CERo Therapeutics(CERO) - 2023 Q1 - Quarterly Report

PART I – FINANCIAL INFORMATION Item 1. Financial Statements Unaudited Q1 2023 financial statements detail a pre-business combination SPAC's $14.4 million assets, $481,712 net loss, and going concern issues Unaudited Condensed Balance Sheets Total assets decreased to $14.4 million by March 31, 2023, from $42.4 million due to redemptions, with liabilities at $12.4 million and an $11.6 million stockholders' deficit Condensed Balance Sheet Data (Unaudited) | | March 31, 2023 | December 31, 2022 | | :--- | :--- | :--- | | Total Assets | $14,430,169 | $42,367,032 | | Marketable securities and cash held in Trust Account | $14,031,783 | $41,665,974 (Restricted Cash) | | Cash | $178,093 | $475,870 | | Total Liabilities | $12,443,189 | $39,898,341 | | Deferred underwriting fee payable | $9,150,000 | $9,150,000 | | Shareholder redemption liability | — | $27,842,747 | | Total stockholders' deficit | ($11,578,660) | ($11,000,154) | Unaudited Condensed Statements of Operations Net loss for Q1 2023 increased to $481,712 from $377,997 in Q1 2022, primarily due to higher general and administrative expenses Condensed Statements of Operations (Unaudited) | | For the Three Months Ended March 31, | | :--- | :--- | :--- | | | 2023 | 2022 | | Total operating expenses | $590,268 | $404,777 | | Total other income | $108,556 | $26,780 | | Net Loss | ($481,712) | ($377,997) | | Basic and diluted net loss per share, Class A | ($0.07) | ($0.02) | Unaudited Condensed Statements of Changes in Stockholders' Deficit The accumulated deficit increased from $11.0 million at year-end 2022 to $11.6 million by March 31, 2023, due to the quarterly net loss and Class A stock accretion - The total stockholders' deficit grew to $11,578,660 as of March 31, 2023, from $11,000,154 at December 31, 2022, primarily due to the net loss incurred during the quarter[16] Unaudited Condensed Statements of Cash Flows Net cash used in operating activities was $197,777 for Q1 2023, with $100,000 used in investing, reducing cash from $475,870 to $178,093 Condensed Statements of Cash Flows (Unaudited) | | For the Three Months Ended March 31, | | :--- | :--- | :--- | | | 2023 | 2022 | | Net cash used in operating activities | ($197,777) | ($308,091) | | Net cash used in for investing activities | ($100,000) | — | | Net change in cash | ($297,777) | ($308,091) | | Cash, end of period | $178,093 | $790,482 | Notes to (Unaudited) Condensed Financial Statements Notes detail the SPAC's nature, business combination deadline extension, significant redemptions, substantial going concern doubt, and subsequent NASDAQ delisting notice - The company is a blank check company formed to effect a Business Combination and has not commenced any operations as of March 31, 2023[22][24] - The deadline to consummate a business combination was extended to June 8, 2023. In connection with the extension, holders of 16,211,702 shares of Class A common stock exercised their redemption rights[36][38] - Management has concluded there is substantial doubt about the Company's ability to continue as a going concern for one year from the issuance date of the financial statements due to insufficient funds to cover projected expenses[46][128] - Subsequent to the quarter end, on April 3, 2023, the company received a notice from Nasdaq for non-compliance with the minimum $50 million Market Value of Listed Securities requirement[104] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the SPAC's Q1 2023 net loss of $481,712, extended business combination deadline, redemptions, and substantial going concern doubt due to liquidity issues - The company is a blank check company with no operations, formed for the purpose of effecting a business combination[113] Results of Operations Comparison | | For the Three Months Ended March 31, | | :--- | :--- | :--- | | | 2023 | 2022 | | Net Loss | $481,712 | $377,997 | | Reason for Change | Increase primarily due to higher general and administrative expenses. | | - The company extended its business combination deadline to June 8, 2023. The Sponsor has deposited funds into the Trust Account to facilitate this extension[115][117] - The company projects it will not have sufficient funds to cover expenses over the next year, raising substantial doubt about its ability to continue as a going concern[128][46] Item 3. Quantitative and Qualitative Disclosures about Market Risk As a smaller reporting company, the registrant is exempt from providing quantitative and qualitative disclosures about market risk - As a smaller reporting company, the registrant is not required to provide quantitative and qualitative disclosures about market risk[139] Item 4. Controls and Procedures Management concluded that disclosure controls and procedures were effective as of March 31, 2023, with no material changes to internal control over financial reporting - Based on an evaluation as of March 31, 2023, the Chief Executive Officer and Chief Financial Officer concluded that the company's disclosure controls and procedures were effective[141] - No changes in internal control over financial reporting occurred during the quarter that materially affected, or are reasonably likely to materially affect, these controls[142] PART II – OTHER INFORMATION Item 1. Legal Proceedings The company reports no involvement in any legal proceedings - The company is not involved in any legal proceedings[143] Item 1A. Risk Factors No material changes occurred to the risk factors previously disclosed in the Annual Report on Form 10-K for the year ended December 31, 2022 - No material changes have occurred to the risk factors disclosed in the Annual Report on Form 10-K filed on March 24, 2023[144] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds Details the use of IPO and private placement proceeds, with $178.5 million funding the Trust Account and $12.7 million in offering costs, including deferred underwriting fees - The company consummated its IPO of 15,500,000 units at $10.00 per unit on October 8, 2021, generating gross proceeds of $155,000,000[145] - Simultaneously with the IPO and over-allotment exercise, the company sold 885,000 Private Placement Units at $10.00 per unit, generating gross proceeds of $8,850,000[147][148] - A total of $178,500,000 from the net proceeds was placed in a trust account to be used for a future Business Combination[150] Item 3. Defaults Upon Senior Securities The company reports no defaults upon senior securities - There were no defaults upon senior securities[152] Item 4. Mine Safety Disclosures This item is not applicable to the company - Mine safety disclosures are not applicable[153] Item 5. Other Information No other information was reported for this item - No other information was reported[154] Item 6. Exhibits This section lists exhibits filed with the Form 10-Q, including certifications by the Principal Executive and Financial Officers - A list of exhibits filed with or incorporated by reference into the Form 10-Q is provided[155]