2.5 U.S. Tax Treatment.
(a) For U.S. federal income tax purposes (and for purposes of any applicable state or local income Tax Law that follows US. federal income Tax Law), each of the parties intends that (a) the Domestication qualify for the Domestication Intended Tax Treatment, (b) the Merger qualify for the Merger Intended Tax Treatment. The parties to this Agreement hereby (i) adopt this Agreement as a Plan of Reorganization with respect to each of the Domestication and the Merger, (ii) agree to file and retain such information as shall be required under Treasury Regulations Section 1.368-3, and (iii) agree to file all Tax Returns on a basis consistent with the Intended Tax Treatment and not otherwise to take any position or action inconsistent with the Intended Tax Treatment unless required as a
A-1-16
Table of Contents
result of a “determination” within the meaning of Section 1313(a) of the Code (or any similar provision of applicable state, local or non-U.S. Tax Law) or otherwise required by an Authority. None of the parties knows of any fact or circumstance (without conducting independent inquiry or diligence of the other relevant party), or has knowingly taken or will knowingly take any action (or knowingly fail to take any action), if such fact, circumstance or action (or failure to act) would be reasonably expected to prevent or impede the Domestication Intended Tax Treatment or the Merger Intended Tax Treatment, and each of the parties shall use its reasonable best efforts to cause the Domestication to qualify for the Domestication Intended Tax Treatment and the Merger to qualify for the Merger Intended Tax Treatment. Each of the parties acknowledges and agrees that each has had the opportunity to obtain independent legal and tax advice with respect to the transactions contemplated by this Agreement.
(b) The parties intend for any issuance of Earnout Shares to the Company Earnout Holders pursuant to this Agreement (excluding any issuance that is properly treated as compensation for applicable Tax purposes, and excluding any amounts properly characterized as interest for applicable tax purposes), including any issuance of Earnout Shares made upon the occurrence of a Change of Control pursuant to Section 3.7(c), to be treated as an adjustment to the Aggregate Merger Consideration by the parties that is eligible for treatment as qualifying property that may be received without the recognition of gain in connection with the Merger for U.S. federal income Tax purposes, and the parties agree to prepare and file all Tax Returns consistent with such treatment and not otherwise take any position or action inconsistent with such treatment unless required as a result of a “determination” within the meaning of Section 1313(a) of the Code (or any similar provision of applicable state, local or non-U.S. Tax Law) or otherwise required by an Authority. Any such issuance of Earnout Shares is intended to comply with, and (without modifying any of the other express terms hereof) shall be effected in accordance with, Rev. Proc. 84-42, 1984-1 C.B. 521.
(c) Parent and the Company shall promptly notify the other party in writing if, before the Closing Date, either such party knows or has reason to believe that the Domestication may not qualify for the Domestication Intended Tax Treatment or that the Merger may not qualify for the Merger Intended Tax Treatment (and whether the terms of this Agreement could be reasonably amended in order to facilitate such qualification, which amendments shall be made if the Company reasonably determines on the advice of its counsel that such amendments would be reasonably expected to result in the Domestication Intended Tax Treatment or the Merger Intended Tax Treatment and would not be commercially impracticable).
(d) In the event the SEC requests or requires a tax opinion regarding the (i) Domestication Intended Tax Treatment, Parent will use its commercially reasonable efforts to cause Loeb & Loeb LLP to deliver such tax opinion to Parent, or (ii) the Merger Intended Tax Treatment, the Company shall use its commercially reasonable efforts to cause Latham & Watkins LLP to deliver such tax opinion to the Company. Each party shall use reasonable best efforts to execute and deliver customary tax representation letters to the applicable tax advisor in form and substance reasonably satisfactory to such advisor. Notwithstanding anything to the contrary in this Agreement, Loeb & Loeb LLP shall not be required to provide any opinion to any party regarding the Merger Intended Tax Treatment and Latham & Watkins LLP shall not be required to provide any opinion to any party regarding the Domestication Intended Tax Treatment. Notwithstanding anything to the contrary in this Agreement, advisors to neither Parent nor the Company will be required to provide any tax opinion as a condition precedent to the transactions contemplated by this Agreement.
2.6 Company Charter; Company Bylaws.
(a) At the Effective Time, the certificate of incorporation of the Company shall, in accordance with the terms thereof and the DGCL, be amended and restated in its entirety as set forth in an exhibit to the Certificate of Merger, and, as so amended and restated, shall be the certificate of incorporation of the Surviving Corporation until thereafter duly amended in accordance with the terms thereof and the DGCL.
(b) The Company Bylaws as in effect immediately prior to the Effective Time shall be the bylaws of the Surviving Corporation, except that the name of the Surviving Corporation shall be the name mutually agreed by the parties prior to the Closing until thereafter amended in accordance with the terms thereof, the certificate of incorporation of the Surviving Corporation and applicable Law.
2.7 Closing. Unless this Agreement is earlier terminated in accordance with ARTICLE X, the closing of the Merger (the “Closing”) shall take place virtually on the second (2nd) Business Day after the satisfaction or waiver (to the extent permitted by applicable Law) of the conditions set forth in ARTICLE IX (other than those conditions that
A-1-17
Table of Contents
by their terms are to be satisfied at the Closing, but subject to the satisfaction or waiver thereof), or at such other time, date and location as Parent and Company agree in writing. The parties may participate in the Closing via the exchange of signature pages via email or other electronic means. The date on which the Closing actually occurs is hereinafter referred to as the “Closing Date”. For the avoidance of doubt, the Closing and the Effective Time shall occur after the completion of the Domestication.
2.8 Directors and Officers of Surviving Corporation.
(a) At the Effective Time, the initial directors of the Surviving Corporation shall consist of the same persons serving on Parent’s Board of Directors in accordance with Section 2.9, and such directors shall hold office until their successors shall have been duly elected or appointed and qualified or until their earlier death, resignation or removal in accordance with the Surviving Corporation’s certificate of incorporation and bylaws.
(b) At the Effective Time, the officers of the Company identified on Schedule 2.9 shall become the initial officers of the Surviving Corporation and shall hold office until their respective successors are duly elected or appointed and qualified, or until their earlier death, resignation or removal.
2.9 Directors and Officers of Parent. At the Effective Time, Parent’s Board of Directors will consist of seven directors. The Company shall have the right to designate five directors and the remaining two directors shall be jointly designated by the Company and the Sponsor. At least a majority of the Board of Directors shall qualify as independent directors under Nasdaq or Alternate Exchange rules, as applicable. The individuals identified on Schedule 2.9 shall be the officers of Parent as of immediately after the Effective Time, with such individuals holding the titles set forth opposite their names until their respective successors are duly elected or appointed and qualified, or until their earlier death, resignation or removal.
2.10 Taking of Necessary Action; Further Action. If, at any time after the Closing, any further action is necessary or desirable to carry out the purposes of this Agreement and to vest the Surviving Corporation with full right, title and interest in, to and under, or possession of, all assets, property, rights, privileges, powers and franchises of the Company and Merger Sub, the officers and directors of the Surviving Corporation are fully authorized in the name and on behalf of the Company and Merger Sub, to take all lawful action necessary or desirable to accomplish such purpose or acts, so long as such action is not inconsistent with this Agreement.
2.11 No Further Ownership Rights in Company Capital Stock. All consideration paid or payable in respect of shares of Company Capital Stock hereunder, or upon the exercise of the appraisal rights described in Section 3.3, shall be deemed to have been paid or payable in full satisfaction of all rights pertaining to such shares of Company Capital Stock and from and after the Effective Time, there shall be no further registration of transfers of shares of Company Capital Stock on the stock transfer books of the Surviving Corporation. If, after the Effective Time, certificates formerly representing shares of Company Capital Stock (each, a “Company Stock Certificate”) are presented to the Surviving Corporation, subject to the terms and conditions set forth herein, they shall be cancelled and exchanged for the consideration provided for, and in accordance with the procedures set forth, in ARTICLE III.
ARTICLE III
EFFECT OF THE MERGER
3.1 Effect of the Merger on Company Capital Stock. At the Effective Time, as a result of the Merger and without any action on the part of Parent, Merger Sub, the Company or the holders of any shares of capital stock of any of them:
(a) Cancellation of Certain Shares of Company Capital Stock. Each share of Company Capital Stock, if any, that is owned by Parent or Merger Sub (or any other Subsidiary of Parent) or the Company (as treasury stock or otherwise), will automatically be cancelled and retired without any conversion thereof and will cease to exist, and no consideration will be delivered in exchange therefor. Each share of Company Capital Stock, if any, held immediately prior to the Effective Time by the Company as treasury stock shall be automatically canceled and extinguished, and no consideration shall be paid with respect thereto.
(b) Conversion of Shares of Company Preferred Stock. Each share of Company Preferred Stock issued and outstanding immediately prior to the Effective Time (other than any such shares of Company Preferred Stock cancelled pursuant to Section 3.1(a) and any Dissenting Shares) shall, in accordance with the Company Charter, be converted into the right to receive a number of Parent Common Shares equal to: (a) (i) the Conversion
A-1-18
Table of Contents
Ratio multiplied by (ii) the number of shares of Company Common Stock issuable upon conversion of such share of Company Preferred Stock as of immediately prior to the Effective Time plus (b) a number of Earnout Shares equal to the Earnout Pro Rata Share in accordance with, and subject to the contingencies, set forth in Section 3.7 (the “Per Preferred Share Merger Consideration”).
(c) Conversion of Shares of Company Common Stock.
(i) Each share of Company Class A Common Stock issued and outstanding immediately prior to the Effective Time (other than any such shares of Company Class A Common Stock cancelled pursuant to Section 3.1(a) and any Dissenting Shares) shall be converted into the right to receive: (i) a number of Parent Class A Common Shares equal to the Conversion Ratio plus (ii) a number of Earnout Shares in the form of Parent Class A Common Shares equal to the Earnout Pro Rata Share in accordance with, and subject to the contingencies, set forth in Section 3.7.
(ii) Each share of Company Class B Common Stock issued and outstanding immediately prior to the Effective Time (other than any such shares of Company Class B Common Stock cancelled pursuant to Section 3.1(a) and any Dissenting Shares) shall be converted into the right to receive: (i) a number of Parent Class B Common Shares equal to the Conversion Ratio plus (ii) a number of Earnout Shares in the form of Parent Class B Common Shares equal to the Earnout Pro Rata Share in accordance with, and subject to the contingencies, set forth in Section 3.7.
(d) Effect on Company Capital Stock. At the Effective Time, all shares of Company Capital Stock converted pursuant to Section 3.1(b) or Section 3.1(c) shall no longer be outstanding and shall automatically be canceled and shall cease to exist, and each holder of Company Capital Stock shall thereafter cease to have any rights with respect to such securities, except the right to receive a portion of the Aggregate Merger Consideration plus the contingent right to receive their applicable portion of Earnout Shares in accordance with their Earnout Pro Rata Share.
(e) Conversion of Merger Sub Capital Stock. Each share of common stock, par value $0.0001 per share, of Merger Sub issued and outstanding immediately prior to the Effective Time shall be converted into and become one newly issued, fully paid and nonassessable share of common stock of the Surviving Corporation.
3.2 Treatment of Company Options and Company Convertible Notes
(a) Treatment of Options. Prior to the Closing, the Company’s Board of Directors (or, if appropriate, any committee thereof administering the Equity Incentive Plan) shall adopt such resolutions or take such other actions as may be required to adjust the terms of all Company Options (whether vested or unvested) as necessary to provide that, at the Effective Time, each Company Option shall be converted into (i) an option to acquire, subject to substantially the same terms and conditions as were applicable under such Company Option (including expiration date, vesting conditions, and exercise provisions), the number of Parent Class A Common Shares (rounded down to the nearest whole share), determined by multiplying the number of shares of Company Class A Common Stock subject to such Company Option as of immediately prior to the Effective Time by the Conversion Ratio, at an exercise price per Parent Class A Common Share (rounded up to the nearest whole cent) equal to (A) the exercise price per share of Company Class A Common Stock of such Company Option divided by (B) the Conversion Ratio (a “Converted Stock Option”), and (ii) the right to receive a number of Earnout Shares in accordance with, and subject to the contingencies, set forth in Section 3.7; provided, however, that the exercise price and the number of Parent Class A Common Shares covered by each Converted Stock Option shall be determined in a manner consistent with the requirements of Sections 422 and 409A of the Code and the applicable regulations promulgated thereunder such that such conversion will not constitute a “modification” of such Company Options for purposes of Section 409A or Section 424 of the Code.
(b) Assumption of Converted Stock Options by Parent. At the Effective Time, Parent shall assume all obligations of the Company under the Equity Incentive Plan, each outstanding Converted Stock Option and the agreements evidencing the grants thereof. As soon as practicable after the Effective Time, Parent shall deliver to the holders of Converted Stock Options appropriate notices setting forth such holders’ rights, and the agreements evidencing the grants of such Converted Stock Options shall continue in effect on substantially the same terms and conditions (subject to the adjustments required by Section 3.2(a) and Section 3.2(b) after giving effect to the Merger).
(c) Treatment of Convertible Notes. Prior to the Closing, the Company’s Board of Directors shall adopt such resolutions or take such other actions as may be required to adjust the terms of all Company Convertible Notes as necessary to provide that, at the Effective Time, each Company Convertible Note shall be converted into
A-1-19
Table of Contents
the right to receive a number of Parent Common Shares equal to (a) (i) the Conversion Ratio multiplied by (ii) the number of shares of Company Common Stock issuable upon conversion of such Company Convertible Note as of immediately prior to the Effective Time plus (b) the contingent right to receive their applicable portion of Earnout Shares in accordance with their Earnout Pro Rata Share (the “Per Convertible Note Merger Consideration”).
(d) Effect on Convertible Notes. At the Effective Time, all Company Convertible Notes converted pursuant to Section 3.2(c) shall no longer be outstanding and shall automatically be canceled and shall cease to exist, and each holder of Company Convertible Notes shall thereafter cease to have any rights with respect to such securities, except the right to receive a portion of the Aggregate Merger Consideration and the contingent right to receive a number of Earnout Shares into which such Company Convertible Note shall have been converted in the Merger.
3.3 Dissenting Shares. Notwithstanding any provision of this Agreement to the contrary, shares of Company Capital Stock issued and outstanding immediately prior to the Effective Time (other than shares of Company Capital Stock cancelled in accordance with Section 3.1(a)) and held by a holder who has not voted in favor of adoption of this Agreement or consented thereto in writing and who has properly exercised and perfected appraisal rights for such shares in accordance with Section 262 of the DGCL (such shares of Company Capital Stock being referred to collectively as the “Dissenting Shares” until such time as such holder fails to perfect or otherwise waives, withdraws, or loses such holder’s appraisal rights under the DGCL with respect to such shares) shall not be converted into a right to receive a portion of the Aggregate Merger Consideration, but instead shall be entitled to only such rights as are granted by Section 262 of the DGCL; provided, however, that if, after the Effective Time, such holder fails to perfect, waives, withdraws, or loses such holder’s right to appraisal pursuant to Section 262 of the DGCL or if a court of competent jurisdiction shall determine that such holder is not entitled to the relief provided by Section 262 of the DGCL, such shares of Company Capital Stock shall be treated as if they had been converted as of the Effective Time into the right to receive a portion of the Aggregate Merger Consideration and a number of Earnout Shares equal to the Earnout Pro Rata Share in accordance with, and subject to the contingencies, set forth in Section 3.7, to which such holder is entitled in accordance with Section 3.1(b), without interest thereon, upon transfer of such shares. The Company shall promptly provide Parent with written notice of any intent to dissent, demand for payment or any demands received by the Company for appraisal of shares of Company Capital Stock, any withdrawal of any such demand and any other demand, notice or instrument delivered to the Company prior to the Effective Time pursuant to the DGCL that relates to such demand, and Parent shall have the opportunity to participate in all negotiations and proceedings with respect to such demands.
3.4 Surrender and Payment.
(a) Exchange Fund. Prior to the Effective Time, Parent shall enter into an agreement (the “Exchange Agreement”) acceptable to the other parties hereto with Continental Stock Transfer & Trust Company (the “Exchange Agent”) for the purpose of exchanging Parent Common Shares for the Aggregate Merger Consideration. At or promptly after the Effective Time, Parent shall deposit, or shall cause to be deposited, with the Exchange Agent, for the benefit of the Company Stockholders, for exchange in accordance with the Exchange Agreement and this ARTICLE III, the number of Parent Common Shares sufficient to deliver the Aggregate Merger Consideration payable pursuant to this Agreement (such Parent Common Shares, the “Exchange Fund”). Parent shall cause the Exchange Agent, pursuant to irrevocable instructions, to pay the Aggregate Merger Consideration out of the Exchange Fund in accordance with the Closing Consideration Spreadsheet and the other applicable provisions contained in this Agreement and the Exchange Agreement. The Exchange Fund shall not be used for any other purpose other than as contemplated by this Agreement.
(b) Exchange Procedures. As soon as practicable following the Effective Time, and in any event within two Business Days following the Effective Time (but in no event prior to the Effective Time), Parent shall cause the Exchange Agent to deliver to each Company Stockholder, as of immediately prior to the Effective Time, represented by certificate or book-entry, a letter of transmittal and instructions for use in exchanging such Company Stockholder’s shares of Company Capital Stock for such Company Stockholder’s applicable portion of the Aggregate Merger Consideration from the Exchange Fund, and which shall be in form and contain provisions which Parent may specify and which are reasonably acceptable to the Company (a “Letter of Transmittal”), and promptly following receipt of a Company Stockholder’s properly executed Letter of Transmittal, deliver such Company Stockholder’s applicable portion of the Aggregate Merger Consideration to such Company Stockholder.
(c) Termination of Exchange Fund. Any portion of the Exchange Fund relating to the Aggregate Merger Consideration that remains undistributed to the Company Stockholders for two years after the Effective Time shall be delivered to Parent, upon demand, and any Company Stockholders who have not theretofore complied with
A-1-20
Table of Contents
this Section 3.4 shall thereafter look only to Parent for their portion of the Aggregate Merger Consideration. Any portion of the Exchange Fund remaining unclaimed by Company Stockholders as of a date which is immediately prior to such time as such amounts would otherwise escheat to or become property of any Authority shall, to the extent permitted by applicable Law, become the property of Parent free and clear of any claims or interest of any person previously entitled thereto.
3.5 Consideration Spreadsheet.
(a) At least five Business Days prior to the Closing, the Company shall deliver to Parent a spreadsheet (the “Closing Consideration Spreadsheet”), prepared by the Company in good faith and detailing the following, in each case, as of immediately prior to the Effective Time:
(i) the name and address of record of each Company Stockholder and the number and class, type or series of shares of Company Capital Stock held by each, and in the case of shares of each series of Company Preferred Stock, the number of shares of Company Class A Common Stock into which such shares of Company Preferred Stock are convertible;
(ii) the names of record of each holder of Company Options, and the exercise price, number of shares of Company Class A Common Stock subject to each Company Options held by such holder (including, in the case of unvested Company Options, the vesting schedule, vesting commencement date, date fully vested);
(iii) the name and address of record of each holder of Company Convertible Notes and the number of shares of Company Class A Common Stock into which such Company Convertible Notes are convertible;
(iv) the number of Aggregate Fully Diluted Company Common Stock;
(v) the aggregate number of shares subject to Company Options;
(vi) the aggregate number of shares subject to Company Convertible Notes;
(vii) detailed calculations of each of the following (in each case, determined without regard to withholding):
(A) the Aggregate Merger Consideration;
(B) the Aggregate Exercise Price;
(C) the aggregate number of Parent Class B Common Shares included in the Aggregate Merger Consideration;
(D) the Conversion Ratio;
(E) the Per Preferred Share Merger Consideration for each series of Company Preferred Stock;
(F) the Per Convertible Note Merger Consideration;
(G) for each Company Earnout Holder, its Earnout Pro Rata Share;
(H) for each Converted Stock Option, the exercise price therefor and the number of Parent Common Shares subject to such Converted Stock Option; and
(I) the Earnout Denominator;
(viii) a calculation demonstrating that the Minimum Ownership Threshold has been satisfied, including the number of Aggregate Parent Fully Diluted Shares, the adjusted Base Purchase Price, and the resulting adjusted Conversion Ratio.
A-1-21
Table of Contents
(b) The contents of the Closing Consideration Spreadsheet delivered by the Company hereunder shall be subject to reasonable review and comment by Parent, but the Company shall, in all events, remain solely responsible for the contents of the Closing Consideration Spreadsheet. The parties agree that Parent shall be entitled to rely on the Closing Consideration Spreadsheet in making payments under ARTICLE III.
3.6 Adjustment.
(a) The shares comprising the Aggregate Merger Consideration and Conversion Ratio shall be adjusted to reflect appropriately the effect of any stock split, subdivision, reverse stock split, consolidation, stock dividend, recapitalization, reclassification, combination, exchange of shares or other like change with respect to Parent Common Shares occurring prior to the date the shares comprising the Aggregate Merger Consideration are issued.
(b) The Base Purchase Price shall be automatically adjusted upwards in increments of $10.00 until the Aggregate Merger Consideration represents at least 50.1% of the Aggregate Parent Fully Diluted Shares (the “Minimum Ownership Threshold”). Such adjustment shall be self-executing, shall not require any further action by any party, and shall be reflected in the Closing Consideration Spreadsheet delivered pursuant to Section 3.5.
3.7 Earnout.
(a) Issuance of Earnout Shares.
(i) From and after the Closing until the end of the Earnout Period, as additional consideration in the Merger in respect of the shares of Company Capital Stock, the Company Options and the Company Convertible Notes (and without the need for additional consideration from any holder thereof), the Company Earnout Holders shall be entitled to earn, in accordance with their respective Earnout Pro Rata Share, up to an aggregate amount of 15,000,000 additional Parent Common Shares (which, for the avoidance of doubt, shall be issued as Parent Class A Common Shares to Company Earnout Holders who hold exclusively Company Class A Common Stock, Company Preferred Stock, Company Options or Company Convertible Notes and as Parent Class B Common Shares to Company Earnout Holders who hold any shares of Company Class B Common Stock), in accordance with Sections 3.7(a)(i)(A), 3.7(a)(i)(B), and 3.7(a)(i)(C) (subject to any adjustment pursuant to Section 3.7(f), the “Earnout Shares”):
(A) Subject to the Earnout Cap, one-third of the Earnout Shares if, at any time during the Earnout Period, (1) over any 10 Trading Days within any 20 consecutive Trading Day period the VWAP of the Parent Common Shares is greater than or equal to $14.00 per share or (2) as reported in Parent’s Form 10-Q or Form 10-K the ARR is greater than or equal to $45 million (the “First Earnout Milestone”), whichever occurs earlier;
(B) Subject to the Earnout Cap, one-third of the Earnout Shares if, at any time during the Earnout Period, (1) over any 10 Trading Days within any 20 consecutive Trading Day period the VWAP of the Parent Common Shares is greater than or equal to $16.00 per share or (2) as reported in Parent’s Form 10-Q or Form 10-K the ARR is greater than or equal to $55 million (the “Second Earnout Milestone”), whichever occurs earlier; and
(C) Subject to the Earnout Cap, one-third of the Earnout Shares if, at any time during the Earnout Period, (1) over any 10 Trading Days within any 20 consecutive Trading Day period the VWAP of the Parent Common Shares is greater than or equal to $18.00 per share or (2) as reported in Parent’s Form 10-Q or Form 10-K the ARR is greater than or equal to $65 million (the “Third Earnout Milestone”), whichever occurs earlier; and
(ii) Parent shall deliver or cause to be delivered the applicable Earnout Shares to the Company Earnout Holders (subject to Section 3.7(b)(ii) in respect of holders of unvested Company Options) promptly (but in any event within 10 Business Days) following the date on which such Earnout Milestone is achieved.
(b) Earnout Cap; Service Requirements.
(i) For the avoidance of doubt, the Company Earnout Holders shall be entitled to earn Earnout Shares upon the occurrence of each Earnout Milestone (or a Change of Control as described below in Section 3.7(c), if applicable) during the Earnout Period; provided, however, that each Earnout Milestone (or
A-1-22
Table of Contents
a Change of Control as described below in Section 3.7(c), if applicable) shall only occur once, if at all, and in no event shall the Company Earnout Holders be entitled to earn more than 15,000,000 Earnout Shares in the aggregate (subject to adjustment as set forth in Section 3.7(e)) (the “Earnout Cap”).
(ii) Notwithstanding anything in this Agreement to the contrary, any Earnout Shares issuable under this Section 3.7 to a Company Earnout Holder in respect of each Company Option held by such Company Earnout Holder as of immediately prior to the Effective Time shall be earned by such Company Earnout Holder on the occurrence of the applicable Earnout Milestone, but only if such Company Earnout Holder continues to provide services (whether as an employee, director or individual independent contractor) to Parent or one of its Subsidiaries through such date. Notwithstanding the foregoing, any Earnout Shares that are not earned by a Company Earnout Holder in respect of its Company Options on or before the fifth anniversary of the Closing Date shall be forfeited without any consideration. Any Earnout Shares that are forfeited pursuant to this Section 3.7(b)(ii) shall be reallocated to the other Company Earnout Holders who remain entitled to receive Earnout Shares in accordance with their respective Earnout Pro Rata Shares.
(c) Change of Control Event. If at any time during the Earnout Period, there occurs any transaction resulting in a Change of Control, then, as of immediately prior to the consummation of such Change of Control, all the Earnout Shares not yet earned shall be earned by the Company Earnout Holders and shall be delivered to the Company Earnout Holders as of immediately prior to the Change of Control, and the Company Earnout Holders shall be eligible to participate in such Change of Control transaction with respect to such Earnout Shares.
(d) Evidence of Issuance of Earnout Shares. Parent shall take such actions as are reasonably requested by the Company Stockholders to evidence the issuances pursuant to this Section 3.7, including through the provision of an updated stock ledger showing such issuances (as certified by an officer of Parent responsible for maintaining such ledger or the applicable registrar or transfer agent of Parent).
(e) Adjustments to Earnout Shares. In the event Parent shall at any time on or prior to the fifth anniversary of the Closing Date, pay any dividend on Parent Common Shares by the issuance of additional Parent Common Shares, or effect a subdivision, recapitalization, split, or combination, exchange or consolidation of the outstanding Parent Common Shares (by reclassification or otherwise) into a greater or lesser number of Parent Common Shares, then in each such case, in respect of the Earnout Shares then remaining (i) the number of Earnout Shares shall be adjusted by multiplying such amount by a fraction, the numerator of which is the number of Parent Common Shares (including any other shares so reclassified as Parent Common Shares) outstanding immediately after such event and the denominator of which is the number of Parent Common Shares that were outstanding immediately prior to such event, and (ii) the dollar values set forth in Sections 3.7(a)(i)(A) and Section 3.7(a)(i)(B) above shall be appropriately adjusted to provide to the Company Earnout Holders the same economic effect as contemplated by this Agreement prior to such event.
(f) Assignment of Earnout Shares. In no event shall any right to receive Earnout Shares pursuant to this Section 3.7 be represented by any negotiable certificate of any kind, and in no event shall any Company Earnout Holder or its successor in interest take any step that would render such rights readily marketable.
3.8 No Fractional Shares. No fractional Parent Common Shares, or certificates or scrip representing fractional Parent Common Shares, will be issued upon the conversion of the Company Capital Stock pursuant to the Merger, and such fractional share interests will not entitle the owner thereof to vote or to any rights of a shareholder of Parent. No Company Securityholder shall be entitled to receive any fraction of a Parent Common Share and the number of Parent Common Shares to be received by such Company Securityholder shall be rounded down to the nearest whole number.
3.9 Lost or Destroyed Certificates. Notwithstanding the foregoing, if any Company Stock Certificate, shall have been lost, stolen or destroyed, then upon the making of a customary affidavit of that fact by the Person claiming such Company Stock Certificate to be lost, stolen or destroyed in a form reasonably acceptable to Parent, the Exchange Agent shall issue, in exchange for such lost, stolen or destroyed Company Stock Certificate, the portion of the Aggregate Merger Consideration to be paid in respect of the shares of Company Capital Stock formerly represented by such Company Stock Certificate as contemplated under this ARTICLE III.
3.10 Withholding. Notwithstanding any other provision to this Agreement, Parent, Merger Sub, the Company and its Subsidiaries and the transfer agent, as applicable, shall be entitled to deduct and withhold from any amount payable pursuant to this Agreement such Taxes that are required to be deducted and withheld from such amounts
A-1-23
Table of Contents
under the Code or any other applicable Law (as reasonably determined by Parent, Merger Sub, the Company or its Subsidiaries, or the transfer agent, respectively). To the extent that any amounts are so deducted and withheld, such deducted and withheld amounts shall be treated for all purposes of this Agreement as having been paid to the Person in respect of which such deduction and withholding was made and paid to the applicable Authority. In the case of any such payment payable to employees of the Company or its Subsidiaries in connection with the Merger treated as compensation, the parties shall cooperate to pay such amounts through the Company’s or the relevant Subsidiary’s payroll to facilitate applicable withholding. To the extent any party hereto becomes aware of any obligation to deduct or withhold from amounts otherwise payable, issuable or transferable pursuant to this Agreement, such party shall notify the other parties hereto at least 10 days prior to the date of the relevant payment, and the parties hereto shall reasonably cooperate to obtain any certificates or other documentation required in respect of such deduction or withholding obligation and to reduce or eliminate any applicable deduction or withholding.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as set forth in the disclosure schedules delivered by the Company to Parent concurrently with the execution of this Agreement (with specific reference to the particular section or subsection of this Agreement to which the information set forth in such disclosure letter relates (which qualify (a) the correspondingly numbered representation, warranty or covenant specified therein and (b) such other representations, warranties or covenants where its relevance as an exception to (or disclosure for purposes of) such other representation, warranty or covenant is reasonably apparent on its face or cross-referenced)), the Company hereby represents and warrants to Parent that each of the following representations and warranties are true, correct and complete as of the date of this Agreement and as of the Closing Date (except for representations and warranties that are made as of a specific date, which are made only as of such date).
4.1 Corporate Existence and Power. Each of the Company and its Subsidiaries is a corporation or legal entity duly organized, validly existing and in good standing (with respect to jurisdictions that recognize that concept) under the laws of the jurisdiction of its incorporation (the Company and its Subsidiaries, collectively, the “Company Group”). Each member of the Company Group has all requisite power and authority, corporate and otherwise, to own, lease or otherwise hold and operate its properties and other assets and to carry on the Business as presently conducted and as proposed to be conducted. Each member of the Company Group is duly licensed or qualified to do business and is in good standing (with respect to jurisdictions that recognize that concept) in each jurisdiction in which the nature of its business or the ownership, leasing or operation of its properties or other assets makes such qualification, licensing or good standing necessary, except where the failure to be so qualified, licensed or in good standing, individually or in the aggregate, has not had and would not reasonably be expected to have a Material Adverse Effect in respect of the Company Group. The Company has made available to Parent, prior to the date of this Agreement, complete and accurate copies of the organizational documents of each member of the Company Group, in each case as amended to the date hereof. The organizational documents of each member of the Company Group are in full force and effect. No member of the Company Group is in violation of its organizational documents, except any such violations that would not have or reasonably be expected to have a Material Adverse Effect.
4.2 Authorization.
(a) The Company has all requisite corporate power and authority to execute and deliver this Agreement and the Ancillary Agreements to which it is a party and to consummate the transactions contemplated hereby and thereby, in the case of the Merger, subject to receipt of the Company Stockholder Approval. The execution and delivery by the Company of this Agreement and the Ancillary Agreements to which it is a party and the consummation by the Company of the transactions contemplated hereby and thereby have been duly authorized by all necessary corporate action on the part of the Company. No other corporate proceedings on the part of the Company are necessary to authorize this Agreement or the Ancillary Agreements to which it is a party or to consummate the transactions contemplated by this Agreement (other than, in the case of the Merger, the receipt of the Company Stockholder Approval) or the Ancillary Agreements. This Agreement and the Ancillary Agreements to which the Company is a party have been duly executed and delivered by the Company and, assuming the due authorization, execution and delivery by each of the other parties hereto and thereto, this Agreement and the Ancillary Agreements to which the Company is a party constitute a legal, valid and binding obligation of the Company, enforceable against the Company in accordance with their respective terms, subject to bankruptcy, insolvency, fraudulent transfer, moratorium, reorganization or similar Laws affecting the rights of creditors generally and the availability of equitable remedies (the “Enforceability Exceptions”).
A-1-24
Table of Contents
(b) By resolutions duly adopted (and not thereafter modified or rescinded) by the requisite vote of the Board of Directors of the Company, the Board of Directors of the Company has (i) approved the execution, delivery and performance by the Company of this Agreement, the Ancillary Agreements to which it is a party and the consummation of the transactions contemplated hereby and thereby, including the Merger, on the terms and subject to the conditions set forth herein and therein; (ii) determined that this Agreement, the Ancillary Agreements to which it is a party, and the transactions contemplated hereby and thereby, upon the terms and subject to the conditions set forth herein, are advisable and fair to and in the best interests of the Company and the Company Stockholders; (iii) directed that the adoption of this Agreement be submitted to the Company Stockholders for consideration and recommended that all of the Company Stockholders adopt this Agreement. Either (x) the affirmative vote of (A) Persons holding a majority (on an as-converted basis) of the voting power of the Company Stockholders; (B) Persons holding a majority of the outstanding shares of Company Series Seed Preferred Stock, voting as a separate class; (C) Persons holding a majority of the outstanding shares of Company Series A Preferred Stock, voting as a separate class; and (D) Persons holding a majority of the outstanding shares of Company Series B Preferred Stock, voting as a separate class, who are present in person or by proxy at such meeting and voting thereon or (y) the affirmative written consent, signed by the Company Stockholders having not less than the minimum number of votes that would be necessary to authorize or take such action under clause (x) at a meeting at which all shares entitled to vote were present and voted, is required to, and shall be sufficient to, approve this Agreement and the transactions contemplated hereby (the “Company Stockholder Approval”). The Company Stockholder Approval is the only vote or consent of any of the holders of Company Capital Stock necessary to adopt this Agreement and approve the Merger and the consummation of the other transactions contemplated hereby.
4.3 Governmental Authorization. None of the execution, delivery or performance by the Company of this Agreement or any Ancillary Agreement to which the Company is or will be a party, or the consummation of the transactions contemplated hereby or thereby, requires any consent, approval, license, Order or other action by or in respect of, or registration, declaration or filing with, any Authority other than the filing of the Certificate of Merger with the Secretary of State of the State of Delaware pursuant to the DGCL and any SEC or Nasdaq approval required to consummate the transactions contemplated hereunder. Neither the Company’s annual net sales nor its total assets exceed the current threshold of $26.8 million under Section 18a(a)(2)(B)(ii) of the HSR Act.
4.4 Non-Contravention. None of the execution, delivery or performance by the Company of this Agreement or any Ancillary Agreement to which the Company is or will be a party or the consummation by the Company of the transactions contemplated hereby and thereby does or will (a) contravene or conflict with the Company Charter or the Company Bylaws or the organizational documents of any Subsidiary, (b) contravene or conflict with or constitute a violation of any provision of any Law or Order binding upon or applicable to the Company or to any of its respective properties, rights or assets, except as set forth in Section 4.4 of this Agreement, (c) except for the Contracts listed on Schedule 4.8 requiring Company Consents (but only as to the need to obtain such Company Consents), (i) require consent, approval or waiver under, (ii) constitute a default under or breach of (with or without the giving of notice or the passage of time or both), (iii) violate, (iv) give rise to any right of termination, cancellation, amendment or acceleration of any right or obligation of the Company Group or to a loss of any material benefit to which the Company Group is entitled, in the case of each of clauses (i) – (iv), under any provision of any Permit, Contract or other instrument or obligations binding upon the Company Group or any of its respective properties, rights or assets, (d) result in the creation or imposition of any Lien (except for Permitted Liens) on any of the Company Group’s properties, rights or assets, or (e) require any consent, approval or waiver from any Person pursuant to any provision of the organizational documents of the Company Group, except for such consent, approval or waiver which shall be obtained (and a copy provided to Parent) prior to the Closing.
4.5 Capitalization.
(a) As of the date of this Agreement, the authorized capital stock of the Company consists of 16,500,000 shares of Class A Common Stock, $0.00001 par value per share, 3,994,802 shares of Class B Common Stock, $0.00001 par value per share, and 8,374,367 shares of preferred stock, $0.00001 par value per share, of which 720,022 shares of Company Class A Common Stock, 3,994,802 shares of Company Class B Common Stock, 3,730,391 shares of Company Series Seed Preferred Stock, 2,321,980] shares of Company Series A Preferred Stock and 128,004 shares of Company Series B Preferred Stock are issued and outstanding. As of the date of this Agreement, there are 1,999,925 shares of Company Common Stock reserved for issuance under the Equity Incentive Plan, and options to purchase 938,456 shares of Company Common Stock are outstanding. Except as set forth on Schedule 4.5(a), no other shares of capital stock or other voting securities of the Company are authorized, issued, reserved for issuance
A-1-25
Table of Contents
or outstanding. All issued and outstanding shares of Company Capital Stock are duly authorized, validly issued, fully paid and non-assessable and were issued in compliance with all applicable Laws (including any applicable securities laws) and in compliance with the Company Charter and the Company Bylaws. No shares of Company Capital Stock are subject to or were issued in violation of any purchase option, right of first refusal, preemptive right, subscription right or any similar right (including under any provision of the DGCL, the Company Charter or any Contract to which the Company is a party or by which the Company or any of its properties, rights or assets are bound). As of the date of this Agreement, all outstanding shares of Company Capital Stock are owned of record by the Persons set forth on Schedule 4.5(a) in the amounts set forth opposite their respective names. Schedule 4.5(a) contains a true, correct and complete list of each Company Option outstanding as of the date of this Agreement, the holder thereof, the number of shares of Company Capital Stock issuable thereunder or otherwise subject thereto, the grant date thereof and the exercise price, if any, and expiration date thereof and whether such Company Option is intended to qualify as an “incentive stock option”.
(b) Except as set forth on Schedule 4.5(a), there are no (i) outstanding warrants, options, agreements, convertible securities, performance units or other commitments or instruments pursuant to which the Company is or may become obligated to issue or sell any of its shares of Company Capital Stock or other securities, (ii) outstanding obligations of the Company to repurchase, redeem or otherwise acquire outstanding capital stock of the Company or any securities convertible into or exchangeable for any shares of capital stock of the Company, (iii) treasury shares of capital stock of the Company, (iv) bonds, debentures, notes or other Indebtedness of the Company having the right to vote (or convertible into, or exchangeable for, securities having the right to vote) on any matters on which shareholders of the Company may vote, are issued or outstanding, (v) preemptive or similar rights to purchase or otherwise acquire shares or other securities of the Company (including pursuant to any provision of Law, the Company Charter or any Contract to which the Company is a party), (vi) Liens (including any right of first refusal, right of first offer, proxy, voting trust, voting agreement or similar arrangement) with respect to the sale or voting of shares or securities of the Company (whether outstanding or issuable) or (vii) any stock appreciation, phantom stock or similar rights with respect to the Company.
(c) Each Company Option (i) was granted in compliance in all material respects with (A) all applicable Laws and (B) all of the terms and conditions of the Equity Incentive Plan pursuant to which it was issued, (ii) has an exercise price per share of Company Common Stock equal to or greater than the fair market value of such share at the close of business on the date of such grant, (iii) has a grant date no earlier than the date on which the Board of Directors of the Company or compensation committee actually awarded such Company Option, (iv) qualifies for the tax and accounting treatment afforded to such Company Option in the Company’s tax returns and the Company’s financial statements, respectively, and (v) does not trigger any liability for the holder thereof under Section 409A of the Code.
4.6 Subsidiaries. Schedule 4.6 sets forth the name of each Subsidiary of the Company, and with respect to each Subsidiary, its jurisdiction of incorporation, formation or organization, its authorized shares or other equity interests (if applicable), and the number of issued and outstanding shares or other equity interests and the record holders thereof. Except as set forth on Schedule 4.6, the Company does not own, directly or indirectly, any equity interest in any other Person. All of the outstanding equity securities of each Subsidiary of the Company are duly authorized and validly issued, duly registered, fully paid and non-assessable (if applicable), were offered, sold and delivered in compliance with all applicable securities Laws and such Subsidiary’s organizational documents in force at the relevant time, and are owned by the Company or one of its Subsidiaries free and clear of all Liens (other than those, if any, imposed by such Subsidiary’s organizational documents).
4.7 Corporate Records. All proceedings occurring since January 1, 2022 of the Board of Directors of the Company, including all committees thereof, and of the Company Stockholders, and all consents to actions taken thereby that are required by Law, the Company Charter or the Company Bylaws, are accurately reflected in the minutes and records contained in the corporate minute books of the Company and made available to Parent. The shareholder ledger of the Company is true, correct and complete.
4.8 Consents. The Contracts listed on Schedule 4.8 are the only Material Contracts requiring a consent, approval, authorization, order or other action of or filing with any Person as a result of the execution, delivery and performance of this Agreement or any Ancillary Agreement to which the Company is or will be a party or the consummation of the transactions contemplated hereby or thereby (each of the foregoing, a “Company Consent”).
A-1-26
Table of Contents
4.9 Financial Statements.
(a) The Company has delivered to Parent the unaudited consolidated balance sheets of the Company as of December 31, 2025 and December 31, 2024, and the related statements of operations, changes in stockholders’ equity and cash flows, for the fiscal years ended December 31, 2025 and December 31, 2024 (the “Company Financial Statements”). The Company Financial Statements have been prepared in conformity with U.S. GAAP applied on a consistent basis and in accordance with the requirements of the Public Company Accounting Oversight Board for public companies. The Company Financial Statements fairly present, in all material respects, the financial position of the Company as of the dates thereof and the results of operations of the Company for the periods reflected therein. The Company Financial Statements were prepared from the Books and Records of the Company in all material respects. Since December 31, 2025 (the “Balance Sheet Date”), except as required by applicable Law or U.S. GAAP, there has been no change in any accounting principle, procedure or practice followed by the Company or in the method of applying any such principle, procedure or practice.
(b) The Company Group has no material liabilities, debts or obligations of the type that would be required to be set forth on a balance sheet prepared in accordance with GAAP, except for (i) liabilities arising in the ordinary course of business consistent with past practice since the Balance Sheet Date, (ii) to the extent specifically disclosed, reflected or fully reserved for on the Balance Sheet and (iii) liabilities specifically set forth on Schedule 4.9(b).
(c) Except as set forth on Schedule 4.9(c), the Company Group does not have any Indebtedness.
4.10 Internal Accounting Controls. The Company has established a system of internal accounting controls sufficient to provide reasonable assurance that: (a) transactions are executed in accordance with management’s general or specific authorizations; (b) transactions are recorded as necessary to permit preparation of financial statements in conformity with U.S. GAAP, and the Company’s historical practices and to maintain asset accountability; and (c) the recorded accountability for assets is compared with the existing assets at reasonable intervals and appropriate action is taken with respect to any differences.
4.11 Absence of Certain Changes. From the Balance Sheet Date until the date of this Agreement, (a) the Company has conducted its businesses in the ordinary course and in a manner consistent with past practices; (b) there has not been any Material Adverse Effect in respect of the Company; and (c) the Company has not taken any action that, if taken after the date of this Agreement and prior to the consummation of the Merger, would require the consent of Parent pursuant to Section 6.1 and Parent has not given consent.
4.12 Properties; Title to the Company Group’s Assets.
(a) All items of material Tangible Personal Property as set forth on Schedule 4.12 have no material defects, are in good operating condition and repair in all material respects and function in accordance with their intended uses (ordinary wear and tear excepted), have been properly maintained in all material respects and are suitable for their present uses and meet all specifications and warranty requirements with respect thereto. All of the material Tangible Personal Property is located at the offices of the Company Group.
(b) The Company Group has good, valid and marketable title in and to, or in the case of the Lease and the assets which are leased or licensed pursuant to Contracts, a valid leasehold interest or license in or a right to use all of the tangible assets reflected on the Balance Sheet. Except as set forth on Schedule 4.12, no such tangible asset is subject to any Lien other than Permitted Liens. The Company’s assets constitute all of the rights, properties, and assets of any kind or description whatsoever, including goodwill, necessary for the Company Group to operate the Business immediately after the Closing in substantially the same manner as the Business is currently being conducted.
4.13 Litigation. There is no Action pending or, to the Knowledge of the Company, threatened against or affecting the Company Group, any of the officers or directors of the Company Group, the Business, any of the Company Group’s rights, properties or assets or any Contract before any Authority or which in any manner challenges or seeks to prevent, enjoin, alter or delay the transactions contemplated by this Agreement or any Ancillary Agreement. There are no outstanding judgments against the Company Group or any of its rights, properties or assets. The Company Group or any of its rights, properties or assets is not, nor has been since January 1, 2023, subject to any Action by any Authority.
A-1-27
Table of Contents
4.14 Contracts.
(a) Schedule 4.14(a) sets forth a true, complete and accurate list, as of the date of this Agreement, of all of the following Contracts as amended to date which are currently in effect (other than any Plans) (collectively, “Material Contracts”):
(i) all Contracts that require annual payments or expenses incurred by, or annual payments or income to, the Company Group of $250,000 or more (other than Contracts entered into in the ordinary course of business consistent with past practices);
(ii) each Contract with any of the Top Customers or the Top Suppliers;
(iii) each Contract with any current employee of the Company Group (A) which has continuing obligations for payment of an annual compensation of at least $500,000, and which is not terminable for any reason or no reason upon reasonable notice without payment of any penalty, severance or other obligation; (B) providing for severance or post-termination payments or benefits to such employee (other than COBRA obligations); or (C) providing for a payment or benefit upon the consummation of the transactions contemplated by this Agreement or any Ancillary Agreement or as a result of a change of control of the Company;
(iv) all Contracts creating a joint venture, strategic alliance, limited liability company or partnership arrangement to which the Company or any Subsidiary is a party;
(v) all Contracts relating to any acquisitions or dispositions of material assets by the Company Group (other than acquisitions or dispositions of inventory in the ordinary course of business consistent with past practices);
(vi) all IP Contracts, separately identifying all such IP Contracts under which the Company is obligated to pay royalties thereunder and all such IP Contracts under which the Company is entitled to receive royalties thereunder, provided, however, that no Standard Contracts shall be required to be disclosed on Schedule 4.14(a)(vi), but shall constitute Material Contracts for purposes of this Agreement if they otherwise qualify;
(vii) Contracts containing covenants of the Company or any of the Company’s Subsidiaries (A) materially prohibiting or limiting the right of the Company or any of the Company’s Subsidiaries to engage in or compete with any Person in any line of business or (B) materially prohibiting or restricting the Company’s and the Company’s Subsidiaries’ ability to conduct their business with any Person in any geographic area;
(viii) all Contracts that (A) grant to any Person any preferred pricing, “most favored nation” or similar rights, (B) grant exclusivity to any Person in respect of any geographic location, any customer, or any product or service, (C) require the purchase of all or a given portion of the Company’s or any of its Subsidiary’s requirements for products or services from any Person, or any other similar provision, or (D) grant to any Person price guarantees for a period greater than one year from the date of this Agreement and requires aggregate future payments to the Company Group in excess of $250,000 in any calendar year;
(ix) Contracts granting to any Person (other than the Company or its Subsidiaries) a right of first refusal, first offer or similar right to purchase or acquire exclusive rights or ownership with respect to any service, product or Intellectual Property of the Company Group or to purchase or acquire equity interests in the Company or any of the Company’s Subsidiaries;
(x) all Contracts (other than Contracts entered into in the ordinary course of business consistent with past practices) providing for guarantees, indemnification arrangements and other hold harmless arrangements made or provided by the Company Group;
(xi) all Contracts (other than employment agreements, employee confidentiality and invention assignment agreements, equity or equity incentive documents, governing documents, Contracts relating to such Affiliate’s status as a Company Securityholder) between a member of the Company Group, on the one hand, and Affiliates of the Company or any of the Company’s Subsidiaries (other than the Company or any of the Company’s Subsidiaries), the officers and managers (or equivalents) of the Company or any of the
A-1-28
Table of Contents
Company’s Subsidiaries, the members or shareholders of the Company or any of the Company’s Subsidiaries, any employee of the Company or any of the Company’s Subsidiaries or, to the knowledge of the Company, a member of the immediate family of the foregoing Persons, on the other hand;
(xii) all Contracts relating to property or assets (whether real or personal, tangible or intangible) in which the Company holds a leasehold interest and which involve payments to the lessor thereunder in excess of $200,000 per year;
(xiii) all Contracts relating to the voting or control of the equity interests of the Company Group or the election of directors of the Company of any of its Subsidiaries (other than the organizational or constitutive documents of the Company or its Subsidiaries);
(xiv) all Contracts not cancellable by the Company Group with no more than 60 days’ notice if the effect of such cancellation would result in monetary penalty to the Company in excess of $250,000 per the terms of such contract;
(xv) all contracts and agreements with any Authority (other than purchase orders entered into in the ordinary course of business consistent with past practices) to which any member of the Company Group is a party;
(xvi) all Contracts creating or otherwise relating to outstanding Indebtedness (other than intercompany Indebtedness) in the aggregate that are valued at $500,000 or greater;
(xvii) all material Contracts that may be terminated, or the provisions of which may be altered, as a result of the consummation of the transactions contemplated by this Agreement or any Ancillary Agreement;
(xviii) all Contracts under which any of the benefits, compensation or payments (or the vesting thereof) will be increased or accelerated by the consummation of the transactions contemplated by this Agreement or any Ancillary Agreement, or the amount or value thereof will be calculated on the basis of, the transactions contemplated by this Agreement or any Ancillary Agreement; and
(xix) any outstanding written commitment to enter into any Contract of the type described in clauses (i) through (xviii) of this Section 4.14(a).
(b) Each Material Contract is (i) a valid and binding agreement, (ii) in full force and effect and (iii) enforceable by and against the Company Group and each counterparty that is party thereto, subject, in the case of this clause (iii), to the Enforceability Exceptions. Except, in each case, where the occurrence of such breach or default or failure to perform would not be material to the Company Group, taken as a whole (w) neither the Company Group nor, to the Company’s Knowledge, any other party to a Material Contract is in material breach or default (whether with or without the passage of time or the giving of notice or both) under the terms of any such Material Contract, (x) each member of the Company Group has performed in all respects all respective obligations required to be performed by them to date under each Material Contract, (y) no member of the Company Group has received any written claim or written notice of termination or breach of or default under any such Material Contract, and (z) no event has occurred which, individually or together with other events, would reasonably be expected to result in a breach of or a default under any such Material Contract by a member of the Company Group or, to the knowledge of the Company, any other party thereto (in each case, with or without notice or lapse of time or both). No member of the Company Group has assigned, delegated or otherwise transferred any of its rights or obligations under any Material Contract or granted any power of attorney with respect thereto.
(c) Each member of the Company Group is in compliance in all material respects with all covenants, including all financial covenants, in all notes, indentures, bonds and other instruments or Material Contracts establishing or evidencing any Indebtedness. The consummation and closing of the transactions contemplated by this Agreement shall not cause or result in an event of default under any instruments or Material Contracts establishing or evidencing any Indebtedness.
4.15 Licenses and Permits. Schedule 4.15 sets forth a true, complete and correct list of each Permit held by a member of the Company Group that is required under applicable Law to permit the Company Group to own, operate, use and maintain their assets in the manner in which they are now operated and maintained and to carry out or conduct
A-1-29
Table of Contents
the Business, together with the name of the Authority issuing the same. Such Permits are valid and in full force and effect, and none of the Permits will be terminated or impaired or become terminable as a result of the transactions contemplated by this Agreement or any Ancillary Agreement. The Company has all Permits necessary to operate the Business, and each of the Permits is in full force and effect. The Company is not in material breach or violation of, or material default under, any such Permit, and, to the Company’s Knowledge, no basis (including the execution of this Agreement and the other Ancillary Agreements to which the Company is a party and the consummation of the transactions contemplated by this Agreement or any Ancillary Agreement) exists which, with notice or lapse of time or both, would reasonably constitute any such breach, violation or default or give any Authority grounds to suspend, revoke or terminate any such Permit. The Company has not received any written (or, to the Company’s Knowledge, oral) notice from any Authority regarding any material violation of any Permit. There has not been and there is not any pending or, to the Company’s Knowledge, threatened Action, investigation or disciplinary proceeding by or from any Authority against the Company involving any material Permit.
4.16 Compliance with Laws. Neither the Company nor, to the Knowledge of the Company, any Representative or other Person acting on behalf of the Company, is in violation in any material respect of, and, since January 1, 2023, no such Person has failed to be in compliance in all material respects with, all applicable Laws and Orders. Since January 1, 2023, (i) no event has occurred or circumstance exists that (with or without notice or due to lapse of time) would reasonably constitute or result in a material violation by the Company of, or material failure on the part of the Company to comply with, or any material liability suffered or incurred by the Company in respect of any violation of or material noncompliance with, any Laws, Orders or policies by Authority that are or were applicable to it or the conduct or operation of its business or the ownership or use of any of its assets and (ii) no Action is pending, or to the Knowledge of the Company, threatened, alleging any such violation or noncompliance by the Company. Since January 1, 2023, the Company has not been threatened in writing or, to the Company’s Knowledge, orally to be charged with, or given written or, to the Company’s Knowledge, oral notice of any violation of any Law or any judgment, order or decree entered by any Authority.
4.17 Intellectual Property.
(a) (i) The Company or one of its Subsidiaries possesses and is the sole and exclusive owner of all right, title, and interest in and to each item of Company Owned IP, and owns or has a valid license to use all other Intellectual Property and IT Systems used or practiced (or held for use or practice) in or necessary for the conduct of the Businesses, in each case, free and clear of any Liens (except for Permitted Liens). (ii) The Company or one of its Subsidiaries has a valid right and license to use all Company Licensed IP. None of the foregoing (i) – (ii) will be adversely affected in any material respect by (nor will require the payment or grant of additional amounts or consideration as a result of) the execution, delivery, or performance of this Agreement nor the consummation of the transactions contemplated hereby.
(b) Schedule 4.17(b) sets forth a true, correct and complete list of all (i) Registered Owned IP; (ii) Domain Names constituting Company Owned IP; and (iii) all social media handles constituting Company Owned IP and material unregistered Marks, in each case, accurately specifying as to each of the foregoing, as applicable: (A) in the case of Registered Owned IP, the filing number, issuance or registration number, or other identifying details; (B) the owner and any other person other than the Company Group that has an ownership interest and the nature of such other person’s ownership interest; (C) the jurisdictions by or in which such Registered Owned IP has been issued, registered, or in which an application for such issuance or registration has been filed; and (D) the status and expiration date and (E) any liens or security interests that apply.
(c) All Registered Owned IP is subsisting, and, to the Knowledge of the Company, valid enforceable. Each item of Registered Owned IP is and has been at all times prosecuted, recorded, filed, and maintained, as applicable, in compliance with applicable Law or the rules of the applicable registrar, and none of the Registered Owned IP has been cancelled, abandoned, rejected, repudiated or otherwise terminated other than in the ordinary course of business. No Registered Owned IP is or has been involved in any interference, opposition, reissue, reexamination, revocation or equivalent proceeding, and no such proceeding has been threatened in writing with respect thereto. In the past six years, there have been no claims filed, served or threatened in writing, or to the Knowledge of the Company orally threatened, against the Company Group contesting the validity, use, ownership, enforceability, patentability, registrability, or scope of any Registered Owned IP. All registration, maintenance and renewal fees currently due in connection with any Registered Owned IP have been paid and all documents, recordations and certificates in
A-1-30
Table of Contents
connection therewith have been filed with the Authorities in the United States or foreign jurisdictions, as the case may be, for the purposes of prosecuting, maintaining and perfecting such rights and recording the Company Group’s ownership or interests therein.
(d) (i) The use of the Company Owned IP, and the conduct of the Business (including the manufacturing, development, marketing, licensing, sale, use, or distribution of the Company’s products and services) have not, to the Knowledge of the Company, in the past three years infringed, misappropriated, or otherwise violated and do not infringe, misappropriate, or otherwise violate any Intellectual Property rights of any Person. and no member of the Company Group has any current outstanding liability for any of the foregoing. (ii) There is no Action pending (and in the past six years, there have been no claims filed, served or threatened in writing, or to the Knowledge of the Company orally threatened, against any member the Company Group) either (x) alleging any conflict with, infringement, misappropriation, unauthorized use, or other violation of any Intellectual Property of a third Person (including any unsolicited written offers to license any such Intellectual Property), or (y) challenging the use, ownership, validity or enforceability of any Company Owned IP, and in each case, no member of the Company Group knows of any valid basis therefor.
(e) (i) To the Knowledge of the Company, in the past six years no third Person has conflicted with, infringed, misappropriated, used without authorization, or otherwise violated any Company Owned IP. (ii) In the past six years the Company Group has not filed, served, or threatened a third Person in writing with any claims alleging any conflict with, infringement, misappropriation, use without authorization, or other violation of any Company IP. (iii) There are no Actions pending that involve a claim against a third Person by the Company Group alleging infringement, misappropriation, use without authorization, or other violation of Company IP. (iv) The Company Group is not subject to any Order that adversely restricts the use, transfer, registration or licensing of any Company IP by any member of the Company Group.
(f) Each past and present employee, agent, consultant, and contractor who is or who has contributed to or participated in the creation or development of any material Intellectual Property on behalf of any member of the Company Group or any predecessor in interest thereto has executed a valid and enforceable written form of proprietary information and/or inventions agreement or similar written Contract with the Company Group under which such Person has validly and presently assigned all right, title and interest in and to such Intellectual Property to the Company (or such predecessor in interest, as applicable) (or all such rights, title and interest have vested or will vest in the Company or one of its Subsidiaries by operation of Law).
(g) Each past and present employee, agent, consultant, and contractor having access to Trade Secrets or other confidential or non-public information of the Company Group have entered into agreements with the Company Group under which such Person is obligated to maintain the confidentiality of the Company Group’s confidential information and other Trade Secrets. To the Knowledge of the Company, no party thereto is in default or breach of such confidentiality obligations.
(h) No government funding or facility of a university, college, other educational institution or research center was used in the development of any item of material Registered Owned IP that adversely affects the Company Group’s rights in such Intellectual Property. The Company is not part of any standards group which would require sharing Registered Owned IP with members of the standards group.
(i) None of the execution, delivery or performance by the Company of this Agreement or any of the Ancillary Agreements to which the Company is or will be a party or the consummation by the Company of the transactions contemplated hereby or thereby will (i) cause any item of Company Owned IP, or any material item of Company Licensed IP immediately prior to the Closing, to not be owned, licensed or available for use by the Company Group on substantially the same terms and conditions immediately following the Closing or (ii) require any additional payment obligations by the Company Group in order to use or exploit any other such Intellectual Property to the same extent as the Company Group was permitted immediately before the Closing.
(j) (i) Except with respect to the agreements listed on Schedule 4.14(a)(vi), the Company Group is not obligated under any material Contract to make any material payments by way of royalties, fees, or otherwise to any owner or licensor of, or other claimant to, any Intellectual Property.
(k) The Company Group has taken all necessary and otherwise reasonable steps necessary to maintain, protect and enforce the secrecy, confidentiality and value of all Trade Secrets held by them or otherwise used in the Business (including all source code for Company Software and all proprietary AI/ML), in each instance that
A-1-31
Table of Contents
are at least consistent with efforts undertaken by third Persons in the industry within which the Business is a part. No such Trade Secret has been disclosed by the Company Group to any third Person other than pursuant to the terms of a valid, written confidentiality agreement with such Person that (i) obligates such Person to maintain the confidentiality thereof, (ii) imposes perpetual confidentiality obligations with respect to trade secrets, and (iii) is in full force and effect, to the Knowledge of the Company, not breached, and legally enforceable by the Company Group.
(l) No Company Owned IP is subject to any technology or source code escrow arrangement or obligation. No person other than the Company Group (and its employees and contractors bound by reasonable confidentiality obligations and who have a need to know) has been granted by the Company Group an actual or contingent right to access or possess (including pursuant to escrow), a copy in any form of the source code of the Company Software, or will be entitled to obtain access to or possession of such source code as a result of the execution, delivery and performance of by the Company of this Agreement. The Company Group is in actual possession and control of the source code of any Company Software and all related documentation and materials.
(m) In the past three years, the Company Group has complied in all material respects with all (i) applicable Data Protection Laws, (ii) Contracts to which the Company is a party regarding the Processing, privacy, security, and confidentiality of Personal Information; and (iii) policies and notices regarding the Processing of Personal Information established by the Company Group regarding the operation of the business as currently conducted (the “Privacy Policies” and, collectively (i)-(iii) the “Privacy Obligations”) that are made available to all visitors to the Sites. For purposes of this subsection (m), “Sites” shall mean, any websites or applications made available by the Company Group to the general public. The Privacy Policies accurately describe the Company Group’s collection, disclosure and use of Personal Information in all material respects, and materially comply with all applicable Data Protection Laws. In the past three years, none of the marketing materials and/or advertisements provided by the Company Group have been in material violation of applicable Data Protection Laws.
(n) In the past three years, there have been no written complaints, audits, proceedings, investigations, or claims pending or that have been made against the Company Group by any Authority, or by any Person, in respect of Processing of Personal Information by the Company Group or relating to Security Incidents. The Company Group (i) has implemented commercially reasonable physical, technical, organizational and administrative security measures and policies designed to protect the confidentiality, integrity and availability of all Personal Information Processed or maintained by the Company Group and confidential information, including from unauthorized physical or virtual access, use, modification, acquisition, disclosure or other misuse, and (ii) except as would not be material to the Company Group, requires by written contract all third party providers who Process Personal Information on the Company Group’s behalf to implement commercially reasonable security and adequate policies consistent with applicable Data Protection Laws. In the past three years, the Company Group has not experienced any unauthorized access, use, disclosure or modification of Personal Information maintained by the Company Group (a “Security Incident”). To the Knowledge of the Company, in the past three years, no service provider (in the course of providing services for or on behalf of the Company Group) has suffered any material Security Incident relating to its Processing of Personal Information on the Company Group’s behalf, and each such service provider is in compliance with the terms of its Contracts with the Company Group in all material respects.
(o) The execution, delivery and performance of this Agreement, including the transfer of any material Personal Information and the consummation of the transactions contemplated hereby materially comply with all Data Protection Laws. Except as would not be material to the Company Group, the Company Group has all necessary authority and lawful basis, and has at all times made all disclosures to, and obtained any necessary consents from, users, customers, employees, contractors and other applicable Persons required by all Data Protection Laws.
(p) The Company Information Systems and Company Software and all Software that is used by the Company Group, to the Knowledge of the Company, are free of all viruses, worms, keylogger software, “time bombs,” “back doors,” “trap doors,” Trojan horses and other material known contaminants and does not contain any bugs, errors, faults, malicious code, disabling devices, or problems of a material nature that would disrupt its operation or have an adverse impact the functionality of or permit unauthorized access or to disable or otherwise harm any computer, Software or other IT Systems. None of the Company Software is subject to any Copyleft Licenses. The Company Group is in material compliance with all Publicly Available Software license terms applicable to any Publicly Available Software licensed to or used by the Company Group. The Company Group has used commercially reasonable efforts to maintain the confidentiality of the source code and confidential system documentation relating to all Company Software, including proprietary AI/ML.
A-1-32
Table of Contents
(q) The Company Information Systems constitute all IT Systems used in or necessary for the operation of the business of the Company Group. The Company Group has implemented and maintained (or, where applicable, has required its vendors to maintain) in material compliance with the Company’s internal standards as well as its contractual obligations to other Persons (including any applicable warranties or other user instructions from vendors), commercially reasonable security, and adequate policies and procedures regarding the performance, security, confidentiality, availability, and integrity of the Company Information Systems from unauthorized physical or virtual access, use, modification, acquisition, disclosure or other misuse. To the Knowledge of the Company, there has been no material breach, intrusion, unauthorized access to or use of the Company Information Systems or other security incident that has impacted the integrity or availability of the Company Information Systems, nor has there been any downtime or unavailability of the Company Information Systems that resulted in a material disruption of the Business, in each case, in the past three years. The Company Information Systems and Company Software (i) are adequate and sufficient (including with respect to working condition and capacity) for the operations of the Business and perform in all material conformance with their documentation and functional specifications, (ii) operate and perform in all material respects as currently required to conduct and operate the Business; (iii) are free from any material software defect. Aside from the outages described in Schedule 4.17(q), there are currently no known and unresolved malfunctions, misconfigurations, vulnerabilities, or failures with respect to any Company Information System that has had a material effect on the operations of the Company Group. The Company Group has implemented commercially reasonable backup, anti-virus, malware protection, server patch, intrusion detection, and disaster recovery technology, policies and procedures and all other security and incident detection and response measures (including access control protocols and capabilities for proprietary AI/ML).
(r) The Company Group maintains industry standard access control protocols and capabilities that secure access to the Company AI Products and the Data used to train, teach, or improve any Company AI Product and there has been, to the Knowledge of the Company, (A) no unauthorized access to the Company Software used in a Company AI Product, or to the Data used to train, teach, or improve any Company AI Product; (B) no unauthorized access to the IT Systems used in the development, improvement or operation of Company AI Products; and (C) no use of the Company AI Product by a third party to engage in unlawful activity. The Company AI Products and, to the Knowledge of the Company, other AI/ML used (or held for use) by the Company Group do not permit or cause unauthorized access to, or disruption, impairment, modification, recordation, misuse, transmission, disablement or destruction of any Software, Data, systems or other materials.
(s) The Company Group maintains a technical description of any neural networks used in or with any Company AI Products that is a sufficiently detailed so that the neural network can be modified, debugged and improved from time to time by programmers skilled in the development of AI/ML. For each Company AI Product that is used to make (or facilitate the making of) decisions, the Company Group have materially complied with all the Laws applicable to the Company AI Product.
(t) The Company Group is in material compliance with industry standards policies and procedures relating to the ethical or responsible use of AI/ML. There has been (1) no material non-compliance alleged in writing against the Company Group with any such policies or and procedures challenging the Company Group’s ethical use of AI/ML; (2) no material failure alleged in writing against the Company Group of a Company AI Product failing to satisfy the ethical or responsible use requirements or guidelines specified in any such policies or procedures; (3) no written complaint, claim, proceeding or litigation against the Company Group alleging that training data used in the development, training, improvement or testing of any Company AI Product was falsified, biased, untrustworthy or manipulated in an unethical or unscientific way; and to the Knowledge of the Company, no report, finding or impact assessment of any internal or external auditor, technology review committee, independent technology consultant, whistle-blower, transparency or privacy advocate, labor union, journalist or academic that makes any such allegation; and (4) no written request to the Company Group from regulators or legislators concerning any Company AI Product or its proprietary AI/ML.
(u) The Company Group has complied with all license terms applicable to all third-party Data used by the Company Group to train, teach or improve any AI/ML that is owned by the Company Group.
4.18 Employees; Employment Matters.
(a) The Company has made available to Parent or its counsel a true, correct and complete list of each person currently employed by the Company Group and each such person’s principal location of employment, employer, hire date, status as exempt or non-exempt from overtime Laws, base or hourly wage or other compensation
A-1-33
Table of Contents
rate (as applicable), commission, bonus or other incentive opportunity, leave status and accrued vacation and paid-time-off as of the date such schedule was made available (which date shall be within 10 days of the date of this Agreement).
(b) The Company has made available to Parent or its counsel a true, correct and complete list of each person currently engaged by the Company Group as a consultant or an independent contractor, such person’s principal location of engagement, date of retention, and the compensation arrangement for the person as of the date such schedule was made available (which date shall be within 10 days of the date of this Agreement). The Company Group has properly classified all service providers as either self-employed, employees or independent contractors and as exempt or non-exempt for all purposes in all material respects and has made all necessary filings in connection with services provided by, and compensation paid to, such service providers in all material respects.
(c) The Company Group is not a party to, bound by, negotiating or required to negotiate any collective bargaining agreement or other agreement with a labor union or other labor organization. No employees of the Company Group or any of its Subsidiaries are represented by any labor union or other labor organization, and, since January 1, 2023, to the Knowledge of the Company, there has been no activities or proceeding by a labor union or other labor organization seeking to organize any employees of the Company Group and no demand for recognition or certification as the exclusive bargaining representative of any employees has been made by or on behalf of any labor union or other labor organization. There is no labor strike, material slowdown or material work stoppage or lockout pending or, to the Knowledge of the Company, threatened in writing against the Company Group, and, since January 1, 2023, the Company Group has not experienced any strike, material slowdown, material work stoppage or lockout, grievance or labor dispute or similar activity in respect of the business of the Company Group that may, individually or in the aggregate, interfere in any material respect with the respective business activities of the Company.
(d) There are no pending or, to the Knowledge of the Company, threatened in writing material Actions against the Company Group (including, without limitation, any such Actions under any worker’s compensation policy or long-term disability policy) by any of its current or former employees, independent contractors or job applicants. There is no material unfair labor practice charge or complaint pending or, to the Knowledge of the Company, threatened in writing before any applicable Authority relating to employees of the Company Group. Since January 1, 2023, the Company Group has been in compliance in all material respects with notice and other requirements under the Workers’ Adjustment Retraining and Notification Act of 1988, as amended, or any similar state or local statute, rule or regulation relating to plant closings and layoffs (collectively, the “WARN Act”). There is no ongoing location closing, employee layoff, or relocation activities that would trigger notice or any other requirements under the WARN Act.
(e) The Company Group is, and since January 1, 2023 has been, in compliance in all material respects with all applicable Laws relating to employment, including all applicable Laws relating to wages, hours, overtime, collective bargaining, equal employment opportunity, discrimination, harassment (including, but not limited to sexual harassment), retaliation, immigration, verification of identity and employment authorization of individuals employed in the United States, employee leave, disability rights or benefits, employment and reemployment rights of members and veterans of the uniformed services, paid time off/vacation, unemployment insurance, safety and health, workers’ compensation, pay equity, restrictive covenants, whistleblower rights, child labor, classification of employees and independent contractors, meal and rest breaks, reimbursement of business expenses, and the collection and payment of withholding or social security Taxes.
(f) Schedule 4.18(f) discloses each individual who is employed by the Company pursuant to a visa and the expiration date of such visa.
(g) To the Knowledge of the Company, no Key Employee is a party to or bound by any enforceable confidentiality agreement, non-competition agreement or other restrictive covenant (with any Person) that materially interferes with: (i) the performance by such Key Employee of his or her duties or responsibilities as an officer or employee of the Company Group or (ii) the Company Group’s business or operations. No Key Employee has given notice (written or oral) of his or her definite intent to terminate his or her employment with the Company Group, nor has the Company Group provided notice (written or oral) of the termination of the employment of any of the foregoing.
(h) Since January 1, 2023, the Company Group has not received written notice of any material claim or litigation relating to an allegation of discrimination, retaliation, harassment (including sexual harassment), or sexual misconduct; nor is there any outstanding obligation for the Company Group under any settlement relating to such matters and to the Knowledge of the Company, no such claim or litigation has been threatened in writing.
A-1-34
Table of Contents
(i) As of the date hereof and since January 1, 2023, there have been no material audits of the Company Group by any Authority, under any applicable federal, state or local occupational safety and health Law and Orders (collectively, “OSHA”) against the Company Group, nor have there been any related charges, fines, or penalties, and the Company Group has been in compliance in all material respects with OSHA.
(j) All employees of the Company Group are legally authorized to work in the location in which they work, and the Company Group maintains accurate records concerning all I-9 filings for employees working in the United States.
4.19 Withholding. Except as disclosed on Schedule 4.19, all reasonably anticipated obligations of the Company Group with respect to employees of the Company Group (except for those related to wages during the pay period immediately prior to the Closing Date, arising in connection with the consummation of the transactions contemplated hereby or arising in the ordinary course of business consistent with past practices), whether arising by operation of Law, or by contract, for salaries, bonuses and vacation pay/paid time off to such employees in respect of the services rendered by any of them prior to the date hereof have been or will be paid by the Company or accrued on the Company Financial Statements prior to the Closing Date.
4.20 Employee Benefits.
(a) Schedule 4.20(a) sets forth a correct and complete list of all material Plans. With respect to each Plan, the Company has made available to Parent or its counsel a true and complete copy, to the extent applicable, of: (i) each writing constituting a part of such Plan and all amendments thereto, including all plan documents, material employee communications, benefit schedules, trust agreements, and insurance contracts and other funding vehicles; (ii) a written description of such Plan if such Plan is not set forth in a written document; (iii) the current summary plan description and any material modifications thereto; (iv) the most recent annual financial and actuarial reports; (v) the most recent determination or advisory letter received by the Company from the IRS regarding the tax-qualified status of such Plan; (vi) the most recent written results of all required compliance testing since January 1, 2023; and (vii) all material correspondence to or from the IRS, the United States Department of Labor, the Pension Benefit Guaranty Corporation or any other Authority received in the last three years with respect to any Plan.
(b) No Plan is or has at any time been (i) subject to Title IV or Section 302 of ERISA or Section 412 or 4971 of the Code, (ii) a “multiemployer plan” (as defined in Section 3(37) of ERISA), (iii) a “multiple employer plan” (within the meaning of the Code or ERISA), (iv) a “multiple employer welfare arrangement” (within the meaning of Section 3(40) of ERISA), (v) a “funded welfare plan” within the meaning of Section 419 of the Code or (iv) sponsored by a human resources or benefits outsourcing entity, professional employer organization or other similar vendor or provider. Neither the Company nor any ERISA Affiliate has ever maintained, established, participated in or contributed to, or is or has been obligated to contribute to, or has otherwise incurred any obligation or liability (including any contingent liability) under, any multiemployer plan or has withdrawn at any time since January 1, 2023 from any multiemployer plan or incurred any withdrawal liability which remains unsatisfied.
(c) With respect to each Plan that is intended to qualify under Section 401(a) of the Code, such Plan, including its related trust, has received a determination letter (or may rely upon opinion letters in the case of any prototype plans) from the IRS that it is so qualified and that its trust is exempt from Tax under Section 501(a) of the Code, and, to the Knowledge of the Company, nothing has occurred with respect to the operation of any such Plan that could reasonably be expected to cause the loss of such qualification or exemption.
(d) There are no pending or, to the Knowledge of the Company, threatened material Actions against or relating to the Plans, the assets of any of the trusts under such Plans or the Plan sponsor or the Plan administrator, or against any fiduciary of any Plan with respect to the operation of such Plan (other than routine benefits claims). No Plan is presently under audit or examination (nor has written notice been received of a potential audit or examination) by any Authority.
(e) Each Plan has been established, administered, maintained and funded in accordance with its terms and in compliance in all material respects with the applicable provisions of ERISA, the Code and other applicable Laws. There is not now, nor, to the Knowledge of the Company, do any circumstances exist that could give rise to, any requirement for the posting of security with respect to a Plan or the imposition of any lien on the assets of the Company under ERISA or the Code. All premiums due or payable with respect to insurance policies funding any Plan have been made or paid in full or, to the extent not required to be made or paid on or before the date hereof, have been fully reflected on the Company Financial Statements.
A-1-35
Table of Contents
(f) None of the Plans provide retiree or post-employment health, disability, life insurance or other welfare benefits and no member of the Company Group has any obligation to provide such benefits, except as may be required by Section 4980B of the Code, Section 601 of ERISA or any other applicable Law. There has been no material violation of the “continuation coverage requirement” of “group health plans” as set forth in Section 4980B of the Code and Part 6 of Subtitle B of Title I of ERISA with respect to any Plan to which such continuation coverage requirements apply.
(g) Except as set forth on Schedule 4.20(g), neither the execution and delivery of this Agreement nor the consummation of the transactions contemplated hereby will (either alone or in combination with another event) (i) result in any payment becoming due, or increase the amount of any compensation or benefits due, to any current or former employee of the Company with respect to any Plan; (ii) increase any benefits otherwise payable under any Plan; (iii) result in the acceleration of the time of payment or vesting of any such compensation or benefits; or (iv) result in the payment of any amount that would, individually or in combination with any other such payment, be an “excess parachute payment” within the meaning of Section 280G of the Code. No Person is entitled to receive any additional payment (including any tax gross-up or other payment) from the Company as a result of the imposition of the excise taxes required by Section 4999 of the Code or any taxes required by Section 409A of the Code.
(h) Each Plan that is a “nonqualified deferred compensation plan” (as defined in Section 409A(d)(1) of the Code) is in all respects in documentary compliance with, and has been administered in all respects in compliance with, Section 409A of the Code.
(i) Each Plan that is subject to the Patient Protection and Affordable Care Act, as amended by the Health Care and Education Reconciliation Act of 2010 (the “Affordable Care Act”) has been established, maintained and administered in compliance with the requirements of the Affordable Care Act.
(j) All Plans subject to the laws of any jurisdiction outside of the United States (“Non-U.S. Plans”) are listed on Schedule 4.20(j). All Non-U.S. Plans comply in all material respects with applicable local Law, and all such plans that are intended to be funded and/or book-reserved are funded and/or book reserved, as appropriate, based upon reasonable actuarial assumptions, and if they are intended to qualify for special tax treatment, meet all requirements for such treatment. As of the date hereof, there is no pending or, to the Knowledge of the Company, threatened material litigation relating to any Non-U.S. Plan.
4.21 Real Property.
(a) Except as set forth on Schedule 4.21, the Company Group does not own nor has it ever owned, or otherwise have an interest in, any Real Property, including under any Real Property Lease. The Leases are the only Contracts pursuant to which the Company leases, subleases or uses any Real Property or right in any Real Property. The Company Group has provided to Parent and Merger Sub accurate and complete copies of all Leases. The Company Group has good, valid and subsisting title to its respective leasehold estates in all the Real Property it Leases, which Real Property consists of the research, manufacturing, and office facilities described on Schedule 4.21, free and clear of all Liens. The Company Group has not materially breached or violated any local zoning ordinance, and no notice from any Person has been received by the Company Group or served upon the Company Group claiming any violation of any local zoning ordinance.
(b) With respect to each Lease: (i) it is valid, binding and enforceable in accordance with its terms and in full force and effect; (ii) all rents and additional rents and other sums, expenses and charges due thereunder have been paid; (iii) the Company Group has been in peaceable possession of the premises leased thereunder since the commencement of the original term thereof; (iv) no waiver, indulgence or postponement of the Company Group’s obligations thereunder has been granted by the lessor; (v) the Company Group has performed all material obligations imposed on it under such Lease and there exist no default or event of default thereunder by the Company Group or, to the Company’s Knowledge, by any other party thereto; (vi) there exists, to the Company’s Knowledge, no occurrence, condition or act which, with the giving of notice, the lapse of time or the happening of any further event or condition, would reasonably be expected to become a default or event of default by the Company Group thereunder or by the counterparty thereunder; (vii) to the Company’s Knowledge, there are no outstanding claims of breach or indemnification or notice of default or termination thereunder; and (viii) the Company Group has not exercised early termination options, if any, under any such Lease. The Company Group holds the leasehold estate established under the Leases free and clear of all Liens, except for Liens of mortgagees made by the owners of the Real Property on which such leasehold estate is located or other Permitted Liens. The Real Property leased by the Company Group is in
A-1-36
Table of Contents
a state of maintenance and repair in all material respects adequate and suitable for the purposes for which it is presently being used, and there are no material repair or restoration works likely to be required in connection with such leased Real Property. The Company Group is in physical possession and actual and exclusive occupation of the whole of the leased Real Property subject to such Leases, none of which is subleased or assigned to another Person. Each Lease is a lease of all useable square footage of the premises located at each leased Real Property. To the Knowledge of the Company, the Company does not owe any brokerage commission with respect to any Real Property. To the Company’s Knowledge, there is no condemnation or similar proceeding pending or threatened with respect to any Real Property leased by the Company Group or any portion thereof.
4.22 Tax Matters. Except as set forth on Schedule 4.22,
(a) The Company and each of its Subsidiaries have duly and timely filed all income and other material Tax Returns which are required to be filed by it, and have paid all material Taxes (whether or not shown on such Tax Returns) which have become due, and all such Tax Returns of the Company and each of its Subsidiaries are true, correct and complete and accurate in all material respects.
(b) There is no Action, assessment, deficiency or proposed adjustment with respect to a material amount of Taxes that has been asserted or assessed, or that is pending or proposed in writing, by any Authority against any member of the Company Group that remains unresolved or unpaid.
(c) No statute of limitations in respect of the assessment or collection of any Taxes of any member of the Company Group has been waived or extended (other than pursuant to extensions of time to file Tax Returns obtained in the ordinary course of business), which waiver or extension is in effect.
(d) Each member of the Company Group has duly withheld or collected and paid over to the applicable Taxing Authority in a timely manner all material Taxes required to be withheld or collected by such member of the Company Group in connection with any amounts paid or owing to any employee, creditor, independent contractor or other third party and has otherwise complied in all material respects with all applicable withholding and related reporting requirements with respect to such Taxes.
(e) Each member of the Company Group has collected and remitted to the applicable Taxing Authority all material sales Taxes required to be collected by such member of the Company Group.
(f) No member of the Company Group has requested any letter ruling, technical advice, a change of any method of accounting, or any similar request that is in progress or pending with any Authority with respect to any Taxes.
(g) There is no Lien (other than Permitted Liens) for Taxes upon any of the assets of any member of the Company Group.
(h) No member of the Company Group has received any written request from a Taxing Authority in a jurisdiction where a member of the Company Group has not paid any Tax or filed Tax Returns asserting that a member of the Company Group is or may be subject to Tax in such jurisdiction, and no member of the Company Group has a permanent establishment (within the meaning of an applicable Tax treaty) or other fixed place of business in a country other than the country in which it is organized.
(i) No member of the Company Group is a party to any Tax sharing, Tax indemnity or Tax allocation Contract (other than a contract entered into in the ordinary course of business the principal purpose of which is not related to Taxes).
(j) No member of the Company Group has been a member of an affiliated, consolidated, combined or unitary group filing for U.S. federal, state or local income Tax purposes (other than a group the common parent of which was the Company or any of its Subsidiaries).
(k) No member of the Company Group has any liability for the Taxes of any other Person (other than the Company Group): (1) under Treasury Regulations Section 1.1502-6 (or any similar provision of applicable Law), (2) as a transferee or successor or (3) otherwise by operation of applicable Law.
A-1-37
Table of Contents
(l) No member of the Company Group is a “United States real property holding corporation” within the meaning of Section 897(c)(2) of the Code during the applicable period specified in Section 897(c)(1)(A)(ii) of the Code.
(m) No member of the Company Group has been a party to any “listed transaction” or failed to report any “reportable transaction” as such terms are defined in Section 6707A(c) of the Code and Treasury Regulations Section 1.6011-4(b) and as such reporting is required pursuant thereto.
(n) No member of the Company Group has been a party to any transaction treated by the parties as a distribution of stock qualifying for tax-free treatment under Section 355 of the Code in the five years prior to the date of this Agreement.
(o) No member of the Company Group is a “controlled foreign corporation” as defined in Section 957 of the Code or is a “passive foreign investment company” within the meaning of Section 1297 of the Code.
(p) No member of the Company Group will be required to include any material item of income or exclude any material item of deduction for any taxable period ending after the Closing Date as a result of: (i) adjustment under Section 481 of the Code (or any corresponding or similar provision of state, local or non-U.S. income Tax Law) by reason of a change in method of accounting for a taxable period ending on or before the Closing Date; (ii) any “closing agreement” described in Section 7121 of the Code (or any corresponding or similar provision of state, local or non-U.S. income Tax Law) executed on or before the Closing Date; (iii) any installment sale or open transaction disposition made on or before the Closing Date; (iv) any prepaid amount or deferred revenue realized or received on or before the Closing Date; (v) any intercompany transaction or excess loss account described in Treasury Regulations under Section 1502 of the Code (or any corresponding or similar provision of state, local or non-U.S. income Tax Law); or (vi) election under Section 965 of the Code.
(q) The Company is and has been treated as a C corporation for U.S. federal, state and local income tax purposes since the date of its formation. Schedule 4.22(q) sets forth the U.S. federal income tax classification of each Subsidiary of the Company.
(r) No member of the Company Group is aware of any fact or circumstance (without conducting independent inquiry or diligence of the other relevant party), and has not knowingly taken or agreed to take any action (or failed to take any action), that would reasonably be expected to prevent or impede the Domestication from qualifying for the Domestication Intended Tax Treatment or the Merger from qualifying for the Merger Intended Tax Treatment.
(s) The Company is not an “investment company” within the meaning of Section 368(a)(2)(F) of the Code.
4.23 Environmental Laws. The Company Group has complied and is in material compliance with all Environmental Laws, and there are no Actions pending or, to the Knowledge of the Company, threatened against the Company Group alleging any failure to so comply. The Company Group has not (i) received any written notice of any alleged claim, violation of or liability under any Environmental Law nor any claim of potential liability with regard to any Hazardous Material, which has not heretofore been cured or for which there is any remaining liability; (ii) to the Knowledge of the Company, disposed of, emitted, discharged, handled, stored, transported, used or released any Hazardous Material, arranged for the disposal, discharge, storage or release of any Hazardous Material or exposed any employee or other individual or property to any Hazardous Material so as to give rise to any liability or corrective or remedial obligation under any Environmental Laws; or (iii) entered into any agreement that may require it to guarantee, reimburse, pledge, defend, hold harmless or indemnify any other Person with respect to liabilities arising out of Environmental Laws or the Hazardous Material Activity. To the Knowledge of the Company, there are no Hazardous Materials in, on or under any properties owned, leased or used at any time by the Company Group that could give rise to any liability or corrective or remedial obligation of the Company Group under any Environmental Laws.
4.24 Finders’ Fees. Except as set forth on Schedule 4.24, there is no investment banker, broker, finder or other intermediary which has been retained by or is authorized to act on behalf of the Company or any of its respective Affiliates who might be entitled to any fee or commission from the Company, Merger Sub, Parent or any of its respective Affiliates upon consummation of the transactions contemplated by this Agreement or any of the Ancillary Agreements.
A-1-38
Table of Contents
4.25 Directors and Officers. Schedule 4.25 sets forth a true, correct and complete list of all directors and officers of the Company and each Subsidiary as of the date of this Agreement.
4.26 Certain Business Practices.
(a) The Company currently is and has at all times been, in compliance with applicable Laws related to (i) anti-corruption or anti-bribery, including the U.S. Foreign Corrupt Practices Act of 1977, 15 U.S.C. §§78dd-1, et seq., and any other equivalent or comparable Laws of other countries (collectively, “Anti-Corruption Laws”), (ii) economic sanctions administered, enacted or enforced by any Authority (collectively, “Sanctions Laws”), (iii) export controls, including the U.S. Export Administration Regulations, 15 C.F.R. §§730, et seq., and any other equivalent or comparable Laws of other countries (collectively, “Export Control Laws”), (iv) anti-money laundering, including the Money Laundering Control Act of 1986, 18 U.S.C. §§1956, 1957, and any other equivalent or comparable Laws of other countries (collectively, “Anti-Money Laundering Laws”), (v) anti-boycott regulations, as administered by the U.S. Department of Commerce, and (vi) importation of goods, including Laws administered by the U.S. Customs and Border Protection, Title 19 of the U.S.C. and C.F.R., and any other equivalent or comparable Laws of other countries (collectively, “International Trade Control Laws”).
(b) Neither the Company nor, to the Knowledge of the Company, any Representative of the Company (acting on behalf of the Company), is or is acting under the direction of, on behalf of or for the benefit of a Person that is, (i) the subject of Sanctions Laws or identified on any sanctions or similar lists administered by an Authority, including the U.S. Department of the Treasury’s Specially Designated Nationals List, the U.S. Department of Commerce’s Denied Persons List and Entity List, the U.S. Department of State’s Debarred List, HM Treasury’s Consolidated List of Financial Sanctions Targets and the Investment Bank List, or any similar list enforced by any other relevant Authority, as amended from time to time, or any Person owned or controlled by any of the foregoing (collectively, “Prohibited Party”); (ii) the target of any Sanctions Laws; (iii) located, organized or resident in a country or territory that is, or whose government is, the target of comprehensive trade sanctions under Sanctions Laws, including, as of the date of this Agreement, Cuba, Iran, North Korea, Russia, Sudan and Syria; or (iv) an officer or employee of any Authority or public international organization, or officer of a political party or candidate for political office. Neither the Company nor, to the Knowledge of the Company, any Representative of the Company (acting on behalf of the Company), (A) has participated in any transaction involving a Prohibited Party, or a Person who is the target of any Sanctions Laws, or any country or territory that was during such period or is, or whose government was during such period or is, the target of comprehensive trade sanctions under Sanctions Laws, (B) to the Knowledge of the Company, has exported (including deemed exportation) or re-exported, directly or indirectly, any commodity, software, technology, or services in violation of any applicable Export Control Laws or (C) has participated in any transaction in violation of or connected with any purpose prohibited by Anti-Corruption Laws or any applicable International Trade Control Laws, including support for international terrorism and nuclear, chemical, or biological weapons proliferation.
(c) The Company has not received written notice of, nor, to the Knowledge of the Company, any of its Representatives is or has been the subject of, any investigation, inquiry or enforcement proceedings by any Authority regarding any offense or alleged offense under Anti-Corruption Laws, Sanctions Laws, Anti-Money Laundering Laws, Export Control Laws or International Trade Control Laws (including by virtue of having made any disclosure relating to any offense or alleged offense) and, to the Knowledge of the Company, there are no circumstances likely to give rise to any such investigation, inquiry or proceeding.
4.27 Insurance. All forms of insurance owned or held by and insuring the Company Group are set forth on Schedule 4.27, and such policies are in full force and effect. All premiums due with respect to such policies covering all periods up to and including the Closing Date have been paid, no notice of cancellation or termination has been received with respect to any such policy which was not replaced on substantially similar terms prior to the date of such cancellation or termination and there is no claim by the Company Group or, to the Company’s Knowledge, any other Person pending under any of such insurance policies as to which coverage has been questioned, denied or disputed by the underwriters or issuers of such policies. There is no existing default or event which, to the Company’s Knowledge, with or without the passage of time or the giving of notice or both, would constitute noncompliance with, or a default under, any such policy or entitle any insurer to terminate or cancel any such policy. Such policies will not in any way be affected by or terminate or lapse by reason of the transactions contemplated by this Agreement or the Ancillary Agreements. The insurance policies to which the Company Group is a party are of at least like character and amount as are carried by like businesses similarly situated and sufficient for compliance with all requirements of all Material Contracts to which the Company Group is a party or by which the Company Group is bound. Since January 1, 2023,
A-1-39
Table of Contents
no member of the Company Group has been refused any insurance with respect to its assets or operations or had its coverage limited by any insurance carrier to which it has applied for any such insurance or with which it has carried insurance. No member of the Company Group has any self-insurance arrangements. No fidelity bonds, letters of credit, performance bonds or bid bonds have been issued to or in respect of any member of the Company Group.
4.28 Related Party Transactions. Except as set forth in Schedule 4.28 or as contemplated by this Agreement, no Affiliate of the Company or any of its Subsidiaries, Company Stockholder, current or former director, manager, officer or employee of any Person in the Company or any immediate family member or Affiliate of any of the foregoing (a) is a party to any Contract, or has otherwise entered into any transaction, understanding or arrangement, with a member of the Company Group, (b) owns any asset, property or right, tangible or intangible, which is used by a member of the Company Group, or (c) is a borrower or lender, as applicable, under any Indebtedness owed by or to a member of the Company Group since January 1, 2023.
4.29 No Trading or Short Position. None of the Company Group or any of their respective managers and officers, members and employees has engaged in any short sale of Parent’s voting stock or any other type of hedging transaction involving Parent’s securities (including, without limitation, depositing shares of Parent’s securities with a brokerage firm where such securities are made available by the broker to other customers of the firm for purposes of hedging or short selling Parent’s securities).
4.30 Exchange Act. No member of the Company Group is currently (nor has either previously been) subject to the requirements of Section 12 of the Exchange Act.
4.31 Top Customers and Top Suppliers.
(a) Schedule 4.31(a) sets forth, as of the date of this Agreement, the top 10 customers based on aggregate dollar value of the Company Group’s transaction volume with such counterparty (a “Top Customer”) and the top 10 vendors of the Company Group based on aggregate spend of such counterparty (a “Top Supplier”), in each case, during the trailing 12 months for the period ending December 31, 2025.
(b) Except as set forth in Schedule 4.31(b), none of the Top Customers or Top Suppliers has, as of the date of this Agreement, informed in writing any of the Company or any of the Company’s Subsidiaries that it will, or, to the Knowledge of the Company, has threatened in writing to, terminate, cancel or materially limit or materially and adversely modify any of its existing business with a member of the Company Group (other than due to the expiration of an existing contractual arrangement), and to the knowledge of the Company, none of the Top Customers or Top Supplier is, as of the date of this Agreement, otherwise involved in or threatening a material dispute against a member of the Company Group or their respective businesses.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB
Except as disclosed in the Parent SEC Documents filed with or furnished to the SEC prior to the date of this Agreement (to the extent the qualifying nature of such disclosure is reasonably apparent from the content of such Parent SEC Documents, but excluding any risk factor disclosures or other similar cautionary or predictive statements therein), it being acknowledged that nothing disclosed in such Parent SEC Documents shall be deemed to modify or qualify the representations and warranties set forth in Sections 5.1, 5.3 or 5.8, Parent and Merger Sub (the “Parent Parties”) hereby represent and warrant to the Company that each of the following representations and warranties are true, correct and complete as of the date of this Agreement and as of the Closing Date:
5.1 Corporate Existence and Power. Parent is a company duly incorporated, validly existing and in good standing under the Laws of the Cayman Islands. The Merger Sub is a corporation duly incorporated and validly existing under the Laws of the State of Delaware. Merger Sub does not hold and has not held any material assets or incurred any material liabilities, and has not carried on any business activities other than in connection with the Merger. Each of the Parent Parties has all requisite power and authority, corporate and otherwise, to own and operate its properties and assets and to carry on its business as presently conducted.
5.2 Merger Sub. Merger Sub was formed solely for the purpose of engaging in the transactions contemplated hereby and activities incidental thereto. Either Parent or a wholly owned (direct or indirect) Subsidiary of Parent owns beneficially and of record all of the outstanding capital stock of Merger Sub.
A-1-40
Table of Contents
5.3 Corporate Authorization. Each of the Parent Parties has all requisite corporate power and authority to execute and deliver this Agreement and the Ancillary Agreements to which it is a party and to consummate the transactions contemplated hereby and thereby, in the case of the Merger, subject to receipt of the Parent Shareholder Approval. The execution and delivery by each of the Parent Parties of this Agreement and the Ancillary Agreements to which it is a party and the consummation by each of the Parent Parties of the transactions contemplated hereby and thereby have been duly authorized by all necessary corporate action on the part of such Parent Party. No other corporate proceedings on the part of such Parent Party are necessary to authorize this Agreement or the Ancillary Agreements to which it is a party or to consummate the transactions contemplated by this Agreement (other than, in the case of the Domestication and the Merger, the receipt of the Parent Shareholder Approval) or the Ancillary Agreements. This Agreement and the Ancillary Agreements to which such Parent Party is a party have been duly executed and delivered by such Parent Party and, assuming the due authorization, execution and delivery by each of the other parties hereto and thereto (other than a Parent Party), this Agreement and the Ancillary Agreements to which such Parent Party is a party constitute a legal, valid and binding obligation of such Parent Party, enforceable against such Parent Party in accordance with their respective terms, subject to the Enforceability Exceptions. Approval of (i) the Parent Certificate of Incorporation and Parent Bylaws requires a special resolution under Cayman Islands Law, being an affirmative vote of the holders of a majority of at least two-thirds of the outstanding Parent Common Shares entitled to vote, who attend and vote thereupon (as determined in accordance with the Parent Articles), (ii) this Agreement, the Merger, the Issuance Proposal, the Board Proposal, the LTIP Proposal, and the Adjournment Proposal are subject to the passing of, in each case, an ordinary resolution under Cayman Islands Law, being an affirmative vote of the holders of at least a majority of the outstanding Parent Common Shares entitled to vote, who attend and vote thereupon (as determined in accordance with the Parent Articles), (iii) the Domestication, a special resolution of the holders of the Parent Ordinary Shares, and (iv) with respect to any other proposal proposed to the holders of Parent Common Shares, the requisite approval required under the Parent Articles, the Cayman Companies Act or any other applicable Law, in each case, at Parent’s Shareholder Meeting. The affirmative vote or written consent of the sole shareholder of Merger Sub is the only vote of the holders of any of Merger Sub’s capital stock necessary to adopt this Agreement and approve the Merger and the consummation of the other transactions contemplated hereby.
5.4 Governmental Authorization. Assuming the accuracy of the representations and warranties of the Company set forth in Section 4.3, none of the execution, delivery or performance of this Agreement or any Ancillary Agreement by a Parent Party or the consummation by a Parent Party of the transactions contemplated hereby and thereby requires any consent, approval, license or other action by or in respect of, or registration, declaration or filing with any Authority except for (a) any SEC or Nasdaq filings and approval required to consummate the transactions contemplated hereunder, (b) filing with the Secretary of State of the State of Delaware a Certificate of Domestication with respect to the Domestication, (c) filings required to be made with the Cayman Registrar in connection with the Domestication, and (d) the filing of the Certificate of Merger with the Secretary of State of the State of Delaware pursuant to the DGCL.
5.5 Non-Contravention. The execution, delivery and performance by a Parent Party of this Agreement or the consummation by a Parent Party of the transactions contemplated hereby and thereby do not and will not (a) contravene or conflict with the organizational or constitutive documents of the Parent Parties, or (b) contravene or conflict with or constitute a violation of any provision of any Law or any Order binding upon the Parent Parties.
5.6 Finders’ Fees. Except for the Persons identified on Schedule 5.6, there is no investment banker, broker, finder or other intermediary which has been retained by or is authorized to act on behalf of the Parent Parties or their Affiliates who might be entitled to any fee or commission from the Company or any of its Affiliates upon consummation of the transactions contemplated by this Agreement or any of the Ancillary Agreements.
5.7 Issuance of Shares. The Aggregate Merger Consideration and the Earnout Shares, when issued in accordance with this Agreement, will be duly authorized and validly issued, and will be fully paid and nonassessable, and each such share comprising the Aggregate Merger Consideration and each Earnout Share shall be issued free and clear of preemptive rights and all Liens, other than transfer restrictions under applicable securities laws and the organizational or constitutive documents of Parent. The Aggregate Merger Consideration and the Earnout Shares shall be issued in compliance with all applicable securities Laws and other applicable Laws and without contravention of any other person’s rights therein or with respect thereto.
A-1-41
Table of Contents
5.8 Capitalization.
(a) The authorized share capital of Parent is US$5,100 divided into 50,000,000 Parent Ordinary Shares and 1,000,000 preference shares, par value $0.0001 per share, of which 29,320,000 Parent Ordinary Shares (inclusive of Parent Ordinary Shares included in any outstanding Parent Units), and no preference shares are issued and outstanding. In addition, 23,570,000 Parent Rights (inclusive of Parent Rights included in any outstanding Parent Units), convertible for 2,357,000 Parent Ordinary Shares, are issued and outstanding. No other share capital or other voting securities of Parent are issued, reserved for issuance or outstanding. All issued and outstanding Parent Common Shares are duly authorized, validly issued, fully paid and nonassessable and are not subject to, and were not issued in violation of, any purchase option, right of first refusal, preemptive right, subscription right or any similar right under any provision of the Cayman Companies Act, the Parent Articles, other organizational documents of Parent or any contract to which Parent is a party or by which Parent is bound. All outstanding Parent Rights have been duly authorized and validly issued and constitute valid and binding obligations of Parent, enforceable against Parent in accordance with their terms, subject to the Enforceability Exceptions and are not subject to, and were not issued in violation of, any purchase option, right of first refusal, preemptive right, subscription right or any similar right under any provision of the Cayman Companies Act, the Parent Articles, other organizational documents of Parent or any contract to which Parent is a party or by which Parent is bound. Except as set forth in the Parent Articles or other organizational documents of Parent or hereunder, there are no outstanding contractual obligations of Parent to repurchase, redeem or otherwise acquire any Parent Common Shares or any share capital of Parent. There are no outstanding contractual obligations of Parent to provide funds to, or make any investment (in the form of a loan, capital contribution or otherwise) in, any other Person. All outstanding Parent Units, Parent Common Shares and Parent Rights have been issued in compliance with all applicable securities and other applicable Laws and were issued free and clear of all Liens other than transfer restrictions under applicable securities Laws and the organizational or constitute documents of Parent.
(b) Merger Sub is authorized to issue 100 shares of common stock, par value $0.0001 per share (“Merger Sub Common Stock”), all of which are issued and outstanding as of the date hereof. No other shares of capital stock or other voting securities of Merger Sub are issued, reserved for issuance or outstanding. All issued and outstanding shares of Merger Sub Common Stock are duly authorized, validly issued, fully paid and nonassessable and are not subject to, and were not issued in violation of, any purchase option, right of first refusal, preemptive right, subscription right or any similar right under any provision of the DGCL, Merger Sub’s organizational documents or any contract to which Merger Sub is a party or by which Merger Sub is bound. There are no outstanding contractual obligations of Merger Sub to repurchase, redeem or otherwise acquire any shares of Merger Sub Common Stock or any equity capital of Merger Sub. There are no outstanding contractual obligations of Merger Sub to provide funds to, or make any investment (in the form of a loan, capital contribution or otherwise) in, any other Person.
5.9 Information Supplied. None of the information supplied or to be supplied by the Parent Parties expressly for inclusion, or for mailing with, the Registration Statement, Proxy Statement/Prospectus or other Offer Documents will, (a) when the Registration Statement is first filed, (b) on the effective date of the Registration Statement, (c) on the date when the Proxy Statement/Prospectus is mailed to the Parent’s shareholders and (d) at the time of the Parent Shareholder Meeting, as the case may be, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they are made, not misleading (subject to the qualifications and limitations set forth in the materials provided by Parent or included in the Parent SEC Documents, the Additional Parent SEC Documents, the Registration Statement or any Other Filing).
5.10 Trust Fund. As of the date of this Agreement, Parent has approximately $230,000,000 (including, if applicable, any Deferred Underwriting Commissions being held in the Trust Account) in the trust account established by Parent for the benefit of its public shareholders (the “Trust Account”) maintained by Continental Stock Transfer & Trust Company (the “Trustee”) and held in trust by the Trustee pursuant to the Investment Management Trust Agreement dated as of December 16, 2025, between Parent and the Trustee (the “Trust Agreement”). The Trust Agreement is valid and in full force and effect and enforceable in accordance with its terms, except as may be limited by the Enforceability Exceptions, and has not been amended or modified except as set forth in the Parent SEC Documents. There are no separate agreements, side letters or other agreements or understandings (whether written or unwritten, express or implied) that would cause the description of the Trust Agreement in the Parent SEC Documents to be inaccurate in any material respect or that would entitle any Person (other than public shareholders of Parent holding Parent Ordinary Shares sold in Parent’s IPO who shall have elected to redeem their Parent Ordinary Shares pursuant to the Parent
A-1-42
Table of Contents
Articles or the underwriters of the IPO) to any portion of the proceeds in the Trust Account. Prior to the Closing, none of the funds held in the Trust Account may be released except in accordance with the Trust Agreement and the Parent Articles. Parent has performed all material obligations required to be performed by it to date under, and is not in material default or delinquent in performance or any other respect (claimed or actual) in connection with, the Trust Agreement, and no event has occurred which, with due notice or lapse of time or both, would reasonably be expected to constitute such a material default thereunder. There are no claims or proceedings pending with respect to the Trust Account. Since December 16, 2025, Parent has not released any money from the Trust Account (other than as permitted by the Trust Agreement). As of the Effective Time, (i) the obligations of Parent to dissolve or liquidate pursuant to the Parent Articles shall terminate, and (ii) Parent shall have no obligation whatsoever pursuant to the Parent Articles to dissolve and liquidate the assets of Parent by reason of the consummation of the transactions contemplated by this Agreement. Following the Effective Time, no shareholder of Parent shall be entitled to receive any amount from the Trust Account except to the extent a Parent’s public shareholder shall have elected to tender its Parent Ordinary Shares for redemption pursuant to the Parent Articles.
5.11 Listing. The issued and outstanding Parent Units are registered pursuant to Section 12(b) of the Exchange Act and are listed for trading on Nasdaq under the symbol “IRHOU”. The issued and outstanding Parent Ordinary Shares are registered pursuant to Section 12(b) of the Exchange Act and are listed for trading on Nasdaq under the symbol “IRHO”. The issued and outstanding Parent Rights are registered pursuant to Section 12(b) of the Exchange Act and are listed for trading on Nasdaq under the symbol “IRHOR”. Since its initial public offering, Parent has complied in all material respects with all applicable listing and corporate governance rules and regulations of Nasdaq. As of the date of this Agreement, there is no Action or proceeding pending or, to the Knowledge of Parent, threatened against Parent by the Nasdaq or the SEC with respect to any intention by such entity to deregister the Parent Units, the Parent Ordinary Shares, or the Parent Rights or prohibit or terminate the listing of the Parent Units, the Parent Ordinary Shares, or the Parent Rights on the Nasdaq or prohibit the transfer of the listing to an Alternate Exchange. None of Parent, Merger Sub or their respective Affiliates has taken any action in an attempt to terminate the registration of the Parent Units, the Parent Ordinary Shares, or the Parent Rights under the Exchange Act except as contemplated by this Agreement.
5.12 Board Approval.
(a) Parent’s Board of Directors (including any required committee or subgroup of such board) has unanimously (i) declared the advisability of the transactions contemplated by this Agreement, (ii) determined that the transactions contemplated hereby are in the best interests of the shareholders of Parent and (iii) determined that the transactions contemplated hereby constitutes a “Business Combination” as such term is defined in the Parent Articles and (iv) recommended to the Parent’s shareholders to adopt and approve each of the Parent Proposals (“Parent Board Recommendation”).
(b) The Merger Sub’s Board of Directors has, as of the date of this Agreement, unanimously (i) declared the advisability of the transactions contemplated by this Agreement and (ii) determined that the transactions contemplated hereby are in the best interests of its sole shareholder.
5.13 Parent SEC Documents and Financial Statements.
(a) Parent has filed all forms, reports, schedules, statements and other documents, including any exhibits thereto, required to be filed or furnished by Parent with the SEC since Parent’s formation under the Exchange Act or the Securities Act, together with any amendments, restatements or supplements thereto, and will use commercially reasonable efforts to file all such forms, reports, schedules, statements and other documents required to be filed subsequent to the date of this Agreement (the “Additional Parent SEC Documents”). Parent has made available to the Company copies in the form filed with the SEC of all of the following, except to the extent available in full without redaction on the SEC’s website through EDGAR for at least two Business Days prior to the date of this Agreement: (i) Parent’s Annual Reports on Form 10-K for each fiscal year of Parent beginning with the first year that Parent was required to file such a form, (ii) all proxy statements relating to Parent’s meetings of shareholders (whether annual or special) held, and all information statements relating to shareholder consents, since the beginning of the first fiscal year referred to in clause (i) above, (iii) its Form 8-Ks filed since the beginning of the first fiscal year referred to in clause (i) above, and (iv) all other forms, reports, registration statements and other documents (other than preliminary materials if the corresponding definitive materials have been provided to the Company pursuant to
A-1-43
Table of Contents
this Section 5.13) filed by Parent with the SEC since Parent’s formation (the forms, reports, registration statements and other documents referred to in clauses (i) through (iv) above, whether or not available through EDGAR, collectively, as they have been amended, revised or superseded by a later filing, the “Parent SEC Documents”).
(b) Parent SEC Documents were, and the Additional Parent SEC Documents will be, prepared in all material respects in accordance with the requirements of the Securities Act, the Exchange Act, and the Sarbanes-Oxley Act, as the case may be, and the rules and regulations thereunder. Parent SEC Documents did not, and the Additional Parent SEC Documents will not, at the time they were or are filed, as the case may be, with the SEC (except to the extent that information contained in any Parent SEC Document or Additional Parent SEC Document has been or is amended, revised or superseded by a later filed Parent SEC Document or Additional Parent SEC Document, then on the date of such filing) contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements made therein, in the light of the circumstances under which they were made, not misleading; provided, however, that the foregoing does not apply to statements in or omissions in any information supplied or to be supplied by the Company expressly for inclusion in the Registration Statement or Other Filing.
(c) As used in this Section 5.13, the term “file” shall be broadly construed to include any manner in which a document or information is furnished, supplied or otherwise made available to the SEC.
(d) Except as not required in reliance on exemptions from various reporting requirements by virtue of Parent’s status as an “emerging growth company” within the meaning of the Securities Act, as modified by the JOBS Act, or “smaller reporting company” within the meaning of the Exchange Act, since its initial public offering, (i) Parent has established and maintained a system of internal controls over financial reporting (as defined in Rule 13a-15 and Rule 15d-15 under the Exchange Act) sufficient to provide reasonable assurance regarding the reliability of Parent’s financial reporting and the preparation of Parent’s financial statements for external purposes in accordance with GAAP and (ii) Parent has established and maintained disclosure controls and procedures (as defined in Rule 13a-15 and Rule 15d-15 under the Exchange Act) designed to ensure that material information relating to Parent is made known to Parent’s principal executive officer and principal financial officer by others within Parent. Parent maintains and, for all periods covered by the Parent Financial Statements, has maintained Books and Records of Parent in the ordinary course of business in accordance with GAAP in all material respects and other applicable legal and accounting requirements.
(e) Parent has not taken any action prohibited by Section 402 of the Sarbanes-Oxley Act.
(f) The Parent SEC Documents contain true and complete copies of the applicable Parent Financial Statements. Except as disclosed in the Parent SEC Documents, the Parent Financial Statements (i) fairly present in all material respects the financial position of Parent as at the respective dates thereof, and the results of its operations, shareholders’ equity and cash flows for the respective periods then ended (subject, in the case of any unaudited interim financial statements, to normal year-end audit adjustments (none of which is material) and the absence of footnotes), (ii) were prepared in conformity with GAAP applied on a consistent basis during the periods involved (subject, in the case of any unaudited financial statements, to normal year-end audit adjustments (none of which is material) and the absence of footnotes), (iii) in the case of the audited Parent Financial Statements, were audited in accordance with the standards of the PCAOB and (iv) comply in all material respects with the applicable accounting requirements and with the rules and regulations of the SEC, the Exchange Act and the Securities Act in effect as of the respective dates thereof (including Regulation S-X or Regulation S-K, as applicable).
(g) Except as disclosed in the Parent SEC Documents, Parent has not received any written complaint, allegation, assertion or claim that there is (i) a “significant deficiency” in the internal controls over financial reporting of Parent to Parent’s Knowledge, (ii) a “material weakness” in the internal controls over financial reporting of Parent to Parent’s Knowledge or (iii) fraud, whether or not material, that involves management or other employees of Parent who have a significant role in the internal controls over financial reporting of Parent.
5.14 Certain Business Practices. Neither Parent nor, to the Knowledge of Parent, any Representative of Parent (acting on behalf of Parent), has: (a) used any funds for unlawful contributions, gifts, entertainment or other unlawful expenses relating to political activity, (b) made any unlawful payment to foreign or domestic government officials, employees or political parties or campaigns, (c) violated any provision of the Foreign Corrupt Practices Act of 1977 or (d) made any other unlawful payment. Neither Parent nor any director, officer, or to the Knowledge of Parent, any agent or employee of Parent (nor any Person acting on behalf of any of the foregoing, but solely in his or her capacity as a director, officer, employee or agent of Parent) has, since the IPO, directly or indirectly, given or agreed to give any gift
A-1-44
Table of Contents
or similar benefit in any material amount to any customer, supplier, governmental employee or other Person in order to assist Parent in connection with any actual or proposed transaction, which, if not given or continued in the future, would reasonably be expected to (i) adversely affect the business of Parent and (ii) subject Parent to suit or penalty in any private or governmental Action.
5.15 Anti-Money Laundering Laws. The operations of Parent are and have been at all times conducted in compliance with the Anti-Money Laundering Laws, and no Action involving Parent with respect to the Anti-Money Laundering Laws is pending or, to the Knowledge of Parent, threatened.
5.16 Affiliate Transactions. Except as described in Parent SEC Documents, there are no transactions, agreements, arrangements or understandings between Parent or any of its Subsidiaries, on the one hand, and any director, officer, employee, shareholder, rights holder or Affiliate of Parent or any of its Subsidiaries, on the other hand.
5.17 Litigation. There is no (a) Action pending or, to the Knowledge of Parent, threatened against Parent or any of its Subsidiaries or that affects its or their assets or properties, or (b) Order outstanding against Parent or any of its Subsidiaries or that affects its or their assets or properties. Neither Parent nor any of its Subsidiaries is party to a settlement or similar agreement regarding any of the matters set forth in the preceding sentence that contains any ongoing obligations, restrictions or liabilities (of any nature) that are material to Parent and its Subsidiaries.
5.18 Expenses, Indebtedness and Other Liabilities. Except as set forth in Parent SEC Documents, Parent does not have any Indebtedness or other liabilities.
5.19 Brokers and Other Advisors. No broker, investment banker, financial advisor or other Person is entitled to any broker’s, finder’s, financial advisor’s or other similar fee or commission in connection with the transactions contemplated hereby based upon arrangements made by or on behalf of Parent or any of its Subsidiaries except for Persons, if any, whose fees and expenses shall be paid by Parent.
5.20 Tax Matters.
(a) Parent has duly and timely filed all income and other material Tax Returns which are required to be filed by it, and has paid all material Taxes (whether or not shown on such Tax Returns) which have become due and all such Tax Returns are true, correct and complete and accurate in all material respects.
(b) There is no Action, assessment, deficiency or proposed adjustment with respect to a material amount of Taxes that has been asserted or assessed, or that is pending or proposed in writing, by any Authority against Parent that remains unresolved or unpaid.
(c) No statute of limitations in respect of the assessment or collection of any Taxes of Parent has been waived or extended (other than pursuant to extensions of time to file Tax Returns obtained in the ordinary course of business), which waiver or extension is in effect.
(d) Parent has collected and remitted to the applicable Taxing Authority all material sales Taxes required to be collected by Parent.
(e) Parent has duly withheld or collected and paid over to the applicable Taxing Authority in a timely manner all material Taxes required to be withheld or collected by Parent in connection with any amounts paid or owing to any employee, creditor, independent contractor or other third party and has otherwise complied in all material respects with all applicable withholding and related reporting requirements with respect to such Taxes.
(f) Parent has not requested any letter ruling, technical advice, a change of any method of accounting, or any similar request that is in progress or pending with any Authority with respect to any Taxes.
(g) There is no Lien (other than liens for Taxes (i) not yet due and delinquent or (ii) which are being contested in good faith by appropriate proceedings (and for which adequate accruals or reserves have been established on the Parent Financial Statements in accordance with U.S. GAAP)) for Taxes upon any of the assets of Parent.
(h) Parent has not received any written request from a Taxing Authority in a jurisdiction where Parent has not paid any Tax or filed Tax Returns asserting that Parent is or may be subject to Tax in such jurisdiction, and Parent does not have a permanent establishment (within the meaning of an applicable Tax treaty) or other fixed place of business in a country other than the country in which it is organized.
A-1-45
Table of Contents
(i) Parent is not a party to any Tax sharing, Tax indemnity or Tax allocation Contract (other than a contract entered into in the ordinary course of business consistent with past practices, the primary purpose of which is not related to Taxes).
(j) Parent has not been a member of an affiliated, consolidated, combined or unitary group filing for U.S. federal, state or local income Tax purposes (other than a group the common parent of which was Parent).
(k) Parent does not have any liability for the Taxes of any other Person: (1) under Treasury Regulations Section 1.1502-6 (or any similar provision of applicable Law), (2) as a transferee or successor or (3) otherwise by operation of applicable Law.
(l) Parent is not a “United States real property holding corporation” within the meaning of Section 897(c)(2) of the Code during the applicable period specified in Section 897(c)(1)(A)(ii) of the Code.
(m) Parent has not been a party to any listed transaction or failed to report any “reportable transaction” as such terms are defined in Section 6707A(c)(1) of the Code and Treasury Regulations Section 1.6011-4(b) and as such reporting is required pursuant thereto.
(n) Parent has not been a party to any transaction treated by the parties as a distribution of stock qualifying for tax-free treatment under Section 355 of the Code in the five years prior to the date of this Agreement.
(o) Parent will not be required to include any material item of income or exclude any material item of deduction for any taxable period ending after the Closing Date as a result of: (i) adjustment under Section 481 of the Code (or any corresponding or similar provision of state, local or non-U.S. income Tax Law) by reason of a change in method of accounting for a taxable period ending on or before the Closing Date; (ii) any “closing agreement” described in Section 7121 of the Code (or any corresponding or similar provision of state, local or non-U.S. income Tax Law) executed on or before the Closing Date; (iii) any installment sale or open transaction disposition made on or before the Closing Date; (iv) any prepaid amount or deferred revenue realized or received on or before the Closing Date; (v) any intercompany transaction or excess loss account described in Treasury Regulations under Section 1502 of the Code (or any corresponding or similar provision of state, local or non-U.S. income Tax Law); or (vi) election under Section 965 of the Code.
(p) Parent is and has been treated as a C corporation for U.S. federal, state and local income tax purposes since the date of its formation.
(q) Parent is not aware of any fact or circumstance (without conducting independent inquiry or diligence of the other relevant party), and has not knowingly taken or agreed to take any action (or failed to take any action), that would reasonably be expected to prevent or impede the Domestication from qualifying for the Domestication Intended Tax Treatment or the Merger from qualifying for the Merger Intended Tax Treatment.
(r) Parent is not an “investment company” within the meaning of Section 368(a)(2)(F) of the Code.
ARTICLE VI
COVENANTS OF THE PARTIES PENDING CLOSING
6.1 Conduct of the Business. Each of the Company and Parent covenants and agrees that:
(a) Except as expressly contemplated by this Agreement or the Ancillary Agreements or as set forth on Schedule 6.1(a), from the date hereof until the earlier of the Closing Date and the termination of this Agreement in accordance with its terms (the “Interim Period”), each party shall conduct its business only in the ordinary course (including the payment of accounts payable and the collection of accounts receivable), consistent with past practices and use its commercially reasonable efforts to preserve intact its business and assets. Without limiting the generality of the foregoing, and except as expressly contemplated by this Agreement (including the PIPE Financing) or the Ancillary Agreements or as set forth on Schedule 6.1(a), or as required by applicable Law, from the date hereof until
A-1-46
Table of Contents
the earlier of the Closing Date and the termination of this Agreement in accordance with its terms, without the other party’s prior written consent (which shall not be unreasonably conditioned, withheld or delayed), neither the Company, Parent, nor any of their Subsidiaries, shall be permitted to:
(i) amend, modify or supplement its certificate of incorporation or bylaws, memorandum and articles of association or other organizational or governing documents except as contemplated hereby, or engage in any reorganization, reclassification, liquidation, dissolution or similar transaction;
(ii) amend, waive any provision of, terminate prior to its scheduled expiration date, or otherwise compromise in any way or relinquish any material right under, any (A) in the case of the Company Group, any Material Contract or Lease or (B) in the case of Parent, material contract, agreement, lease, license or other right or asset of Parent, as applicable;
(iii) other than in the ordinary course of business consistent with past practice, modify, amend or enter into any contract, agreement, lease, license or commitment that extends for a term of one year or more or obligates the payment by any member of the Company Group or Parent, as applicable, of more than $1,000,000 (individually or in the aggregate);
(iv) other than in the ordinary course of business consistent with past practice, make any capital expenditures in excess of $250,000 (individually or in the aggregate);
(v) sell, lease, license or otherwise dispose of any of the Company Group’s or Parent’s, as applicable, material assets, except pursuant to existing contracts or commitments disclosed herein or in the ordinary course of business consistent with past practices;
(vi) solely in the case of the Company Group, (i) transfer, sell, assign, lease, license, sublicense, covenant not to assert, subject to a Lien (other than a Permitted Lien), abandon, allow to lapse, or otherwise dispose of any right, title or interest of the Company or its Subsidiaries in material Company Owned IP (other than non-exclusive licenses of Company Owned IP granted to customers, end users, or service providers granted in the ordinary course of business); (ii) disclose any Trade Secrets to any third party (other than pursuant to a written confidentiality agreement entered into in the ordinary course of business that contains reasonable protections therefor); or (iii) subject any source code for any Company Software to any Copyleft Licenses;
(vii) (A) pay, declare or promise to pay any dividends, distributions or other amounts with respect to its capital stock or other equity securities; (B) pay, declare or promise to pay any other amount to any shareholder or other equityholder in its capacity as such; and (C) except as contemplated hereby or by any Ancillary Agreement, amend any term, right or obligation with respect to any outstanding shares of its capital stock or other equity securities;
(viii) (A) make any loan, advance or capital contribution to any Person; (B) incur any Indebtedness including drawings under the lines of credit, in the case of the Company Group, in excess of an aggregate principal amount of $500,000 or such lesser amount if the aggregate principal amount of such new Indebtedness together with the aggregate principal amount all other Indebtedness of the Company Group would exceed $1,000,000 other than (1) loans evidenced by promissory notes made to Parent as working capital advances as described in the Prospectus and (2) intercompany Indebtedness; or (C) repay or satisfy any Indebtedness, other than the repayment of Indebtedness in accordance with the terms thereof;
(ix) suffer or incur any Lien, except for Permitted Liens, on the Company’s or its Subsidiaries or Parent’s, as applicable, assets;
(x) delay, accelerate or cancel, or waive any material right with respect to, any receivables or Indebtedness owed to a member of the Company Group or write off or make reserves against the same (other than in the ordinary course of business consistent with past practice or as otherwise required by U.S. GAAP);
(xi) merge or consolidate or enter a similar transaction with, or acquire all or substantially all of the assets or business of, any other Person; make any material investment in any Person; or be acquired by any other Person;
A-1-47
Table of Contents
(xii) terminate or allow to lapse any insurance policy protecting any of the Company Group’s or Parent’s, as applicable, assets, unless simultaneously with such termination or lapse, a replacement policy underwritten by an insurance company of nationally recognized standing having comparable deductions and providing coverage equal to or greater than the coverage under the terminated or lapsed policy for substantially similar premiums or less is in full force and effect;
(xiii) waive, release, institute, compromise, settle or agree to settle any legal proceeding or any Action before any Authority, in each case, where such waiver, release, institution, compromise or settlement is in excess of $500,000 (exclusive of any amounts covered by insurance) or that imposes injunctive or other non-monetary relief on such party;
(xiv) except as required by U.S. GAAP, make any material change in its accounting principles, methods or practices or write down the value of its assets;
(xv) except in connection with the exercise of rights under securities set forth on Schedule 4.5(a), issue, redeem or repurchase any capital stock, membership interests or other securities, or issue any securities exchangeable for or convertible into any shares of its capital stock or other securities, amend, modify or waive any of the material terms or rights set forth in any Parent Right or the Parent Rights Agreement, other than any redemption by Parent of Parent Ordinary Shares and Parent Units held by its public shareholders pursuant to the Parent Articles or as otherwise contemplated herein or in any Ancillary Agreement;
(xvi) (A) make, change or revoke any election in respect of material Taxes; (B) amend, modify or otherwise change any filed Tax Return in respect of material Taxes, (C) adopt or request permission of any Taxing Authority to change any accounting method in respect of material Taxes, (D) settle or compromise any claim, notice, audit report, Action, suit, litigation, proceeding, arbitration, investigation, controversy, or assessment in respect of material Taxes; (E) enter into any Tax allocation, Tax sharing, Tax indemnity, private letter ruling closing agreement, or other binding written agreement relating to any Taxes; (F) surrender or forfeit any right to claim a material Tax refund, (G) consent to any extension or waiver of the limitation period applicable to any claim or assessment in respect of material Taxes or in respect to any material Tax attribute that would give rise to any claim or assessment of Taxes, or (H) knowingly take any action, or knowingly fail to take any action, which action or failure to act prevents or impedes, or could reasonably be expected to prevent or impede, the Domestication Intended Tax Treatment or the Merger Intended Tax Treatment;
(xvii) enter into any transaction with or distribute or advance any material assets or property to any of its Affiliates, other than the payment of salary and benefits in the ordinary course;
(xviii) solely in the case of the Company Group, other than as required by Law or by the terms of a Plan (A) increase the compensation, bonus, pension, welfare, fringe or other benefits, severance or termination pay of any of any employee of a member of the Company Group or service provider of a member of the Company Group at the level of manager or above, except for annual compensation increases not to exceed 25% in the aggregate, (B) accelerate the vesting or payment of any compensation or benefits of any employee or service provider of the Company, (C) enter into, amend, terminate, amend the actuarial assumptions used in respect of, any Plan (or any plan, program, agreement or arrangement that would be a Plan if in effect on the date hereof) or grant, amend or terminate any awards thereunder, (D) make or forgive any loan to any present or former employee, director, officer, or contractor or other individual service provider of the Company Group other than advancement of expenses in the ordinary course of business consistent with past practices, (E) enter into, amend or terminate any collective bargaining agreement or other agreement with a labor union or labor organization, (F) adopt any severance or retention plan, (G) cause the funding of any rabbi trust or similar arrangement or take any action to fund or in any other way secure the payment of compensation or benefits under any Plan, (H) hire or engage any new employee or consultant if such new employee or consultant will receive annual base compensation in excess of $500,000, or (I) waive any restrictive covenants with respect to any Company Group employee or service provider;
(xix) solely in the case of the Parent Parties, other than as required by Law or by the terms of a Plan (A) increase the compensation, bonus, pension, welfare, fringe or other benefits, severance or termination pay of any of any employee of a member of the Parent Parties, (B) accelerate the vesting or payment of any compensation or benefits of any employee or service provider of Parent, (C) enter into, amend, terminate, amend the actuarial assumptions used in respect of, any Plan (or any plan, program, agreement
A-1-48
Table of Contents
or arrangement that would be a Plan if in effect on the date hereof) or grant, amend or terminate any awards thereunder, (D) make or forgive any loan to any present or former employee, director, officer, or contractor or other individual service provider of the Parent Parties, (E) enter into, amend or terminate any collective bargaining agreement or other agreement with a labor union or labor organization, (F) adopt any severance or retention plan, (G) cause the funding of any rabbi trust or similar arrangement or take any action to fund or in any other way secure the payment of compensation or benefits under any Plan, (H) hire or engage any new employee or consultant; or (I) waive any restrictive covenants with respect to any Parent Group employee or service provider;
(xx) fail to duly observe and conform to any applicable Laws and Orders;
(xxi) solely in the case of the Company Group, (A) limit the right of the Company or any of the Company’s Subsidiaries to engage in any line of business or in any geographic area, to develop, market or sell products or services, or to compete with any Person or (B) grant any exclusive or similar rights to any Person, in each case, except where such limitation or grant does not, and would not be reasonably likely to, individually or in the aggregate, materially and adversely affect, or materially disrupt, the ordinary course operation of the businesses of the Company Group, taken as a whole; or
(xxii) agree or commit to do any of the foregoing.
(b) Neither party shall (i) take or agree to take any action that would be reasonably likely to cause any representation or warranty of such party to be inaccurate or misleading in any respect at, or as of any time prior to, the Closing Date or (ii) omit to take, or agree to omit to take, any action necessary to prevent any such representation or warranty from being inaccurate or misleading in any respect at any such time.
(c) Nothing in this Agreement is intended to give Parent or Merger Sub, directly or indirectly, the right to control or direct the Company’s operations prior to the Closing Date, and nothing in this Agreement is intended to give the Company, directly or indirectly, the right to control or direct Parent’s or its Subsidiaries’ operations prior to the Closing Date. Prior to the Closing Date, each of the Company, Parent and Merger Sub shall exercise, consistent with the terms and conditions of this Agreement, complete control and supervision over its and its Subsidiaries’ respective operations.
6.2 Exclusivity.
(a) During the Interim Period, no member of the Company Group, on the one hand, nor Parent, on the other hand, shall, and such Persons shall cause their respective Representatives not to, without the prior written consent of the other party (which consent may be withheld in the sole and absolute discretion of the party asked to provide consent), directly or indirectly, (i) encourage, solicit, initiate, engage or participate in negotiations with any Person concerning any Alternative Transaction, (ii) take any other action intended or designed to facilitate the efforts of any Person relating to a possible Alternative Transaction, (iii) approve, recommend or enter into any Alternative Transaction or any contract or agreement related to any Alternative Transaction or (iv) otherwise cooperate in any way with, or assist or participate in, or knowingly facilitate or encourage any effort or attempt by any Person to do or seek to do any of the foregoing. Immediately following the execution of this Agreement, the Company, on the one hand, and Parent, on the other hand, shall, and shall cause each of their Representatives, to cease and terminate any discussion or negotiations that may be ongoing with any Persons other than the Company or Parent, as applicable, concerning any Alternative Transaction. Each of the Company and Parent shall be responsible for any acts or omissions of any of its respective Representatives that, if they were the acts or omissions of the Company or Parent, as applicable, would be deemed a breach of such party’s obligations hereunder (it being understood that such responsibility shall be in addition to and not by way of limitation of any right or remedy the Company or Parent, as applicable, may have against such Representatives with respect to any such acts or omissions). For purposes of this Agreement, except as disclosed on Schedule 6.2(a), the term “Alternative Transaction” means any of the following transactions involving the Company or the Company’s Subsidiaries or Parent or Parent’s Subsidiaries (other than the transactions contemplated by this Agreement or the Ancillary Agreements): (A) any merger, consolidation, share exchange, business combination or other similar transaction, (B) any sale, lease, exchange, transfer or other disposition of all or a material portion of the assets of such Person (other than sales of inventory in the ordinary course of business) or any capital stock or other
A-1-49
Table of Contents
equity interests of the Company, Parent, or its Subsidiaries in a single transaction or series of transactions, (C) with respect to Parent, any other Business Combination or (D) with respect to the Company Group, any public offering of any equity securities of the Company, any of its Subsidiaries, or a newly formed holding company of the Company or such Subsidiaries.
(b) In the event that there is a proposal for, or an indication of interest in entering into, an Alternative Transaction, communicated in writing to the Company or Parent or any of their respective Representatives (each, an “Alternative Proposal”), such party shall as promptly as practicable (and in any event within one Business Day after receipt thereof) advise the other parties to this Agreement, orally and in writing, of such Alternative Proposal and the material terms and conditions thereof (including any changes thereto) and the identity of the Person making any such Alternative Proposal. The Company and Parent shall keep each other informed on a reasonably current basis of material developments with respect to any such Alternative Proposal. As used herein with respect to Parent, the term “Alternative Proposal” shall not include the receipt by Parent of any unsolicited communications (including the receipt of draft non-disclosure agreements) in the ordinary course of business inquiring as to Parent’s interest in a potential target for a business combination; provided, however, that Parent shall inform the person initiating such communication of the existence of this Agreement.
6.3 Access to Information. During the Interim Period, the Company and Parent shall each, use its commercially reasonable efforts to, (a) continue to give the other party, its legal counsel and its other Representatives full access to the offices, properties and Books and Records, (b) furnish to the other party, its legal counsel and its other Representatives such information relating to the business of the Company or Parent as such Persons may request and (c) cause its employees, legal counsel, accountants and other Representatives to cooperate with the other party in its investigation of the Business (in the case of the Company) or the business of Parent (in the case of Parent); provided, that no investigation pursuant to this Section 6.3 (or any investigation made prior to the date hereof) shall affect any representation or warranty given by the Company or Parent; and provided, further, that any investigation pursuant to this Section 6.3 shall be conducted in such manner as not to interfere unreasonably with the conduct of the Business of the Company. Notwithstanding anything to the contrary expressed or implied in this Agreement, neither party shall be required to provide the access described above or disclose any information to the other party if doing so is, in such party’s reasonable judgement, reasonably likely to (i) result in a waiver of attorney-client privilege, work product doctrine or similar privilege or (ii) violate any contract to which it is a party or to which it is subject or any applicable Law.
6.4 Notices of Certain Events. During the Interim Period, each of Parent and the Company shall promptly notify the other party of:
(a) any notice from any Person alleging or raising the possibility that the consent of such Person is or may be required in connection with the transactions contemplated by this Agreement or that the transactions contemplated by this Agreement might give rise to any Action or other rights by or on behalf of such Person or result in the loss of any rights or privileges of the Company (or Parent, post-Closing) to any such Person or create any Lien on any of the Company’s or Parent’s assets;
(b) any notice or other communication from any Authority in connection with the transactions contemplated by this Agreement or the Ancillary Agreements;
(c) any Actions commenced or threatened against, relating to or involving or otherwise affecting either party or any of their shareholders or their equity, assets or business or that relate to the consummation of the transactions contemplated by this Agreement or the Ancillary Agreements;
(d) any written notice from Nasdaq with respect to the listing of the securities of Parent;
(e) the occurrence of any fact or circumstance which constitutes or results, or would reasonably be expected to constitute or result in a Material Adverse Effect; and
(f) any inaccuracy of any representation or warranty of such party contained in this Agreement at any time during the term hereof, or any failure of such party to comply with or satisfy any covenant, condition or agreement to be complied with or satisfied by it hereunder, that would reasonably be expected to cause any of the conditions set forth in ARTICLE IX not to be satisfied.
A-1-50
Table of Contents
6.5 Registration Statement/Proxy Statement; Other Filings.
(a) As promptly as practicable after the execution of this Agreement, Parent and the Company shall jointly prepare and file with the SEC, and with all other applicable regulatory bodies, mutually acceptable proxy materials for the purpose of soliciting proxies from holders of Parent Common Shares sufficient to obtain Parent Shareholder Approval at a meeting of holders of Parent Common Shares to be called and held for such purpose (the “Parent Shareholder Meeting”). Such proxy materials shall be in the form of a proxy statement (the “Proxy Statement”), which shall be included in a Registration Statement on Form S-4, or other appropriate form, including any pre-effective or post-effective amendments or supplements thereto (the “Registration Statement”), filed by Parent with the SEC, which shall also include a prospectus (such prospectus, together with the Proxy Statement and any amendments or supplements thereto, the “Proxy Statement/Prospectus”) pursuant to which the securities of Parent issuable in the Domestication and Merger shall be registered. Parent shall promptly respond to any SEC comments on the Registration Statement. Parent also agrees to use its best efforts to obtain all necessary state securities law or “Blue Sky” permits and approvals required to carry out the transactions contemplated hereby, and the Company shall furnish all information concerning the Company Group and any of its respective members or shareholders as may be reasonably requested in connection with any such action. Each of Parent and the Company agrees, as promptly as reasonably practicable, to furnish to the other party all information concerning itself, its Subsidiaries, officers, directors, managers, shareholders, and other equityholders and information regarding such other matters as may be reasonably necessary or advisable or as may be reasonably requested in connection with the preparation of the Registration Statement, the Proxy Statement/Prospectus, a Current Report on Form 8-K pursuant to the Exchange Act in connection with the signing of this Agreement and the Ancillary Agreements, a Current Report on Form 8-K pursuant to the Exchange Act in connection with the Closing of the transactions contemplated by this Agreement, or any other statement, filing, notice or application made by or on behalf of Parent, the Company or their respective Subsidiaries to any regulatory authority (including Nasdaq) in connection with the Merger and the other transactions contemplated hereby (the “Offer Documents”).
(b) Parent (i) shall permit the Company and its counsel to review and comment on the Registration Statement and Proxy Statement/Prospectus and any exhibits, amendments or supplements thereto (or other related documents); (ii) shall consider any such comments reasonably and in good faith; and (iii) shall not file the Registration Statement and Proxy Statement/Prospectus or any exhibit, amendment or supplement thereto without giving reasonable and good faith consideration to the comments of the Company. As promptly as practicable after receipt thereof, Parent shall provide to the Company and its counsel notice and a copy of all correspondence (or, to the extent such correspondence is oral, a summary thereof), including any comments from the SEC or its staff, between Parent or any of its Representatives, on the one hand, and the SEC or its staff or other government officials, on the other hand, with respect to the Registration Statement and Proxy Statement/Prospectus, and, in each case, shall consult with the Company and its counsel concerning any such correspondence. Parent shall not file any response letters to any comments from the SEC without consulting reasonably and in good faith with the Company. Parent will use its reasonable efforts to permit the Company’s counsel to participate in any calls, meetings or other communications with the SEC or its staff. Parent will advise the Company, promptly after it receives notice thereof, of the time when the Registration Statement and Proxy Statement/Prospectus or any amendment or supplement thereto has been filed with the SEC and the time when the Registration Statement is declared effective or any stop order relating to the Registration Statement is issued.
(c) As soon as practicable following the date on which the Registration Statement is declared effective by the SEC, Parent shall distribute the Proxy Statement/Prospectus to the holders of Parent Common Shares and, pursuant thereto, shall call the Parent Shareholder Meeting in accordance with its organizational documents, the applicable Nasdaq rules and the applicable Laws of the Cayman Islands and, subject to the other provisions of this Agreement, solicit proxies from such holders to vote in favor of the adoption of this Agreement and the approval of the transactions contemplated hereby and the other proposals presented to the holders of Parent Common Shares for approval or adoption at the Parent Shareholder Meeting.
(d) Parent shall comply with all applicable provisions of and rules under the Securities Act and Exchange Act, the applicable Nasdaq rules and all applicable Laws of the Cayman Islands and the State of Delaware, in the preparation, filing and distribution of the Registration Statement and the Proxy Statement/Prospectus (or any amendment or supplement thereto), as applicable, the solicitation of proxies under the Proxy Statement/Prospectus and the calling and holding of the Parent Shareholder Meeting. Without limiting the foregoing, Parent shall ensure that each of the Registration Statement, as of the effective date of the Registration Statement, and the Proxy
A-1-51
Table of Contents
Statement/Prospectus, as of the date on which it is first distributed to the holders of Parent Common Shares, and as of the date of the Parent Shareholder Meeting, does not contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements made, in light of the circumstances under which they were made, not misleading (provided, that Parent shall not be responsible for the accuracy or completeness of any information relating to the Company (or any other information) that is furnished by the Company expressly for inclusion in the Proxy Statement/Prospectus). The Company represents and warrants that the information relating to the Company supplied by the Company for inclusion in the Registration Statement or the Proxy Statement/Prospectus, as applicable, will not as of the effective date of the Registration Statement and the date on which the Proxy Statement/Prospectus (or any amendment or supplement thereto) is first distributed to the holders of Parent Common Shares or at the time of the Parent Shareholder Meeting does not contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements made in light of the circumstances under which they were made, not misleading. If at any time prior to the Effective Time, a change in the information relating to Parent or the Company or any other information furnished by Parent, Merger Sub or the Company for inclusion in the Registration Statement or the Proxy Statement/Prospectus, which would make the preceding two sentences incorrect, should be discovered by Parent, Merger Sub or the Company, as applicable, such party shall promptly notify the other parties of such change or discovery and an appropriate amendment or supplement describing such information shall be promptly filed with the SEC and, to the extent required by Law, disseminated to the holders of Parent Common Shares. In connection therewith, Parent, Merger Sub and the Company shall instruct their respective employees, counsel, financial advisors, auditors and other authorized representatives to reasonably cooperate with Parent as relevant if required to achieve the foregoing.
(e) In accordance with the Parent Articles and applicable securities laws, rules and regulations, including the Cayman Companies Act and rules and regulations of Nasdaq, in the Proxy Statement/Prospectus, Parent shall seek from the holders of Parent Common Shares the approval the following proposals: (i) the Parent Shareholder Approval; (ii) amendment and restatement of Parent’s organizational documents, in the form attached as Exhibits A and B to this Agreement (with such changes as may be agreed in writing by Parent and the Company, including a change of Parent’s name to “ELECTRA AI, Inc.”) (as may be subsequently amended by mutual written agreement of Parent and the Company at any time before the effectiveness of the Registration Statement) in connection with the Domestication, including any separate or unbundled proposals as are required to implement the foregoing; (iii) approval of the issuance Parent Common Shares in connection with the Domestication, the Merger under applicable exchange listing rules (the “Issuance Proposal”); (iv) approval of the Parent Equity Incentive Plan (the “LTIP Proposal”) (the proposals set forth in the foregoing clauses (i) through (iv), the “Required Parent Proposals”); (vi) approval of Parent’s post-closing Board of Directors (the “Board Proposal”); (vii) approval to obtain any and all other approvals necessary or advisable to effect the consummation of the Merger as reasonably determined by the Company and Parent; and (viii) approval to adjourn the Parent Shareholder Meeting, if necessary, to permit further solicitation of proxies because there are not sufficient votes to approve and adopt any of the foregoing, or otherwise if additional time is needed to consummate the transactions contemplated by this Agreement and the Ancillary Agreements (the “Adjournment Proposal”) (the proposals set forth in the forgoing clauses (i) through (vii) collectively, the “Parent Proposals”).
(f) Parent, with the assistance of the Company, shall use its reasonable best efforts to cause the Registration Statement to “clear” comments from the SEC and the Registration Statement to become effective as promptly as reasonably practicable thereafter. As soon as practicable after the Registration Statement is “cleared” by the SEC, Parent shall cause the Proxy Statement/Prospectus, together will all other Offer Documents, to be disseminated to holders of Parent Common Shares. The Offer Documents shall provide the public shareholders of Parent with the opportunity to redeem all or a portion of their Parent Ordinary Shares at a price per share equal to the pro rata share of the funds in the Trust Account, all in accordance with and as required by the Parent Articles, the Trust Agreement, applicable Law and any applicable rules and regulations of the SEC. In accordance with the Parent Articles, the proceeds held in the Trust Account will first be used for the redemption of the Parent Ordinary Shares held by Parent’s public shareholders who have elected to redeem such shares.
(g) Parent shall call and hold the Parent Shareholder Meeting as promptly as practicable after the effective date of the Registration Statement for the purpose of seeking the approval of each of the Parent Proposals in accordance with the Parent Articles, and Parent shall consult in good faith with the Company with respect to the date on which such meeting is to be held. Parent shall use reasonable best efforts to solicit from its shareholders proxies in favor of the approval and adoption of the Parent Proposals. Except as otherwise required by applicable Law, including in respect of the duties of the directors of Parent in accordance with the Laws of the Cayman Islands, Parent’s Board of Directors shall recommend that the holders of Parent Common Shares vote in favor of the Parent Proposals.
A-1-52
Table of Contents
(h) The Company acknowledges that a substantial portion of the Proxy Statement/ Prospectus shall include disclosure regarding the Company and its management, operations and financial condition. Accordingly, the Company agrees to as promptly as reasonably practical provide Parent with such information as shall be reasonably requested by Parent for inclusion in or attachment to the Proxy Statement/ Prospectus, and that such information is accurate in all material respects and complies as to form in all material respects with the requirements of the Exchange Act and the rules and regulations promulgated thereunder. The Company understands that such information shall be included in the Proxy Statement/ Prospectus or responses to comments from the SEC or its staff in connection therewith. In connection with the preparation and filing of the Registration Statement and any amendments thereto, the Company shall reasonably cooperate with the Parent and shall make their directors, officers and appropriate senior employees reasonably available to Parent and its counsel in connection with the drafting of such filings and mailings and responding in a timely manner to comments from the SEC.
(i) Except as otherwise required by applicable Law, including in respect of the duties of the directors of Parent in accordance with the Laws of the Cayman Islands, Parent covenants that none of Parent, Parent’s Board of Directors nor any committee thereof shall withdraw or modify, or propose publicly or by formal action of Parent, Parent’s Board of Directors or any committee thereof to withdraw or modify, in any manner adverse to the Company, the Parent Board Recommendation.
(j) Notwithstanding anything else to the contrary in this Agreement or any Ancillary Agreements, Parent may make any public filing with respect to the Merger to the extent required by applicable Law, provided that prior to making any filing that includes information regarding the Company, Parent shall provide a copy of the filing to the Company and permit the Company to make revisions to protect confidential or proprietary information of the Company.
6.6 Trust Account. Upon satisfaction or waiver of the conditions set forth in ARTICLE IX and provision of notice thereof to the Trustee (which notice Parent shall provide to the Trustee in accordance with the terms of the Trust Agreement), (i) in accordance with and pursuant to the Trust Agreement, Parent (a) shall cause any documents, opinions and notices required to be delivered to the Trustee pursuant to the Trust Agreement to be so delivered and (b) shall use its reasonable best efforts to cause the Trustee to, and the Trustee shall thereupon be obligated to (1) immediately prior to the Domestication, pay as and when due all amounts payable to Parent Ordinary Shares held by the public shareholders (the “Parent Redemption Amount”), (2) at the Closing, pay any unpaid transaction expenses, and (3) at the Closing, following the payment of unpaid transaction expenses in subparagraph (2), pay all remaining amounts then available in the Trust Account to Parent or the Surviving Corporation for immediate use, subject to this Agreement and the Trust Agreement, and (ii) thereafter, the Trust Account shall terminate, except as otherwise provided therein.
6.7 Obligations of Merger Sub. Parent shall take all action necessary to cause Merger Sub to perform its obligations under this Agreement and to consummate the transactions contemplated under this Agreement, upon the terms and subject to the conditions set forth in this Agreement.
6.8 Joinders to Parent Support Agreement. In the event any director or officer of Parent or any Affiliate of the Sponsor acquires beneficial ownership of any securities of Parent prior to the Closing, Parent shall cause such Person(s) to execute a joinder to the Parent Support Agreement.
6.9 PIPE Financing. During the Interim Period, Parent and the Company will use its commercially reasonable best efforts to enter into and consummate subscription agreements with investors to purchase shares of Parent in connection with a private placement on terms and conditions, including as to amounts, mutually agreeable to Parent and the Company, acting reasonably (any such purchase by investors, a “PIPE Financing”).
ARTICLE VII
COVENANTS OF THE COMPANY
7.1 Reporting; Compliance with Laws; No Insider Trading. During the Interim Period,
(a) Each member of the Company Group shall duly observe and conform in all material respects to all applicable Law, including the Exchange Act, and Orders.
(b) The Company shall not, and it shall direct its Representatives to not, directly or indirectly, (i) purchase or sell (including entering into any hedge transaction with respect to) any Parent Common Shares, Parent Units or Parent Rights, except in compliance with all applicable securities Laws, including Regulation M under the
A-1-53
Table of Contents
Exchange Act; (ii) use or disclose or permit any other Person to use or disclose any information that Parent or its Affiliates has made or makes available to the Company and its Representatives in violation of the Exchange Act, the Securities Act or any other applicable securities Law; or (iii) disclose to any third party any non-public information about the Company, Parent, the Merger or the other transactions contemplated hereby or by any Ancillary Agreement.
7.2 Company’s Shareholders Approval.
(a) As promptly as reasonably practicable after the effective date of the Registration Statement, and in any event within five Business Days following such date (the “Company Stockholder Written Consent Deadline”), the Company shall obtain and deliver to Parent a true and correct copy of a written consent (in form and substance reasonably satisfactory to Parent) evidencing the Company Stockholder Approval that is duly executed by the Company Stockholders that hold at least the requisite number and class of issued and outstanding shares of Company Capital Stock required to obtain the Company Stockholder Approval (the “Company Stockholder Written Consent”).
(b) The Company’s Board of Directors shall recommend that the Company Stockholders vote in favor of this Agreement, the Ancillary Agreements to which the Company is or will be a party, the transactions contemplated hereby and thereby and other related matters, and neither the Company’s Board of Directors, nor any committee thereof, shall withhold, withdraw, amend, modify, change or propose or resolve to withhold, withdraw, amend, modify or change, in each case in a manner adverse to Parent, the recommendation of the Company’s Board of Directors.
7.3 Additional Financial Information. The Company shall use its reasonable best efforts to provide Parent with the audited financial statements of the Company and its Subsidiaries for the twelve month periods ended December 31, 2025 and 2024 consisting of the audited consolidated balance sheets as of such dates, the audited consolidated income statements for the twelve month period ended on such date, and the audited consolidated cash flow statements for the twelve month period ended on such date, together with the auditors report thereon (the “Year End Financials”) by no later than May 14, 2026; it being understood and agreed that the Company shall provide to Parent substantially completed drafts of the Year-End Financials no later than April 30, 2026. Subsequent to the delivery of the Year End Financials, the Company’s consolidated interim financial information for each quarterly period thereafter shall be delivered to Parent no later than 40 calendar days following the end of each quarterly period (the “Required Financial Statements”). All of the financial statements to be delivered pursuant to this Section 7.3, shall be prepared under U.S. GAAP in accordance with requirements of the PCAOB for public companies. The Required Financial Statements shall be accompanied by a certificate of the Chief Executive Officer of the Company to the effect that all such financial statements fairly present the financial position and results of operations of the Company as of the date or for the periods indicated, in accordance with U.S. GAAP, except as otherwise indicated in such statements and subject to year-end audit adjustments. The Company will promptly provide Parent with additional Company financial information reasonably requested by Parent for inclusion in the Registration Statement, the Proxy Statement/Prospectus and any other filings to be made by Parent with the SEC.
ARTICLE VIII
COVENANTS OF ALL PARTIES HERETO
8.1 Reasonable Best Efforts; Further Assurances.
(a) Subject to the terms and conditions of this Agreement, Parent and the Company shall, and the Company shall cause its Subsidiaries to, use its reasonable best efforts to take, or cause to be taken, all actions and to do, or cause to be done, all things necessary or desirable under applicable Laws, or as reasonably requested by the other parties, to consummate and implement expeditiously each of the transactions contemplated by this Agreement, including using its reasonable best efforts to (i) obtain all necessary actions, nonactions, waivers, consents, approvals and other authorizations from all applicable Authorities or other third parties prior to the Effective Time; (ii) avoid an Action by any Authority, and (iii) execute and deliver any additional instruments reasonably necessary to consummate the transactions contemplated by this Agreement. The parties shall execute and deliver such other documents, certificates, agreements and other writings and take such other actions as may be reasonably necessary in order to consummate or implement expeditiously each of the transactions contemplated by this Agreement.
(b) Subject to applicable Law, each of the Company and Parent agrees to (i) reasonably cooperate and consult with the other regarding obtaining and making all notifications and filings with Authorities, (ii) furnish to the other such information and assistance as the other may reasonably request in connection with its preparation of
A-1-54
Table of Contents
any notifications or filings, (iii) keep the other reasonably apprised of the status of matters relating to the completion of the transactions contemplated by this Agreement, including promptly furnishing the other with copies of notices and other communications received by such party from, or given by such party to, any third party or any Authority with respect to such transactions, (iv) permit the other party to review and incorporate the other party’s reasonable comments in any communication to be given by it to any Authority with respect to any filings required to be made with, or action or nonactions, waivers, expirations or terminations of waiting periods, clearances, consents or orders required to be obtained from, such Authority in connection with execution and delivery of this Agreement and the consummation of the transactions contemplated by this Agreement and (v) to the extent reasonably practicable, consult with the other in advance of and not participate in any meeting or discussion relating to the transactions contemplated by this Agreement, either in person or by telephone, with any Authority in connection with the proposed transactions unless it gives the other party the opportunity to attend and observe; provided, however, that, in each of clauses (iii) and (iv) above, that materials may be redacted (A) to remove references concerning the valuation of such party and its Affiliates, (B) as necessary to comply with contractual arrangements or applicable Laws, and (C) as necessary to address reasonable attorney-client or other privilege or confidentiality concerns.
(c) During the Interim Period, Parent, on the one hand, and the Company, on the other hand, shall each notify the other in writing promptly after learning of any shareholder demands or other shareholder Action (including derivative claims) relating to this Agreement, any of the Ancillary Agreements or any matters relating thereto commenced or threatened in writing against Parent, any of the Parent Parties or any of its or their respective Representatives in their capacity as a representative of a Parent Party or against the Company (collectively, the “Transaction Litigation”). Parent shall control the negotiation, defense and settlement of any such Transaction Litigation brought against Parent, Merger Sub or members of the boards of directors of Parent or Merger Sub and the Company shall control the negotiation, defense and settlement of any such Transaction Litigation brought against the Company or the members of its board of directors; provided, however, that in no event shall the Company or Parent settle, compromise or come to any arrangement with respect to any Transaction Litigation, or agree to do the same, without the prior written consent of the other party (not to be unreasonably withheld, conditioned or delayed); provided, that it shall be deemed to be reasonable for Parent (if the Company is controlling the Transaction Litigation) or the Company (if Parent is controlling the Transaction Litigation) to withhold, condition or delay its consent if any such settlement or compromise (A) does not provide for a legally binding, full, unconditional and irrevocable release of each Parent Party (if the Company is controlling the Transaction Litigation) or the Company (if the Parent is controlling the Transaction Litigation) and its respective Representative that is the subject of such Transaction Litigation, (B) provides for any non-monetary, injunctive, equitable or similar relief against any Parent Party (if the Company is controlling the Transaction Litigation) or the Company (if Parent is controlling the Transaction Litigation) or (C) contains an admission of wrongdoing or liability by a Parent Party (if the Company is controlling the Transaction Litigation) or the Company (if Parent is controlling the Transaction Litigation) and its respective Representative that is the subject of such Transaction Litigation. Parent and the Company shall each (i) keep the other reasonably informed regarding any Transaction Litigation, (ii) give the other the opportunity to, at its own cost and expense, participate in the defense, settlement and compromise of any such Transaction Litigation and reasonably cooperate with the other in connection with the defense, settlement and compromise of any such Transaction Litigation, (iii) consider in good faith the other’s advice with respect to any such Transaction Litigation and (iv) reasonably cooperate with each other.
8.2 Compliance with SPAC Agreements. Parent shall (a) comply with the Trust Agreement, the Parent Rights Agreement and the Underwriting Agreement, dated as of December 16, 2025, by and between Parent and Cantor Fitzgerald & Co., as representative of the underwriters thereto, and (b) enforce the terms of the letter agreement, dated as of December 16, 2025, by and among Parent, the Sponsor and each of the officers and directors of Parent named therein, in each case, as has been or may be amended from time to time.
8.3 Confidentiality. Except as necessary to complete the Registration Statement, the other Offer Documents or any Other Filings, the Company, on the one hand, and Parent and Merger Sub, on the other hand, shall comply with the Confidentiality Agreement.
8.4 Directors’ and Officers’ Indemnification and Liability Insurance.
(a) All rights to indemnification for acts or omissions occurring through the Closing Date now existing in favor of the current directors and officers of the Company or the Parent Parties and Persons who served as a director, officer, member, trustee or fiduciary of another corporation, partnership, joint venture, trust, pension or other employee benefit plan or enterprise at the request of the Company or the Parent Parties, as provided in their
A-1-55
Table of Contents
respective organizational documents or in any indemnification agreements shall survive the Merger and shall continue in full force and effect in accordance with their terms. For a period of six years after the Effective Time, Parent shall cause the organizational documents of Parent, its Subsidiaries, and the Surviving Corporation to contain provisions no less favorable with respect to exculpation and indemnification of and advancement of expenses than are set forth as of the date of this Agreement in the organizational documents of, with respect to Parent, Parent, and with respect to the Surviving Corporation, the Company, as applicable, to the extent permitted by applicable Law.
(b) Prior to the Closing, Parent and the Company shall reasonably cooperate in order to obtain directors’ and officers’ liability insurance for Parent and the Company that shall be effective as of Closing and will cover (i) those Persons who were directors and officers of the Company prior to the Closing and (ii) those Persons who will be the directors and officers of Parent and its Subsidiaries (including the Surviving Corporation after the Effective Time) at and after the Closing on terms not less favorable than the better of (x) the terms of the current directors’ and officers’ liability insurance in place for the Company’s directors and officers and (y) the terms of a typical directors’ and officers’ liability insurance policy for a company whose equity is listed on Nasdaq or an Alternate Exchange, as applicable, which policy has a scope and amount of coverage that is reasonably appropriate for a company of similar characteristics (including the line of business and revenues) as the Company.
(c) The provisions of this Section 8.4 are intended to be for the benefit of, and shall be enforceable by, each Person who will have been a director or officer of the Company or Parent for all periods ending on or before the Closing Date and may not be changed with respect to any officer or director without his or her written consent.
(d) Prior to the Effective Time, the Company shall obtain and fully pay the premium for a six year prepaid “tail” policy for the extension of the directors’ and officers’ liability coverage of the Company’s existing directors’ and officers’ liability insurance policies, for claims reporting or discovery period of six years from and after the Effective Time, on terms and conditions providing coverage retentions, limits and other material terms (other than premiums payable) substantially equivalent to the current policies of directors’ and officers’ liability insurance maintained by the Company with respect to matters arising on or before the Effective Time, covering without limitation the transactions contemplated hereby.
8.5 Parent Public Filings; Nasdaq. During the Interim Period, Parent will keep current and timely file all of its public filings with the SEC and otherwise comply in all material respects with applicable securities Laws, and shall use its reasonable best efforts prior to the Closing to maintain the listing of the Parent Ordinary Shares, the Parent Units and the Parent Rights on Nasdaq. During the Interim Period, Parent shall use its reasonable best efforts to cause (a) Parent’s initial listing application with Nasdaq or an Alternate Exchange, to be agreed mutually by Parent and the Company, in connection with the transactions contemplated by this Agreement to have been approved; (b) all applicable initial and continuing listing requirements of Nasdaq or an Alternate Exchange, as applicable, to be satisfied; and (c) the Parent Common Shares, including the shares comprising the Aggregate Merger Consideration, and the Parent Rights to be approved for listing on Nasdaq or an Alternate Exchange, as applicable, subject to official notice of issuance, in each case, as promptly as reasonably practicable after the date of this Agreement and in any event prior to the Effective Time.
8.6 Certain Tax Matters.
(a) The Company and Parent shall (and shall cause its respective Subsidiaries to) cooperate fully, as and to the extent reasonably requested by another party hereto, in connection with the filing of relevant Tax Returns, and any audit or Tax proceeding. Such cooperation shall include the retention and (upon the other party’s request) the provision of records and information reasonably relevant to any tax proceeding or audit, making employees available on a mutually convenient basis to provide additional information and explanation of any material provided hereunder.
(b) All Transfer Taxes of Parent, Company, and Merger Sub shall be borne and paid by the Surviving Corporation, and the parties will cooperate to file in a timely manner all necessary documents (including, but not limited to, all Tax Returns) with respect to all such amounts for which the Surviving Corporation is so liable.
8.7 Parent Equity Incentive Plan.
Prior to the effective date of the Registration Statement, Parent shall adopt a new equity incentive plan in substantially the form attached hereto as Exhibit G, with such changes or modifications thereto as the Company and Parent may mutually agree (such agreement not to be unreasonably withheld, conditioned or delayed) (the “Parent Equity Incentive Plan”). The Parent Equity Incentive Plan shall have such number of shares available for issuance equal
A-1-56
Table of Contents
to 10% of the Parent Common Shares to be issued and outstanding immediately after the Closing and shall include an “evergreen” provision that is mutually agreeable to the Company and Parent that will provide for an automatic increase on the first day of each fiscal year in the number of shares available for issuance under the Parent Equity Incentive Plan as mutually determined by the Company and Parent. Parent shall not file a registration statement on Form S-8 or Form S-1 (or other applicable or successor form) to register the resale by the holders thereof of the Parent Common Shares issuable upon the exercise of the Converted Options prior to the date that is 180 days after the Closing Date.
8.8 Section 16 Matters. Prior to the Effective Time, each of the Company and Parent shall take all such steps as may be required (to the extent permitted under applicable Law) to cause any dispositions of shares of the Company Capital Stock or acquisitions of Parent Common Shares (including, in each case, securities deliverable upon exercise, vesting or settlement of any derivative securities) resulting from the transactions contemplated hereby by each individual who may become subject to the subject to the reporting requirements of Section 16 of the Exchange Act to the extent necessary for such issuance to be an exempt acquisition pursuant to Rule 16b-3 promulgated under the Exchange Act.
8.9 Employment Agreements. Prior to the Effective Time, Parent shall use commercially reasonable efforts to enter into employment agreements reasonably satisfactory to the Company and Parent, to be effective as of the Closing, with the key executives of the Company set forth on Schedule 8.9 (the “Key Executives”), each agreement containing customary non-disclosure, non-competition and non-solicitation terms and conditions, in each case, subject to applicable Law.
ARTICLE IX
CONDITIONS TO CLOSING
9.1 Condition to the Obligations of the Parties. The obligations of all of the parties to consummate the Closing are subject to the satisfaction or written waiver (where permissible) by all of such parties of all the following conditions:
(a) No provisions of any applicable Law and no Order shall be in effect restraining, prohibiting or imposing any condition on the consummation of the transactions contemplated hereby, including the Merger.
(b) Each consent, approval or authorization of any Authority required of Parent, its Subsidiaries, or the Company to consummate the Merger set forth on Schedule 9.1(b) shall have been obtained and shall be in full force and effect.
(c) No Authority shall have issued an Order or enacted a Law, having the effect of prohibiting the Merger or making the Merger illegal, which Order or Law is final and non-appealable.
(d) The Company Stockholder Approval shall have been obtained.
(e) Each of the Required Parent Proposals shall have been approved at the Parent Shareholder Meeting.
(f) Parent’s initial listing application with Nasdaq or an Alternate Exchange, as applicable, in connection with the transactions contemplated by this Agreement shall have been conditionally approved and, immediately following the Effective Time, Parent shall satisfy any applicable initial and continuing listing requirements of Nasdaq or an Alternate Exchange, as applicable, and Parent shall not have received any notice of non-compliance therewith, and the shares comprising the Aggregate Merger Consideration, the Earnout Shares and any shares issued in connection with a PIPE Financing, as applicable, shall have been approved for listing on Nasdaq or an Alternate Exchange, as applicable.
(g) The Registration Statement shall have become effective in accordance with the provisions of the Securities Act, no stop order suspending the effectiveness of the Registration Statement shall have been issued by the SEC that remains in effect and no proceeding seeking such a stop order shall have been initiated by the SEC and not withdrawn.
A-1-57
Table of Contents
9.2 Conditions to Obligations of Parent and Merger Sub. The obligation of Parent and Merger Sub to consummate the Closing is subject to the satisfaction, or the waiver in Parent’s sole and absolute discretion, of all the following further conditions:
(a) The Company shall have duly performed or complied with, in all material respects, all of its obligations hereunder required to be performed or complied with (without giving effect to any materiality or similar qualifiers contained therein) by the Company at or prior to the Closing Date.
(b) The representations and warranties of the Company contained in this Agreement (disregarding all qualifications contained therein relating to materiality or Material Adverse Effect), other than the Company Fundamental Representations, shall be true and correct in all respects as of the date of this Agreement and as of the Closing Date, as if made at and as of such date (except to the extent that any such representation and warranty is made as of an earlier date, in which case such representation and warranty shall be true and correct at and as of such earlier date) except, in each case, for any failure of such representations and warranties (disregarding all qualifications and exceptions contained therein relating to materiality or Material Adverse Effect) to be so true and correct that would not in the aggregate have or reasonably be expected to have a Material Adverse Effect in respect of the Company.
(c) The Company Fundamental Representations (disregarding all qualifications and exceptions contained therein relating to materiality or Material Adverse Effect) shall be true and correct in all respects at and as of the date of this Agreement and as of the Closing Date, as if made as of such date (except to the extent that any such representation and warranty is expressly made as of a specific date, in which case such representation and warranty shall be true and correct at and as of such specific date), other than de minimis inaccuracies.
(d) Since the date of this Agreement, there shall not have occurred a Material Adverse Effect in respect of the Company that is continuing.
(e) Parent shall have received a certificate, dated as of the Closing Date, signed by the Chief Executive Officer of the Company certifying the accuracy of the provisions of the foregoing clauses (a), (b), (c) and (d) of this Section 9.2.
(f) Parent shall have received a certificate, dated as of the Closing Date, signed by the Secretary of the Company attaching true, correct and complete copies of (i) the Company Charter, certified as of a recent date by the Secretary of State of the State of Delaware; (ii) the Company Bylaws; (iii) copies of resolutions duly adopted by the Board of Directors of the Company authorizing this Agreement, the Ancillary Agreements to which the Company is a party and the transactions contemplated hereby and thereby and the Company Stockholder Written Consent; and (iv) a certificate of good standing or available equivalent of the Company, certified as of a recent date by the Secretary of State of the State of Delaware.
(g) Each of the Company and certain Company Securityholders, as applicable, shall have executed and delivered to Parent a copy of each Ancillary Agreement to which the Company or such Company Securityholder, as applicable, is a party.
(h) The Company shall have delivered to Parent a duly executed certificate conforming to the requirements of Treasury Regulations Sections 1.897-2(g), (h)(1)(i) and 1.1445-2(c)(3)(i) certifying that no interest in the Company is, or has been during the relevant period specified in Section 897(c)(1)(A)(ii) of the Code, a “U.S. real property interest” within the meaning of Section 897(c) of the Code, and a notice to be delivered to the IRS as required under Treasury Regulations Section 1.897-2(h)(2) together with written authorization for Parent to deliver such notice to the IRS on behalf of the Company following the Closing, each dated no more than 30 days prior to the Closing Date and in form and substance as reasonably agreed upon by Parent and the Company.
(i) The Company shall have delivered to Parent a resignation from the Company of each non-continuing director of the Company as designated by the Company in writing prior to the Closing, effective as of the Closing Date.
9.3 Conditions to Obligations of the Company. The obligations of the Company to consummate the Closing is subject to the satisfaction, or the waiver in the Company’s sole and absolute discretion, of all of the following further conditions:
(a) Parent and Merger Sub shall each have duly performed or complied with, in all material respects, all of its respective obligations hereunder required to be performed or complied with (without giving effect to any materiality or similar qualifiers contained therein) by Parent or Merger Sub, as applicable, at or prior to the Closing Date.
A-1-58
Table of Contents
(b) The representations and warranties of Parent and Merger Sub contained in this Agreement (disregarding all qualifications contained therein relating to materiality or Material Adverse Effect), other than the Parent Fundamental Representations, shall be true and correct as of the date of this Agreement and as of the Closing Date, as if made at and as of such date (except to the extent that any such representation and warranty is made as of an earlier date, in which case such representation and warranty shall be true and correct at and as of such earlier date), except, in each case, for any failure of such representations and warranties (disregarding all qualifications and exceptions contained therein relating to materiality or Material Adverse Effect) to be so true and correct that would not in the aggregate have or reasonably be expected to have a Material Adverse Effect in respect of Parent or Merger Sub.
(c) The Parent Fundamental Representations shall be true and correct in all respects at and as of the date of this Agreement and as of the Closing Date, as if made as of such date (except to the extent that any such representation and warranty is expressly made as of a specific date, in which case such representation and warranty shall be true and correct at and as of such specific date), other than de minimis inaccuracies.
(d) Since the date of this Agreement, there shall not have occurred a Material Adverse Effect in respect of Parent that is continuing.
(e) The Company shall have received a certificate, dated as of the Closing Date, signed by the Chief Executive Officer of Parent certifying the accuracy of the provisions of the foregoing clauses (a), (b), (c) and (d) of this Section 9.3.
(f) The Parent Certificate of Incorporation shall have been filed with, and declared effective by, the Secretary of State of the State of Delaware.
(g) The Company shall have received a certificate, dated as of the Closing Date, signed by the Secretary of Parent attaching true, correct and complete copies of resolutions duly adopted by the Board of Directors of Parent authorizing this Agreement, the Ancillary Agreements to which Parent is a party and the transactions contemplated hereby and thereby and the Parent Proposals.
(h) The Company shall have received a certificate, dated as of the Closing Date, signed by the Secretary of Merger Sub attaching true, correct and complete copies of (i) copies of resolutions duly adopted by the Board of Directors and sole shareholder of Merger Sub authorizing this Agreement, the Ancillary Agreements to which Merger Sub is a party and the transactions contemplated hereby and thereby and (ii) a certificate of good standing or available equivalent of Merger Sub, certified as of a recent date by the Secretary of State of the State of Delaware.
(i) Each of Parent, Sponsor or other shareholder of Parent, as applicable, shall have executed and delivered to the Company a copy of each Ancillary Agreement to which Parent, Sponsor or such other shareholder of Parent, as applicable, is a party.
(j) The size and composition of the post-Closing Parent Board of Directors shall have been appointed as set forth in Section 2.9.
(k) The accrued but unpaid fees, costs and expenses, including fees of outside legal counsel (but excluding the Deferred Underwriting Commission), of the Parent Parties as of immediately prior to the Closing shall collectively not exceed $2,000,000 without the prior written consent of the Company; it being agreed that any such excess fees incurred without the Company’s prior written consent will reduce the share consideration remaining for the Sponsor such that only the Sponsor bears such excess fees, costs and expenses assuming $10 price per Parent Common Share.
(l) The amount of Parent Closing Cash at the Closing shall equal or exceed $30,000,000.
ARTICLE X
TERMINATION
10.1 Termination Without Default.
(a) In the event that (i) the Closing of the transactions contemplated hereunder has not occurred on or before January 21, 2027 (the “Outside Closing Date”); and (ii) the material breach or violation of any representation, warranty, covenant or obligation under this Agreement by the party (i.e., Parent or Merger Sub, on one hand, or the Company, on the other hand) seeking to terminate this Agreement was not the cause of, or resulted in, the failure of the
A-1-59
Table of Contents
Closing to occur on or before the Outside Closing Date, then Parent or the Company, as applicable, shall have the right, at its sole option, to terminate this Agreement without liability to the other party. Such right may be exercised by Parent or the Company, as the case may be, giving written notice to the other at any time after the Outside Closing Date.
(b) In the event an Authority shall have issued an Order or enacted a Law, having the effect of prohibiting the Merger or making the Merger illegal, which Order or Law is final and non-appealable, Parent or the Company shall have the right, at its sole option, to terminate this Agreement without liability to the other party; provided, however, that the right to terminate this Agreement pursuant to this Section shall not be available to the Company or Parent if the failure by such party or its Affiliates to comply with any provision of this Agreement has been a substantial cause of, or substantially resulted in, such action by such Authority.
(c) This Agreement may be terminated at any time by mutual written consent of the Company and Parent duly authorized by each of their respective boards of directors.
10.2 Termination Upon Default.
(a) Parent may terminate this Agreement by giving written notice to the Company, without prejudice to any rights or obligations Parent or Merger Sub may have: (i) at any time prior to the Closing if the Company shall have breached any representation, warranty, agreement or covenant contained herein to be performed on or prior to the Closing, which has rendered or would reasonably be expected to render the satisfaction of any of the conditions set forth in Section 9.2(a) or 9.2(b) impossible (a “Terminating Company Breach”); except that, if such Terminating Company Breach is curable by the Company through the exercise of its reasonable best efforts, then, for a period of up to 30 days after receipt by the Company of notice from Parent of such breach, but only as long as the Company continues to use its reasonable best efforts to cure such Terminating Company Breach (the “Company Cure Period”), such termination shall not be effective, and such termination shall become effective only if the Terminating Company Breach is not cured within the Company Cure Period; or (ii) at any time after the Company Stockholder Written Consent Deadline if the Company has not delivered the Company Stockholder Approval to Parent (provided, that upon the Company delivering the Company Stockholder Approval to Parent, Parent shall no longer have any right to terminate this Agreement under this clause (ii)).
(b) The Company may terminate this Agreement by giving written notice to Parent, without prejudice to any rights or obligations the Company may have, if at any time prior to the Closing, Parent shall have breached any of its covenants, agreements, representations, and warranties contained herein to be performed on or prior to the Closing, which has rendered or reasonably would render the satisfaction of any of the conditions set forth in Section 9.3(a) or 9.3(b) impossible (a “Terminating Parent Breach”); except that, if such Terminating Parent Breach is curable by Parent through the exercise of its reasonable best efforts, then, for a period of up to 30 days after receipt by Parent of notice from the Company of such breach, but only as long as Parent continues to use its reasonable best efforts to cure such Terminating Parent Breach (the “Parent Cure Period”), such termination shall not be effective, and such termination shall become effective only if the Terminating Parent Breach is not cured within the Parent Cure Period.
10.3 Effect of Termination. If this Agreement is terminated pursuant to this ARTICLE X, this Agreement shall become void and of no further force or effect without liability of any party (or any shareholder, director, officer, employee, Affiliate, agent, consultant or representative of such party) to the other parties hereto; provided that, if such termination shall result from the willful and material breach by a party of its covenants and agreements hereunder or common law fraud or willful and material breach in connection with the transactions contemplated by this Agreement, such party shall not be relieved of liability to the other parties for any such willful and material breach or common law fraud occurring prior to such termination. The provisions of Section 8.3, this Section 10.3 and ARTICLE XI, and the Confidentiality Agreement, shall survive any termination hereof pursuant to this ARTICLE X.
ARTICLE XI
MISCELLANEOUS
11.1 Notices. Any notice hereunder shall be sent in writing, addressed as specified below, and shall be deemed given: (a) if by hand, electronic mail, or nationally recognized overnight courier service, by 5:00 PM Eastern Time on a Business Day, addressee’s day and time, on the date of delivery, and if delivered after 5:00 PM Eastern Time, on the first Business Day after such delivery; (b) if by email, on the date of transmission with affirmative confirmation of receipt; or (c) three Business Days after mailing by prepaid certified or registered mail, return receipt requested.
A-1-60
Table of Contents
Notices shall be addressed to the respective parties as follows, or to such other address as a party shall specify to the others in accordance with these notice provisions:
if to the Company (or, following the Closing, the Surviving Corporation or Parent), to:
Electra Vehicles, Inc.
110 K Street, Suite 330
Boston, MA 02127
Attention: Fabrizio Martini, Chief Executive Officer
E-mail: fmartini@electravehicles.com
with a copy (which shall not constitute notice) to:
Latham & Watkins LLP
10250 Constellation Blvd., Suite 1100
Los Angeles, CA 90067
Attention: Steven B. Stokdyk; Brian P. Duff
E-mail: steven.stokdyk@lw.com; brian.duff@lw.com
if to Parent or Merger Sub (prior to the Closing):
Iron Horse Acquisition II Corp.
851 Broken Sound Parkway NW, Suite 230
Boca Raton, FL 33487
Attention: Jose Antonio Bengochea, Chief Executive Officer
E-mail: jose@ironhorseacquisition.com
with a copy (which shall not constitute notice) to:
Loeb & Loeb LLP
345 Park Avenue
New York, NY 10154
Attention: Mitchell S. Nussbaum
E-mail: mnussbaum@loeb.com
11.2 Amendments; No Waivers; Remedies.
(a) This Agreement cannot be amended, except by a writing signed by each party, and cannot be terminated orally or by course of conduct. No provision hereof can be waived, except by a writing signed by the party against whom such waiver is to be enforced, and any such waiver shall apply only in the particular instance in which such waiver shall have been given.
(b) Neither any failure or delay in exercising any right or remedy hereunder or in requiring satisfaction of any condition herein nor any course of dealing shall constitute a waiver of or prevent any party from enforcing any right or remedy or from requiring satisfaction of any condition. No notice to or demand on a party waives or otherwise affects any obligation of that party or impairs any right of the party giving such notice or making such demand, including any right to take any action without notice or demand not otherwise required by this Agreement. No exercise of any right or remedy with respect to a breach of this Agreement shall preclude exercise of any other right or remedy, as appropriate to make the aggrieved party whole with respect to such breach, or subsequent exercise of any right or remedy with respect to any other breach.
(c) Except as otherwise expressly provided herein, no statement herein of any right or remedy shall impair any other right or remedy stated herein or that otherwise may be available.
(d) Notwithstanding anything to the contrary contained herein, no party shall seek, nor shall any party be liable for, punitive or exemplary damages under any tort, contract, equity or other legal theory with respect to any breach (or alleged breach) of this Agreement or any provision hereof or any matter otherwise relating hereto or arising in connection herewith.
A-1-61
Table of Contents
11.3 Arm’s Length Bargaining; No Presumption Against Drafter. This Agreement has been negotiated at arm’s-length by parties of equal bargaining strength, each represented by counsel or having had but declined the opportunity to be represented by counsel and having participated in the drafting of this Agreement. This Agreement creates no fiduciary or other special relationship between the parties, and no such relationship otherwise exists. No presumption in favor of or against any party in the construction or interpretation of this Agreement or any provision hereof shall be made based upon which Person might have drafted this Agreement or such provision.
11.4 Publicity. Except as required by Law or applicable stock exchange rules and except with respect to the Additional Parent SEC Documents, the parties agree that neither they nor their Representatives shall issue any press release or make any other public disclosure prior to the Closing concerning the transactions contemplated hereunder without the prior approval of the other party hereto, which approval shall not be unreasonably withheld by any party. If a party is required to make such a disclosure as required by Law or applicable stock exchange rules, the party making such determination will, if practicable in the circumstances, use reasonable commercial efforts to allow the other party reasonable time to comment on such disclosure in advance of its issuance.
11.5 Expenses. Except as otherwise provided in Section 9.3(k), the costs and expenses in connection with this Agreement and the transactions contemplated hereby shall be paid by Parent after the Closing. For the avoidance of doubt, any payments to be made (or to cause to be made) by Parent pursuant to this Section 11.5 shall be paid upon consummation of the Merger and release of proceeds from the Trust Account. If the Closing does not take place, each party shall be responsible for its own expenses.
11.6 No Assignment or Delegation. No party may assign any right or delegate any obligation hereunder, including by merger, consolidation, operation of law or otherwise, without the written consent of the other party. Any purported assignment or delegation without such consent shall be void.
11.7 Governing Law. This Agreement and all disputes or controversies arising out of or relating to this Agreement or the transactions contemplated hereby, including the applicable statute of limitations, shall be governed by and construed in accordance with the Laws of the State of New York, without giving effect to any choice of law or conflict of law provision or rule (whether of the State of New York or any other jurisdiction) that would cause the application of the Law of any jurisdiction other than the State of New York, except that the Domestication, the internal affairs of Parent prior to the Domestication and any provisions of this Agreement that are expressly or otherwise required to be governed by the Cayman Companies Act, shall be governed by the Laws of the Cayman Islands (without giving effect to choice of law principles thereof) in respect of which the parties irrevocably submit to the non-exclusive jurisdiction of the courts of the Cayman Islands.
11.8 Counterparts; Electronic Signatures. This Agreement may be executed in counterparts, each of which shall constitute an original, but all of which shall constitute one agreement. This Agreement shall become effective upon delivery to each party of an executed counterpart or the earlier delivery to each party of original, photocopied, or electronically transmitted signature pages that together (but need not individually) bear the signatures of all other parties.
11.9 Entire Agreement. This Agreement, together with the Ancillary Agreements, sets forth the entire agreement of the parties with respect to the subject matter hereof and thereof and supersedes all prior and contemporaneous understandings and agreements related thereto (whether written or oral), all of which are merged herein. No provision of this Agreement or any Ancillary Agreement may be explained or qualified by any agreement, negotiations, understanding, discussion, conduct or course of conduct or by any trade usage. Except as otherwise expressly stated herein or in any Ancillary Agreement, there is no condition precedent to the effectiveness of any provision hereof or thereof. Notwithstanding the foregoing, the Confidentiality Agreement is not superseded by this Agreement or merged herein and shall continue in accordance with its terms, including in the event of any termination of this Agreement.
11.10 Severability. A determination by a court or other legal authority that any provision that is not of the essence of this Agreement is legally invalid shall not affect the validity or enforceability of any other provision hereof. The parties shall cooperate in good faith to substitute (or cause such court or other legal authority to substitute) for any provision so held to be invalid a valid provision, as alike in substance to such invalid provision as is lawful.
A-1-62
Table of Contents
11.11 Further Assurances. Each party shall execute and deliver such documents and take such action, as may reasonably be considered within the scope of such party’s obligations hereunder, necessary to effectuate the transactions contemplated by this Agreement.
11.12 Third Party Beneficiaries. Except as provided in Section 8.4 and Section 11.20, neither this Agreement nor any provision hereof confers any benefit or right upon or may be enforced by any Person not a signatory hereto.
11.13 Waiver. The Company has read the Prospectus and understands that Parent has established the Trust Account for the benefit of the public shareholders of Parent and the underwriters of the IPO pursuant to the Trust Agreement and that, except for a portion of the interest earned on the amounts held in the Trust Account, Parent may disburse monies from the Trust Account only for the purposes set forth in the Trust Agreement. For and in consideration of Parent agreeing to enter into this Agreement, the Company, for itself and on behalf of the Company Securityholders, hereby agrees that it does not now and shall not at any time hereafter prior to the Closing have any right, title, interest or claim of any kind in or to any monies in the Trust Account as a result of, or arising out of, any negotiations, contracts or agreements with Parent and hereby agrees that it will not seek recourse against the Trust Account for any reason.
11.14 No Other Representations; No Reliance.
(a) NONE OF THE COMPANY, ANY COMPANY SECURITYHOLDER NOR ANY OF THEIR RESPECTIVE REPRESENTATIVES HAS MADE ANY REPRESENTATIONS OR WARRANTIES, EXPRESS OR IMPLIED, OF ANY NATURE WHATSOEVER RELATING TO THE COMPANY OR THE BUSINESS OR OTHERWISE IN CONNECTION WITH THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT OR ANY ANCILLARY AGREEMENT, OTHER THAN THOSE REPRESENTATIONS AND WARRANTIES EXPRESSLY SET FORTH IN ARTICLE IV, IN EACH CASE, AS MODIFIED BY THE SCHEDULES TO THIS AGREEMENT. Without limiting the generality of the foregoing, neither the Company, any Company Securityholder nor any of their respective Representatives has made, and shall not be deemed to have made, any representations or warranties in the materials relating to the Company made available to Parent and its Representatives, including due diligence materials, or in any presentation of the business of the Company by management of the Company or others in connection with the transactions contemplated hereby, and no statement contained in any of such materials or made in any such presentation shall be deemed a representation or warranty hereunder or otherwise or deemed to be relied upon by Parent or Merger Sub in executing, delivering and performing this Agreement, the Ancillary Agreements or the transactions contemplated hereby or thereby, in each case except for the representations and warranties set forth in ARTICLE IV as modified by the Schedules to this Agreement. It is understood that any cost estimates, projections or other predictions, any data, any financial information or any memoranda or offering materials or presentations, including any offering memorandum or similar materials made available by the Company, any Company Securityholder or their respective Representatives are not and shall not be deemed to be or to include representations or warranties of the Company or any Company Securityholder, and are not and shall not be deemed to be relied upon by Parent or Merger Sub in executing, delivering and performing this Agreement, the Ancillary Agreement and the transactions contemplated hereby or thereby, in each case except for the representations and warranties set forth in ARTICLE IV, in each case, as modified by the Schedules to this Agreement. Except for the specific representations and warranties expressly made by the Company in ARTICLE IV, in each case as modified by the Schedules: (a) Parent acknowledges and agrees that: (i) neither the Company, the Company Securityholders nor any of their respective Representatives is making or has made any representation or warranty, express or implied, at law or in equity, in respect of the Company, the business, assets, liabilities, operations, prospects or condition (financial or otherwise) of the Company, the nature or extent of any liabilities of the Company, the effectiveness or the success of any operations of the Company or the accuracy or completeness of any confidential information memoranda, projections, forecasts or estimates of earnings, or other information (financial or otherwise) regarding the Company furnished to Parent, Merger Sub or their respective Representatives or made available to Parent and its Representatives in any “data rooms,” “virtual data rooms,” management presentations or any other form in expectation of, or in connection with, the transactions contemplated hereby, or in respect of any other matter or thing whatsoever; and (ii) no Representative of any Company Securityholder or the Company has any authority, express or implied, to make any representations, warranties or agreements not specifically set forth in ARTICLE IV and subject to the limited remedies herein provided; (b) each of Parent and Merger Sub specifically disclaims that it is relying upon or has relied upon any such other representations or warranties that may have been made by any Person, and acknowledges and agrees that the Company Securityholders and the Company have specifically disclaimed and do hereby specifically disclaim any such other representation or warranty made by any Person; and (c) none of the Company, the Company Securityholders nor any other Person
A-1-63
Table of Contents
shall have any liability to Parent, Merger Sub or any other Person with respect to any such other representations or warranties, including projections, forecasts, estimates, plans or budgets of future revenue, expenses or expenditures, future results of operations, future cash flows or the future financial condition of the Company or the future business, operations or affairs of the Company.
(b) NONE OF PARENT, MERGER SUB NOR ANY OF THEIR RESPECTIVE REPRESENTATIVES HAS MADE ANY REPRESENTATIONS OR WARRANTIES, EXPRESS OR IMPLIED, OF ANY NATURE WHATSOEVER RELATING TO PARENT, MERGER SUB OR OTHERWISE IN CONNECTION WITH THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT OR ANY ANCILLARY AGREEMENT, OTHER THAN THOSE REPRESENTATIONS AND WARRANTIES EXPRESSLY SET FORTH IN ARTICLE V, IN EACH CASE, AS MODIFIED BY THE SCHEDULES TO THIS AGREEMENT AND THE PARENT SEC DOCUMENTS. Without limiting the generality of the foregoing, neither Parent, Merger Sub nor any of their respective Representatives has made, and shall not be deemed to have made, any representations or warranties in the materials relating to Parent and Merger Sub made available to the Company and the Company Securityholders and their Representatives, including due diligence materials, or in any presentation of the business of Parent by management of Parent or others in connection with the transactions contemplated hereby, and no statement contained in any of such materials or made in any such presentation shall be deemed a representation or warranty hereunder or otherwise or deemed to be relied upon by the Company and the Company Securityholders in executing, delivering and performing this Agreement, the Ancillary Agreements or the transactions contemplated hereby or thereby, in each case except for the representations and warranties set forth in ARTICLE V as modified by the Schedules to this Agreement and the Parent SEC Documents. It is understood that any cost estimates, projections or other predictions, any data, any financial information or any memoranda or offering materials or presentations, including any offering memorandum or similar materials made available by Parent, Merger Sub or their respective Representatives are not and shall not be deemed to be or to include representations or warranties of Parent and Merger Sub, and are not and shall not be deemed to be relied upon by the Company or Company Securityholders in executing, delivering and performing this Agreement, the Ancillary Agreement and the transactions contemplated hereby or thereby, in each case except for the representations and warranties set forth in ARTICLE V, in each case, as modified by the Schedules to this Agreement and the Parent SEC Documents. Except for the specific representations and warranties expressly made by Parent and Merger Sub in ARTICLE V, in each case as modified by the Schedules and the Parent SEC Documents: (a) the Company acknowledges and agrees that: (i) neither Parent, Merger Sub nor any of their respective Representatives is making or has made any representation or warranty, express or implied, at law or in equity, in respect of Parent, Merger Sub, the business, assets, liabilities, operations, prospects or condition (financial or otherwise) of Parent or Merger Sub, the nature or extent of any liabilities of Parent or Merger Sub, the effectiveness or the success of any operations of Parent or Merger Sub or the accuracy or completeness of any confidential information memoranda, projections, forecasts or estimates of earnings, or other information (financial or otherwise) regarding Parent or Merger Sub furnished to the Company, the Company Securityholders or their respective Representatives or made available to the Company, the Company Securityholders and their Representatives in any “data rooms,” “virtual data rooms,” management presentations or any other form in expectation of, or in connection with, the transactions contemplated hereby, or in respect of any other matter or thing whatsoever; and (ii) no Representative of Parent or Merger Sub has any authority, express or implied, to make any representations, warranties or agreements not specifically set forth in ARTICLE V and subject to the limited remedies herein provided; (b) the Company specifically disclaims that it is relying upon or has relied upon any such other representations or warranties that may have been made by any Person, and acknowledges and agrees that Parent and Merger Sub have specifically disclaimed and do hereby specifically disclaim any such other representation or warranty made by any Person; and (c) none of Parent, Merger Sub nor any other Person shall have any liability to the Company, the Company Securityholders or any other Person with respect to any such other representations or warranties, including projections, forecasts, estimates, plans or budgets of future revenue, expenses or expenditures, future results of operations, future cash flows or the future financial condition of Parent or the future business, operations or affairs of Parent.
11.15 Waiver of Jury Trial. THE PARTIES EACH HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY RIGHT TO TRIAL BY JURY OF ANY PROCEEDING (I) ARISING UNDER THIS AGREEMENT OR UNDER ANY ANCILLARY AGREEMENT OR (II) IN ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES IN RESPECT OF THIS AGREEMENT OR ANY ANCILLARY AGREEMENT OR ANY OF THE TRANSACTIONS RELATED HERETO OR THERETO OR ANY FINANCING IN CONNECTION WITH THE TRANSACTIONS CONTEMPLATED HEREBY OR ANY OF THE TRANSACTIONS CONTEMPLATED THEREBY, IN EACH CASE, WHETHER NOW EXISTING OR
A-1-64
Table of Contents
HEREAFTER ARISING, AND WHETHER IN CONTRACT, TORT, EQUITY, OR OTHERWISE. THE PARTIES EACH HEREBY AGREES AND CONSENTS THAT ANY SUCH PROCEEDING SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY AND THAT THE PARTIES MAY FILE AN ORIGINAL COUNTERPART OF A COPY OF THIS AGREEMENT WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE PARTIES HERETO TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY. EACH PARTY CERTIFIES AND ACKNOWLEDGES THAT (A) NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER, (B) EACH SUCH PARTY UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF THIS WAIVER, (C) EACH SUCH PARTY MAKES THIS WAIVER VOLUNTARILY AND (D) EACH SUCH PARTY HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 11.15.
11.16 Submission to Jurisdiction. Each of the parties irrevocably and unconditionally submits to the exclusive jurisdiction of a federal court sitting in the Borough of Manhattan of The City of New York or, if such federal court does not have jurisdiction over any such Actions, the Supreme Court of the State of New York, Commercial Division, sitting in the Borough of Manhattan of The City of New York (and any appellate court therefrom), for the purposes of any Action (a) arising under this Agreement or under any Ancillary Agreement or (b) in any way connected with or related or incidental to the dealings of the parties in respect of this Agreement or any Ancillary Agreement or any of the transactions contemplated hereby or thereby, and irrevocably and unconditionally waives any objection to the laying of venue of any such Action in any such court, and further irrevocably and unconditionally waives and agrees not to plead or claim in any such court that any such Action has been brought in an inconvenient forum. Each party hereby irrevocably and unconditionally waives, and agrees not to assert, by way of motion or as a defense, counterclaim or otherwise, in any Action (i) arising under this Agreement or under any Ancillary Agreement or (ii) in any way connected with or related or incidental to the dealings of the parties in respect of this Agreement or any Ancillary Agreement or any of the transactions contemplated hereby or thereby, (A) any claim that it is not personally subject to the jurisdiction of the courts as described in this Section 11.16 for any reason, (B) that it or its property is exempt or immune from the jurisdiction of any such court or from any Action commenced in such courts (whether through service of notice, attachment prior to judgment, attachment in aid of execution of judgment, execution of judgment or otherwise) and (C) that (x) the Action in any such court is brought in an inconvenient forum, (y) the venue of such Action is improper or (z) this Agreement, or the subject matter hereof, may not be enforced in or by such courts. Each party agrees that service of any process, summons, notice or document by registered mail to such party’s respective address set forth in Section 11.1 shall be effective service of process for any such Action.
11.17 Attorneys’ Fees. In the event of any legal action initiated by any party prior to the Closing arising under or out of, in connection with or in respect of, this Agreement, the prevailing party shall be entitled to reasonable attorneys’ fees, costs and expenses incurred in such action, as determined and fixed by the court.
11.18 Remedies. Except as otherwise expressly provided herein, any and all remedies provided herein will be deemed cumulative with and not exclusive of any other remedy conferred hereby, or by law or equity upon such party, and the exercise by a party of any one remedy will not preclude the exercise of any other remedy. The parties agree that irreparable damage for which monetary damages, even if available, would not be an adequate remedy, would occur in the event that the parties do not perform their respective obligations under the provisions of this Agreement (including failing to take such actions as are required of them hereunder to consummate the transactions contemplated by this Agreement) in accordance with their specific terms or otherwise breach such provisions. It is accordingly agreed that the parties shall be entitled to an injunction or injunctions, specific performance and other equitable relief to prevent breaches of this Agreement and to enforce specifically the terms and provisions of this Agreement, in each case, without posting a bond or undertaking and without proof of damages and this being in addition to any other remedy to which they are entitled at law or in equity. Each of the parties agrees that it will not oppose the granting of an injunction, specific performance and other equitable relief when expressly available pursuant to the terms of this Agreement on the basis that the other parties have an adequate remedy at law or an award of specific performance is not an appropriate remedy for any reason at law or equity.
11.19 Non-Recourse. This Agreement may be enforced only against, and any dispute, claim or controversy based upon, arising out of or related to this Agreement or the transactions contemplated hereby may be brought only against, the entities that are expressly named as parties hereto and then only with respect to the specific obligations set forth in this Agreement with respect to such party. No past, present or future director, officer, employee, incorporator,
A-1-65
Table of Contents
member, partner, shareholder, agent, attorney, advisor, lender or representative or Affiliate of any named party to this Agreement (which Persons are intended third party beneficiaries of this Section 11.19) shall have any liability (whether in contract or tort, at law or in equity or otherwise, or based upon any theory that seeks to impose liability of an entity party against its owners or Affiliates) for any one or more of the representations, warranties, covenants, agreements or other obligations or liabilities of such named party or for any dispute, claim or controversy based on, arising out of, or related to this Agreement or the transactions contemplated hereby.
11.20 Conflicts and Privilege.
(a) Parent and the Company, on behalf of their respective successors and assigns (including, after the Closing, the Surviving Corporation), hereby agree that, in the event a dispute with respect to this Agreement or the transactions contemplated hereby arises after the Closing between or among (i) the Sponsor, the stockholders or holders of other equity interests of Parent or the Sponsor and/or any of their respective directors, members, partners, officers, employees or Affiliates (other than the Surviving Corporation) (collectively, the “IRHO Group”), on the one hand, and (ii) the Surviving Corporation and/or any member of the Electra Group, on the other hand, any legal counsel, including Loeb & Loeb LLP (“Loeb”), that represented Parent and/or the Sponsor prior to the Closing may represent the Sponsor and/or any other member of the IRHO Group, in such dispute even though the interests of such Persons may be directly adverse to the Surviving Corporation, and even though such counsel may have represented Parent in a matter substantially related to such dispute, or may be handling ongoing matters for the Surviving Corporation and/or the Sponsor. Parent and the Company, on behalf of their respective successors and assigns (including, after the Closing, the Surviving Corporation), further agree that, as to all legally privileged communications prior to the Closing (made in connection with the negotiation, preparation, execution, delivery and performance under, or any dispute or Action arising out of or relating to, this Agreement, any Ancillary Agreements or the transactions contemplated hereby or thereby) between or among Parent, the Sponsor and/or any other member of the IRHO Group, on the one hand, and Loeb, on the other hand, the attorney/client privilege and the expectation of client confidence shall survive the Merger and belong to the IRHO Group after the Closing, and shall not pass to or be claimed or controlled by the Surviving Corporation. Notwithstanding the foregoing, any privileged communications or information shared by the Company prior to the Closing with Parent or the Sponsor under a common interest agreement shall remain the privileged communications or information of the Surviving Corporation.
(b) Parent and the Company, on behalf of their respective successors and assigns (including, after the Closing, the Surviving Corporation), hereby agree that, in the event a dispute with respect to this Agreement or the transactions contemplated hereby arises after the Closing between or among (i) the stockholders or holders of other equity interests of the Company and/or any of their respective directors, members, partners, officers, employees or Affiliates (other than the Surviving Corporation) (collectively, the “Electra Group”), on the one hand, and (ii) the Surviving Corporation and/or any member of the IRHO Group, on the other hand, any legal counsel, including Latham & Watkins LLP (“LW”) that represented the Company prior to the Closing may represent any member of the Electra Group in such dispute even though the interests of such Persons may be directly adverse to the Surviving Corporation, and even though such counsel may have represented Parent and/or the Company in a matter substantially related to such dispute, or may be handling ongoing matters for the Surviving Corporation, further agree that, as to all legally privileged communications prior to the Closing (made in connection with the negotiation, preparation, execution, delivery and performance under, or any dispute or Action arising out of or relating to, this Agreement, any Ancillary Agreements or the transactions contemplated hereby or thereby) between or among the Company and/or any member of the Electra Group, on the one hand, and LW, on the other hand, the attorney/client privilege and the expectation of client confidence shall survive the Merger and belong to the Electra Group after the Closing, and shall not pass to or be claimed or controlled by the Surviving Corporation. Notwithstanding the foregoing, any privileged communications or information shared by Parent prior to the Closing with the Company under a common interest agreement shall remain the privileged communications or information of the Surviving Corporation.
[The remainder of this page intentionally left blank; signature pages to follow]
A-1-66
Table of Contents
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed as of the day and year first above written.
| Parent: | ||||||
| IRON HORSE ACQUISITION II CORP. | ||||||
| By: | /s/ Jose Antonio Bengochea | |||||
| Name: | Jose Antonio Bengochea | |||||
| Title: | Chief Executive Officer | |||||
| Merger Sub: | ||||||
| IRHO MERGER SUB, INC. | ||||||
| By: | /s/ Jose Antonio Bengochea | |||||
| Name: | Jose Antonio Bengochea | |||||
| Title: | Chief Executive Officer | |||||
| Company: | ||||||
| ELECTRA VEHICLES, INC. | ||||||
| By: | /s/ Fabrizio Martini | |||||
| Name: | Fabrizio Martini | |||||
| Title: | Chief Executive Officer and Co-Founder | |||||
[Signature Page to Merger Agreement]
A-1-67
Table of Contents
EXHIBIT A
Form of Parent Certificate of Incorporation
(See attached)
A-1-68
Table of Contents
EXHIBIT B
Form of Parent Bylaws
(See attached)
A-1-69
Table of Contents
EXHIBIT C
Form of Company Support Agreement
(See attached)
A-1-70
Table of Contents
EXHIBIT D
Form of Parent Support Agreement
(See attached)
A-1-71
Table of Contents
EXHIBIT E
Form of Lock-Up Agreement
(See attached)
A-1-72
Table of Contents
EXHIBIT F
Form of Amended and Restated Registration Rights Agreement
(See attached)
A-1-73
Table of Contents
EXHIBIT G
Form of Parent Equity Incentive Plan
(See attached)
A-1-74
Table of Contents
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 20. Indemnification of Directors and Officers.
Cayman Islands law does not limit the extent to which a company’s memorandum and articles of association may provide for indemnification of officers and directors, except to the extent any such provision may be held by the Cayman Islands courts to be contrary to public policy, such as to provide indemnification against willful default, civil fraud or the consequences of committing a crime. Following the Business Combination, the Proposed Charter and the Proposed Bylaws will provide for indemnification of its officers and directors to the maximum extent permitted by law, including for any liability incurred in their capacities as such, except through their own actual fraud or willful default. IRHO has purchased a policy of directors’ and officers’ liability insurance that insures its officers and directors against the cost of defense, settlement or payment of a judgment in some circumstances and insures IRHO against its obligations to indemnify its officers and directors.
Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers or persons controlling IRHO pursuant to the foregoing provisions, IRHO has been informed that in the opinion of the SEC such indemnification is against public policy as expressed in the Securities Act and is therefore unenforceable.
Item 21. Exhibits and Financial Statement Schedules.
(a) The following exhibits are filed as part of this registration statement:
| Exhibit No. | Description | |
| 2.1†** | Merger Agreement, dated April 21, 2026, by and among Iron Horse Acquisition II Corp., Merger Sub, Inc. and Electra Vehicles, Inc. (included as Annex A-1 to the proxy statement/prospectus). | |
| 2.2** | Amendment to Merger Agreement, dated May 14, 2026, by and among Iron Horse Acquisition II Corp., Merger Sub, Inc. and Electra Vehicles, Inc. (included as Annex A-2 to the proxy statement/prospectus). | |
| 2.3* | Plan of Domestication. | |
| 3.1** | Amended and Restated Memorandum and Articles of Association (included as Annex G-1 to the proxy statement/prospectus). | |
| 3.2** | Amendment to the Amended and Restated Memorandum and Articles of Association (included as Annex G-2 to the proxy statement/prospectus). | |
| 3.3** | Amendment to the Amended and Restated Memorandum and Articles of Association (included as Annex G-3 to the proxy statement/prospectus). | |
| 3.4** | Form of Certificate of Incorporation of Electra Pubco (included as Annex B-1 to the proxy statement/prospectus). | |
| 3.5** | Form of Bylaws of Electra Pubco (included as Annex B-2 to the proxy statement/prospectus). | |
| 3.6* | Certificate of Domestication. | |
| 4.1** | Specimen Stock Certificate | |
| 5.1* | Opinion of Loeb & Loeb LLP. | |
| 8.1* | Opinion of Latham & Watkins LLP | |
| 10.1** | Letter Agreement, dated December 16, 2025, by and among Iron Horse Acquisition II Corp., its officers, its directors and IRHO Sponsor LLC (incorporated by reference to Exhibit 10.2 of Iron Horse Acquisition II Corp.’s Current Report on Form 8-K (File No. 001-43021), filed with the SEC on December 18, 2025). | |
| 10.2** | Investment Management Trust Agreement, dated December 16, 2025, by and between Iron Horse Acquisition II Corp. and Continental Stock Transfer & Trust Company (incorporated by reference to Exhibit 10.3 of Iron Horse Acquisition II Corp.’s Current Report on Form 8-K (File No. 001-43021), filed with the SEC on December 18, 2025). | |
| 10.3** | Registration Rights Agreement, dated December 16, 2025, by and among Iron Horse Acquisition II Corp., IRHO Sponsor LLC and the holders signatory thereto (incorporated by reference to Exhibit 10.1 of Iron Horse Acquisition II Corp.’s Current Report on Form 8-K (File No. 001-43021), filed with the SEC on December 18, 2025). |
II-1
Table of Contents
| Exhibit No. | Description | |
| 10.4** | Private Placement Units Purchase Agreement, dated December16, 2025, by and between Iron Horse Acquisition II Corp. and IRHO Sponsor LLC (incorporated by reference to Exhibit 10.5.1 of Iron Horse Acquisition II Corp.’s Current Report on Form 8-K (File No. 001-43021), filed with the SEC on December 18, 2025). | |
| 10.5** | Parent Support Agreement, dated as of April 21, 2026 by and among IRHO Sponsor LLC, Iron Horse Acquisition II Corp., and Electra Vehicles, Inc. (included as Annex F to the proxy statement/prospectus). | |
| 10.6** | Company Support Agreement, dated as of April 21, 2026, by and among Iron Horse Acquisition II Corp., Electra Vehicles, Inc. and the other parties thereto (included as Annex E to the proxy statement/prospectus). | |
| 10.10** | Form of Amended and Restated Registration Rights Agreement (included as Annex D to the proxy statement/prospectus). | |
| 10.15** | Form of Lock-Up Agreement | |
| 10.16** | Retention letter, dated December 31, 2025, by and between Fabrizio Martini and Electra Vehicles, Inc. | |
| 10.17** | Retention letter, dated January 1, 2026, by and between Nick Chakalos and Electra Vehicles, Inc. | |
| 10.18** | 2016 Stock Incentive Plan of Electra Vehicles, Inc. | |
| 10.19** | Amendment to the 2016 Stock Incentive Plan of Electra Vehicles, Inc. | |
| 10.20* | Electra AI, Inc. 2026 Incentive Award Plan | |
| 23.1 | Consent of MaloneBailey, LLP | |
| 23.2 | Consent of MaloneBailey, LLP | |
| 23.3* | Consent of Loeb & Loeb LLP (included as part of Exhibit 5.1 hereto). | |
| 23.4* | Consent of Latham (included as part of Exhibit 8.1 hereto). | |
| 23.5* | Consent of Loeb & Loeb LLP (included as part of Exhibit 5.1 hereto). | |
| 24.1** | Power of Attorney (included on the signature page to the initial filing of this registration statement). | |
| 99.1* | Form of Preliminary Proxy Card. | |
| 99.3* | Consent of _______ to be named as a director of Electra Pubco. | |
| 99.4* | Consent of _________ to be named as a director of Electra Pubco. | |
| 99.5* | Consent of ________to be named as a Director of Electra Pubco. | |
| 99.6* | Consent of _____ to be named as a Director of Electra Pubco. | |
| 101.INS | XBRL Instance Document | |
| 101.SCH | XBRL Taxonomy Extension Schema Document | |
| 101.CAL | XBRL Taxonomy Extension Calculation Linkbase Document | |
| 101.DEF | XBRL Taxonomy Extension Definition Linkbase Document | |
| 101.LAB | XBRL Taxonomy Extension Label Linkbase Document | |
| 101.PRE | XBRL Taxonomy Extension Presentation Linkbase Document | |
| 104 | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) | |
| 107** | Calculation of Registration Fee Table |
____________
* To be filed by amendment.
** Previously filed.
+ Indicates a management or compensatory plan.
† Certain schedules and similar attachments to this Exhibit have been omitted in accordance with Item 601(a)(5) of Regulation S-K. IRHO agrees to furnish supplementally a copy of any omitted exhibit or schedule to the SEC upon its request.
II-2
Table of Contents
Item 22. Undertakings.
The undersigned registrant hereby undertakes as follows:
(a) (1) To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of the Securities Act;
(ii) To reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the SEC pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than 20 percent change in the maximum aggregate offering price set forth in the “Calculation of Registration Fee” table in the effective registration statement;
(iii) To include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement.
(2) That, for the purpose of determining any liability under the Securities Act, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering.
(4) That, for the purpose of determining liability under the Securities Act to any purchaser, if the registrant is subject to Rule 430C, each prospectus filed pursuant to Rule 424(b) as part of a registration statement relating to an offering, other than registration statements relying on Rule 430B or other than prospectuses filed in reliance on Rule 430A, shall be deemed to be part of and included in the registration statement as of the date it is first used after effectiveness; provided, however, that no statement made in a registration statement or prospectus that is part of the registration statement or made in a document incorporated or deemed incorporated by reference into the registration statement or prospectus that is part of the registration statement will, as to a purchaser with a time of contract of sale prior to such first use, supersede or modify any statement that was made in the registration statement or prospectus that was part of the registration statement or made in any such document immediately prior to such date of first use.
(5) That, for the purpose of determining any liability under the Securities Act to any purchaser in the initial distribution of the securities, the undersigned registrant undertakes that in a primary offering of securities of the undersigned registrant pursuant to this registration statement, regardless of the underwriting method used to sell the securities to the purchaser, if the securities are offered or sold to such purchaser by means of any of the following communications, the undersigned registrant will be a seller to the purchaser and will be considered to offer or sell such securities to such purchaser:
(i) Any preliminary prospectus or prospectus of the undersigned registrant relating to the offering required to be filed pursuant to Rule 424;
(ii) Any free writing prospectus relating to the offering prepared by or on behalf of the undersigned registrant or used or referred to by the undersigned registrant;
II-3
Table of Contents
(iii) The portion of any other free writing prospectus relating to the offering containing material information about the undersigned registrant or its securities provided by or on behalf of the undersigned registrant; and
(iv) Any other communication that is an offer in the offering made by the undersigned registrant to the purchaser.
(6) That prior to any public reoffering of the securities registered hereunder through use of a prospectus which is a part of this registration statement, by any person or party who is deemed to be an underwriter within the meaning of Rule 145(c), the issuer undertakes that such reoffering prospectus will contain the information called for by the applicable registration form with respect to reofferings by persons who may be deemed underwriters, in addition to the information called for by the other items of the applicable form.
(7) That every prospectus: (i) that is filed pursuant to the immediately preceding paragraph, or (ii) that purports to meet the requirements of Section 10(a)(3) of the Securities Act and is used in connection with an offering of securities subject to Rule 415, will be filed as a part of an amendment to the registration statement and will not be used until such amendment is effective, and that, for purposes of determining any liability under the Securities Act, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.
(b) Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons of the undersigned pursuant to the foregoing provisions, or otherwise, the undersigned has been advised that in the opinion of the SEC such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the undersigned of expenses incurred or paid by a director, officer or controlling person of the undersigned in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the undersigned will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue.
(c) The undersigned registrant hereby undertakes to supply by means of a post-effective amendment all information concerning a transaction, and the company being acquired involved therein, that was not the subject of and included in the registration statement when it became effective.
II-4
Table of Contents
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant has duly caused this Amendment No. 1 to the registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Miami, Florida on the 10th day of November, 2026.
| IRON HORSE ACQUISITION II CORP. | ||||
| By: | /s/ Jose Bengochea | |||
| Name: | Jose Bengochea | |||
| Title: | Chief Executive Officer and Director | |||
Pursuant to the requirements of the Securities Act, this Amendment No. 1 registration statement has been signed by the following persons in the capacities and on the dates indicated:
| Signature | Title | Date | ||
| /s/ Jose Bengochea | Chief Executive Officer and Director | November 10, 2026 | ||
| Jose Bengochea | (Principal Executive Officer) | |||
| /s/ William Caragol | Chief Financial Officer and Director | November 10, 2026 | ||
| William Caragol | (Principal Financial Officer) | |||
| /s/ * | Director | November 10, 2026 | ||
| Thayer Wade | ||||
| /s/ * | Director | November 10, 2026 | ||
| Daniel Becker | ||||
| /s/ * | Director | November 10, 2026 | ||
| Tarron Hecox |
| *By: | /s/ Jose Bengochea | |||||
| Jose Bengochea, Attorney-in-fact |
II-5
Table of Contents
Pursuant to the requirements of the Securities Act, this Amendment No. 1 registration statement has been signed by the following persons in the capacities and on the dates indicated:
| Signature | Title | Date | ||
| /s/ Fabrizio Martini | Chief Executive Officer | November 10, 2026 | ||
| Fabrizio Martini | (Principal Executive Officer) | |||
| /s/ Nicholas Chakalos | President and Chief Financial Officer | November 10, 2026 | ||
| Nicholas Chakalos | (Principal Financial Officer) | |||
| ** | Director | November 10, 2026 | ||
| Marco Morchio | ||||
| /s/ ** | Director | November 10, 2026 | ||
| Jacopo Drudi |
| **By: | /s/ Fabrizio Martini | |||||
| Fabrizio Martini, Attorney-in-fact |
II-6