CERo Therapeutics(CERO) - 2022 Q3 - Quarterly Report

PART I – FINANCIAL INFORMATION Financial Statements This section presents Phoenix Biotech Acquisition Corp.'s unaudited condensed financial statements as of September 30, 2022, detailing its pre-business combination SPAC status, assets primarily in a Trust Account, minimal operations, and the subsequent business combination agreement with Intrinsic Medicine, Inc Unaudited Condensed Balance Sheets As of September 30, 2022, the balance sheet shows total assets of $180.5 million, primarily $179.6 million in the Trust Account, with $10.0 million in liabilities and a $9.1 million stockholders' deficit due to redeemable Class A common stock Balance Sheet Highlights | Balance Sheet Highlights | September 30, 2022 (Unaudited) ($) | December 31, 2021 (Audited) ($) | | :--- | :--- | :--- | | Assets | | | | Cash | $507,915 | $1,098,573 | | Cash and marketable securities held in Trust Account | $179,644,568 | $178,499,615 | | Total Assets | $180,451,041 | $180,078,207 | | Liabilities & Equity | | | | Total Liabilities | $10,025,967 | $9,248,072 | | Class A Common stock subject to possible redemption | $179,482,271 | $178,500,000 | | Total stockholders' deficit | ($9,057,197) | ($7,669,865) | Unaudited Condensed Statements of Operations For the three months ended September 30, 2022, the company reported $84,505 net income, driven by Trust Account gains offsetting expenses, while the nine-month period resulted in a $405,061 net loss Operating Results (Unaudited) | Operating Results (Unaudited) | Three Months Ended Sep 30, 2022 ($) | Nine Months Ended Sep 30, 2022 ($) | | :--- | :--- | :--- | | Total operating expenses | $836,685 | $1,618,042 | | Total other income | $981,651 | $1,273,442 | | Net Income (Loss) | $84,505 | ($405,061) | | Basic and diluted net income (loss) per share, Class A | $0.00 | ($0.02) | Unaudited Condensed Statements of Cash Flows For the nine months ended September 30, 2022, the company used $719,147 in cash for operating activities, resulting in a decrease of its cash balance to $507,915 Cash Flow Summary (Unaudited) | Cash Flow Summary (Unaudited) | Nine Months Ended Sep 30, 2022 ($) | | :--- | :--- | | Net cash used for operating activities | ($719,147) | | Net change in cash | ($590,658) | | Cash, end of period | $507,915 | Notes to (Unaudited) Condensed Financial Statements These notes clarify the company's SPAC nature, its January 8, 2023 business combination deadline, significant liquidity issues raising going concern doubts, and the subsequent agreement with Intrinsic Medicine, Inc - The company is a special purpose acquisition company (SPAC) formed to effect a business combination and must complete one by January 8, 2023, or face liquidation[21][35] - Management has concluded that there is substantial doubt about the Company's ability to continue as a going concern due to insufficient funds to cover expenses for the next year[43][44] - On October 30, 2022, the Company entered into a definitive business combination agreement with Intrinsic Medicine, Inc[100] - The company has related party agreements for monthly payments, including $15,000 for consulting services to the CEO's spouse and $20,000 for administrative services to an affiliate of the Sponsor[77][78] Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the company's blank check status, the recent business combination agreement with Intrinsic Medicine, Inc., its reliance on Trust Account interest, and critical liquidity issues raising going concern doubts Recent Developments On October 30, 2022, the company signed a definitive business combination agreement with Intrinsic Medicine, Inc., involving the issuance of 13.6 million Class A common shares and a proxy filing to extend the combination deadline - The Company entered into a business combination agreement with Intrinsic Medicine, Inc. on October 30, 2022, with Intrinsic set to become a wholly-owned subsidiary[106] - The merger consideration consists of an aggregate of 13.6 million shares of Class A common stock to be issued to Intrinsic's equity owners[107] - The company filed a preliminary proxy statement on November 4, 2022, to extend the date by which it must consummate an initial business combination[112] Liquidity and Going Concern As of September 30, 2022, the company had $507,915 cash outside the Trust Account, raising substantial doubt about its ability to continue as a going concern due to insufficient funds - As of September 30, 2022, the company had $507,915 in cash held outside the Trust Account[121] - The company projects it will not have sufficient funds to cover expenses over a one-year period, raising substantial doubt about its ability to continue as a going concern[122] Contractual Obligations The company's primary contractual obligations include a $9.15 million deferred underwriting fee contingent on a business combination, plus ongoing monthly payments of $20,000 and $15,000 for administrative and consulting services - The company is obligated to pay a deferred underwriting fee of $9,150,000, which is contingent upon the completion of a Business Combination[125] - The company has monthly contractual payments of $20,000 for administrative services and $15,000 for consulting services[124][126] Quantitative and Qualitative Disclosures About Market Risk As a smaller reporting company, Phoenix Biotech Acquisition Corp. is not required to provide information for this item - The company is not required to provide information for this item as it qualifies as a smaller reporting company[132] Controls and Procedures As of September 30, 2022, the CEO and CFO concluded disclosure controls and procedures were effective, with no material changes to internal control over financial reporting - The company's CEO and CFO concluded that disclosure controls and procedures were effective as of September 30, 2022[134] - No material changes to the company's internal control over financial reporting occurred during the most recently completed fiscal quarter[135] PART II – OTHER INFORMATION Legal Proceedings The company reports no legal proceedings - The company has no legal proceedings to report[136] Risk Factors This section updates risk factors, emphasizing potential adverse effects from regulatory changes, including proposed SEC SPAC rules, and explicitly noting substantial doubt about the company's going concern ability - The company highlights risks from potential changes in laws and regulations, including proposed SEC rules for SPACs, which could increase the costs and time needed to complete a business combination[138][139] - A new risk factor has been added stating there is substantial doubt about the company's ability to continue as a 'going concern' due to its financial condition and limited working capital[140] Unregistered Sales of Equity Securities and Use of Proceeds This section details the use of proceeds from the IPO and concurrent private placement, which generated $175 million and $8.85 million respectively, with $178.5 million deposited into the Trust Account - The company consummated its IPO of 15,500,000 units and a partial over-allotment of 2,000,000 units, generating total gross proceeds of $175,000,000[141][143] - Simultaneously, the company sold 885,000 Private Placement Units at $10.00 per unit, generating gross proceeds of $8,850,000[142][143] - Following the offerings, $178,500,000 of the net proceeds was placed in a trust account[145] Defaults Upon Senior Securities The company reports no defaults upon senior securities - None reported[147] Mine Safety Disclosures This item is not applicable to the company - Not applicable[148] Other Information The company reports no other information - None reported[149] Exhibits This section lists exhibits filed with the Form 10-Q, including the Business Combination Agreement with Intrinsic Medicine, Inc., related support agreements, and corporate documents - The exhibits filed with the report include the Business Combination Agreement dated October 30, 2022, and various related support agreements[152][153]