CERo Therapeutics(CERO) - 2022 Q2 - Quarterly Report

PART I – FINANCIAL INFORMATION Financial Statements (Unaudited) The pre-business combination SPAC reported a net loss of $489,566 for the six months ended June 30, 2022, with total assets of $179.7 million, a significant stockholders' deficit, and substantial doubt about its going concern ability Condensed Balance Sheets As of June 30, 2022, the company reported total assets of $179.7 million, primarily trust account holdings, with total liabilities of $9.4 million and a stockholders' deficit of $8.2 million Condensed Balance Sheet Highlights (Unaudited) | Account | June 30, 2022 (USD) | December 31, 2021 (USD) | | :--- | :--- | :--- | | Assets | | | | Cash | $553,775 | $1,098,573 | | Cash and marketable securities held in Trust Account | $178,791,405 | $178,499,615 | | Total Assets | $179,724,777 | $180,078,207 | | Liabilities & Stockholders' Deficit | | | | Total current liabilities | $234,208 | $98,072 | | Deferred underwriting fee payable | $9,150,000 | $9,150,000 | | Total Liabilities | $9,384,208 | $9,248,072 | | Class A Common stock subject to possible redemption | $178,500,000 | $178,500,000 | | Total stockholders' deficit | ($8,159,431) | ($7,669,865) | Condensed Statements of Operations For the three and six months ended June 30, 2022, the company reported net losses of $111,569 and $489,566 respectively, with no operating revenue and other income from trust account investments Statement of Operations Summary (Unaudited) | Metric | Three Months Ended June 30, 2022 (USD) | Six Months Ended June 30, 2022 (USD) | | :--- | :--- | :--- | | Total operating expenses | $376,580 | $781,357 | | Total other income | $265,011 | $291,791 | | Net Loss | ($111,569) | ($489,566) | | Basic and diluted net loss per share, Class A | ($0.00) | ($0.02) | Condensed Statements of Changes in Stockholders' Deficit The stockholders' deficit increased from $7.67 million at December 31, 2021, to $8.16 million at June 30, 2022, primarily due to the net loss incurred during the period - The total stockholders' deficit grew from $(7,669,865) at December 31, 2021, to $(8,159,431) at June 30, 2022, with the change attributed to the net loss for the period[16] Condensed Statements of Cash Flows For the six months ended June 30, 2022, the company used $544,798 in cash for operating activities, resulting in a decrease in cash to $553,775 at period-end, primarily due to the net loss Cash Flow Summary (Unaudited) | Metric | Six Months Ended June 30, 2022 (USD) | | :--- | :--- | | Net loss | ($489,566) | | Net cash used for operating activities | ($544,798) | | Cash, End of Period | $553,775 | Notes to Condensed Financial Statements The notes detail the company's SPAC nature, its January 8, 2023 business combination deadline, substantial doubt about its going concern ability, related party transactions, and a $9.15 million deferred underwriting fee - The company is a SPAC formed to effect a business combination and has not commenced any operations. It has until January 8, 2023 (15 months from its IPO) to complete a transaction[23][25][37] - Management has concluded that there is substantial doubt about the Company's ability to continue as a going concern for one year, as projected funds are insufficient to cover expenses[44] - The company pays a monthly fee of $20,000 to an affiliate of the Sponsor for office and administrative services, and a monthly consulting fee of $15,000 to the CEO's spouse for assistance in identifying acquisition targets[78][79] - A deferred underwriting commission of $9,150,000 is payable from the Trust Account only upon the completion of a Business Combination[82] Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the company's status as a blank check company with no operations, its $489,566 net loss for the first six months of 2022, significant liquidity concerns raising substantial doubt about its going concern ability, and key contractual obligations - The company is a blank check company with all activity to date related to its formation, IPO, and search for a Business Combination[102][104] - A net loss of $489,566 was recorded for the six months ended June 30, 2022, consisting of general, administrative, and franchise tax expenses, partially offset by interest and gains on trust account investments[105] - The company projects it will not have sufficient funds to cover expenses for one year, raising substantial doubt about its ability to continue as a going concern[114] - Contractual obligations include a $20,000 monthly fee to a Sponsor affiliate for support services and a deferred underwriting commission of $9,150,000, payable only if a Business Combination is completed[116][117] Quantitative and Qualitative Disclosures About Market Risk As a smaller reporting company, the registrant is not required to provide information regarding quantitative and qualitative disclosures about market risk - As a smaller reporting company, the registrant is not required to provide the information required by this item[124] Controls and Procedures As of June 30, 2022, the company's disclosure controls and procedures were deemed effective, with no material changes in internal control over financial reporting during the most recent fiscal quarter - The Principal Executive Officer and Principal Financial Officer concluded that the company's disclosure controls and procedures were effective as of June 30, 2022[126] - No changes in internal control over financial reporting occurred during the most recently completed fiscal quarter that have materially affected, or are reasonably likely to materially affect, internal controls[127] PART II – OTHER INFORMATION Legal Proceedings The company reports no legal proceedings - None[128] Risk Factors Key risk factors include potential changes in laws and regulations, particularly SEC's proposed SPAC rules, and management's conclusion of substantial doubt about the company's going concern ability - The company is subject to risks from changes in laws and regulations, particularly the SEC's proposed rules for SPACs issued on March 30, 2022, which could increase costs and time needed to complete a business combination[130][131] - A key risk factor is the management's conclusion of substantial doubt about the company's ability to continue as a 'going concern' due to limited cash and working capital, which may impede its ability to complete a Business Combination[132] Unregistered Sales of Equity Securities and Use of Proceeds The company details proceeds from its IPO of 15.5 million units at $10.00 each, generating $155 million, and private placements totaling $8.85 million, with $178.5 million placed into the Trust Account - On October 8, 2021, the company consummated its IPO of 15,500,000 units at $10.00 per unit, generating gross proceeds of $155,000,000[133] - Simultaneously with the IPO, the company sold 845,000 Private Placement Units at $10.00 each, and an additional 40,000 units related to the over-allotment exercise, raising a total of $8,850,000 in private placements[134][135] - Following the IPO and private placements, $178,500,000 ($10.20 per Unit) was placed in the Trust Account[137] Defaults Upon Senior Securities The company reports no defaults upon senior securities - None[140] Mine Safety Disclosures This item is not applicable to the company - Not applicable[141] Other Information The company reports no other information - None[142] Exhibits This section lists exhibits filed with the Form 10-Q, including corporate documents, officer certifications, and XBRL interactive data files - Exhibits filed include officer certifications (31.1, 31.2, 32.1, 32.2) and XBRL data files (101 series)[146] Signatures Signatures The report was signed on August 11, 2022, by Chris Ehrlich, Chief Executive Officer, and Daniel Geffken, Chief Financial Officer - The report is duly signed and authorized on August 11, 2022[148][150]