Integrated Rail and Resources Acquisition (IRRX) - 2025 Q1 - Quarterly Report

PART I—FINANCIAL INFORMATION Item 1: Consolidated Financial Statements This section presents the unaudited consolidated condensed financial statements, including the balance sheets, statements of operations, changes in stockholders' deficit, and cash flows, along with comprehensive notes detailing the company's operations, accounting policies, related party transactions, commitments, and fair value measurements. It highlights the company's significant net loss for Q1 2025 and its ongoing efforts to complete a business combination Consolidated Condensed Balance Sheets The balance sheet shows a significant increase in total liabilities and stockholders' deficit from December 31, 2024, to March 31, 2025, primarily driven by increases in warrant liabilities and notes payable. Total assets also increased, mainly due to investments held in the Trust Account and cash Total Assets | Date | Amount ($) | | :--- | :--- | | March 31, 2025 | 3,646,136 | | December 31, 2024 | 3,277,614 | | Change | +368,522 | Total Liabilities | Date | Amount ($) | | :--- | :--- | | March 31, 2025 | 29,337,767 | | December 31, 2024 | 25,617,910 | | Change | +3,719,857 | Stockholders' Deficit | Date | Amount ($) | | :--- | :--- | | March 31, 2025 | (29,006,639) | | December 31, 2024 | (25,488,958) | | Change | -3,517,681 | Key Liability Changes (March 31, 2025 vs. Dec 31, 2024) | Liability | March 31, 2025 ($) | Dec 31, 2024 ($) | Change ($) | | :-------------------------------- | :---------------- | :---------------- | :--------- | | Warrant liabilities | 6,061,000 | 4,180,000 | +1,881,000 | | Note Payable—related party | 1,729,710 | 390,710 | +1,339,000 | | Accrued excise tax | 2,937,587 | 2,649,197 | +288,390 | | Convertible promissory note, net | 1,417,154 | 1,255,062 | +162,092 | - Class A Common Stock subject to possible redemption increased from $3,148,662 (Dec 31, 2024) to $3,315,008 (March 31, 2025), reflecting a remeasurement increase of $166,346[8][115] Unaudited Consolidated Condensed Statements of Operations The company reported a significant net loss of $3,351,335 for the three months ended March 31, 2025, a stark contrast to the net income of $2,292,526 in the same period of 2024. This shift was primarily driven by a large negative change in the fair value of warrant liabilities and increased operating expenses, interest expense, and excise tax interest and penalties Net (Loss) Income | Period | Amount ($) | | :--- | :--- | | 3 months ended March 31, 2025 | (3,351,335) | | 3 months ended March 31, 2024 | 2,292,526 | | Change | -5,643,861 | Key Expense/Income Changes (3 months ended March 31, 2025 vs. 2024) | Item | 2025 ($) | 2024 ($) | Change ($) | | :-------------------------------- | :--------- | :--------- | :--------- | | Operating expenses | 1,035,602 | 272,128 | +763,474 | | Interest and income on cash and trust investments | 34,256 | 674,258 | -630,002 | | Interest expense | (162,092) | — | -162,092 | | Change in fair value of warrant liabilities | (1,881,000) | 2,048,200 | -3,929,200 | | Excise tax interest and penalties | (288,390) | — | -288,390 | Basic and Diluted Net (Loss) Income Per Share (Redeemable Class A Common Stock) | Period | Amount ($) | | :--- | :--- | | 3 months ended March 31, 2025 | (0.56) | | 3 months ended March 31, 2024 | 0.24 | | Change | -0.80 | Unaudited Consolidated Condensed Statements of Changes in Stockholders' Deficit The total stockholders' deficit increased significantly from $(25,488,958) at January 1, 2025, to $(29,006,639) at March 31, 2025, primarily due to a net loss of $3,351,335 and a remeasurement of common stock subject to redemption of $166,346. In the prior year, the deficit also increased due to excise tax and remeasurement, despite a net income Total Stockholders' Deficit | Date | Amount ($) | | :--- | :--- | | March 31, 2025 | (29,006,639) | | January 1, 2025 | (25,488,958) | | Change | -3,517,681 | Components of Change (3 months ended March 31, 2025) | Item | Amount ($) | | :-------------------------------- | :--------- | | Net loss | (3,351,335) | | Remeasurement of Common Stock subject to redemption | (166,346) | Components of Change (3 months ended March 31, 2024) | Item | Amount ($) | | :-------------------------------- | :--------- | | Net income | 2,292,526 | | Accrued excise tax on Common Stock redemptions | (509,757) | | Remeasurement of Common Stock subject to redemption | (791,449) | Unaudited Consolidated Condensed Statements of Cash Flows For the three months ended March 31, 2025, the company experienced a net increase in cash of $184,266, primarily driven by cash provided by financing activities ($1,339,000), partially offset by cash used in operating activities ($1,004,734) and investing activities ($150,000). This contrasts with the prior year where cash provided by investing activities was substantial due to withdrawals from the Trust Account for redemptions Net Change in Cash | Period | Amount ($) | | :--- | :--- | | 3 months ended March 31, 2025 | 184,266 | | 3 months ended March 31, 2024 | 1,890 | | Change | +182,376 | Cash Flows from Operating Activities | Period | Amount ($) | | :--- | :--- | | 3 months ended March 31, 2025 | (1,004,734) | | 3 months ended March 31, 2024 | (168,110) | | Change | -836,624 | Cash Flows from Investing Activities | Period | Amount ($) | | :--- | :--- | | 3 months ended March 31, 2025 | (150,000) | | 3 months ended March 31, 2024 | 50,072,460 | | Change | -50,222,460 | Cash Flows from Financing Activities | Period | Amount ($) | | :--- | :--- | | 3 months ended March 31, 2025 | 1,339,000 | | 3 months ended March 31, 2024 | (49,902,460) | | Change | +51,241,460 | - Significant noncash activity for the three months ended March 31, 2025, included a remeasurement of Common Stock subject to redemption of $166,346[13] Notes to Consolidated Condensed Financial Statements (Unaudited) These notes provide detailed explanations and disclosures supporting the consolidated condensed financial statements. They cover the company's nature as a SPAC, its IPO, the process of seeking a business combination, significant accounting policies, related party transactions, commitments, and the valuation methodologies for financial instruments. Key updates include multiple extensions to the business combination deadline, associated share redemptions, the proposed merger with TSH Company, and a non-binding offtake agreement with Shell Trading NOTE 1 – DESCRIPTION OF ORGANIZATION, BUSINESS OPERATIONS, AND GOING CONCERN This note describes the company's formation as a blank check company, its IPO, the mechanism of its Trust Account, and the process for a business combination. It details numerous extensions to the combination deadline, resulting in significant share redemptions, the company's NYSE delisting, and the proposed merger with Tar Sands Holdings II, LLC (TSH Company). It also outlines a non-binding crude supply and offtake agreement with Shell Trading (US) Company (STUSCO) and raises substantial doubt about the company's ability to continue as a going concern Company Overview and IPO Integrated Rail and Resources Acquisition Corp. is a blank check company (SPAC) incorporated in Delaware on March 12, 2021, for the purpose of effecting a business combination. It completed its IPO on November 16, 2021, raising $230,000,000 from 23,000,000 units and an additional $9,400,000 from private placement warrants - Company Type: Blank check company (SPAC) incorporated on March 12, 2021[15] - IPO Date: November 16, 2021[17] IPO and Private Placement Proceeds | Item | Amount ($) | | :--- | :--- | | IPO Gross Proceeds (23,000,000 units) | 230,000,000 | | Private Placement Warrants Gross Proceeds (9,400,000 warrants) | 9,400,000 | Trust Account and Redemption Mechanism Proceeds from the IPO and private placement warrants are held in a Trust Account, to be used for a business combination or redeemed to public shareholders if no combination is completed. Public shareholders have redemption rights for a pro rata portion of the Trust Account funds, while initial stockholders waive these rights for their Founder Shares - Trust Account holds IPO and private placement proceeds for Business Combination or redemption[21] - Public Stockholders can redeem shares for a pro rata portion of Trust Account funds (initially $10.10 per share plus interest, less taxes)[23] - Initial Stockholders waive redemption rights for Founder Shares; underwriters waive rights to deferred underwriting commission if no Business Combination is completed[25][29] Trust Extensions and Redemptions The company has repeatedly extended its deadline to complete a Business Combination through various stockholder meetings and deposits into the Trust Account by the Sponsor. These extensions have led to significant redemptions of public shares, reducing the number of outstanding shares and the funds in the Trust Account - Initial Combination Period was 12 months from IPO (November 16, 2021)[33] - Sponsor deposited $2,300,000 in November 2022 for a 3-month extension; subsequent extensions involved monthly deposits (e.g., $140,000, $50,000, $5,000)[33][35][37][41][43] - Total deposits for extensions as of the 10-Q filing date aggregated $7,998,225, extending the period to consummate a Business Combination to June 15, 2025[45] Significant Share Redemptions | Event | Shares Redeemed | Amount Withdrawn ($) | Per Share Value ($) | | :-------------------------------- | :---------------- | :------------------- | :------------------ | | February 2023 Special Meeting | 9,155,918 | 94,489,075 | ~10.32 | | August 2023 Annual Meeting | 7,354,836 | 79,652,874 | ~10.83 | | February 2024 Special Meeting | 4,573,860 | 50,312,460 | ~11.00 | | November 2024 Special Meeting | 1,665,727 | 2,764,686 (owed) | ~13.32 | | May 2025 Extension Meeting | 207,559 | 2,764,686 (removed) | ~13.32 | Conversion of Class B shares to Class A shares On November 13, 2024, all 5,750,000 outstanding Class B common stock shares were converted into Class A common stock on a one-for-one basis. These newly issued Class A shares retain their "Founder Shares" designation and associated transfer restrictions - All 5,750,000 Class B common stock shares converted to Class A common stock on November 13, 2024[46] - Newly issued Class A shares continue to be referred to as Founder Shares and retain transfer restrictions[46] NYSE Delisting The Company's securities were delisted from the NYSE on March 11, 2024, due to falling below the minimum market capitalization requirement ($40,000,000). Trading subsequently moved to the over-the-counter (OTC Pink) market effective March 12, 2024 - Delisted from NYSE on March 11, 2024[49] - Reason for delisting: Failed to maintain an average aggregate global market capitalization of at least $40,000,000[48] - Trading moved to the over-the-counter (OTC Pink) market effective March 12, 2024[49] Proposed Business Combination On August 12, 2024, the Company entered into a Merger Agreement to combine with Tar Sands Holdings II, LLC (TSH Company). The transaction involves a SPAC Merger and a Company Merger, resulting in TSH Company becoming a subsidiary of Holdings, and SPAC security holders receiving equivalent Holdings securities. The merger is subject to customary closing conditions, including SPAC stockholder approval and a minimum available cash of $44,000,000 - Merger Agreement signed on August 12, 2024, with Tar Sands Holdings II, LLC ("TSH Company")[51] - Transaction structure involves a SPAC Merger and a Company Merger, with SPAC security holders receiving equivalent securities of Holdings[51][55] - Key closing conditions include SPAC Stockholder Approval, effectiveness of Form S-4 registration, and Available Closing Date Cash of not less than $44,000,000[63][65] - The Merger Agreement may be terminated if the Effective Time has not occurred prior to July 15, 2025[66] Ancillary Agreements In connection with the Merger Agreement, several ancillary agreements were executed or will be entered into, including Sponsor and Company Support Agreements (for voting in favor of the merger), a Registration Rights Agreement (for resale of Holdings securities), and a Warrant Amendment (governing Holdings Public Warrants) - Sponsor and Company Support Agreements require voting in favor of the proposed Business Combination[70] - A Registration Rights Agreement will provide certain TSH Company equity holders with rights for resale of Holdings securities[71] - A Warrant Amendment will govern the terms and conditions of the Holdings Public Warrants[72] Litigation On September 6, 2024, Tyr Energy Utah Logistics, LLC filed a lawsuit against the Company, Sponsor, and affiliates, alleging breach of and tortious interference with a non-disclosure and non-circumvention agreement related to the proposed Business Combination. The defendants dispute liability and intend to vigorously defend - Tyr Energy Utah Logistics, LLC filed suit on September 6, 2024, alleging breach of and tortious interference with a non-disclosure and non-circumvention agreement[73] - The Company and other defendants dispute liability and intend to vigorously defend against the claims[73] Amendments to Merger Agreement and Sponsor Support Agreement On November 8, 2024, the Merger Agreement was amended to replace SPAC Parties with Uinta Infrastructure Group Corp. (UIGC) and its subsidiaries, permit Class B to Class A common stock conversion, and waive certain breaches. The Sponsor Support Agreement was also amended to reflect the replacement of Holdings with UIGC - Merger Agreement amended on November 8, 2024, to replace SPAC Parties with Uinta Infrastructure Group Corp. (UIGC) and its subsidiaries[74] - Amendment permitted the conversion of SPAC Class B Common Stock to Class A and waived certain representations or interim covenants[74] - Sponsor Support Agreement also amended on November 8, 2024, to replace Holdings with UIGC[75] Entry into Non-Binding Letter of Intent with Shell Trading On November 6, 2024, the Company entered into a non-binding letter of intent with Shell Trading (US) Company (STUSCO) for a crude supply and offtake agreement, conditioned on the closing of the proposed Business Combination. STUSCO would be the exclusive supplier of crude feedstock to the Vernal, Utah facility and exclusive purchaser of refined products for an initial 7-year term, with potential renewals. The agreement includes a minimum revenue commitment from STUSCO and a profit-sharing split - Non-binding letter of intent for crude supply and offtake agreement with Shell Trading (US) Company (STUSCO) entered on November 6, 2024, with a formal agreement on May 7, 2025[77][81][206] - STUSCO will be the exclusive supplier of crude feedstock and exclusive purchaser of refined products for the facility's initial Nameplate Capacity[80][81] - Initial term is 7 years from the In-Service Date (expected December 31, 2028), with automatic 2-year renewal periods[78][81] - STUSCO will pay a monthly minimum revenue commitment of $400,000 for five years, totaling $25,000,000[87][258] - A 50%/50% profit-sharing split applies to positive differentials (Crack exceeding Processing Fee + Monthly Minimum Revenue Commitment), adjusting to 75% Company / 25% STUSCO after the initial term or total minimum revenue commitment is met[88][89][259][261] Waiver to Merger Agreement On April 30, 2025, parties waived the condition requiring Holdings Class A Common Stock and Public Warrants to be listed on a National Exchange for 90 days post-closing. In return, SPAC agreed to pay the Company $120,000 monthly if listing is not achieved by the end of the waiver period, up to $4,000,000 - Waiver to Merger Agreement signed on April 30, 2025, waiving the condition for Holdings Class A Common Stock and Public Warrants to be listed on a National Exchange for 90 days post-closing[94] - SPAC agreed to make monthly payments of $120,000 to the Company, up to $4,000,000, if the listing is not achieved by the end of the waiver period[94] Liquidity and Going Concern As of March 31, 2025, the Company had $224,204 in cash and a working capital deficit of $15,002,563. Management has determined that these factors, combined with the less than 12 months remaining to complete a Business Combination before liquidation, raise substantial doubt about the Company's ability to continue as a going concern Liquidity Snapshot (March 31, 2025) | Item | Amount ($) | | :--- | :--- | | Cash | 224,204 | | Working Capital Deficit | (15,002,563) | - Substantial doubt exists about the Company's ability to continue as a going concern due to the working capital deficit and the requirement to complete a Business Combination within 12 months or liquidate[96] NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES This note outlines the accounting principles used in preparing the financial statements, including the basis of presentation, consolidation, and the company's status as an emerging growth company. It details key accounting estimates and policies for net loss per share, redeemable common stock, warrants, derivatives, and the convertible promissory note, emphasizing fair value measurements. It also covers income tax accounting, the impact of the excise tax, recent accounting pronouncements, and the treatment of cash and trust account investments Basis of Presentation and Principles of Consolidation The unaudited consolidated condensed financial statements are prepared in accordance with GAAP for interim financial information and SEC regulations. They include the accounts of the Company and its wholly-owned subsidiaries, with all intercompany transactions eliminated - Financial statements prepared in accordance with GAAP for interim information and SEC regulations (Form 10-Q, Article 8 and 10 of Regulation S-X)[99] - Consolidated financial statements include the Company and its wholly-owned subsidiaries, with all intercompany transactions eliminated[101] Emerging Growth Company Status The Company is an "emerging growth company" under the JOBS Act, allowing it to take advantage of certain exemptions from reporting requirements, including extended transition periods for new accounting standards. The Company has elected not to opt out of this extended transition period - The Company is an "emerging growth company" as defined in Section 2(a) of the Securities Act, modified by the JOBS Act[103] - Benefits include exemptions from auditor attestation, reduced executive compensation disclosures, and an extended transition period for new accounting standards[103] - The Company has elected not to opt out of the extended transition period for complying with new or revised financial accounting standards[105] Key Accounting Estimates and Policies The preparation of financial statements requires significant management estimates, particularly for the fair value of warrant liabilities. The company applies the two-class method for net (loss) income per common stock, classifying redeemable Class A common stock as temporary equity. Warrants are classified as liability instruments and re-measured at fair value, with changes recognized in operations. The convertible promissory note's conversion feature is treated as an embedded derivative, bifurcated, and reported at fair value - Significant accounting estimates include the fair value of warrant liabilities[108] - Net (loss) income per common stock is computed using the two-class method; redeemable Class A common stock accretion is excluded[110] - Class A common stock subject to possible redemption is classified as temporary equity and measured at redemption value[114] - Warrant liabilities are recorded at initial fair value and re-valued at each balance sheet date, with changes recognized in the consolidated statements of operations[117] - The conversion feature of the convertible promissory note is treated as an embedded derivative, bifurcated, and reported at fair value as a conversion event liability[120] - Stock-based compensation for Founder Shares is not recognized as a Business Combination is not yet considered probable[127] Income Taxes and Excise Tax The Company applies ASC Topic 740 for income taxes, using an asset and liability approach. Its effective tax rate for Q1 2025 was (0.2)%, differing from the statutory 21% due to warrant fair value changes, tax interest/penalties, and valuation allowances. The Inflation Reduction Act of 2022 introduced a 1% excise tax on stock repurchases, which may apply to redemptions after December 31, 2022. The Company has recognized significant excise tax payable, including interest and penalties - Effective tax rate for the three months ended March 31, 2025, was (0.2)%, differing from the statutory 21% due to warrant fair value changes, tax interest/penalties, and valuation allowances[128] - The Inflation Reduction Act of 2022 introduced a 1% excise tax on stock repurchases after December 31, 2022, which may apply to redemptions[130] Excise Tax Payable | Date | Amount ($) | Interest and Penalties ($) | | :--- | :--- | :--- | | March 31, 2025 | 2,937,587 | 502,847 | | December 31, 2024 | 2,649,197 | 214,457 | - The excise tax liability related to share redemptions is offset against accumulated deficit, while interest and penalties are reported in other income, net[134] Recent Accounting Pronouncements The FASB issued ASU No. 2023-09, "Income Taxes (Topic 740): Improvements to Income Tax Disclosures," effective for annual periods after December 15, 2024, requiring enhanced income tax rate reconciliation and disaggregation of taxes paid. The Company is evaluating its impact - ASU No. 2023-09, "Income Taxes (Topic 740): Improvements to Income Tax Disclosures," will require additional information in income tax rate reconciliation and disaggregation of taxes paid[137] - Effective for annual periods beginning after December 15, 2024; the Company is currently reviewing its impact[137] Cash and Investments The Company considers short-term investments with original maturities of three months or less as cash equivalents, though it had none as of March 31, 2025, and December 31, 2024. Funds in the Trust Account are primarily invested in Money Market Funds holding U.S. Treasury Securities, measured at fair value (Level 1) - No cash equivalents as of March 31, 2025, and December 31, 2024[139] - Investments held in Trust Account primarily consist of Money Market Funds invested in U.S. Treasury Securities, measured at Level 1 fair value[140][194] NOTE 3 – INITIAL PUBLIC OFFERING The Sponsor purchased 9,400,000 Private Placement Warrants for $9,400,000 concurrently with the IPO. These warrants are exercisable at $11.50 per share and will expire worthless if a Business Combination is not completed. They are non-redeemable and exercisable on a cashless basis as long as held by the Sponsor or permitted transferees - Sponsor purchased 9,400,000 Private Placement Warrants for $9,400,000 concurrently with the IPO[142] - Each warrant is exercisable for one share of Class A common stock at $11.50 per share[143] - Private Placement Warrants will expire worthless if the Company does not complete a Business Combination and are non-redeemable and exercisable on a cashless basis if held by the Sponsor or permitted transferees[143] NOTE 4 – RELATED PARTY TRANSACTIONS The Company has several related party transactions, including the issuance of Founder Shares to the Sponsor and independent directors, and various loans from the Sponsor and Trident Point 2, LLC (a related party). The Sponsor also provided administrative services, for which fees were waived in March 2025 - Sponsor paid $25,000 for 5,750,000 Class B common stock (Founder Shares), with some transferred to independent directors[144] - Fair value of share-based compensation for director transfers was $667,250 (April 2021/March 2022) and $74,637 (December 2022)[145][147] - All 5,750,000 Class B common stock converted to Class A on November 13, 2024, retaining Founder Share status and transfer restrictions[150] Related Party Loans (Outstanding as of March 31, 2025) | Loan Type | Lender | Amount ($) | Purpose | Maturity | | :-------------------------------- | :------- | :--------- | :-------------------------------- | :------- | | Note Payable—Related Party | Trident Point 2, LLC | 1,729,710 | Working capital, Business Combination costs | July 15, 2025 | | Note Payable—Sponsor | Sponsor | 5,393,225 | Extension purposes | Upon Business Combination | | Working Capital Loan—Related Party | Sponsor | 17,935 | Business Combination costs | Upon Business Combination | | Convertible Promissory Note | BH Inc. | 1,500,000 | General | Upon Business Combination | - Administrative services fees of $120,000 owed to the Sponsor were waived in March 2025[163] NOTE 5 – COMMITMENTS & CONTINGENCIES The Company has commitments related to registration rights for certain security holders, deferred underwriting commissions payable upon a Business Combination, and an investment banking advisory agreement with contingent fees. Warrants are accounted for as liabilities and are subject to re-measurement - Holders of Founder Shares, Private Placement Warrants, and warrants from Working Capital Loans are entitled to registration rights[165] - A deferred underwriting commission of $8.05 million is payable to underwriters upon completion of a Business Combination[166] - Warrants are classified as liabilities and re-measured at fair value at each balance sheet date, with changes recognized in the consolidated statements of operations[167] - Investment banking advisory fees (greater of $4,250,000 or up to 0.65% of acquisition value if >$900M) are contingent on the consummation and specific terms of an initial Business Combination; no accrual has been made[170] NOTE 6 – WARRANT LIABILITIES Warrants have an exercise price of $11.50 per share and expire five years after a Business Combination. Their exercise price and redemption trigger price ($18.00) are subject to adjustment under certain conditions related to future equity issuances and market value. Private Placement Warrants are non-redeemable and exercisable on a cashless basis if held by initial purchasers or permitted transferees - Warrants have an exercise price of $11.50 per share and expire five years after the completion of a Business Combination[173] - The exercise price and the $18.00 per share redemption trigger price are subject to adjustment based on future equity issuances and market value conditions[173] - Private Placement Warrants are non-redeemable and exercisable on a cashless basis as long as held by the Sponsor or its permitted transferees[174] - Public Warrants may be redeemed at $0.01 per warrant if the Class A common stock price is at least $18.00 for 20 trading days within a 30-day period, subject to an effective registration statement[175][177] NOTE 7 – STOCKHOLDERS' DEFICIT The Company is authorized to issue Preferred Stock (1,000,000 shares), Class A Common Stock (100,000,000 shares), and Class B Common Stock (10,000,000 shares). As of March 31, 2025, no Preferred Stock or Class B Common Stock was outstanding. 5,750,000 Class A Common Stock shares were outstanding (excluding redeemable shares), which includes the converted Founder Shares Authorized Shares | Class | Authorized Shares | | :--- | :--- | | Preferred Stock | 1,000,000 | | Class A Common Stock | 100,000,000 | | Class B Common Stock | 10,000,000 | Outstanding Shares (March 31, 2025) | Class | Outstanding Shares | | :--- | :--- | | Preferred Stock | 0 | | Class A Common Stock (excluding redeemable) | 5,750,000 | | Class B Common Stock | 0 | - All 5,750,000 Class B shares converted to Class A on November 13, 2024, and are referred to as Founder Shares with transfer restrictions[184] NOTE 8 – FAIR VALUE MEASUREMENTS The Company measures certain financial assets and liabilities at fair value using a hierarchy (Level 1, 2, 3). Investments in the Trust Account are Level 1. The conversion event liability and warrant liabilities (Public and Private Placement Warrants) are Level 3, valued using complex models with unobservable inputs like stock price, discount rate, probability of closing, and volatility - Investments held in Trust Account are Level 1 fair value measurements[194] - Conversion event liability and warrant liabilities (Public and Private Placement Warrants) are Level 3 fair value measurements[185] Key Inputs for Conversion Event Liability Valuation (March 31, 2025) | Input | Value | | :--- | :--- | | Share price | $11.25 | | Discount rate | 11.3% | | Probability of close | 60.0% | | Years to expiration | 0.13 | | Market adjustment for implied probability of acquisition | 26.13% | Key Inputs for Warrant Liabilities Valuation (March 31, 2025) | Input | Value | | :--- | :--- | | Share price | $11.25 | | Exercise price | $11.50 | | Years to expiration | 5.13 | | Volatility | 2.2% | | Risk-free rate | 3.89% | | Dividend yield | 0.00% | Changes in Fair Value of Level 3 Financial Liabilities (3 months ended March 31, 2025) | Item | Change in Fair Value ($) | | :-------------------------------- | :----------------------- | | Private Placement Warrants | +846,000 | | Public Warrants | +1,035,000 | | Conversion Feature | +12,656 | NOTE 9 – SEGMENT INFORMATION The Company operates as a single segment, with the CEO identified as the Chief Operating Decision Maker (CODM). As a blank check company, it has no operating revenue and focuses on managing operating expenses and cash outflows to complete a Business Combination - The Company has only one operating segment, with the Chief Executive Officer as the Chief Operating Decision Maker (CODM)[197] - As a blank check company, it has no operating revenue and focuses on managing operating expenses and cash outflows to complete a Business Combination[198][199] - The CODM monitors significant expenses including operating expenses, excise tax interest and penalties, provision for income taxes, interest expense, and changes in fair value of warrant liabilities and conversion event liability[201] NOTE 10 – SUBSEQUENT EVENTS After the balance sheet date, the Company entered into a Crude Oil and Crude Oil Products Supply, Offtake and Processing Agreement with STUSCO on May 7, 2025. Stockholders also approved the May 2025 Extension Amendment Proposal on May 13, 2025, extending the Business Combination deadline to June 15, 2025 (with a further option to July 15, 2025), leading to additional share redemptions and an amendment to a related party promissory note. An amendment to remove the $5,000,001 net tangible asset limitation for redemptions was also approved - Entered into a Crude Oil and Crude Oil Products Supply, Offtake and Processing Agreement with STUSCO on May 7, 2025[206] - Stockholders approved the May 2025 Extension Amendment Proposal on May 13, 2025, extending the Business Combination deadline to June 15, 2025, with an option to extend to July 15, 2025[207] - The May 2025 Extension Meeting resulted in the redemption of 207,559 shares, with $2,764,686 owed to redeeming stockholders[208] - Approved the NTA Amendment Proposal to remove the $5,000,001 net tangible asset limitation for redemptions[210] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations This section provides management's perspective on the Company's financial condition and results, reiterating much of the information from the financial statements and notes. It highlights the Company's status as a blank check company, the ongoing efforts to complete a Business Combination, the various extensions and associated redemptions, the proposed merger with TSH Company, and the non-binding letter of intent with STUSCO. It also details the significant net loss for Q1 2025 and the liquidity challenges, emphasizing the going concern doubt - The Company is a blank check company formed to effect a Business Combination[213] - Multiple trust extensions have been approved, with Sponsor deposits, extending the Business Combination deadline to June 15, 2025[214][225] - Significant share redemptions occurred in connection with extension votes, reducing the number of outstanding shares and funds in the Trust Account[216][218][220][222][224] - All 5,750,000 Class B shares converted to Class A on November 13, 2024[227] - The Company was delisted from the NYSE on March 11, 2024, and now trades on the OTC Pink market[231][232] - A Merger Agreement with TSH Company was signed on August 12, 2024, with subsequent amendments, subject to stockholder approval and a minimum of $44,000,000 in available cash[233][244] - A non-binding letter of intent with STUSCO for exclusive crude supply and product offtake is contingent on the merger closing, including a minimum revenue commitment[253][258] - For the three months ended March 31, 2025, the Company reported a net loss of $3,351,335, primarily due to changes in warrant liabilities, operating costs, and excise tax interest and penalties[268] - As of March 31, 2025, the Company had $224,204 in cash and a working capital deficit of $15,002,563, raising substantial doubt about its ability to continue as a going concern[270][278] Overview The Company is a blank check company incorporated on March 12, 2021, for the purpose of effecting a Business Combination, utilizing proceeds from its IPO and private placement warrants - The Company is a blank check company formed on March 12, 2021, to effect a Business Combination[213] - It intends to use cash from its IPO and the sale of Private Placement Warrants, along with shares or debt, for the Business Combination[213] Trust Extensions The Company has repeatedly extended its deadline to complete a Business Combination through various stockholder meetings and deposits into the Trust Account by the Sponsor. These extensions have led to significant redemptions of public shares, reducing the number of outstanding shares and the funds in the Trust Account - Initial Combination Period was 12 months from IPO (November 16, 2021)[214] - Sponsor deposited $2,300,000 in November 2022 for a 3-month extension; subsequent extensions involved monthly deposits (e.g., $140,000, $50,000, $5,000)[215][217][219][221][223] - Total deposits for extensions aggregated $7,998,225, extending the period to consummate a Business Combination to June 15, 2025[225] Significant Share Redemptions (MD&A) | Event | Shares Redeemed | Amount Withdrawn ($) | Per Share Value ($) | | :-------------------------------- | :---------------- | :------------------- | :------------------ | | February 2023 Special Meeting | 9,155,918 | 94,489,075 | ~10.32 | | August 2023 Annual Meeting | 7,354,836 | 79,652,874 | ~10.83 | | February 2024 Special Meeting | 4,573,860 | 50,312,460 | ~11.00 | | November 2024 Extension Meeting | 1,665,727 | 19,470,737 | ~11.69 | | May 2025 Extension Meeting | 207,559 | 2,764,686 (owed) | ~13.32 | Conversion of Class B Shares to Class A Shares On November 13, 2024, all 5,750,000 outstanding Class B common stock shares were converted into Class A common stock on a one-for-one basis. These newly issued Class A shares retain their "Founder Shares" designation and associated transfer restrictions - All 5,750,000 Class B common stock shares converted to Class A common stock on November 13, 2024[227] - The newly issued Class A shares continue to be referred to as Founder Shares and carry restrictions regarding assignment, transference, and selling[227] Promissory Notes The Company has issued several unsecured promissory notes to Trident Point 2, LLC and a convertible promissory note to BH Inc. These notes are primarily for funding working capital deficiencies, financing transaction costs related to the Business Combination, and covering monthly extension payments. Their maturity dates have been extended, and the convertible note converts into UIGC common stock upon the Business Combination - Unsecured promissory notes issued to Trident Point 2, LLC for working capital and Business Combination costs, with maturity dates extended to July 15, 2025[228][229] - An unsecured convertible promissory note issued to BH Inc. for up to $1,500,000, which converts into 355,000 shares of UIGC common stock upon the Business Combination[230] - If the Business Combination fails, the convertible note will be repaid by cash payment of $3,900,000, solely from funds outside the Trust Account[230] NYSE Delisting The Company's securities were delisted from the NYSE on March 11, 2024, due to falling below the minimum market capitalization requirement ($40,000,000). Trading subsequently moved to the over-the-counter (OTC Pink) market effective March 12, 2024 - Delisted from NYSE on March 11, 2024, due to failing to maintain an average aggregate global market capitalization of at least $40,000,000[231] - Company's securities became available for trading in the over-the-counter (OTC Pink) market effective March 12, 2024[232] Proposed Business Combination The Company is pursuing a Business Combination with Tar Sands Holdings II, LLC (TSH Company) via a Merger Agreement signed August 12, 2024, which has undergone several amendments. The transaction involves a SPAC Merger and a Company Merger, with SPAC security holders receiving equivalent securities of Holdings. The combination is subject to various closing conditions, including stockholder approval and a minimum cash threshold. Ancillary agreements support the merger, and a non-binding offtake agreement with STUSCO is contingent on its closing. Litigation related to the proposed merger is ongoing, and a waiver was granted for the national exchange listing condition post-closing Merger Agreement The Company entered into a Merger Agreement on August 12, 2024, with TSH Company, involving a SPAC Merger and a Company Merger. SPAC security holders will receive equivalent Holdings securities. The merger is subject to customary closing conditions, including SPAC stockholder approval, effectiveness of Form S-4, and a minimum of $44,000,000 in available cash. The agreement can be terminated under specific conditions, including if the closing does not occur by July 15, 2025 - Merger Agreement with TSH Company signed on August 12, 2024, and unanimously approved by the SPAC Board[233] - The transaction involves a SPAC Merger (SPAC into Holdings subsidiary) and a Company Merger (TSH Company into Lower Holdings subsidiary)[235][237] - SPAC security holders will receive substantially equivalent securities of Holdings, while TSH Company members will receive cash[235][238][239] - Key closing conditions include SPAC Stockholder Approval, effectiveness of Form S-4 registration, and Available Closing Date Cash of not less than $44,000,000[244] - The Merger Agreement may be terminated if the Effective Time has not occurred prior to July 15, 2025[245] Ancillary Agreements In connection with the Merger Agreement, several ancillary agreements were executed or will be entered into, including Sponsor and Company Support Agreements (for voting in favor of the merger), a Registration Rights Agreement (for resale of Holdings securities), and a Warrant Amendment (governing Holdings Public Warrants) - Sponsor and Company Support Agreements require parties to vote their shares in favor of the proposed Business Combination[247] - A Registration Rights Agreement will provide certain TSH Company equity holders with rights relating to the registration for resale of Holdings securities[248] - A Warrant Amendment will govern the terms and conditions of the Holdings Public Warrants[249] Litigation On September 6, 2024, Tyr Energy Utah Logistics, LLC filed a lawsuit against the Company, Sponsor, and affiliates, alleging breach of and tortious interference with a non-disclosure and non-circumvention agreement related to the proposed Business Combination. The defendants dispute liability and intend to vigorously defend - Tyr Energy Utah Logistics, LLC filed suit on September 6, 2024, alleging breach of and tortious interference with a non-disclosure and non-circumvention agreement[250] - The Company and other defendants vehemently dispute liability and intend to vigorously defend against the claims[250] Amendments to Merger Agreement The Merger Agreement has been amended multiple times (November 8, 2024, December 31, 2024, April 30, 2025, and May 14, 2025) to reflect changes such as replacing SPAC Parties with UIGC and its subsidiaries, permitting Class B to Class A common stock conversion, and waiving certain conditions - The Merger Agreement has been amended multiple times, including on November 8, 2024, December 31, 2024, April 30, 2025, and May 14, 2025[234][251] - Amendment No. 1 (November 8, 2024) replaced SPAC Parties with Uinta Infrastructure Group Corp. (UIGC) and its subsidiaries, permitted Class B to Class A common stock conversion, and waived certain breaches[74][251] Amendment to Sponsor Support Agreement On November 8, 2024, in connection with Amendment No. 1 to the Merger Agreement, the Sponsor Support Agreement was amended to replace Holdings with UIGC - Sponsor Support Agreement amended on November 8, 2024, to replace Holdings with UIGC[252] Entry into Non-Binding Letter of Intent with STUSCO On November 6, 2024, the Company entered into a non-binding letter of intent with Shell Trading (US) Company (STUSCO) for a crude supply and offtake agreement, conditioned on the closing of the proposed Business Combination. STUSCO would be the exclusive supplier of crude feedstock to the Vernal, Utah facility and exclusive purchaser of refined products for an initial 7-year term, with potential renewals. The agreement includes a minimum revenue commitment from STUSCO and a profit-sharing split - Non-binding letter of intent for crude supply and offtake agreement with STUSCO entered on November 6, 2024, conditioned on the closing of the Business Combination[253] - STUSCO will be the sole supplier of Crude Feedstock and sole purchaser of Crude Oil Products for the initial Nameplate Capacity of the facility[256] - The initial term is 10 years from the In-Service Date (expected December 31, 2028), with an option for STUSCO to extend by five years and subsequent one-year renewals[254] - STUSCO has a Monthly Minimum Revenue Commitment of $400,000 for five years, totaling $25,000,000[258] - A 50%/50% profit-sharing split applies to positive differentials, adjusting to 75% Company / 25% STUSCO after the initial term or total minimum revenue commitment is met[259][261] Waiver to Merger Agreement On April 30, 2025, the parties to the Merger Agreement entered into a Waiver, agreeing to waive the condition requiring Holdings Class A Common Stock and Public Warrants to be listed on a National Exchange for 90 days from the Closing. In exchange, SPAC agreed to make monthly payments of $120,000 to the Company if the listing is not achieved by the end of the waiver period, up to $4,000,000 - Waiver to Merger Agreement signed on April 30, 2025, waiving the condition for Holdings Class A Common Stock and Public Warrants to be listed on a National Exchange for 90 days from the Closing[266] - SPAC agreed to pay the Company $120,000 per month, up to $4,000,000, if the listing is not achieved by the end of the waiver period[266] Results of Operations The Company reported a net loss of $3,351,335 for the three months ended March 31, 2025, a significant decline from the net income of $2,292,526 in the prior year. This was primarily driven by a negative change in the fair value of warrant liabilities, increased operating costs, interest expense, and excise tax interest and penalties Net (Loss) Income (MD&A) | Period | Amount ($) | | :--- | :--- | | 3 months ended March 31, 2025 | (3,351,335) | | 3 months ended March 31, 2024 | 2,292,526 | | Change | -5,643,861 | - The net loss for Q1 2025 was primarily due to a $1,881,000 change in fair value of warrant liabilities, $1,035,602 in operating costs, $288,390 in excise tax interest and penalties, and $162,092 in interest expense[268] - In Q1 2024, net income was driven by $674,258 in interest income and a $2,048,200 gain on change in fair value of warrant liabilities[269] Liquidity and Capital Resources As of March 31, 2025, the Company had $224,204 in cash and a working capital deficit of $15,002,563. Cash used in operating activities was $1,004,734, while financing activities provided $1,339,000. The Company relies on funds outside the Trust Account and related party loans for working capital and faces substantial doubt about its ability to continue as a going concern due to insufficient funds and the limited time to complete a Business Combination Liquidity Snapshot (March 31, 2025) | Item | Amount ($) | | :--- | :--- | | Cash | 224,204 | | Working Capital Deficit | (15,002,563) | Cash Flow Summary (3 months ended March 31, 2025) | Activity | Amount ($) | | :--- | :--- | | Net Cash Used in Operating Activities | (1,004,734) | | Net Cash Used in Investing Activities | (150,000) | | Net Cash Provided by Financing Activities | 1,339,000 | - The Company has $224,204 in cash outside the Trust Account and relies on advances and notes from related parties for working capital and extension purposes[276] - Management has determined that factors such as the working capital deficit and the limited time to complete a Business Combination raise substantial doubt about the Company's ability to continue as a going concern[278] Off-Balance Sheet Financing Arrangements As of March 31, 2025, the Company had no obligations, assets, or liabilities considered off-balance sheet arrangements. It does not participate in transactions with unconsolidated entities or financial partnerships for off-balance sheet financing - The Company had no off-balance sheet arrangements as of March 31, 2025[279] - It has not entered into special purpose entities, guaranteed debt, or purchased non-financial assets for off-balance sheet purposes[279] Contractual Obligations As of March 31, 2025, the Company had outstanding promissory notes with a related party totaling $1,729,710, a convertible promissory note for $1,500,000, and a $5,393,225 note payable to the Sponsor for extension costs. An administrative services fee agreement with the Sponsor was waived in March 2025. Contingent investment banking advisory fees are also in place but not yet accrued - Outstanding promissory notes with a related party totaled $1,729,710 as of March 31, 2025[280] - A convertible promissory note for $1,500,000 was outstanding[280] - Owed an affiliate of the Sponsor $5,393,225 for Business Combination extension costs[280] - An agreement to pay the Sponsor $10,000 per month for administrative services was waived in March 2025[280] - Contingent investment banking advisory fees (greater of $4,250,000 or up to 0.65% of acquisition value if >$900M) are not accrued as they depend on the consummation and terms of a Business Combination[281] Critical Accounting Estimates The Company's critical accounting estimates primarily involve determining the fair value of Warrants and the conversion event liability. These valuations rely on assumptions related to market activity, expected share-price volatility, expected time to consummating a business combination, risk-free interest rate, discount rate, probability of closing, and a market adjustment for implied probability of closing - Critical accounting estimates include the fair value of Warrants and the conversion event liability[282] - Valuation assumptions include market activity, expected share-price volatility, expected time to consummating a business combination, risk-free interest rate, discount rate, probability of closing, and a market adjustment for implied probability of closing[282] Recent Accounting Standards The FASB issued ASU No. 2023-09, "Income Taxes (Topic 740): Improvements to Income Tax Disclosures," effective for annual periods after December 15, 2024, requiring enhanced income tax rate reconciliation and disaggregation of taxes paid. The Company is evaluating its impact - ASU No. 2023-09, "Income Taxes (Topic 740): Improvements to Income Tax Disclosures," will require additional information in income tax rate reconciliation and disaggregation of taxes paid[283] - Effective for annual periods beginning after December 15, 2024; the Company is currently reviewing its impact[283] Item 3. Quantitative and Qualitative Disclosures about Market Risk As a smaller reporting company, the Company is not required to provide detailed quantitative and qualitative disclosures about market risk - The Company is a smaller reporting company and is not required to provide quantitative and qualitative disclosures about market risk[285] Item 4. Control and Procedures The CEO and CFO concluded that the Company's disclosure controls and procedures were not effective as of March 31, 2025, due to inadequate controls around the calculation and payment of funds from the Trust Account to redeeming shareholders, identifying this as a material weakness. Management plans to remediate this by enhancing the control process. No material changes in internal control over financial reporting occurred during the quarter - The Chief Executive Officer and Chief Financial Officer concluded that disclosure controls and procedures were not effective as of March 31, 2025[287] - A material weakness was identified due to inadequate controls around the calculation of amounts due and payment of funds from the Trust Account to redeeming shareholders[287] - Management plans to remediate the material weakness by enhancing the control process for Trust Account calculations and payments[288] - No material changes in internal control over financial reporting occurred during the most recently completed fiscal quarter[289] Evaluation of Disclosure Controls and Procedures The CEO and CFO evaluated the effectiveness of disclosure controls and procedures as of March 31, 2025, and concluded they were not effective due to a material weakness related to inadequate controls over Trust Account calculations and payments to redeeming shareholders. Management plans to enhance these control processes - Disclosure controls and procedures were deemed not effective as of March 31, 2025[287] - A material weakness was identified concerning inadequate controls over the calculation and payment of funds from the Trust Account to redeeming shareholders[287] - Management intends to remediate this material weakness by enhancing the control process[288] Changes in Internal Control Over Financial Reporting During the most recently completed fiscal quarter, there were no changes in the Company's internal control over financial reporting that materially affected, or are reasonably likely to materially affect, its internal control over financial reporting - No material changes in internal control over financial reporting occurred during the most recently completed fiscal quarter[289] PART II—OTHER INFORMATION Item 1. Legal Proceedings Tyr Energy Utah Logistics, LLC filed a lawsuit on September 6, 2024, against the Company, Sponsor, and affiliates, alleging breach of and tortious interference with a non-disclosure and non-circumvention agreement related to the proposed Business Combination. The Company disputes liability and intends to vigorously defend - Tyr Energy Utah Logistics, LLC filed suit on September 6, 2024, against the Company, Sponsor, and affiliates[291] - Allegations include breach of and tortious interference with a non-disclosure and non-circumvention agreement related to the proposed Business Combination[291] - The Company vehemently disputes liability and intends to vigorously defend against Tyr Energy's claims[291] Item 1A. Risk Factors There have been no material changes to the risk factors disclosed in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2024 - No material changes to the risk factors disclosed in the Annual Report on Form 10-K for the fiscal year ended December 31, 2024[292] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds There were no unregistered sales of equity securities or use of proceeds to report for the period - None[293] Item 3. Defaults Upon Senior Securities There were no defaults upon senior securities to report for the period - None[294] Item 4. Mine Safety Disclosures Mine safety disclosures are not applicable to the Company - Not applicable[295] Item 5. Other Information During the three months ended March 31, 2025, no director or officer of the Company adopted or terminated a "Rule 10b5-1 trading arrangement" or "non-Rule 10b5-1 trading arrangement" - No director or officer adopted or terminated a "Rule 10b5-1 trading arrangement" or "non-Rule 10b5-1 trading arrangement" during the three months ended March 31, 2025[296] Item 6. Exhibits This section lists the exhibits filed as part of, or incorporated by reference into, this Quarterly Report on Form 10-Q, including amendments to the Certificate of Incorporation, By-Laws, Promissory Notes, and various certifications - The exhibits include amendments to the Amended & Restated Certificate of Incorporation, By-Laws, Promissory Notes, and certifications (e.g., Section 302 and Section 906 of Sarbanes-Oxley Act)[299] SIGNATURES The report is signed by Mark A. Michel, Chief Executive Officer and Chairman, and Timothy J. Fisher, Chief Financial Officer, President and Vice Chairman, on May 20, 2025, certifying its submission in accordance with Exchange Act requirements - The report was signed on May 20, 2025[304] - Signatories are Mark A. Michel (Chief Executive Officer and Chairman) and Timothy J. Fisher (Chief Financial Officer, President and Vice Chairman)[304]