INTEGRATED RAIL AND RESOURCES ACQUISITION CORP.
NOTES TO FINANCIAL STATEMENTS
For the Period from March 12, 2021 (Inception) Through December 31, 2021
NOTE 1 – DESCRIPTION OF ORGANIZATION, BUSINESS OPERATIONS, AND LIQUIDITY – CONTINUED
Liquidity and Management’s Plans
Prior to the completion of the IPO, the Company lacked the liquidity it needed to sustain operations for a reasonable period of time, which is considered to be one year from the issuance date of the financial statements. The Company has since completed its IPO at which time capital in excess of the funds deposited in the Trust Account and/or used to fund offering expenses was released to the Company for general working capital purposes. As indicated in the accompanying balance sheet, at December 31, 2021, the Company has approximately $1,004,000 in cash and approximately $1,122,000 in working capital. The Company will use these funds primarily to identify and evaluate target businesses and complete an initial business combination.
The Company does not believe it will need to raise additional funds to meet the expenditures required for operating its business. However, if the Company’s estimates of the costs of completing an initial business combination are less than the actual amount necessary to do so, it may have insufficient funds available to operate the business prior to the initial business combination. If the Company is unable to complete an initial business combination due to insufficient available funds, it will be forced to cease operations and liquidate the trust account.
In order to fund working capital deficiencies or finance transaction costs in connection with an intended initial business combination, the sponsor or any affiliates of the sponsor, may, but are not obligated to, loan funds to the Company on a
non-interest
basis as may be required. In the event that an 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. Up to $1,500,000 of such loans may be convertible into warrants, identical to the private placement warrants, at a price of $1.00 per warrant at the option of the lender. The Company does not expect to seek loans from parties other than the sponsor or any affiliates of the sponsor. Additionally, the Company could suspend payments on the Administrative Service Agreement (Note 5) to conserve working capital.
In connection with the Company’s assessment of going concern considerations in accordance with ASC
205-40,
Going Concern, management believes that the current working capital along with the ability to suspend certain costs and also raise funding through sponsor financing, will enable it to sustain operations for a period of at least
one-year
form the issuance date of these financial statements. Accordingly, substantial doubt about the Company’s ability to continue as a going concern as disclosed in previously issued financial statements has been alleviated.
Risks and Uncertainties
Management continues to evaluate the impact of the
COVID-19
pandemic and has concluded that while it is reasonably possible that the virus could have a negative effect on the Company’s financial position, results of its operations, and/or search for a target company, the specific impact is not readily determinable as of the date of the financial statements. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The accompanying financial statements are presented in U.S. dollars in conformity with accounting principles generally accepted in the United States of America (“
GAAP
”) and pursuant to the rules and regulations of the SEC.
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