CERO THERAPEUTICS HOLDINGS, INC. References in this report (this "Quarterly Report") to "we," "us" or the
"Company" refer to
Special Note Regarding Forward-Looking Statements
This Quarterly Report includes "forward-looking statements" within the meaning
of Section 27A of the Securities Act and Section 21E of the Exchange Act that
are not historical facts and involve risks and uncertainties that could cause
actual results to differ materially from those expected and projected. All
statements, other than statements of historical fact included in this Quarterly
Report including, without limitation, statements in this "Management's
Discussion and Analysis of Financial Condition and Results of Operations"
regarding the Company's financial position, business strategy and the plans and
objectives of management for future operations, are forward-looking statements.
Words such as "expect," "believe," "anticipate," "intend," "estimate," "seek"
and variations and similar words and expressions are intended to identify such
forward-looking statements. Such forward-looking statements relate to future
events or future performance, but reflect management's current beliefs, based on
information currently available. A number of factors could cause actual events,
performance or results to differ materially from the events, performance and
results discussed in the forward-looking statements. For information identifying
important factors that could cause actual results to differ materially from
those anticipated in the forward-looking statements, please refer to the Risk
Factors section of the Company's Annual Report on Form 10-K filed with the
Overview
We expect to continue to incur significant costs in the pursuit of our acquisition plans. We cannot assure you that our plans to complete a Business Combination will be successful.
Recent Developments
Business Combination Agreement
On
Intrinsic is a preclinical-stage therapeutics company leveraging synthetic biology-manufactured human milk oligosaccharides as new medicines to treat large patient populations underserved by current treatment options.
The Company will issue to the equity owners of Intrinsic as consideration in the Merger an aggregate of 13.6 million shares of Class A common stock, including the number of shares of Class A common stock that will be issuable upon exercise or conversion of certain warrants, options and notes issuable in the Merger in exchange for outstanding warrants, options and notes with respect to shares of Intrinsic.
The parties to the Business Combination Agreement have agreed to customary representations and warranties for transactions of this type. In addition, the parties to the Business Combination Agreement agreed to be bound by certain customary covenants for transactions of this type, including, among others, covenants with respect to the conduct of Intrinsic, the Company and their respective subsidiaries during the period between execution of the Business Combination Agreement and Closing. The representations, warranties, agreements and covenants of the parties set forth in the Business Combination Agreement will terminate at Closing, except for those representations, warranties, covenants and agreements that, by their terms, contemplate performance after Closing. The Closing is also subject to the satisfaction or waiver of certain conditions set forth in the Business Combination Agreement. Each of the parties to the Business Combination Agreement has agreed to use its reasonable best efforts to take or cause to be taken all actions and things necessary to consummate and expeditiously implement the Merger.
A copy of the Business Combination Agreement is incorporated by reference as
Exhibit 2.1 to this Quarterly Report and is incorporated herein by reference,
and the foregoing description of the Business Combination Agreement and the
Merger does not purport to be complete and is qualified in its entirety by
reference thereto. The Business Combination Agreement contains representations,
warranties and covenants that the respective parties made to each other as of
the date of the Business Combination Agreement or other specific dates. The
assertions embodied in those representations, warranties and covenants were made
for purposes of the contract among the respective parties and are subject to
important qualifications and limitations agreed to by the parties in connection
with negotiating the Business Combination Agreement. The Business Combination
Agreement is being filed to provide investors with information regarding its
terms. It is not intended to provide any other factual information about the
parties to the Business Combination Agreement. In particular, the
representations, warranties, covenants and agreements contained in the Business
Combination Agreement, which were made only for purposes of the Business
Combination Agreement and as of specific dates, were solely for the benefit of
the parties to the Business Combination Agreement, may be subject to limitations
agreed upon by the contracting parties (including being qualified by
confidential disclosures made for the purposes of allocating contractual risk
between the parties to the Business Combination Agreement instead of
establishing these matters as facts) and may be subject to standards of
materiality applicable to the contracting parties that differ from those
applicable to investors, security holders and reports and documents filed with
the
The Business Combination Agreement contemplates the execution of various additional agreements and instruments, including certain support agreements entered into concurrently with the execution of the Business Combination Agreement.
Extension Proxy Statement
On
Results of Operations
As of
For the three and nine months ended
Liquidity and Going Concern
The registration statement for the Company's IPO was declared effective on
Simultaneously with the closing of the IPO, the Company consummated the sale of
845,000 units ("Private Placement Units") at a price of
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Simultaneously with the closing of the IPO, the Company consummated the sale of
2,000,000 additional Units upon receiving notice of the underwriter's election
to partially exercise its over-allotment option ("Over-allotment Units"),
generating additional gross proceeds of
Following the closing of the IPO,
For the nine months ended
We intend to use substantially all of the funds held in the Trust Account, including any amounts representing interest earned on the Trust Account (less taxes payable), to complete our Business Combination. To the extent that our capital stock or debt is used, in whole or in part, as consideration to complete our Business Combination, the remaining proceeds held in the Trust Account will be used as working capital to finance the operations of the target business or businesses, make other acquisitions and pursue our growth strategies.
As of
The Company currently projects that it will not have sufficient funds to cover its expenses over a one-year period from the date the financial statements are available to be issued. If the Company is unable to raise additional capital, it may be required to take additional measures to conserve liquidity, which could include, but not necessarily be limited to, curtailing operations, suspending the pursuit of a potential transaction, and reducing overhead expenses. The Company cannot provide any assurance that new financing will be available to it on commercially acceptable terms, if at all. These conditions raise substantial doubt about the Company's ability to continue as a going concern for a reasonable period of time, which is considered to be one year from the issuance date of the financial statements.
Off-Balance Sheet Arrangements
We have no obligations, assets or liabilities, which would be considered
off-balance sheet arrangements as of
Contractual obligations
We do not have any long-term debt, capital lease obligations, operating lease
obligations or long-term liabilities, other than an agreement to pay the Sponsor
or an affiliate of the Sponsor a monthly fee of
The underwriter is entitled to deferred underwriting commissions of
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The Company entered into an agreement, commencing on the date of its listing on
NASDAQ, to pay the spouse of our Chief Executive Officer a monthly consulting
fee of
Critical Accounting Policies
The preparation of unaudited condensed financial statements and related
disclosures in conformity with accounting principles generally accepted in
Accounting for Warrants
The Company accounts for warrants as either equity-classified or liability-classified instruments based on an assessment of the instruments' specific terms and applicable authoritative guidance in ASC 480 and ASC 815, Derivatives and Hedging ("ASC 815"). The assessment considers whether the instruments are free standing financial instruments pursuant to ASC 480, meet the definition of a liability pursuant to ASC 480, and whether the instruments meet all of the requirements for equity classification under ASC 815, including whether the instruments are indexed to the Company's own common shares and whether the instrument holders could potentially require "net cash settlement" in a circumstance outside of the Company's control, among other conditions for equity classification. This assessment, which requires the use of professional judgment, was conducted at the time of warrant issuance and as of each subsequent period end date while the instruments are outstanding. Management has concluded that the Public Warrants and Private Placement Warrants issued pursuant to the warrant agreement qualify for equity accounting treatment.
Common Stock Subject to Possible Redemption
We account for our common stock subject to possible redemption in accordance with the guidance in ASC Topic 480 "Distinguishing Liabilities from Equity." Common stock subject to mandatory redemption is classified as a liability instrument and is measured at fair value. Conditionally redeemable common stock (including common stock that features redemption rights that are either within the control of the holder or subject to redemption upon the occurrence of uncertain events not solely within our control) is classified as temporary equity. At all other times, common stock is classified as stockholders' equity. Our common stock features certain redemption rights that are considered to be outside of our control and subject to occurrence of uncertain future events. Accordingly, common stock subject to possible redemption is presented as temporary equity, outside of the stockholders' equity section of our condensed balance sheets. The Company recognizes changes in redemption value immediately as they occur and adjusts the carrying value of redeemable common stock to equal the redemption value at the end of each reporting period. Increases or decreases in the carrying amount of redeemable common stock are affected by charges against additional paid in capital and accumulated deficit.
Net Income (Loss) per Common Share
Net income (loss) per share is computed by dividing net income (loss) by the
weighted average number of shares of common stock outstanding during the period,
excluding shares of common stock subject to forfeiture by the Sponsor. At
Recent Accounting Standards
Management does not believe that any recently issued, but not yet effective, accounting standards, if currently adopted, would have a material effect on our condensed financial statements.
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