Trailblazer Merger I(TBMC) - 2024 Q1 - Quarterly Report

PART I. FINANCIAL INFORMATION Item 1. Interim Financial Statements This section presents the unaudited condensed financial statements for Trailblazer Merger Corporation I, including the balance sheets, statements of operations, changes in stockholders' deficit, and cash flows, along with detailed notes explaining the company's organization, significant accounting policies, IPO, private placement, related party transactions, commitments, stockholders' deficit, fair value measurements, and subsequent events Condensed Balance Sheets | Metric | March 31, 2024 (Unaudited) | December 31, 2023 | | :--------------------------------------- | :-------------------------- | :------------------ | | Total Assets | $75,169,828 | $73,770,297 | | Cash and marketable securities in Trust Account | $74,481,555 | $72,994,863 | | Total Liabilities | $4,249,568 | $3,222,405 | | Total Stockholders' Deficit | $(2,705,389) | $(1,677,058) | Condensed Statements of Operations | Metric | For the Three Months Ended March 31, 2024 | For the Three Months Ended March 31, 2023 | | :--------------------------------------- | :---------------------------------------- | :---------------------------------------- | | Operating and formation costs | $388,331 | $53,004 | | Interest earned on marketable securities held in Trust Account | $953,592 | $0 | | Net income (loss) | $372,368 | $(249,591) | | Basic and diluted net income (loss) per share, Class A common stock | $0.04 | $(0.14) | Condensed Statements of Changes in Stockholders' Deficit | Metric | December 31, 2023 | March 31, 2024 | | :--------------------------------------- | :------------------ | :------------- | | Balances — Total Stockholders' Deficit | $(1,677,058) | $(2,705,389) | | Remeasurement of carrying value to redemption value | — | $(1,400,699) | | Net income | — | $372,368 | Condensed Statements of Cash Flows | Cash Flow Activity | Three Months Ended March 31, 2024 | Three Months Ended March 31, 2023 | | :--------------------------------------- | :-------------------------------- | :-------------------------------- | | Net cash used in operating activities | $(182,106) | $(35,439) | | Net cash used in investing activities | $(537,073) | $(70,380,000) | | Net cash provided by financing activities | $690,000 | $71,431,950 | | Net Change in Cash | $(29,179) | $1,016,511 | | Cash – End of period | $578,637 | $1,050,904 | Notes to Condensed Financial Statements (Unaudited) NOTE 1. DESCRIPTION OF ORGANIZATION AND BUSINESS OPERATIONS Trailblazer Merger Corporation I is a blank check company formed to effectuate a business combination, primarily targeting the technology industry, having completed its IPO and private placement in March 2023, placing proceeds into a Trust Account for future acquisition, and facing going concern uncertainties due to liquidity issues and an extended deadline to June 30, 2024 - The company is a blank check company formed on November 12, 2021, for the purpose of effectuating a business combination, with an intent to focus on the technology industry[22][23] - The Initial Public Offering (IPO) was consummated on March 31, 2023, generating gross proceeds of $69,000,000 from 6,900,000 units[25] - Simultaneously, a private placement of 394,500 units generated $3,945,000, with $70,380,000 from both offerings placed in a Trust Account[26][28] - The deadline to complete a Business Combination was extended from March 31, 2024, to June 30, 2024, by a $690,000 deposit from the Sponsor[36][37] - Management has determined that mandatory liquidation, if a Business Combination is not consummated by June 30, 2024 (or September 30, 2024, if extended), and current liquidity issues raise substantial doubt about the company's ability to continue as a going concern[42] - Redemptions or repurchases after December 31, 2022, may be subject to a new U.S. federal 1% excise tax under the Inflation Reduction Act of 2022, potentially reducing cash available for a Business Combination[43][45] NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES This note details the company's accounting policies, including its basis of presentation under GAAP for interim financial information, its status as an emerging growth company, and specific policies for cash, marketable securities in the Trust Account, offering costs, Class A redeemable stock classification, income taxes, net income per share, credit risk, fair value, derivative financial instruments, and stock-based compensation - The unaudited condensed financial statements are prepared in accordance with GAAP for interim financial information and SEC rules[46] - The company is an "emerging growth company" and has elected not to opt out of the extended transition period for complying with new or revised financial accounting standards[48][49] - Marketable securities held in the Trust Account, primarily U.S. Treasury Bills, are accounted for as trading securities at fair value[53] - Class A common stock subject to possible redemption is classified as temporary equity at redemption value, with changes recognized immediately[55] - As of March 31, 2024, the company reported a net deferred tax liability of $68,348, with a fully offset deferred tax asset by a valuation allowance[57] - Stock-based compensation is recognized at fair value on the grant date for equity-classified awards, amortized over the vesting period[67] NOTE 3. INITIAL PUBLIC OFFERING The company completed its Initial Public Offering on March 31, 2023, selling 6,900,000 units at $10.00 per unit, each comprising one Class A common stock and one right to receive one-tenth of a Class A common stock - The Company sold 6,900,000 Units in its Initial Public Offering on March 31, 2023, including the full exercise of the over-allotment option[71] - Each Unit was sold at $10.00 and consisted of one share of Class A common stock and one right to receive one-tenth (1/10) of a Class A common stock[71] NOTE 4. PRIVATE PLACEMENT Concurrently with the IPO, the Sponsor purchased 394,500 Placement Units at $10.00 each in a private placement, with a portion of the proceeds added to the Trust Account, and these units will expire worthless if a business combination is not completed within the specified period - The Sponsor purchased 394,500 Placement Units at $10.00 per unit, generating gross proceeds of $3,945,000[72] - A portion of these proceeds was added to the Trust Account, ensuring it holds $10.20 per unit sold[72] - The Placement Units will expire worthless if the Company does not complete a Business Combination within the Combination Period[72] NOTE 5. RELATED PARTY TRANSACTIONS This note details related party transactions, including the Sponsor's purchase and forfeiture of Founder Shares, stock-based compensation granted to officers and directors, and an unsecured promissory note from the Sponsor, which was amended to increase the maximum borrowing amount and had an outstanding balance of $1,011,585 as of March 31, 2024 - The Sponsor initially purchased 1,940,625 Founder Shares, which were later adjusted to 1,724,999 Class A common stock and 1 Class B common stock after forfeiture[73] - Stock-based compensation of $207,087 was recorded for 47,500 Class A common stock interests granted to management and directors[74] - An unsecured, non-interest bearing promissory note from the Sponsor was amended to increase the maximum amount to $1,090,000, with $1,011,585 outstanding as of March 31, 2024[78] - No amount was outstanding under Working Capital Loans from related parties as of March 31, 2024, though up to $1,500,000 of such loans could be convertible into units[79] NOTE 6. COMMITMENTS AND CONTINGENCIES This section outlines the company's commitments and contingencies, including registration rights for certain securities, a deferred underwriting fee of $2,070,000 payable upon a business combination, and an advisory agreement with LifeSci Capital LLC for 1.5% of total consideration in equity interests upon consummation of an initial business combination, plus expense reimbursements - Holders of Founder Shares, Placement Units, and Working Capital Loan units are entitled to registration rights[80] - Underwriters are entitled to a deferred fee of $2,070,000, payable from the Trust Account solely upon completion of a Business Combination[82] - An advisory agreement with LifeSci Capital LLC mandates a payment of 1.5% of the total consideration of the initial business combination in equity interests, plus expense reimbursements up to $50,000 (and excess upon consummation)[83][86] NOTE 7. STOCKHOLDERS' DEFICIT This note details the company's capital structure, including authorized and outstanding shares of Preferred Stock, Class A Common Stock, and Class B Common Stock, along with their respective voting rights, and explains the conversion mechanism for Public Rights into Class A common stock upon a business combination - The company is authorized to issue 1,000,000 shares of Preferred Stock, but none are issued or outstanding[87] - As of March 31, 2024, there were 2,119,499 shares of Class A common stock issued and outstanding (excluding 6,900,000 shares subject to possible redemption)[88] - One share of Class B common stock is issued and outstanding, granting its holder the right to elect all directors prior to an initial business combination[89][90] - Each Public Right will automatically convert into one-tenth (1/10) of one share of common stock upon consummation of a Business Combination[91] NOTE 8. FAIR VALUE MEASUREMENTS The company adheres to ASC 820 for fair value measurements, classifying assets and liabilities based on observable inputs, and as of March 31, 2024, assets in the Trust Account, primarily U.S. Treasury securities, are classified as Level 1 fair value assets - The company follows ASC 820 for fair value measurements, maximizing the use of observable inputs[93][94] - As of March 31, 2024, assets in the Trust Account included $691,158 in cash and $73,790,396 in U.S. Treasury securities[95] | Description | Level | March 31, 2024 | December 31, 2023 | | :--------------------------------------- | :---- | :------------- | :---------------- | | Marketable securities held in Trust Account | 1 | $73,790,396 | $72,994,711 | NOTE 9. SUBSEQUENT EVENTS The company evaluated subsequent events and transactions through the financial statement issuance date and found no events requiring adjustment or disclosure - No subsequent events requiring adjustment or disclosure were identified after the balance sheet date through the issuance date of the unaudited condensed financial statements[98] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations This section provides management's perspective on the company's financial condition and operational results, covering its overview as a blank check company, results of operations (highlighting a shift to net income due to interest earnings), liquidity and capital resources (including the Trust Account and going concern risk), contractual obligations, critical accounting estimates, and the impact of recent accounting standards and the JOBS Act Overview Trailblazer Merger Corporation I is a blank check company seeking a business combination, primarily in the technology sector, outlining potential impacts of issuing additional shares or incurring significant debt during an acquisition, such as dilution and financial constraints, and expects to incur significant costs in its pursuit of a business combination - The company is a blank check company formed to effectuate a business combination, intending to focus on the technology industry[102] - Issuance of additional shares in connection with an initial business combination may significantly dilute equity interests and could cause a change in control[103] - Incurring significant debt could lead to default, acceleration of obligations, and limitations on financial flexibility[103][104] - The company expects to continue incurring significant costs in pursuit of its initial business combination plans[105] Results of Operations The company has not generated operating revenues, focusing on organizational activities and identifying a business combination target, and generates non-operating income from interest on marketable securities in the trust account, reporting a net income of $372,368 for the three months ended March 31, 2024, a significant improvement from a net loss of $249,591 in the prior year period, primarily driven by interest income - The company has not engaged in operations or generated revenues, with activities focused on formation and identifying a target company[106] - Non-operating income is generated from interest on marketable securities held in the trust account[106] | Metric | Three Months Ended March 31, 2024 | Three Months Ended March 31, 2023 | | :--------------------------------------- | :-------------------------------- | :-------------------------------- | | Net income (loss) | $372,368 | $(249,591) | | Interest earned on Trust Account | $953,592 | $0 | | Operating costs | $388,331 | $53,004 | Liquidity and Capital Resources The company's liquidity is primarily derived from its operating bank account and the Trust Account, which holds $70,380,000 from its IPO and private placement, with the deadline for a business combination extended to June 30, 2024, by a $690,000 payment from the Sponsor, and management has identified substantial doubt about the company's ability to continue as a going concern due to insufficient liquidity and the uncertainty of completing a business combination by the mandatory liquidation date - As of March 31, 2024, the company had $578,637 in its operating bank account for working capital needs[109] - A total of $70,380,000 from the IPO and private placement was deposited into a trust account, generally unavailable until a business combination or liquidation[112] - The deadline to complete a business combination was extended from March 31, 2024, to June 30, 2024, by a $690,000 deposit from the Sponsor, loaned via an unsecured promissory note[115][117][118] - Management has determined that the company currently lacks the liquidity to sustain operations for a reasonable period and faces substantial doubt about its ability to continue as a going concern due to the mandatory liquidation date if a business combination is not completed[122] Off-Balance Sheet Arrangements As of March 31, 2024, Trailblazer Merger Corporation I had no off-balance sheet arrangements - The company did not have any off-balance sheet arrangements as of March 31, 2024[123] Contractual Obligations This section details the company's contractual obligations, including an unsecured promissory note from the Sponsor with an outstanding balance of $1,011,585 as of March 31, 2024, registration rights for certain securities, a deferred underwriting fee of $2,070,000 payable upon a business combination, and an advisory agreement with LifeSci Capital LLC for 1.5% of total consideration in equity interests upon consummation of an initial business combination, plus expense reimbursements - An unsecured, non-interest bearing promissory note from the Sponsor had an outstanding balance of $1,011,585 as of March 31, 2024, payable by September 30, 2024, or upon a business combination[124] - The company has registration rights agreements for Founder Shares, Placement Units, and any units from Working Capital Loans[125] - A deferred underwriting fee of $2,070,000 is payable to underwriters from the Trust Account upon completion of an initial business combination[127] - An advisory agreement with LifeSci Capital LLC requires payment of 1.5% of the total consideration of the initial business combination in equity interests, plus expense reimbursements[128][132] Critical Accounting Estimates This section highlights critical accounting estimates that require significant management judgment, specifically stock-based compensation and derivative financial instruments, where stock-based compensation is valued using a Black-Scholes option pricing model, and Rights are valued based on market comparables - Stock-based compensation is valued at fair value on the grant date using a Black-Scholes option pricing model; $207,087 was recorded for 47,500 Class A common stock interests[135] - Derivative financial instruments, specifically Rights, are equity-classified and valued based on market comparables, using a median market price of 0.108[136][137] Recent Accounting Standards The company discusses ASU 2023-09 (Income Taxes), effective for fiscal years beginning after December 15, 2024, which is not expected to have a material impact, and management does not believe any other recently issued, but not yet effective, accounting standards would materially affect its financial statements - ASU 2023-09, "Income Taxes (Topic 740): Improvements to Income Tax Disclosures," is effective for fiscal years beginning after December 15, 2024, and is not expected to have a material impact[138] - Management does not believe any other recently issued, but not yet effective, accounting standards would have a material effect on the company's financial statements[139] JOBS Act As an "emerging growth company" under the JOBS Act, the company can delay adopting new accounting pronouncements to align with private company effective dates and may utilize reduced reporting requirements, such as exemptions from auditor's attestation reports on internal controls and certain executive compensation disclosures - The company qualifies as an "emerging growth company" under the JOBS Act, allowing it to comply with new or revised accounting pronouncements based on private company effective dates[140] - The company may rely on reduced reporting requirements, including exemptions from auditor's attestation reports on internal controls and certain executive compensation disclosures[141] Item 3. Quantitative and Qualitative Disclosures Regarding Market Risk As a smaller reporting company, Trailblazer Merger Corporation I is exempt from providing quantitative and qualitative disclosures regarding market risk - As a smaller reporting company, the company is not required to make disclosures under this item[142] Item 4. Controls and Procedures Management, including the principal executive and financial officers, evaluated the effectiveness of disclosure controls and procedures as of March 31, 2024, concluding they were effective at a reasonable assurance level, and no material changes in internal control over financial reporting occurred during the quarter - Management concluded that disclosure controls and procedures were effective at a reasonable assurance level as of March 31, 2024[144] - There were no material changes in internal control over financial reporting during the most recent fiscal quarter[145] PART II. OTHER INFORMATION Item 1. Legal Proceedings Trailblazer Merger Corporation I reported no legal proceedings - The company has no legal proceedings[147] Item 1A. Risk Factors There have been no material changes to the risk factors previously disclosed in the company's final prospectus for its Initial Public Offering - No material changes to the risk factors disclosed in the final prospectus for the Initial Public Offering as of the date of this report[147] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds The company confirmed that there has been no material change in the planned use of proceeds from its Initial Public Offering and private placement - There has been no material change in the planned use of proceeds from the Initial Public Offering and private placement[148] Item 3. Defaults Upon Senior Securities Trailblazer Merger Corporation I reported no defaults upon senior securities - The company has no defaults upon senior securities[149] Item 4. Mine Safety Disclosures Trailblazer Merger Corporation I reported no mine safety disclosures - The company has no mine safety disclosures[149] Item 5. Other Information Trailblazer Merger Corporation I reported no other information - The company has no other information to report[149] Item 6. Exhibits This section lists the exhibits filed as part of the Quarterly Report on Form 10-Q, including certifications from principal officers and various Inline XBRL taxonomy documents - Exhibits filed include certifications of Principal Executive Officer and Principal Financial Officer, along with Inline XBRL Instance, Schema, Calculation, Definition, Label, and Presentation Linkbase Documents[151] PART III. SIGNATURES Signatures The report is signed by Arie Rabinowitz, Chief Executive Officer, and Scott Burell, Chief Financial Officer, on behalf of Trailblazer Merger Corporation I, dated May 15, 2024 - The report was signed by Arie Rabinowitz, Chief Executive Officer, and Scott Burell, Chief Financial Officer[156] - The signing date for the report was May 15, 2024[156]