UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
(Mark One)
For the quarterly period ended
For the transition period from to
Commission File Number
(Exact name of registrant as specified in its charter) |
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(State or other jurisdiction of | (IRS Employer | |
122 Mary Street, PO Box |
(Address of principal executive offices and zip code) |
Registrant’s telephone number, including area code: |
Securities registered pursuant to Section 12(b) of the Act:
Title of each class |
| Trading Symbol(s) |
| Name of each exchange on which registered |
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Indicate by check mark whether the Registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ☒ NO ☐
Indicate by check mark whether the Registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the Registrant was required to submit such files). ☒ NO ☐
Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definition of “large accelerated filer,” “accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.:
Large accelerated filer | ☐ | Accelerated filer | ☐ |
| ☒ | Smaller reporting company | |
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| Emerging growth company |
If an emerging growth company, indicate by the check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). YES
As of November 14, 2022, there were
EXPLANATORY NOTE
The sole purpose of this Amendment No. 1 to Iris Acquisition Corp.’s Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2022, originally filed with the Securities and Exchange Commission on November 21, 2022, is to file Exhibit 101 to the Form 10-Q in accordance with Rule 405 of Regulation S-T. The eXtensible Business Reporting Language (XBRL) data files were omitted from the Form 10-Q filing on November 21, 2022. The XBRL data files are attached herewith.
No other changes have been made to the Form 10-Q. This Amendment No. 1 speaks as of the original filing date of the Form 10-Q, does not reflect events that have occurred subsequent to the original filing date, and does not modify or update in any way disclosures made in the original filing of the Form 10-Q.
PART I—FINANCIAL INFORMATION
Item 1. CONDENSED FINANCIAL STATEMENTS (UNAUDITED)
IRIS ACQUISITION CORP
CONDENSED BALANCE SHEETS
September 30, 2022 | December 31, 2021 | |||||
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Assets | ||||||
Current assets | ||||||
Cash | $ | | $ | | ||
Due from Sponsor | | | ||||
Prepaid expenses and other current assets | |
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Total current assets | | | ||||
Investments held in Trust Account | | | ||||
Total Assets | $ | | $ | | ||
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Liabilities, Common Stock Subject to Possible Redemption and Stockholders’ Deficit |
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Current liabilities | ||||||
Accounts payable and accrued expenses | $ | | $ | | ||
Due to related party | | | ||||
Franchise tax payable | | | ||||
Income taxes payable | | — | ||||
Promissory note – related party | | — | ||||
Total current liabilities | | | ||||
Deferred underwriting fee payable |
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Deferred tax liability | | — | ||||
Warrant liability |
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Total Liabilities | |
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Commitments and Contingencies (Note 6) |
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Class A common stock subject to possible redemption, | | | ||||
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Stockholders’ Deficit |
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Preferred stock, $ |
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Class A common stock, $ |
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Class B common stock, $ |
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Additional paid-in capital |
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Accumulated deficit |
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Total Stockholders’ Deficit |
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Total Liabilities, Common Stock Subject to Possible Redemption and Stockholders’ Deficit | $ | | $ | |
The accompanying notes are an integral part of these unaudited condensed financial statements.
1
IRIS ACQUISITION CORP
CONDENSED STATEMENTS OF OPERATIONS
(UNAUDITED)
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||
| 2022 |
| 2021 |
| 2022 |
| 2021 | |||||
Formation and operating costs | $ | | $ | | $ | | $ | | ||||
Forgiveness of unrelated vendor payables | ( | — | ( | — | ||||||||
Income (loss) from operations | | ( | ( | ( | ||||||||
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Other income (expense): |
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Gain on change in fair value of warrant liability | | | | | ||||||||
Interest income on marketable securities held in Trust Account | | | | | ||||||||
Unrealized gain on investments held in Trust Account | | — | | — | ||||||||
Offering costs | — | — | — | ( | ||||||||
Excess of fair value of Private Warrants over proceeds received | — | — | — | ( | ||||||||
Total other income | | | | | ||||||||
Income before provision for income taxes | | | | | ||||||||
Provision for income taxes | ( | — | ( | — | ||||||||
Net income | $ | | $ | | $ | | $ | | ||||
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Basic and diluted weighted average shares outstanding, Class A common stock subject to possible redemption |
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Basic and diluted net income per share, Class A common stock subject to possible redemption | ||||||||||||
Basic and diluted weighted average shares outstanding, Class B common stock |
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Basic and diluted net income per share, Class B common stock | | | |
The accompanying notes are an integral part of these unaudited condensed financial statements.
2
IRIS ACQUISITION CORP
CONDENSED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (DEFICIT)
THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2022
Class B | Additional | Total | |||||||||||||
Common Stock | Paid-in | Accumulated | Stockholders’ | ||||||||||||
| Shares |
| Amount |
| Capital |
| Deficit |
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Balance - December 31, 2021 | | $ | | $ | — | $ | ( | $ | ( | ||||||
Net income | — | — | — | | | ||||||||||
Balance as of March 31, 2022 (Unaudited) |
| | $ | | $ | — | $ | ( | $ | ( | |||||
Forgiveness of payable due to an affiliate of the Sponsor | — | — | | — | | ||||||||||
Remeasurement of Class A common stock to redemption amount |
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Net income | — | — | — | | | ||||||||||
Balance as of June 30, 2022 (Unaudited) | | | | ( | ( | ||||||||||
Remeasurement of Class A common stock to redemption amount | — | — | — | ( | ( | ||||||||||
Net income | — | — | — | | | ||||||||||
Balance as of September 30, 2022 (Unaudited) |
| | $ | | $ | | $ | ( | $ | ( |
THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2021
Class B | Additional | Total | |||||||||||||
Common Stock | Paid-in | Accumulated | Stockholders’ | ||||||||||||
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| Amount |
| Capital |
| Deficit |
| Equity (Deficit) | ||||||
Balance - December 31, 2020 | | $ | | $ | | $ | ( | $ | | ||||||
Remeasurement of shares of Class A common stock subject to possible redemption | — | — | ( | ( | ( | ||||||||||
Net loss | — | — | — | ( | ( | ||||||||||
Balance as of March 31, 2021 (Unaudited) | | | — | ( | ( | ||||||||||
Net loss | — | — | — | ( | ( | ||||||||||
Balance as of June 30, 2021 (Unaudited) | | | — | ( | ( | ||||||||||
Net income | — | — | — | | | ||||||||||
Balance as of September 30, 2021 (Unaudited) | | $ | | $ | — | $ | ( | $ | ( |
The accompanying notes are an integral part of these unaudited condensed financial statements.
3
IRIS ACQUISITION CORP
CONDENSED STATEMENTS OF CASH FLOWS
(UNAUDITED)
Nine Months Ended September 30, | ||||||
| 2022 |
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Cash Flows from Operating Activities: |
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Net income | $ | | $ | | ||
Adjustments to reconcile net income to net cash used in operating activities: |
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Excess of fair value of Private Warrants over proceeds received | — | | ||||
Gain on change in fair value of warrant liability | ( | ( | ||||
Unrealized gain on Investments held in Trust Account | ( | |||||
Interest earned on cash and Investments held in Trust Account | ( | ( | ||||
Deferred tax liability | | — | ||||
Forgiveness of unrelated vendor payables | ( | — | ||||
Offering Costs | — | | ||||
Changes in operating assets and liabilities: | ||||||
Prepaid expenses and other current assets |
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Due from Sponsor | — | ( | ||||
Franchise taxes payable |
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Income tax payable | | — | ||||
Due to related party | | | ||||
Accounts payable and accrued expenses | ( | | ||||
Net cash used in operating activities |
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Cash Flows from Investing Activities: | ||||||
Cash deposited in Trust Account | — | ( | ||||
Net cash used in investing activities | — | ( | ||||
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Cash Flows from Financing Activities: |
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Proceeds from sale of Units, net of offering costs |
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Proceeds from issuance of Private Warrants | — | | ||||
Payment of underwriter discount | — | ( | ||||
Promissory Note – related party | | — | ||||
Net cash provided by financing activities |
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Net Change in Cash |
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Cash, beginning of period |
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Cash, end of period | $ | | $ | | ||
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Supplemental disclosure of non-cash operating and financing activities: |
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Initial classification of warrant liabilities | $ | — | $ | | ||
Deferred underwriting fee payable charged to additional paid-in capital | $ | — | $ | | ||
Remeasurement of Class A common stock subject to redemption value | $ | | $ | | ||
Forgiveness of payable due to an affiliate of the Sponsor | $ | | $ | — |
The accompanying notes are an integral part of these unaudited condensed financial statements.
4
IRIS ACQUISITION CORP
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
NOTE 1. DESCRIPTION OF ORGANIZATION AND BUSINESS OPERATIONS
Iris Acquisition Corp (the “Company”) formally known as Tribe Capital Growth Corp (name of the Company changed on July 27, 2022), is a blank check company incorporated in Delaware on November 5, 2020. The Company was incorporated for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses (the “Business Combination”). While the Company has engaged in substantive discussions and entered into a letter of intent with a potential business combination target, the Company’s board of directors has not approved any business combination.
As of September 30, 2022, the Company had not commenced any operations. All activity for the period from November 5, 2020 (inception) through September 30, 2022 relates to the Company’s formation and the initial public offering described below (the “IPO”), and subsequent to the IPO identifying a target company for a Business Combination. The Company will not generate any operating revenues until after the completion of its initial Business Combination, at the earliest. The Company generates non-operating income in the form of interest income on cash and cash equivalents from the proceeds derived from the IPO and unrealized gains and losses and the change in fair value of its warrants.
The Company’s sponsor is Iris Acquisition Holdings LLC (formerly known as Tribe Arrow Holdings I LLC), a Delaware limited liability company (the “Sponsor”). The registration statement for the Company’s IPO was declared effective on March 4, 2021 (the “Effective Date”). On March 9, 2021, the Company consummated the IPO of
Simultaneously with the closing of the IPO, the Company consummated the sale of
Transaction costs for the IPO amounting to $
Following the closing of the IPO on March 9, 2021, $
5
IRIS ACQUISITION CORP
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
The shares of common stock subject to redemption are recorded at redemption value and classified as temporary equity upon the completion of the IPO, in accordance with Accounting Standards Codification (“ASC”) Topic 480, Distinguishing Liabilities from Equity (“ASC 480”). In such case, the Company will proceed with a Business Combination if the Company has net tangible assets of at least $
The Company will have only
The Sponsor, officers and directors have agreed to (i) waive their redemption rights with respect to any Founder Shares and public shares they hold in connection with the completion of the initial Business Combination, (ii) waive their redemption rights with respect to their Founder Shares and public shares in connection with a stockholder vote to approve an amendment to the Company’s amended and restated certificate of incorporation, (iii) waive their rights to liquidating distributions from the Trust Account with respect to any Founder Shares they hold if the Company fails to complete the initial Business Combination within the Combination Period, and (iv) vote any Founder Shares held by them and any public shares purchased during or after the IPO in favor of the initial Business Combination.
The Sponsor has agreed that it will be liable to the Company if and to the extent any claims by a third party for services rendered or products sold to the Company, or a prospective target business with which the Company has 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) $
Liquidity, Capital Resources and Going Concern
The Company consummated its IPO on March 9, 2021. As of September 30, 2022, the Company had $
In connection with the Company’s assessment of going concern considerations in accordance with FASB Accounting Standards Update (“ASU”) 2014-15, Disclosures of Uncertainties about an Entity’s Ability to Continue as a Going Concern, management has determined that the Company has and will continue to incur significant costs in pursuit of its acquisition plans which raises substantial doubt about the Company’s ability to continue as a going concern. Moreover, we may need to obtain additional financing either to complete our initial Business Combination or because we become obligated to redeem a significant number of our public shares upon consummation of our initial Business Combination, in which case we may issue additional securities or incur debt in connection with such Business Combination. Subject to compliance with applicable securities laws, we would only complete such financing simultaneously with the
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IRIS ACQUISITION CORP
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
completion of 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 Accounts. In addition, following our initial Business Combination, if cash on hand is insufficient, we may need to obtain additional financing in order to meet our obligations.
In connection with the Company’s assessment of going concern considerations in accordance with FASB ASC 205-40, Presentation of Financial Statements—Going Concern, management has determined that if the Company is unable to complete a Business Combination by March 8, 2023, then the Company will cease all operations except for the purpose of liquidating. The date for mandatory liquidation and subsequent dissolution as well as the Company’s working capital deficit raise substantial doubt about the Company’s ability to continue as a going concern. No adjustments have been made to the carrying amounts of assets or liabilities should the Company be required to liquidate after the Combination Period. The Company intends to complete a Business Combination before the mandatory liquidation date.
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The accompanying condensed financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and in accordance with the instructions to Form 10-Q and Article 10 of Regulation S-X. Certain information or footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or 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 condensed 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 condensed financial statements should be read in conjunction with the Company’s Annual Report on Form 10-K as filed with the SEC on April 18, 2022. The interim results for the three and nine months ended September 30, 2022 are not necessarily indicative of the results to be expected for the year ending December 31, 2022 or for any future interim periods.
Emerging Growth Company Status
The Company is an “emerging growth company,” as defined in Section 2(a) of 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 stockholder 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 condensed 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 condensed 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 condensed
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IRIS ACQUISITION CORP
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates.
Cash
The Company considers all short-term investments with an original maturity of three months or less when purchased to be cash equivalents. The Company did not have any cash equivalents as of September 30, 2022 and December 31, 2021. As of September 30, 2022 and December 31, 2021, the Company had operating cash (i.e,. cash held outside the Trust Account) of $
Investments Held in Trust Account
Investments held in Trust Account consist of U.S. Treasury Bills, which are characterized as Level 1 investments within the fair value hierarchy under ASC 820 (as defined below). These investments are classified as trading securities for which interest earned and unrealized and realized gains and losses are included in the condensed statements of operations.
Concentration of Credit Risk
Financial instruments that potentially subject the Company to concentrations of credit risk consist of cash accounts in a financial institution, which, at times, may exceed the federal depository insurance coverage of $250,000. As of September 30, 2022 and December 31, 2021, the Company has not experienced losses on these accounts and management believes the Company is not exposed to significant risks on such accounts.
Common Stock Subject to Possible Redemption
The Company accounts for its shares of common stock subject to possible redemption in accordance with the guidance in ASC 480. Common stock subject to mandatory redemption (if any) is classified as a liability instrument and is measured at fair value. Conditionally redeemable common stock (including common stock that features redemption rights that are either within the control of the holder or subject to redemption upon the occurrence of uncertain events not solely within the Company’s control) is classified as a component of temporary equity. At all other times, shares of common stock are classified as stockholders’ equity. The Company’s common stock features certain redemption rights that are considered to be outside of the Company’s control and subject to the occurrence of uncertain future events. Accordingly, common stock subject to possible redemption is presented at redemption value as temporary equity, outside of the stockholders’ equity section of the Company’s balance sheets.
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IRIS ACQUISITION CORP
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
Net Income Per Common Stock
The Company complies with accounting and disclosure requirements of ASC Topic 260, Earnings Per Share. The Company has two classes of shares, which are referred to as Class A common stock and Class B common stock. Earnings and losses are shared pro rata between the two classes of shares. The Company has not considered the effect of the warrants sold in the IPO and the Private Placement to purchase an aggregate of
| Three Months Ended | Three Months Ended |
| Nine Months Ended | Nine Months Ended | |||||||||||||||||||
September 30, 2022 | September 30, 2021 | September 30, 2022 | September 30, 2021 | |||||||||||||||||||||
| Class A |
| Class B |
| Class A |
| Class B |
| Class A |
| Class B |
| Class A |
| Class B | |||||||||
Basic and diluted net income per share: | ||||||||||||||||||||||||
Numerator: | ||||||||||||||||||||||||
Net income | $ | | $ | | $ | | $ | | $ | | $ | | $ | | $ | | ||||||||
Denominator: | ||||||||||||||||||||||||
Basic and diluted weighted average shares outstanding | | | | | | | | | ||||||||||||||||
Basic and diluted net income per share | | | | | | | | |
Offering Costs
The Company complies with the requirements of the ASC 340-10-S99-1 and SEC Staff Accounting Bulletin (“SAB”) Topic 5A—Expenses of Offering. Offering costs consist principally of professional and registration fees incurred through the balance sheet date that are related to the IPO. Offering costs are charged to stockholders’ equity or the statement of operations based on the relative value of the Public Warrants to the proceeds received from the Units sold upon the completion of the IPO. Offering costs totaled $
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 (“ASC 820”), approximates the carrying amounts in the condensed balance sheets, primarily due to their short-term nature.
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 (“ASC 815”). Derivative instruments are recorded at fair value on the grant date and re-valued at each reporting date, with changes in the fair value reported in the condensed statements of operations. Derivative assets and liabilities are classified in the balance sheet 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 Company has determined that the warrants are a derivative instrument.
ASC Topic 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 IPO proceeds from the Units between Class A common stock and warrants, using the residual method by allocating IPO proceeds first to fair value of the warrants and then the Class A common stock.
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IRIS ACQUISITION CORP
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
Fair Value Measurements
Fair value is defined as the price that would be received for sale of an asset or paid for transfer of a liability in an orderly transaction between market participants at the measurement date. GAAP establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). These tiers include:
● | Level 1, defined as observable inputs such as quoted prices (unadjusted) for identical instruments in active markets; |
● | Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable such as quoted prices for similar instruments in active markets or quoted prices for identical or similar instruments in markets that are not active; and |
● | Level 3, defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions, such as valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable. |
Income Taxes
The Company accounts for income taxes in accordance with ASC Topic 740, Income Taxes (“ASC 740”). ASC 740 requires the recognition of deferred tax assets and liabilities for both the expected impact of differences between the condensed financial statement and tax basis of assets and liabilities and for the expected future tax benefit to be derived from tax loss and tax credit carryforwards. ASC 740 additionally requires a valuation allowance to be established when it is more likely than not that all or a portion of deferred tax assets will not be realized.
ASC 740 also clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s condensed financial statements and prescribes a recognition threshold and measurement process for condensed financial statement recognition and measurement of a tax position 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. There were no tax accruals relating to uncertain tax positions.
The Company recognizes accrued interest and penalties related to unrecognized tax benefits as income tax expense. There were
The Company was incorporated in the State of Delaware and is required to pay franchise taxes to the State of Delaware on an annual basis.
The Inflation Reduction Act (“IRA”) was enacted on August 16, 2022. The IRA includes provisions imposing a 1% excise tax on share repurchases that occur after December 31, 2022 and introduces a 15% corporate alternative minimum tax (“CAMT”) on adjusted financial statement income. The CAMT will be effective for us beginning in fiscal 2024. Currently, the Company is not expecting the IRA to have a material adverse impact to our financial statements.
Recent Accounting Pronouncements
The Company’s 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 condensed financial statements.
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IRIS ACQUISITION CORP
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
Risks and Uncertainties
Management continues to evaluate the impact of the COVID-19 pandemic on the Company’s business objectives and has concluded that while it is reasonably possible that the virus could have a negative effect on the Company’s condensed 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 these condensed financial statements. The condensed financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Additionally, as a result of the military action commenced in February 2022 by the Russian Federation and Belarus in the country of Ukraine and related economic sanctions, the Company’s ability to consummate a Business Combination, or the operations of a target business with which the Company ultimately consummates a Business Combination, may be materially and adversely affected. Further, the Company’s ability to consummate a transaction may be dependent on the ability to raise equity and debt financing which may be impacted by these events, including as a result of increased market volatility, or decreased market liquidity in third-party financing being unavailable on terms acceptable to the Company or at all. The impact of this action and related sanctions on the world economy and the specific impact on the Company’s financial position, results of operations and/or ability to consummate a Business Combination are not yet determinable. The unaudited condensed financial statements do not include any adjustments that might result from the outcome of this uncertainty.
NOTE 3. INITIAL PUBLIC OFFERING
On March 9, 2021, the Company sold
The Company paid an underwriting fee at the closing of the IPO of $
All of the
The Class A common stock is subject to SEC and its staff’s guidance on redeemable equity instruments, which has been codified in ASC 480-10-S99. If it is probable that the equity instrument will become redeemable, the Company has the option to either accrete changes in the redemption value over the period from the date of issuance (or from the date that it becomes probable that the instrument will become redeemable, if later) to the earliest redemption date of the instrument or to recognize changes in the redemption value immediately as they occur and adjust the carrying amount of the instrument to equal the redemption value at the end of each reporting period. The Company recognizes changes in redemption value immediately as they occur. Immediately upon the closing of the IPO, the Company recognized the accretion from initial book value to redemption amount value. The change in the carrying value of redeemable common stock resulted in charges against additional paid-in capital and accumulated deficit.
11
IRIS ACQUISITION CORP
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
As of September 30, 2022 and December 31, 2021, the common stock reflected on the balance sheets are reconciled in the following table:
Gross proceeds from IPO |
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Less: |
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Proceeds allocated to Public Warrants |
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Common stock issuance costs |
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Plus: |
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Accretion of carrying value to redemption value |
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Class A common stock subject to possible redemption as December 31, 2021 | $ | | |
Less: Remeasurement of carrying value to redemption value | ( | ||
Class A common stock subject to possible redemption as June 30, 2022 | | ||
Plus: Accretion of carrying value to redemption value | | ||
Class A common stock subject to possible redemption as September 30, 2022 | $ | |
Warrants — Each whole warrant entitles the holder to purchase
The warrants will become exercisable on the later of
The Company has agreed that as soon as practicable, but in no event later than
(15) business days after the closing of the initial Business Combination, it will use its best efforts to file with the SEC a registration statement for the registration, under the Securities Act, of the Class A common stock issuable upon exercise of the warrants. The Company will use its best efforts to cause the same to become effective and to maintain the effectiveness of such registration statement, and a current prospectus relating thereto, until the expiration of the warrants in accordance with the provisions of the warrant agreement. If a registration statement covering the Class A common stock issuable upon exercise of the warrants is not effective by the sixtieth ( th) business day after the closing of the initial Business Combination, warrant holders may, until such time as there is an effective registration statement and during any period when the Company will have failed to maintain an effective registration statement, exercise warrants on a “cashless basis” in accordance with Section 3(a)(9) of the Securities Act or another exemption. Notwithstanding the above, if the Company’s Class A common stock are at the time of any exercise of a warrant not listed on a national securities exchange such that they satisfy the definition of a “covered security” under Section 18(b)(1) of the Securities Act, the Company may, at its option, require holders of public warrants who exercise their warrants to do so on a “cashless basis” in accordance with Section 3(a)(9) of the Securities Act and, in the event the Company so elects, it will not be required to file or maintain in effect a registration statement, and in the event the Company does not so elect, it will use its best efforts to register or qualify the shares under applicable blue sky laws to the extent an exemption is not available.Once the warrants become exercisable, the Company may call the warrants for redemption for cash:
● | in whole and not in part; |
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IRIS ACQUISITION CORP
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
● | at a price of $ |
● | upon not less than |
● | if, and only if, the closing price of the common stock equals or exceeds $ |
If and when the warrants become redeemable by the Company for cash, the Company may exercise its redemption right even if it is unable to register or qualify the underlying securities for sale under all applicable state securities laws.
NOTE 4. PRIVATE PLACEMENT
Simultaneously with the closing of the IPO, the Sponsor and Cantor purchased an aggregate of
The Private Warrants are identical to the public warrants included as part of the Units sold in the IPO except that they will be non-redeemable and exercisable on a cashless basis for as long as the Private Warrants are held by the Sponsor or Cantor, the representative of the underwriters, or its permitted transferees. Additionally, for so long as the Private Warrants are held by Cantor or its designees or affiliates, they may not be exercised after
NOTE 5. RELATED PARTY TRANSACTIONS
Founder Shares
In December 2020, the Sponsor paid $
The Sponsor has agreed not to transfer, assign or sell any of their Founder Shares until the earlier to occur of: (A)
Promissory Note — Related Party
On December 31, 2020, the Sponsor agreed to loan the Company up to $
On May 27, 2022, the Sponsor agreed to loan the Company up to $
13
IRIS ACQUISITION CORP
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
On October 10, 2022, Iris Acquisition Corp issued an unsecured promissory note in the aggregate principal amount up to $
Related Party Loans
In addition, in order to fund working capital deficiencies or finance transaction costs in connection with an intended 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 on a non-interest bearing basis (“Working Capital Loans”). If the Company completes the initial Business Combination, the Company would repay the Working Capital Loans. 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 the Working Capital Loans, but no proceeds from the Trust Account would be used to repay the Working Capital Loans. Up to
Administrative Support Agreement
Subsequent to the closing of the IPO, the Company began paying an affiliate of the Sponsor, Tribe Capital Markets LLC (“Tribe”) $
On June 1, 2022, Tribe withdrew as a member of the Sponsor. In conjunction with its withdrawal as a member, Tribe resigned as the managing member of the Sponsor effective June 1, 2022. Members holding a majority of the membership interest in the Sponsor appointed Arrow Multi Asset Fund – Arrow SP6 (“Arrow”) as the managing member of the Sponsor effective June 1, 2022. Following the withdrawal of Tribe as a member of the Sponsor, the $
NOTE 6. COMMITMENTS AND CONTINGENCIES
Registration Rights
The holders of the (i) Founder Shares, which were issued in a private placement prior to the closing of the IPO, (ii) Private Warrants, which were issued in a private placement simultaneously with the closing of the IPO and the shares of Class A common stock underlying such Private Warrants and (iii) Private Warrants that may be issued upon conversion of Working Capital Loans will have registration rights to require the Company to register a sale of any of the Company’s securities held by them pursuant to a registration rights agreement to be signed prior to or on the Effective Date. The holders of these securities are entitled to make up to
Underwriting Agreement
The underwriters are entitled to a deferred underwriting discount of
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IRIS ACQUISITION CORP
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
NOTE 7. STOCKHOLDERS’ DEFICIT
Preferred stock—The Company is authorized to issue
Class A common stock—The Company is authorized to issue
Class B common stock—The Company is authorized to issue
Stockholders of record are entitled to
The Class B common stock will automatically convert into Class A common stock upon the consummation of the initial Business Combination on a
NOTE 8. INCOME TAXES
The Company’s effective tax rate for the three and nine months ended September 30, 2022 was
NOTE 9. RECURRING FAIR VALUE MEASUREMENTS
As of September 30, 2022 and December 31, 2021, the Company’s warrant liabilities were valued at $
All of the Company’s permitted investments are held in a money market fund. Fair values of these investments are determined by Level 1 inputs utilizing quoted prices (unadjusted) in active markets for identical assets. The Company’s warrant liability for the Private Placement Warrants is based on a valuation model utilizing management judgment and pricing inputs from observable and unobservable
15
IRIS ACQUISITION CORP
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
markets with less volume and transaction frequency than active markets. Significant deviations from these estimates and inputs could result in a material change in fair value. The fair value of the Private Placement Warrant liability is classified within Level 3 of the fair value hierarchy. The Company’s warrant liability for the Public Warrants is based on unadjusted quoted prices in active markets for identical assets or liabilities that the Company has the ability to access. The fair value of the Public Warrant liability is classified within Level 1 of the fair value hierarchy. During the year ended December 31, 2021, the Public Warrants were reclassified from a Level 3 to a Level 1 classification.
The following table presents fair value information as of September 30, 2022 and December 31, 2021 of the Company’s financial assets and liabilities that were accounted for at fair value on a recurring basis and indicates the fair value hierarchy of the valuation techniques the Company utilized to determine such fair value.
Description |
| Amount at Fair Value |
| Level 1 |
| Level 2 |
| Level 3 | ||||
September 30, 2022 | ||||||||||||
Assets: | ||||||||||||
Investments held in Trust Account: |
|
|
|
|
|
| ||||||
Money Market investments | $ | $ | | $ | — | $ | — | |||||
Liabilities: | ||||||||||||
Public Warrants | $ | | $ | | $ | — | $ | — | ||||
Private Warrants | $ | | $ | — | $ | — | $ | | ||||
December 31, 2021 | ||||||||||||
Assets: | ||||||||||||
Investments held in Trust Account: | ||||||||||||
Money Market Funds | $ | | $ | | $ | — | $ | — | ||||
Liabilities: | ||||||||||||
Private Warrants | $ | | $ | — | $ | — | $ | | ||||
Public Warrants | $ | | $ | | $ | — | $ | — |
Measurement - The Company established the initial fair value for the warrants on March 9, 2021, the date of the consummation of the IPO. On September 30, 2022 and December 31, 2021, the fair value was remeasured. For March 9, 2021, neither the Public Warrants nor the Private Placement Warrants were separately traded on an open market. As such, the Company used a Monte Carlo simulation model to value the Warrants. In May 2021, the Public Warrants were separately traded in the open market and the valuation for the Public Warrants was based on unadjusted quoted prices at September 30, 2022 and December 31, 2021. For September 30, 2022 and December 31, 2021, the Company used a Monte Carlo simulation model to value the Private Placement Warrants.
The key inputs into the Monte Carlo simulation model for the Warrants were as follows at initial measurement, September 30, 2022 and December 31, 2021:
March 9, 2021 (Initial | |||||||
| September 30, 2022 |
| December 31, 2021 |
| Measurement) | ||
Risk-free interest rate | | % | | % | | % | |
Expected term (years) | | | | ||||
Expected volatility | | % | | % | | % | |
Exercise Price | | | |
16
IRIS ACQUISITION CORP
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
The change in the fair value of the warrant liabilities classified as Level 3 for the year ended September 30, 2022 and December 31,2021 is summarized as follows:
Fair value at issuance March 9, 2021 |
| $ | |
Change in fair value | | ||
Fair value at March 31, 2021 | | ||
Public Warrants reclassified to level 1 | ( | ||
Change in fair value | ( | ||
Fair value at June 30, 2021 | | ||
Change in fair value | ( | ||
Fair value at September 30, 2021 |
| | |
Change in fair value | ( | ||
Fair value at December 31, 2021 | | ||
Change in fair value | ( | ||
Fair value at March 31, 2022 | | ||
Change in fair value | ( | ||
Fair value at June 30, 2022 | | ||
Change in fair value | ( | ||
Fair value at September 30, 2022 | $ | |
NOTE 10. SUBSEQUENT EVENTS
The Company has evaluated all events that occurred through the date of this filing. Other than the issuance of the unsecured promissory note on October 10, 2022 as disclosed in Note 5, no events were identified.
17
Item 6. Exhibits, Financial Statement Schedules.
The following exhibits are filed as part of, or incorporated by reference into, this Quarterly Report on Form 10-Q.
No. | Description of Exhibit | |
31.1* |
| |
31.2* |
| |
32.1** |
| |
32.2** |
| |
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) |
*Filed herewith.
**Furnished herewith.
18
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Iris Acquisition Corp | ||
Date: November 22, 2022 | By: | /s/ Sumit Mehta |
Name: Sumit Mehta | ||
Title: Chief Executive Officer | ||
(Principal Executive Officer) | ||
Date: November 22, 2022 | By: | /s/ Lisha Parmar |
Name: Lisha Parmar | ||
Title: Chief Financial Officer | ||
(Principal Financial and Accounting Officer) | ||
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