Trailblazer Merger I(TBMC) - 2024 Q3 - Quarterly Report

PART I - FINANCIAL INFORMATION Item 1. Interim Financial Statements Presents unaudited condensed consolidated financial statements: balance sheets, operations, stockholders' deficit, cash flows, and accounting notes Condensed Consolidated Balance Sheets Balance sheet shows significant increases in total assets and liabilities, driven by restricted funds and Class A common stock pending redemptions; stockholders' deficit also increased Condensed Consolidated Balance Sheets Summary | Metric | September 30, 2024 | December 31, 2023 | | :---------------------- | :----------------- | :---------------- | | Total Assets | $77,160,600 | $73,770,297 | | Total Liabilities | $56,150,186 | $3,222,405 | | Stockholders' Deficit | $(4,998,453) | $(1,677,058) | - Restricted funds in Trust Account increased from $0 to $49,774,936, and Class A common stock pending redemptions increased from $0 to $49,774,936, indicating significant redemption activity[12] - Marketable securities held in Trust Account decreased from $72,994,863 to $26,845,950[12] Condensed Consolidated Statements of Operations Net income reported for both periods, primarily from Trust Account interest, offset by operating costs and taxes; net income per share decreased YoY Condensed Consolidated Statements of Operations Summary | Metric | 3 Months Ended Sep 30, 2024 | 3 Months Ended Sep 30, 2023 | 9 Months Ended Sep 30, 2024 | 9 Months Ended Sep 30, 2023 | | :----------------------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Net Income | $145,328 | $522,948 | $735,207 | $664,229 | | Interest earned on marketable securities | $883,635 | $834,276 | $2,814,405 | $1,632,278 | | Operating and formation costs | $532,847 | $194,068 | $1,493,646 | $432,659 | | Provision for income taxes | $199,929 | $177,308 | $585,552 | $306,725 | | Basic and diluted net income per share, Class A common stock | $0.02 | $0.06 | $0.08 | $0.10 | - Net income for the three months ended September 30, 2024, decreased by 72.2% compared to the same period in 2023, primarily due to higher operating costs and income tax provision[15] - Interest earned on marketable securities in the Trust Account significantly increased by 72.4% for the nine months ended September 30, 2024, compared to 2023[15] Condensed Consolidated Statements of Changes in Stockholders' Deficit Accumulated deficit grew in 2024 and 2023, mainly due to remeasurement to redemption value and excise tax payable, partially offset by net income Total Stockholders' Deficit | Date | Total Stockholders' Deficit | | :-------------------- | :-------------------------- | | September 30, 2024 | $(4,998,453) | | December 31, 2023 | $(1,677,058) | | September 30, 2023 | $(1,569,108) | | December 31, 2022 | $19,813 | - Remeasurement of carrying value to redemption value contributed significantly to the accumulated deficit, totaling $(3,558,853) for the nine months ended September 30, 2024[17] - An excise tax payable of $(497,749) attributable to Class A common stock redemption was recorded in the third quarter of 2024[17] Condensed Consolidated Statements of Cash Flows Net cash used in operating activities increased; investing activities shifted from large outflow to smaller; financing activities provided less cash due to no IPO proceeds Condensed Consolidated Statements of Cash Flows Summary (9 Months Ended Sep 30) | Cash Flow Activity | 2024 | 2023 | | :------------------------------ | :------------ | :------------- | | Net cash used in operating activities | $(839,290) | $(407,328) | | Net cash used in investing activities | $(811,618) | $(70,380,000) | | Net cash provided by financing activities | $1,505,000 | $71,428,450 | | Net Change in Cash and Restricted Cash | $(145,908) | $641,122 | | Cash and Restricted Cash – End of period | $461,908 | $675,515 | - The significant decrease in cash provided by financing activities in 2024 is primarily due to the absence of proceeds from the sale of units and private placement units, which occurred in 2023[24] - Investing activities in 2024 included an extension deposit into the Trust Account of $(1,380,000), contrasting with a large investment of cash into the Trust Account of $(70,380,000) in 2023[24] Notes to Condensed Consolidated Financial Statements Detailed notes explain business operations, accounting policies, IPO, private placement, related party transactions, commitments, stockholders' deficit, fair value, and subsequent events NOTE 1. DESCRIPTION OF ORGANIZATION AND BUSINESS OPERATIONS Trailblazer Merger Corporation I, a blank check company, seeks a Business Combination with Cyabra Strategy Ltd., facing going concern uncertainty and liquidity issues - The Company is a blank check company formed to effect a Business Combination, with Cyabra Strategy Ltd. identified as the target[26][27] - Initial Public Offering (IPO) on March 31, 2023, generated $69,000,000 from 6,900,000 units at $10.00 per unit[29] - A private placement to the Sponsor generated $3,945,000 from 394,500 units at $10.00 per unit, with proceeds placed in the Trust Account[30][32] - The Business Combination deadline has been extended, with the current potential termination date being September 30, 2025, if fully extended[41][44] - Management has determined that mandatory liquidation, if a Business Combination does not occur, and liquidity issues raise substantial doubt about the Company's ability to continue as a going concern[50] - As of September 30, 2024, the Company recorded a 1% excise tax payable of $497,749 based on redeemed shares[55] NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Outlines accounting policies for unaudited condensed consolidated financial statements, covering presentation, consolidation, estimates, cash, securities, stock, taxes, and fair value - The Company is an 'emerging growth company' and has elected not to opt out of the extended transition period for new accounting standards, which may affect comparability with other public companies[59][60] - Cash – restricted cash balance was $353,388 as of September 30, 2024, representing cash withdrawn from the Trust Account for taxes but not yet utilized[65] - Marketable securities in the Trust Account were held in money market funds as of September 30, 2024, and U.S. treasury bills as of December 31, 2023[66] - Class A common stock subject to possible redemption is classified as temporary equity and adjusted to redemption value at each reporting period[68] - The effective tax rate was 57.9% for the three months and 44.3% for the nine months ended September 30, 2024, differing from the 21% statutory rate due to various factors including a valuation allowance on deferred tax assets[71] - Accrued interest and penalties related to underpayment of income taxes amounted to $26,027 as of September 30, 2024[73] NOTE 3. INITIAL PUBLIC OFFERING Completed IPO on March 31, 2023, selling 6,900,000 units at $10.00 each, generating $69,000,000; each unit included one Class A common stock and one right - 6,900,000 Units were sold in the IPO, including the full exercise of the over-allotment option[86] - The purchase price was $10.00 per Unit, generating gross proceeds of $69,000,000[86] - Each Unit consisted of one share of Class A common stock and one right to receive one-tenth (1/10) of a share of Class A common stock[86] NOTE 4. PRIVATE PLACEMENT Sponsor purchased 394,500 Placement Units at $10.00 each for $3,945,000; proceeds added to Trust Account; units expire worthless if no Business Combination - The Sponsor purchased 394,500 Placement Units at $10.00 per unit, for an aggregate of $3,945,000[87] - Proceeds from the Placement Units were added to the Trust Account[87] - Placement Units will expire worthless if the Company does not complete a Business Combination within the Combination Period[87] NOTE 5. RELATED PARTY TRANSACTIONS Details related party transactions, including Founder Shares, stock-based compensation, and an amended unsecured Promissory Note from the Sponsor - The Sponsor purchased 1,940,625 Founder Shares for $25,000, with 215,625 shares later forfeited[88] - Stock-based compensation of $207,087 was recorded for 47,500 Class A common stock interests granted to management and directors[90] Promissory Note - Related Party Outstanding Balance | Date | Outstanding Balance | | :-------------------- | :------------------ | | September 30, 2024 | $1,901,585 | | December 31, 2023 | $321,585 | - The maximum amount available under the Promissory Note was increased to $2,280,000 by September 30, 2024[93] NOTE 6. COMMITMENTS AND CONTINGENCIES Outlines agreements and commitments: registration rights, deferred underwriting fees, advisory agreement, merger agreement with Cyabra Strategy Ltd., support agreements, and PIPE Investment - A deferred underwriting fee of $2,070,000 is payable to the underwriter upon completion of a Business Combination[98] - An advisory agreement with LifeSci Capital LLC entails a payment of 1.5% of the total consideration in equity interests upon consummation of the initial Business Combination[99] - On July 22, 2024, the Company entered into a merger agreement with Cyabra Strategy Ltd., which will result in Cyabra becoming a wholly owned subsidiary of Holdings (to be renamed 'Cyabra, Inc.')[104][105] - Parent Support Agreement and Company Support Agreement are in place, requiring certain stockholders to vote in favor of the merger and restricting transfers[106][107] - A PIPE Investment of no less than $6,000,000 in Company Common Stock will close concurrently with the Merger, with potential reduction if Trust Account funds exceed $3,500,000 after redemptions[112][113] NOTE 7. STOCKHOLDERS' DEFICIT Details authorized and outstanding shares for Preferred Stock, Class A, and Class B Common Stock, and explains Public Rights conversion upon Business Combination - 1,000,000 shares of Preferred Stock are authorized, with none issued and outstanding[114] - 100,000,000 shares of Class A Common Stock are authorized, with 2,119,499 shares issued and outstanding (excluding redeemable shares) as of September 30, 2024[115] - 5,000,000 shares of Class B Common Stock are authorized, with 1 share issued and outstanding as of September 30, 2024[116] - Each Public Right will automatically receive one-tenth (1/10) of one share of common stock upon consummation of a Business Combination[119] NOTE 8. FAIR VALUE MEASUREMENTS Uses ASC 820 for fair value measurements, classifying assets and liabilities into a three-level fair value hierarchy; Trust Account assets are Level 1 as of September 30, 2024 - The Company classifies financial assets and liabilities based on a three-level fair value hierarchy (Level 1, Level 2, Level 3)[122][123] Fair Value of Trust Account Assets (Level 1) | Description | September 30, 2024 | December 31, 2023 | | :---------------------------------------- | :----------------- | :---------------- | | Restricted funds – held in Trust Account | $49,774,936 | $0 | | Marketable securities held in Trust Account | $26,845,950 | $72,994,711 | | Total marketable securities held in Trust Account | $76,620,886 | $72,994,711 | - As of September 30, 2024, assets held in the Trust Account were primarily comprised of money market funds, with $49,774,936 restricted for redeeming stockholders[124] NOTE 9. SUBSEQUENT EVENTS Subsequent events include Sponsor deposits to extend Business Combination Termination Date, fund withdrawals for redemptions and taxes, and a Merger Agreement amendment - The Sponsor deposited $83,287 on October 2, 2024, and again on October 31, 2024, to extend the Business Combination Termination Date to October 30, 2024, and November 30, 2024, respectively[128][129] - On October 9, 2024, $49,774,936 was withdrawn from the Trust Account to pay redeeming stockholders for 4,520,384 shares of Class A common stock[129] - On November 11, 2024, the Merger Agreement was amended to increase the Trailblazer Board to seven directors, increase the 2024 Plan size to 15%, and extend the Outside Date to March 31, 2025[130] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management's discussion of financial condition and operations, highlighting blank check status, Business Combination efforts with Cyabra Strategy Ltd., and associated risks Overview Blank check company seeking Business Combination using IPO/private placement funds, facing potential dilution and significant costs in pursuit of its plans - The Company is a blank check company formed to effect a Business Combination, utilizing proceeds from its IPO and private placement[134] - Issuance of additional shares or significant debt could lead to dilution, subordination of rights, change in control, or adverse market prices[135][137] - The Company expects to continue incurring significant costs in pursuit of its initial Business Combination plans[138] Merger Agreement Entered merger agreement with Cyabra Strategy Ltd. on July 22, 2024, involving a two-step merger where Cyabra becomes a wholly-owned subsidiary of Holdings, renamed 'Cyabra, Inc.' - A merger agreement was entered on July 22, 2024, with Cyabra Strategy Ltd.[139] - The transaction structure involves Trailblazer Merger Corporation I merging into Trailblazer Holdings, Inc., and a merger subsidiary merging into Cyabra Strategy Ltd.[140] - Following the merger, Cyabra will become a wholly owned subsidiary, and the combined entity will be renamed 'Cyabra, Inc.'[140] Results of Operations No operating revenues; activities focus on Business Combination preparation; non-operating income from Trust Account interest, offset by costs and taxes - The Company has not engaged in operations or generated operating revenues, focusing on organizational activities and identifying a target for a Business Combination[141] - Non-operating income is generated from interest on marketable securities held in the Trust Account[141] Net Income Summary | Period | Net Income (2024) | Net Income (2023) | | :----------------------------------- | :---------------- | :---------------- | | Three months ended September 30 | $145,328 | $522,948 | | Nine months ended September 30 | $735,207 | $664,229 | - For the nine months ended September 30, 2024, net income was $735,207, primarily from $2,814,405 in interest income, offset by $1,493,646 in operating costs and $585,552 in income taxes[144] Liquidity and Capital Resources Liquidity from Trust Account proceeds; extended Business Combination deadline via Sponsor deposits; faces going concern doubt if combination not completed by deadline - As of September 30, 2024, the Company had $108,520 in its operating bank account and $353,388 in restricted cash for taxes[147] - The IPO and private placement in March 2023 generated gross proceeds of $69,000,000 and $3,945,000, respectively, with $70,380,000 deposited into a trust account[148][149][150] - The Sponsor deposited $1,380,000 through September 30, 2024, to extend the Business Combination deadline, and further deposits were made in October 2024 to extend to November 30, 2024[153][156][157] - 4,520,384 shares were tendered for redemption, resulting in $49,774,936 being withdrawn from the Trust Account on October 9, 2024[156][157] - Management has determined that there is substantial doubt about the Company's ability to continue as a going concern if a Business Combination is not consummated by November 30, 2024 (or September 30, 2025, if fully extended)[163] Off-Balance Sheet Arrangements No off-balance sheet arrangements as of September 30, 2024 - The Company did not have any off-balance sheet arrangements as of September 30, 2024[164] Contractual Obligations Contractual obligations include Sponsor Promissory Note, registration rights, deferred underwriting fees, advisory agreement, and amended investment management trust agreement - An unsecured Promissory Note to the Sponsor had an outstanding balance of $1,901,585 as of September 30, 2024, with a maximum available amount of $2,280,000[165] - A deferred underwriting commission of $2,070,000 is payable to underwriters upon completion of an initial Business Combination[168] - An advisory agreement with LifeSci Capital LLC stipulates a payment of 1.5% of the total consideration in equity interests upon the consummation of the initial Business Combination[170] - The investment management trust agreement was amended to allow monthly extensions of the Business Combination deadline until September 30, 2025, and removed the provision for withdrawing $100,000 for dissolution expenses[176] Critical Accounting Estimates Critical accounting estimates involve fair value of stock-based compensation and derivative financial instruments; company is an 'emerging growth company' under JOBS Act - Critical accounting estimates include the fair value of stock-based compensation and derivative financial instruments[177] - Stock-based compensation is valued using a Black-Scholes option pricing model at the grant date[178] - Derivative financial instruments (Rights) are equity-classified and valued based on market comparables[181] - As an 'emerging growth company' under the JOBS Act, the Company can delay the adoption of new or revised accounting standards, potentially affecting comparability[184] Item 3. Quantitative and Qualitative Disclosures Regarding Market Risk As a smaller reporting company, no quantitative and qualitative market risk disclosures are required - The Company is not required to make disclosures under this Item as it qualifies as a smaller reporting company[187] Item 4. Controls and Procedures Management evaluated disclosure controls and procedures as effective; no material changes in internal control over financial reporting during the quarter - Disclosure controls and procedures were evaluated as effective at a reasonable assurance level as of September 30, 2024[189] - No material changes in internal control over financial reporting occurred during the most recent fiscal quarter[190] PART II - OTHER INFORMATION Item 1. Legal Proceedings No legal proceedings reported - There are no legal proceedings to report[193] Item 1A. Risk Factors Refers to IPO prospectus for risk factors; no material changes reported - Risk factors are described in the final prospectus for the Initial Public Offering[193] - No material changes to the disclosed risk factors have occurred as of the date of this report[193] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds Refers to Part I, Item 2 for use of IPO and private placement proceeds; no material change in planned use of proceeds - Information on unregistered sales of equity securities and use of proceeds is detailed in Part I, Item 2 of this Quarterly Report[194] - There has been no material change in the planned use of proceeds from the Initial Public Offering and private placement[194] Item 3. Defaults Upon Senior Securities No defaults upon senior securities reported - There are no defaults upon senior securities to report[195] Item 4. Mine Safety Disclosures No mine safety disclosures reported - There are no mine safety disclosures to report[195] Item 5. Other Information No other information reported - There is no other information to report[195] Item 6. Exhibits Lists exhibits filed with the Quarterly Report on Form 10-Q, including officer certifications and Inline XBRL documents - Exhibits include certifications from the Principal Executive Officer (31.1, 32.1) and Principal Financial Officer (31.2, 32.2)[197] - Inline XBRL Instance Document and Taxonomy Extension Documents are filed as exhibits[197] PART III - SIGNATURES Signatures Report signed by CFO Scott Burell and CEO Arie Rabinowitz on November 19, 2024 - The report was signed by Scott Burell, Chief Financial Officer, and Arie Rabinowitz, Chief Executive Officer[200][202] - The signing date for the report was November 19, 2024[200][202]