UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
10-Q
(Mark
One)
☒
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For
the quarterly period ended September 30, 2023
☐
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For
the transition period from to
Commission
File No. 001-40877
PHOENIX
BIOTECH ACQUISITION CORP.
(Exact
name of registrant as specified in its charter)
Delaware | | 87-1088814 |
(State or other jurisdiction of incorporation or organization) | | (I.R.S. Employer Identification No.) |
2201
Broadway, Suite 705, Oakland, CA 94612
(Address
of Principal Executive Offices, including zip code)
(215) 731-9450
(Registrant’s
telephone number, including area code)
N/A
(Former
name, former address and former fiscal year, if changed since last report)
Securities
registered pursuant to Section 12(b) of the Act:
Title of each class | | Trading Symbol(s) | | Name
of each exchange
on which registered |
Units, each consisting of one share of Class A common stock and one-half of one redeemable warrant | | PBAXU | | NASDAQ Global Market |
Class A common stock, par value $0.0001 per share | | PBAX | | NASDAQ Global Market |
Warrants, each whole warrant exercisable for one share of Class A common stock | | PBAXW | | NASDAQ Global Market |
Indicate
by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate
by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405
of Regulation S-T(§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant
was required to submit such files). Yes ☒ No ☐
Indicate
by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting
company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,”
“smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer | ☐ | Accelerated filer | ☐ |
Non-accelerated filer | ☒ | Smaller reporting company | ☒ |
| | Emerging growth company | ☒ |
If
an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying
with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate
by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act): Yes ☒ No ☐
As
of November 9, 2023 there were 6,246,207 shares of Class A common stock, par value $0.0001 per share, and 0 shares of Class B
common stock, $0.0001 par value per share, issued and outstanding.
PHOENIX
BIOTECH ACQUISITION CORP.
FORM
10-Q FOR THE QUARTER ENDED SEPTEMBER 30, 2023
TABLE
OF CONTENTS
PART
1 - FINANCIAL INFORMATION
Item 1.
Financial Statements
PHOENIX
BIOTECH ACQUISITION CORP.
CONDENSED
BALANCE SHEETS
| |
September 30, 2023 (Unaudited) | | |
December 31, 2022 | |
| |
| | |
| |
ASSETS | |
| | |
| |
| |
| | |
| |
CURRENT ASSETS | |
| | |
| |
Cash | |
$ | 119,014 | | |
$ | 475,870 | |
Prepaid expenses and other assets | |
| 21,815 | | |
| 225,188 | |
Money market funds held in Trust Account | |
| 8,329,792 | | |
| — | |
Restricted cash held in Trust Account | |
| — | | |
| 41,665,974 | |
TOTAL ASSETS | |
$ | 8,470,621 | | |
$ | 42,367,032 | |
| |
| | | |
| | |
LIABILITIES, REDEEMABLE COMMON STOCK, AND STOCKHOLDERS’ DEFICIT | |
| | | |
| | |
CURRENT LIABILITIES | |
| | | |
| | |
Accounts payable and accrued expenses | |
$ | 3,311,098 | | |
$ | 1,653,120 | |
Income tax payable | |
| 28,769 | | |
| 599,159 | |
Shareholder redemption liability | |
| — | | |
| 27,842,747 | |
Working capital loan – related party | |
| 1,395,000 | | |
| 650,000 | |
Franchise tax payable | |
| 6,100 | | |
| — | |
Excise tax payable | |
| 56,389 | | |
| — | |
Due to Affiliate | |
| 3,315 | | |
| 3,315 | |
Total current liabilities | |
| 4,800,671 | | |
| 30,748,341 | |
LONG TERM LIABILITIES | |
| | | |
| | |
Deferred underwriting fee payable | |
| 9,150,000 | | |
| 9,150,000 | |
Total liabilities | |
| 13,950,671 | | |
| 39,898,341 | |
| |
| | | |
| | |
COMMITMENTS AND CONTINGENCIES | |
| | | |
| | |
REDEEMABLE COMMON STOCK | |
| | | |
| | |
Class A Common stock subject to possible redemption, $0.0001 par value, 764,957 and 1,288,298 shares at redemption value of $10.83 and $10.45 per share as of September 30, 2023 and December 31, 2022, respectively | |
| 8,287,049 | | |
| 13,468,845 | |
STOCKHOLDERS’ DEFICIT | |
| | | |
| | |
Preferred stock, $0.0001 par value; 1,000,000 shares authorized; none issued or outstanding | |
| — | | |
| — | |
Class A common stock; $0.0001 par value; 60,000,000 shares authorized; 5,481,250 and 885,000 shares issued and outstanding (excluding 764,957 and 1,288,298 shares subject to possible redemption) as of September 30, 2023 and December 31, 2022, respectively | |
| 547 | | |
| 88 | |
Class B common stock; $0.0001 par value; 10,000,000 shares authorized; 0 and 4,596,250 shares issued and outstanding as of September 30, 2023 and December 31, 2022, respectively | |
| — | | |
| 459 | |
Additional paid-in capital | |
| — | | |
| — | |
Accumulated deficit | |
| (13,767,646 | ) | |
| (11,000,701 | ) |
Total stockholders’ deficit | |
| (13,767,099 | ) | |
| (11,000,154 | ) |
TOTAL LIABILITIES, REDEEMABLE COMMON STOCK, AND STOCKHOLDERS’ DEFICIT | |
$ | 8,470,621 | | |
$ | 42,367,032 | |
The
accompanying notes are an integral part of these unaudited condensed financial statements.
PHOENIX
BIOTECH ACQUISITION CORP.
CONDENSED
STATEMENTS OF OPERATIONS (UNAUDITED)
| |
For the Three Months Ended September 30, | | |
For the Nine Months Ended September 30, | |
| |
2023 | | |
2022 | | |
2023 | | |
2022 | |
OPERATING EXPENSES | |
| | |
| | |
| | |
| |
General and administrative | |
$ | 430,901 | | |
$ | 786,685 | | |
$ | 2,518,347 | | |
$ | 1,468,042 | |
Franchise tax | |
| (1,100 | ) | |
| 50,000 | | |
| 45,300 | | |
| 150,000 | |
Loss from operations | |
| (429,801 | ) | |
| (836,685 | ) | |
| (2,563,647 | ) | |
| (1,618,042 | ) |
| |
| | | |
| | | |
| | | |
| | |
Other income: | |
| | | |
| | | |
| | | |
| | |
Interest income earned on marketable securities held in Trust Account | |
| 121,524 | | |
| 320,475 | | |
| 380,583 | | |
| 357,583 | |
Unrealized gain on marketable securities held in Trust Account | |
| — | | |
| 661,176 | | |
| — | | |
| 915,859 | |
Total other income | |
| 121,524 | | |
| 981,651 | | |
| 380,583 | | |
| 1,273,442 | |
| |
| | | |
| | | |
| | | |
| | |
(Loss) income before provision for income taxes | |
| (308,277 | ) | |
| 144,966 | | |
| (2,183,064 | ) | |
| (344,600 | ) |
Provision for income taxes | |
| (25,751 | ) | |
| (60,461 | ) | |
| (70,409 | ) | |
| (60,461 | ) |
Net (loss) income | |
$ | (334,028 | ) | |
$ | 84,505 | | |
$ | (2,253,473 | ) | |
$ | (405,061 | ) |
| |
| | | |
| | | |
| | | |
| | |
Weighted average shares outstanding of Class A common stock | |
| 6,281,964 | | |
| 18,385,000 | | |
| 3,547,888 | | |
| 18,385,000 | |
Basic and diluted net (loss) income per share, Class A common stock | |
$ | (0.05 | ) | |
$ | 0.00 | | |
$ | (0.34 | ) | |
$ | (0.02 | ) |
| |
| | | |
| | | |
| | | |
| | |
Weighted average shares outstanding of Class B common stock | |
| 50,508 | | |
| 4,596,250 | | |
| 3,075,432 | | |
| 4,596,250 | |
Basic and diluted net (loss) income per share, Class B common stock | |
$ | (0.05 | ) | |
$ | 0.00 | | |
$ | (0.34 | ) | |
$ | (0.02 | ) |
The
accompanying notes are an integral part of the unaudited condensed financial statements.
PHOENIX
BIOTECH ACQUISITION CORP.
CONDENSED
STATEMENTS OF CHANGES IN STOCKHOLDERS’ DEFICIT
(UNAUDITED)
FOR
THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2023
| |
Common stock | | |
Additional | | |
| | |
Total | |
| |
Class A | | |
Class B | | |
paid-in | | |
Accumulated | | |
Stockholders’ | |
| |
Shares | | |
Amount | | |
Shares | | |
Amount | | |
capital | | |
deficit | | |
Deficit | |
Balance, December 31, 2022 | |
| 885,000 | | |
$ | 88 | | |
| 4,596,250 | | |
$ | 459 | | |
$ | — | | |
$ | (11,000,701 | ) | |
$ | (11,000,154 | ) |
Accretion for Class A Common Stock Subject to Redemption | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| (96,794 | ) | |
| (96,794 | ) |
Net loss | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| (481,712 | ) | |
| (481,712 | ) |
Balance, March 31, 2023 | |
| 885,000 | | |
| 88 | | |
| 4,596,250 | | |
| 459 | | |
| — | | |
| (11,579,207 | ) | |
| (11,578,660 | ) |
Accretion for Class A Common Stock Subject to Redemption | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| (275,001 | ) | |
| (275,001 | ) |
Net loss | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| (1,437,733 | ) | |
| (1,437,733 | ) |
Balance, June 30, 2023 | |
| 885,000 | | |
| 88 | | |
| 4,596,250 | | |
| 459 | | |
| — | | |
| (13,291,941 | ) | |
| (13,291,394 | ) |
Accretion for Class A Common Stock Subject to Redemption | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| (85,288 | ) | |
| (85,288 | ) |
Excise tax liability accrued for Class A common stock
redemptions | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| (56,389 | ) | |
| (56,389 | ) |
Conversion of Class B common stock to Class A common stock | |
| 4,596,250 | | |
| 459 | | |
| (4,596,250 | ) | |
| (459 | ) | |
| — | | |
| — | | |
| — | |
Net loss | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| (334,028 | ) | |
| (334,028 | ) |
Balance, September 30, 2023 | |
| 5,481,250 | | |
$ | 547 | | |
| — | | |
$ | — | | |
$ | — | | |
$ | (13,767,646 | ) | |
$ | (13,767,099 | ) |
FOR
THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2022
| |
Common stock | | |
Additional | | |
| | |
Total | |
| |
Class A | | |
Class B | | |
paid-in | | |
Accumulated | | |
Stockholders’ | |
| |
Shares | | |
Amount | | |
Shares | | |
Amount | | |
capital | | |
deficit | | |
Deficit | |
Balance, December 31, 2021 | |
| 885,000 | | |
$ | 88 | | |
| 4,596,250 | | |
$ | 459 | | |
$ | — | | |
$ | (7,670,412 | ) | |
$ | (7,669,865 | ) |
Net loss | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| (377,997 | ) | |
| (377,997 | ) |
Balance, March 31, 2022 | |
| 885,000 | | |
| 88 | | |
| 4,596,250 | | |
| 459 | | |
| — | | |
| (8,048,409 | ) | |
| (8,047,862 | ) |
Net loss | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| (111,569 | ) | |
| (111,569 | ) |
Balance, June 30, 2022 | |
| 885,000 | | |
| 88 | | |
| 4,596,250 | | |
| 459 | | |
| — | | |
| (8,159,978 | ) | |
| (8,159,431 | ) |
Accretion for Class A Common Stock Subject to Redemption | |
| | | |
| | | |
| | | |
| | | |
| | | |
| (982,271 | ) | |
| (982,271 | ) |
Net income | |
| | | |
| | | |
| | | |
| | | |
| | | |
| 84,505 | | |
| 84,505 | |
Balance, September 30, 2022 | |
| 885,000 | | |
$ | 88 | | |
| 4,596,250 | | |
$ | 459 | | |
$ | — | | |
$ | (9,057,744 | ) | |
$ | (9,057,197 | ) |
The accompanying
notes are an integral part of the unaudited condensed financial statements.
PHOENIX
BIOTECH ACQUISITION CORP.
CONDENSED
STATEMENTS OF CASH FLOWS (UNAUDITED)
| |
For the Nine Months Ended September 30, | |
| |
2023 | | |
2022 | |
| |
| | |
| |
CASH FLOWS FROM OPERATING ACTIVITIES | |
| | |
| |
Net loss | |
$ | (2,253,473 | ) | |
$ | (405,061 | ) |
Adjustments to reconcile net loss to net cash used in operating activities: | |
| | | |
| | |
Unrealized loss on marketable securities held in Trust Account | |
| — | | |
| (915,859 | ) |
Interest income earned on marketable securities held in Trust Account | |
| (380,583 | ) | |
| (357,583 | ) |
Changes in operating assets and liabilities: | |
| | | |
| | |
Prepaid expenses and other assets | |
| 203,373 | | |
| 181,461 | |
Income tax payable | |
| (570,390 | ) | |
| 60,461 | |
Accounts payable and accrued expenses | |
| 1,657,978 | | |
| 695,922 | |
Franchise tax payable | |
| 6,100 | | |
| 21,512 | |
Net cash used in operating activities | |
| (1,336,995 | ) | |
| (719,147 | ) |
| |
| | | |
| | |
CASH FLOWS FROM INVESTING ACTIVITIES | |
| | | |
| | |
Cash withdrawn from Trust Account for taxes | |
| 678,985 | | |
| 128,489 | |
Investment of cash into Trust Account | |
| (443,846 | ) | |
| — | |
Cash withdrawn from Trust Account
in connection with Class A common stock redemption | |
| 5,638,879 | | |
| — | |
Net cash provided by investing activities | |
| 5,874,018 | | |
| 128,489 | |
| |
| | | |
| | |
CASH FLOWS FROM FINANCING ACTIVITIES: | |
| | | |
| | |
Proceeds from promissory note - related party | |
| 745,000 | | |
| — | |
Redemption of Class A common
stock | |
| (5,638,879 | ) | |
| — | |
Net cash used in financing activities | |
| (4,893,879 | ) | |
| — | |
| |
| | | |
| | |
NET CHANGE IN CASH | |
| (356,856 | ) | |
| (590,658 | ) |
CASH, BEGINNING OF PERIOD | |
| 475,870 | | |
| 1,098,573 | |
CASH, END OF PERIOD | |
$ | 119,014 | | |
$ | 507,915 | |
| |
| | | |
| | |
Supplemental cash flow information: | |
| | | |
| | |
Cash paid for income taxes | |
$ | 577,099 | | |
$ | — | |
| |
| | | |
| | |
Supplemental disclosure of noncash activities: | |
| | | |
| | |
Accretion of Class A common stock subject to possible redemption | |
$ | 457,083 | | |
$ | 982,271 | |
Conversion of Class B common to Class A common | |
$ | (459 | ) | |
$ | — | |
Excise tax liability accrued for Class A common stock redemptions | |
$ | 56,389 | | |
$ | — | |
The
accompanying notes are an integral part of the unaudited condensed financial statements.
PHOENIX
BIOTECH ACQUISITION CORP.
NOTES
TO CONDENSED FINANCIAL STATEMENTS
SEPTEMBER
30, 2023 (UNAUDITED)
Note
1 — Description of Organization and Business Operations and Liquidity
Phoenix
Biotech Acquisition Corp. (the “Company”) was incorporated in Delaware on June 8, 2021. The Company was formed
for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization, or similar business
combination with one or more businesses (the “Business Combination”).
The
Company is not limited to a particular industry or geographic region for purposes of consummating a Business Combination. The Company
is an early stage and emerging growth company and, as such, the Company is subject to all of the risks associated with early stage and
emerging growth companies.
As
of September 30, 2023, the Company had not commenced any operations. All activity through September 30, 2023, relates to the Company’s
formation and initial public offering (“IPO”), which is described below and, since the offering, the search for a prospective
initial Business Combination. The Company will not generate any operating revenues until after the completion of its initial Business
Combination, at the earliest. The Company generates non-operating income in the form of interest income earned on investments from the
proceeds derived from the IPO and placed in the Trust Account (defined below). The registration statement for the Company’s IPO
was declared effective on October 5, 2021. On October 8, 2021, the Company consummated the IPO of 15,500,000 units (“Units”)
(with respect to the Class A common stock included in the Units being offered (the “Public Shares”)) at $10.00 per Unit
generating gross proceeds of $155,000,000, which is discussed in Note 3. The Company has selected December 31 as its fiscal year
end.
Simultaneously
with the closing of the IPO, the Company consummated the sale of 845,000 units (“Private Placement Units”) (with respect
to the Class A common stock included in the Private Placement Units offered, the “Private Placement Shares”) at
a price of $10.00 per Private Placement Unit in a private placement to the Company’s sponsor, Phoenix Biotech Sponsor, LLC (the
“Sponsor”), Cantor Fitzgerald & Co.(“Cantor”) and Cohen & Company Capital Markets, a division
of J.V.B. Financial Group, LLC (“CCM”), generating gross proceeds of $8,450,000, which is described in Note 4.
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 overallotment option (“Overallotment Units”), generating additional gross proceeds of
$20,000,000 and incurring additional offering costs of $1,400,000 in underwriting fees, all of which are deferred until the completion
of the Company’s initial Business Combination. Simultaneously with the exercise of the overallotment, the Company consummated the
Private Placement of an additional 40,000 Private Placement Units to the Sponsor and CCM, generating gross proceeds of $400,000.
Offering
costs for the IPO and exercise of the overallotment option amounted to $12,729,318, consisting of $2,635,000 of underwriting fees, $9,150,000
of deferred underwriting fees payable (which are held in the Trust Account (defined below)) and $944,318 of other costs. As described
in Note 6, the $9,150,000 of deferred underwriting fees payable is contingent upon the consummation of a Business Combination by January
8, 2024, subject to the terms of the underwriting agreement.
Following
the closing of the IPO, $178,500,000 ($10.20 per Unit) from the net proceeds of the sale of the Units in the IPO, the Overallotment Units
and the Private Placement Units was placed in a trust account (“Trust Account”) and invested in U.S. government securities,
within the meaning set forth in Section 2(a)(16) of the Investment Company Act of 1940, as amended (the “Investment Company
Act”), with a maturity of 185 days or less or in money market funds meeting the conditions of the Investment Company Act, as determined
by the Company, until the earlier of: (i) the completion of a Business Combination and (ii) the distribution of the Trust Account,
as described below.
The
Company’s management has broad discretion with respect to the specific application of the net proceeds of the IPO and the sale
of the Private Placement Units, although substantially all of the net proceeds are intended to be applied generally toward consummating
a Business Combination. There is no assurance that the Company will be able to complete a Business Combination successfully. The Company
must complete one or more initial Business Combinations having an aggregate fair market value of at least 80% of the assets held in the
Trust Account (excluding the deferred underwriting commissions and taxes payable on income earned on the Trust Account) at the time of
the agreement to enter into the initial Business Combination. However, the Company will only complete a Business Combination if the post-transaction
company owns or acquires 50% or more of the outstanding voting securities of the target or otherwise acquires a controlling interest
in the target sufficient for it not to be required to register as an investment company under the Investment Company Act. There is no
assurance the Company will be able to successfully effect a Business Combination.
The
Company will provide the holders of the outstanding Public Shares (the “Public Stockholders”) with the opportunity to redeem
all or a portion of their Public Shares upon the completion of a Business Combination either (i) in connection with a stockholder
meeting called to approve the Business Combination or (ii) by means of a tender offer. The decision as to whether the Company will
seek stockholder approval of a Business Combination or conduct a tender offer will be made by the Company. The Public Stockholders will
be entitled to redeem their Public Shares for a pro rata portion of the amount then in the Trust Account (initially $10.20 per Public
Share, plus any pro rata interest then in the Trust Account, net of taxes payable). There will be no redemption rights with respect to
the Company’s warrants.
All
of the Public Shares contain a redemption feature which allows for the redemption of such Public Shares in connection with the Company’s
liquidation, if there is a stockholder vote or tender offer in connection with the Company’s Business Combination and in connection
with certain amendments to the Company’s amended and restated certificate of incorporation (the “Certificate of Incorporation”).
In accordance with the rules of the U.S. Securities and Exchange Commission (the “SEC”) and its guidance on redeemable equity
instruments, which has been codified in Accounting Standards Codification (“ASC”) 480-10-S99, redemption provisions not solely
within the control of a company require common stock subject to redemption to be classified outside of permanent equity. Given that the
Public Shares were issued with other freestanding instruments (i.e., public warrants), the initial carrying value of Class A common
stock classified as temporary equity will be the allocated proceeds determined in accordance with ASC 470-20. The Class A common
stock is subject to ASC 480-10-S99. If it is probable that the equity instrument will become redeemable, the Company has the option to
either (i) accrete changes in the redemption value over the period from the date of issuance (or from the date that it becomes probable
that the instrument will become redeemable, if later) to the earliest redemption date of the instrument or (ii) recognize changes
in the redemption value immediately as they occur and adjust the carrying amount of the instrument to equal the redemption value at the
end of each reporting period. The Company has elected to recognize the changes immediately. The accretion or remeasurement will be treated
as a deemed dividend (i.e., a reduction to retained earnings, or in the absence of retained earnings, additional paid-in capital). While
redemptions cannot cause the Company’s net tangible assets to fall below $5,000,001, the Public Shares are redeemable and are classified
as such on the balance sheet until such date that a redemption event takes place.
Redemptions
of the Company’s Public Shares may be subject to the satisfaction of conditions, including minimum cash conditions, pursuant to
an agreement relating to the Company’s Business Combination. If the Company seeks stockholder approval of the Business Combination,
the Company will proceed with a Business Combination if a majority of the shares voted are voted in favor of the Business Combination,
or such other vote as required by law or stock exchange rule. If a stockholder vote is not required by applicable law or stock exchange
listing requirements and the Company does not decide to hold a stockholder vote for business or other reasons, the Company will, pursuant
to its Certificate of Incorporation, conduct the redemptions pursuant to the tender offer rules of the SEC and file tender offer documents
with the SEC prior to completing a Business Combination. If, however, stockholder approval of the transaction is required by applicable
law or stock exchange listing requirements, or the Company decides to obtain stockholder approval for business or other reasons, the
Company will offer to redeem shares in conjunction with a proxy solicitation pursuant to the proxy rules and not pursuant to the tender
offer rules. If the Company seeks stockholder approval in connection with a Business Combination, the Sponsor has agreed to vote its
Founder Shares (as defined in Note 5), Private Placement Shares and any Public Shares purchased during or after the IPO in favor
of approving a Business Combination. Additionally, each Public Stockholder may elect to redeem their Public Shares without voting, and
if they do vote, irrespective of whether they vote for or against the proposed transaction.
Notwithstanding
the foregoing, the Certificate of Incorporation provides that a Public Stockholder, together with any affiliate of such stockholder or
any other person with whom such stockholder is acting in concert or as a “group” (as defined under Section 13 of the
Securities Exchange Act of 1934, as amended (the “Exchange Act”)), will be restricted from redeeming its shares with respect
to more than an aggregate of 20% or more of the Class A common stock sold in the IPO, without the prior consent of the Company.
The
Company’s Sponsor, officers and directors (the “Initial Stockholders”) have agreed not to propose an amendment to the
Certificate of Incorporation that would affect the substance or timing of the Company’s obligation to redeem 100% of its Public
Shares if the Company does not complete a Business Combination within the Combination Period (defined below), unless the Company provides
the Public Stockholders with the opportunity to redeem their shares of Class A common stock in conjunction with any such amendment.
On
December 16, 2022, the Company held a special meeting of its stockholders (the “Special Meeting”). At the Special Meeting,
our stockholders approved an amendment (the “IMTA Amendment”) to the Company’s Investment Management Trust Agreement
(the “IMTA”), dated October 5, 2021, with Continental Stock Transfer & Trust Company (“CST”), as
trustee, and an amendment to the Company’s Certificate of Incorporation, to extend the date by which we must consummate a business
combination transaction by a maximum of six additional months (the “Charter Amendment”).
In
connection with the Special Meeting, our sponsor agreed that if the Charter Amendment and the IMTA Amendment were approved at the Special
Meeting, our sponsor, or one or more of its affiliates, members or third-party designees (in such capacity, the “Lender”),
would lend to the Company up to $1,500,000 to be deposited into the Trust Account established in connection with the IPO. Accordingly,
on December 20, 2022, the Company issued an unsecured promissory note in the principal amount of $1,500,000 (the “Promissory
Note”) to the Lender, pursuant to which the Lender agreed to loan to the Company up to $1,500,000 in connection with the extension
of the date by which the Company has to consummate an initial business combination.
In
connection with the approval of the extension, holders of 16,211,702 shares of Class A common stock exercised redemption rights
(the “Redemption”). As a result, following the satisfaction of such redemptions, as of December 31, 2022, the Company
had 2,173,298 shares of Class A common stock outstanding, of which 1,288,298 constituted Public Shares issued to the public in the
Company’s IPO. The Public Shares are entitled to receive a pro rata portion of the remaining funds in the Company’s Trust
Account in connection with its initial business combination, a liquidation or certain other events. The remaining 885,000 are shares
of Class A common stock included in the private placement units acquired in the private placement by the Sponsor and other investors
concurrent with the Company’s IPO, which shares of Class A common stock do not have redemption rights.
On
March 31, 2023, May 8, 2023 and June 30, 2023, the Company deposited $100,000, $125,000 and $150,000 into the Trust Account in connection
with the Company’s extensions, respectively. As of September 30, 2023, the Company has deposited $768,846 into the Trust Account
in connection with drawdowns under the Promissory Note in order to effect the extension of the business combination period.
On
July 3, 2023, the Sponsor delivered notice of conversion of an aggregate of 4,596,250 shares of Class B common stock into an equal number
of shares of Class A common stock (the “Conversion”).
On
July 7, 2023, the Company held a special meeting of its stockholders at which the Company’s stockholders approved a proposal to
amend (the “Trust Agreement Amendment”) the IMTA, as amended by the IMTA Amendment, and a proposal to amend the Company’s
Certificate of Incorporation, as amended by the Charter Amendment (the “Second Charter Amendment”), to extend the business
combination period up to six times for one month each time from July 8, 2023 to August 8, 2023, September 8, 2023, October 8, 2023, November
8, 2023, December 8, 2023 or January 8, 2024.
On
July 7, 2023, July 28, 2023, September 1, 2023 and October 4 2023, the Company deposited $37,052, $8,846, $22,949 and $22,949 into the
Trust Account in connection with the Company’s extensions, respectively. As of October 31, 2023, the liquidation date of the Company
has been extended to November 8, 2023.
In
connection with the adoption of the Second Charter Amendment, holders of 523,341 shares of Class A common stock exercised redemption
rights. On July 18, 2023, the Company made a series of payments of an aggregate of $5,638,879 to holders of redeemed shares of Class
A common stock (an aggregate of $10.77 per redeemed share of Class A common stock). As a result, following the satisfaction of such redemptions
and the Conversion, as of September 30, 2023, the Company had 6,246,207 shares of Class A common stock outstanding, of which
764,957 constituted Public Shares issued to the public in the Company’s IPO.
As
a result of the deposits described above, such payments and accrual of interest, the balance in the Trust Account as of September 30,
2023 is approximately $8.3 million.
If
the Company is unable to complete a Business Combination by January 8, 2024 or a further extended date approved by the Company’s
stockholders (the “Combination Period”), the Company will (i) cease all operations except for the purpose of winding
up, (ii) as promptly as reasonably possible but not more than ten business days thereafter, redeem the Public Shares, at a per-share
price, payable in cash, equal to the aggregate amount then on deposit in the Trust Account including interest earned on the funds held
in the Trust Account and not previously released to us to pay the Company’s franchise and income taxes (less up to $100,000 of
interest to pay dissolution expenses), divided by the number of then outstanding Public Shares, which redemption will completely extinguish
Public Stockholders’ rights as stockholders (including the right to receive further liquidating distributions, if any), subject
to applicable law, and (iii) as promptly as reasonably possible following such redemption, subject to the approval of the Company’s
remaining stockholders and the Company’s board of directors, dissolve and liquidate, subject in each case to the Company’s
obligations under Delaware law to provide for claims of creditors and the requirements of other applicable law.
The
Initial Stockholders have agreed to waive their liquidation rights with respect to the Founder Shares and Private Placement Shares if
the Company fails to complete a Business Combination within the Combination Period. However, if the Initial Stockholders should acquire
Public Shares in or after the IPO, they will be entitled to liquidating distributions from the Trust Account with respect to such Public
Shares if the Company fails to complete a Business Combination within the Combination Period. The underwriter has agreed to waive its
rights to the deferred underwriting commission (see Note 6) held in the Trust Account in the event the Company does not complete a Business
Combination within the Combination Period, and, in such event, such amounts will be included with the other funds held in the Trust Account
that will be available to fund the redemption of the Public Shares. In the event of such distribution, it is possible that the per share
value of the residual assets remaining available for distribution (including Trust Account assets) will be only $10.20 per share held
in the Trust Account. In order to protect the amounts held in the Trust Account, the Sponsor has agreed to be liable to the Company if
and to the extent any claims by a vendor for services rendered or products sold to the Company, or a prospective target business with
which the Company has discussed entering into a transaction agreement, reduce the amount of funds in the Trust Account. This liability
will not apply with respect to any claims by a third party who executed a waiver of any right, title, interest or claim of any kind in
or to any monies held in the Trust Account or to any claims under the Company’s indemnity of the underwriter of the IPO against
certain liabilities, including liabilities under the Securities Act of 1933, as amended (the “Securities Act”). Moreover,
in the event that an executed waiver is deemed to be unenforceable against a third party, the Sponsor will not be responsible to the
extent of any liability for such third-party claims.
The
Company will seek to reduce the possibility that the Sponsor will have to indemnify the Trust Account due to claims of creditors by endeavoring
to have all vendors, service providers (except the Company’s independent registered public accounting firm), prospective target
businesses or other entities with which the Company does business, execute agreements waiving any right, title, interest or claim of
any kind in or to monies held in the Trust Account.
NASDAQ
Notice
On
April 3, 2023, the Company received a letter (the “Letter”) from the staff at The Nasdaq Global Market (“Nasdaq”)
notifying the Company that, for the 30 consecutive trading days prior to the date of the Letter, the Company’s common stock had
traded at a value below the minimum $50,000,000 “Market Value of Listed Securities” (“MVLS”) requirement set
forth in Nasdaq Listing Rule 5450(b)(2)(A), which is required for continued listing of the Company’s common stock on Nasdaq. The
Letter is only a notification of deficiency, not of imminent delisting, and has no current effect on the listing or trading of the Company’s
securities on Nasdaq.
In
order to bring the Company into compliance with the MVLS requirement, on July 3, 2023, the Sponsor elected to effect the Conversion.
As of the date hereof, there are 6,246,207 shares of Class A common stock and no shares of Class B common stock issued and outstanding
and entitled to vote.
On
September 7, 2023, the Company received a written notice (the “Notice”) from the Nasdaq Listing Qualifications Department
of Nasdaq indicating that the Company was not in compliance with Listing Rule 5450(a)(2), which requires the Company to have at least
400 public holders for continued listing on the Nasdaq Global Market (the “Minimum Public Holders Rule”). The Notice is only
a notification of deficiency, not of imminent delisting, and has no current effect on the listing or trading of the Company’s securities
on Nasdaq Global Market. The Notice states that the Company has 45 calendar days to submit a plan to regain compliance with the Minimum
Public Holders Rule. The Company has submitted a plan to regain compliance with the Minimum Public Holders Rule. If Nasdaq accepts the
Company’s plan, Nasdaq may grant the Company an extension of up to 180 calendar days from the date of the Notice to evidence compliance
with the Minimum Public Holders Rule. If Nasdaq does not accept the Company’s plan, the Company will have the opportunity to appeal
the decision in front of a Nasdaq Hearings Panel.
The
MVLS deficiency was cured by the conversion of the Class B into Class A because the Class A shares held by Sponsor count towards satisfying
such requirement. We submitted a “plan of
compliance” to NASDAQ indicating that we are aiming to be able to cure the deficiency upon closing of the business combination.
Nasdaq has not responded.
Risks
and Uncertainties
In
March 2020, the World Health Organization declared the outbreak of a novel coronavirus (“COVID-19”) as a pandemic which continues
to spread throughout the United States and the world. Management continues to evaluate the impact of the COVID-19 pandemic and the Company
has concluded that while it is reasonably possible that COVID-19 could have a negative effect on consummating a Business Combination,
the specific impact is not readily determinable as of the date of the financial statements. These unaudited condensed financial statements
do not include any adjustments that might result from the outcome of this uncertainty.
Inflation
Reduction Act of 2022 (the “IR Act”)
On
August 16, 2022, the Inflation Reduction Act of 2022 (the “IR Act”) was signed into federal law. The IR Act provides
for, among other things, a new U.S. federal 1% excise tax on certain repurchases of stock by publicly traded U.S. domestic corporations
and certain U.S. domestic subsidiaries of publicly traded foreign corporations occurring on or after January 1, 2023. The excise
tax is imposed on the repurchasing corporation itself, not its stockholders from which shares are repurchased. The amount of the excise
tax is generally 1% of the fair market value of the shares repurchased at the time of the repurchase. However, for purposes of calculating
the excise tax, repurchasing corporations are permitted to net the fair market value of certain new stock issuances against the fair
market value of stock repurchases during the same taxable year. In addition, certain exceptions apply to the excise tax. The U.S. Department
of the Treasury (the “Treasury”) has been given authority to provide regulations and other guidance to carry out and prevent
the abuse or avoidance of the excise tax.
Any
redemption or other repurchase that occurs after December 31, 2022, in connection with a Business Combination, extension vote or
otherwise, may be subject to the excise tax. Whether and to what extent the Company would be subject to the excise tax in connection
with a Business Combination, extension vote or otherwise would depend on a number of factors, including (i) the fair market value
of the redemptions and repurchases in connection with the Business Combination, extension or otherwise, (ii) the structure of a
Business Combination, (iii) the nature and amount of any “PIPE” or other equity issuances in connection with a Business
Combination (or otherwise issued not in connection with a Business Combination but issued within the same taxable year of a Business
Combination) and (iv) the content of regulations and other guidance from the Treasury. In addition, because the excise tax would
be payable by the Company and not by the redeeming holder, the mechanics of any required payment of the excise tax have not been determined.
The foregoing could cause a reduction in the cash available on hand to complete a Business Combination and in the Company’s ability
to complete a Business Combination.
On
July 17, 2023, the Company redeemed 523,341 shares of Class A common stock tendered for redemption by the Public Stockholders
for a total redemption amount of $5,638,879 in connection with the implementation of the Extension. The Company evaluated the classification
and accounting of the stock redemption under ASC 450, “Contingencies” to determine whether the Company should currently recognize
an excise tax obligation associated therewith. ASC 450 states that when a loss contingency exists the likelihood that the future event(s)
will confirm the loss or impairment of an asset, or the incurrence of a liability can range from probable to remote. Contingent liability
must be reviewed at each reporting period to determine appropriate treatment. The Company evaluated whether a United States excise tax
obligation should be recognized currently related to the stock redemption and concluded that this obligation should be recognized. As
of September 30, 2023, the Company recorded $56,389 of excise tax liability calculated as 1% of shares redeemed on July 17,
2023. Any reduction to this liability resulting from either a subsequent stock issuance or an event giving rise to an exception that
occurs within this tax year, will be recognized in the period (including an interim period) that such stock issuance or event giving
rise to an exception occurs.
Liquidity
and Going Concern
As
of September 30, 2023, the Company had $119,014 in its operating bank accounts, $8,329,792 in marketable securities held in the Trust
Account to be used for a Business Combination or to repurchase or redeem its Public Shares in connection therewith and a working capital
deficit of $4,624,973.
On
May 9, 2023, the Company received a notice from the IRS stating an additional $182,308 of federal income taxes were due by May 22, 2023.
The Company made this payment on June 23, 2023.
The
Company currently projects that it will not have sufficient funds to cover its expenses over a one-year period from the date these 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. These financial
statements do not include any adjustments relating to the recovery of the recorded assets or the classification of the liabilities that
might be necessary should the Company be unable to continue as a going concern.
Note
2 — Summary of Significant Accounting Policies
Basis
of Presentation
The
accompanying unaudited condensed financial statements have been prepared in accordance with accounting principles generally accepted
in the United States of America (“U.S. GAAP”) for interim financial information and in accordance with the instructions to
Form 10-Q and Article 8 of Regulation S-X of the SEC. Certain information or footnote disclosures normally included in financial
statements prepared in accordance with U.S. GAAP have been condensed or omitted, pursuant to the rules and regulations of the SEC for
interim financial reporting. Accordingly, they do not include all the information and footnotes necessary for a complete presentation
of financial position, results of operations, or cash flows. In the opinion of management, the accompanying unaudited condensed financial
statements include all adjustments, consisting of a normal recurring nature, which are necessary for a fair presentation of the financial
position, operating results and cash flows for the periods presented.
The
accompanying unaudited condensed financial statements should be read in conjunction with the Company’s Annual Report on Form 10-K,
as filed with the SEC on March 24, 2023. The interim results for the periods presented are not necessarily indicative of the results
to be expected for the year ending December 31, 2023, or for any future interim periods.
Reclassifications
Certain
prior year amounts have been reclassified due to an immaterial correction of an error and for consistency with the current period presentation.
These reclassifications had no effect on the reported results of operations. An adjustment for $244,777 has been made to Class A
common stock subject to possible redemption and Accumulated deficit as of December 31, 2022 to correct the total amount redeemable
to stockholders.
Emerging
Growth Company
The
Company is an “emerging growth company,” as defined in Section 2(a) of the Securities Act, as modified by the Jumpstart
Our Business Startups Act of 2012 (the “JOBS Act”), and it may take advantage of certain exemptions from various reporting
requirements that are applicable to other public companies that are not emerging growth companies including, but not limited to, not
being required to comply with the independent registered public accounting firm attestation requirements of Section 404 of the Sarbanes-Oxley
Act, reduced disclosure obligations regarding executive compensation in its periodic reports and proxy statements, and exemptions from
the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments
not previously approved.
Further,
Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial
accounting standards until private companies (that is, those that have not had a Securities Act registration statement declared effective
or do not have a class of securities registered under the Exchange Act) are required to comply with the new or revised financial accounting
standards. The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements
that apply to non-emerging growth companies but any such election to opt out is irrevocable. The Company has elected not to opt out of
such extended transition period which means that when a standard is issued or revised and it has different application dates for public
or private companies, the Company, as an emerging growth company, can adopt the new or revised standard at the time private companies
adopt the new or revised standard. This may make comparison of the Company’s financial statements with another public company which
is neither an emerging growth company nor an emerging growth company which has opted out of using the extended transition period difficult
or impossible because of the potential differences in accounting standards used.
Use
of Estimates
The
preparation of condensed financial statements in conformity with U.S. GAAP requires the Company’s management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the
date of the condensed financial statements and the reported amounts of revenues and expenses during the reporting period.
Making
estimates requires management to exercise significant judgment. Such estimates may be subject to change as more current information becomes
available and accordingly the actual results could differ significantly from those estimates. It is at least reasonably possible that
the estimate of the effect of a condition, situation or set of circumstances that existed at the date of the financial statements, which
management considered in formulating its estimate, could change in the near term due to one or more future confirming events. Actual
results could differ from those estimates.
Cash
and Cash Equivalents
The
Company considers all short-term investments with an original maturity of three months or less when purchased to be cash equivalents.
The Company did not have any cash equivalents as of September 30, 2023 and December 31, 2022.
Restricted
Cash
The
Company considers all cash to be held for a specific purpose restricted cash. As of September 30, 2023 and December 31, 2022, the
Company had $0 and $41,665,974 in restricted cash, respectively. The restricted cash as of December 31, 2022 was intended to satisfy
stockholder redemption payments. The cash and restricted cash balances included in the balance sheets as of September 30, 2023 and
December 31, 2022, are comprised of the following:
| |
September 30, 2023 (Unaudited) | | |
December 31, 2022 | |
| |
| | |
| |
Cash | |
$ | 119,014 | | |
$ | 475,870 | |
Restricted cash | |
| — | | |
| 41,665,974 | |
Total cash and restricted cash | |
$ | 119,014 | | |
$ | 42,141,844 | |
Money
market funds Held in Trust Account
At
September 30, 2023, the assets held in Trust Account were held in money market funds that invested in U.S. Treasury securities. At December 31,
2022, substantially all of the assets held in the Trust Account were held as cash. The Company’s investments held in the Trust
Account are classified as trading securities. Trading securities are presented on the balance sheets at fair value at the end of each
reporting period. Gains and losses resulting from the change in fair value of investments held in the Trust Account and interest
earned on marketable securities are included in the accompanying unaudited condensed statements of operations. The estimated fair values
of investments held in the Trust Account are determined using available market information.
Shareholder
Redemption Liability
On
December 20, 2022, in connection with the Company’s special meeting held to consider the Charter Amendment, the Company’s
stockholders redeemed 16,211,702 shares of Class A common stock subject to possible redemption at $10.20 per share redemption
value, plus a pro rata share of interest earned. Of the total amount redeemed, payments for 2,581,004 shares of Class A
common stock totaling $26,481,101 plus a true-up payment of $1,361,646 for a total liability of $27,842,747 were subsequently paid to
redeeming stockholders on January 3, 2023. Therefore, a portion of the total redemption payment has been classified as a stockholder
redemption liability in the accompanying unaudited condensed balance sheet as of December 31, 2022.
Offering
Costs associated with the Initial Public Offering
Offering
costs, including additional underwriting fees associated with the underwriter’s partial exercise of the over-allotment option,
consist principally of legal, accounting, underwriting fees and other costs directly related to the IPO. Offering costs, including those
attributable to the underwriter’s partial exercise of the over-allotment option, amounted to $12,729,318. This amount was charged
to stockholders’ deficit upon the completion of the IPO.
Concentration
of Credit Risk
Financial
instruments that potentially subject the Company to concentrations of credit risk consist of cash accounts in a financial institution,
which, at times, may exceed the Federal Deposit Insurance Corporation coverage limit of $250,000. At September 30, 2023 and December 31,
2022, the Company has not experienced losses on these accounts and management believes the Company is not exposed to significant risks
on such accounts.
Fair
Value of Financial Instruments
The
fair value of the Company’s financial assets and liabilities reflects management’s estimate of amounts that the Company would
have received in connection with the sale of the assets or paid in connection with the transfer of the liabilities in an orderly transaction
between market participants at the measurement date. In connection with measuring the fair value of its assets and liabilities, the Company
seeks to maximize the use of observable inputs (market data obtained from independent sources) and to minimize the use of unobservable
inputs (internal assumptions about how market participants would price assets and liabilities). The following fair value hierarchy is
used to classify assets and liabilities based on the observable inputs and unobservable inputs used in order to value the assets and
liabilities:
Level 1:
Quoted prices in active markets for identical assets or liabilities. An active market for an asset or liability is a market in which
transactions for the asset or liability occur with sufficient frequency and volume to provide pricing information on an ongoing basis.
Level 2:
Observable inputs other than Level 1 inputs. Examples of Level 2 inputs include quoted prices in active markets for similar
assets or liabilities and quoted prices for identical assets or liabilities in markets that are not active.
Level 3:
Unobservable inputs based on our assessment of the assumptions that market participants would use in pricing the asset or liability.
Income
Taxes
The
Company complies with the accounting and reporting requirements of ASC 740, “Income Taxes” (“ASC 740”),
which requires an asset and liability approach to financial accounting and reporting for income taxes. Deferred income tax assets and
liabilities are computed for differences between the financial statement and tax bases of assets and liabilities that will result in
future taxable or deductible amounts, based on enacted tax laws and rates applicable to the periods in which the differences are expected
to affect taxable income. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected
to be realized.
ASC
740 prescribes a recognition threshold and a measurement attribute for the financial statement recognition and measurement of tax positions
taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must be more likely than not to be
sustained upon examination by taxing authorities. There were no unrecognized tax benefits as of September 30, 2023 and December 31,
2022. The Company recognizes accrued interest and penalties related to unrecognized tax benefits as income tax expense. No amounts were
accrued for the payment of interest and penalties at September 30, 2023 and December 31, 2022. The Company is currently not aware
of any issues under review that could result in significant payments, accruals, or material deviation from its position. The Company
is subject to income tax examinations by major taxing authorities since inception.
Class A
Common Stock Subject to Possible Redemption
The
Company accounts for its Class A common stock subject to possible redemption in accordance with the guidance in ASC 480. Shares
of Class A common stock subject to mandatory redemption (if any) are classified as a liability instrument and are measured at fair
value. Conditionally redeemable Class A common stock (including Class A common stock that features redemption rights that are within
the control of the holder or subject to redemption upon the occurrence of uncertain events not solely within the Company’s control)
is classified as temporary equity. At all other times, Class A common stock is classified as stockholders’ equity. The Company’s
Class A common stock features certain redemption rights that are considered to be outside of the Company’s control and subject
to occurrence of uncertain future events. Accordingly, at September 30, 2023 and December 31, 2022, 764,957 and 1,288,298 shares
of Class A common stock subject to possible redemption are presented as temporary equity, outside of the stockholders’ deficit
section of the Company’s condensed balance sheets.
The
Company recognizes changes in redemption value immediately as they occur and adjusts the carrying value of redeemable Class A 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.
At
September 30, 2023 and December 31, 2022, the Class A common stock subject to possible redemption reflected in the condensed
balance sheets is reconciled in the following table:
Class A common stock subject to possible redemption, December 31, 2022 | |
$ | 13,468,845 | |
Plus: Accretion of carrying value to redemption value | |
| 96,795 | |
Class A common stock subject to possible redemption, March 31, 2023 | |
| 13,565,640 | |
Plus: Accretion of carrying value to redemption value | |
| 275,001 | |
Class A common stock subject to possible redemption, June 30, 2023 | |
| 13,840,640 | |
Less: Redemption | |
| (5,638,879 | ) |
Plus: Accretion of carrying value to redemption value | |
| 85,288 | |
Class A common stock subject to possible redemption, September 30, 2023 | |
$ | 8,287,049 | |
Net
(Loss) Income per Common Stock
The
Company has two classes of shares, which are referred to as Class A common stock and Class B common stock (the “Class
B common stock” or the “Founder Shares”). Earnings and losses are shared pro rata between the two classes of shares.
Public Warrants (see Note 3) and Private Placement Warrants (see Note 4) to purchase an aggregate of 9,192,500 shares of Class A
common stock at $11.50 per share were issued on October 29, 2021. At September 30, 2023 and December 31, 2022, no Public
Warrants or Private Placement Warrants have been exercised. The 9,192,500 shares of Class A common stock underlying outstanding
Public Warrants and Private Placement Warrants were excluded from diluted net (loss) income per share for the three and nine months ended
September 30, 2023 and 2022 because they are contingently exercisable, and the contingencies have not yet been met. As a result, diluted
net (loss) income per common stock is the same as basic net (loss) income per common stock for the period. The tables below present a
reconciliation of the numerator and denominator used to compute basic and diluted net (loss) income per share for each class of stock.
| |
For the Three Months Ended September 30, | |
| |
2023 | | |
2022 | |
| |
Class A common stock | | |
Class B
Common stock | | |
Class A common stock | | |
Class B
Common stock | |
Basic and diluted net (loss) income per share: | |
| | |
| | |
| | |
| |
Numerator: | |
| | |
| | |
| | |
| |
Allocation of net (loss) income | |
$ | (331,364 | ) | |
$ | (2,664 | ) | |
$ | 67,604 | | |
$ | 16,901 | |
Denominator: | |
| | | |
| | | |
| | | |
| | |
Weighted average shares outstanding | |
| 6,281,964 | | |
| 50,508 | | |
| 18,385,000 | | |
| 4,596,250 | |
Basic and diluted net (loss) income per share | |
$ | (0.05 | ) | |
$ | (0.05 | ) | |
$ | 0.00 | | |
$ | 0.00 | |
| |
For the Nine Months Ended September 30, | |
| |
2023 | | |
2022 | |
| |
Class A common stock | | |
Class B
Common stock | | |
Class A common stock | | |
Class B
Common stock | |
Basic and diluted net (loss) income per share: | |
| | |
| | |
| | |
| |
Numerator: | |
| | |
| | |
| | |
| |
Allocation of net (loss) income | |
$ | (1,207,109 | ) | |
$ | (1,046,364 | ) | |
$ | (324,049 | ) | |
$ | (81,012 | ) |
Denominator: | |
| | | |
| | | |
| | | |
| | |
Weighted average shares outstanding | |
| 3,547,888 | | |
| 3,075,432 | | |
| 18,385,000 | | |
| 4,596,250 | |
Basic and diluted net (loss) income per share | |
$ | (0.34 | ) | |
$ | (0.34 | ) | |
$ | (0.02 | ) | |
$ | (0.02 | ) |
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. 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 stock 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.
Recent
Accounting Pronouncements
In
June 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016-13
–Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (“ASU
2016-13”). This update requires financial assets measured at amortized cost basis to be presented at the net amount expected
to be collected. The measurement of expected credit losses is based on relevant information about past events, including historical experience,
current conditions, and reasonable and supportable forecasts that affect the collectability of the reported amount. Since June 2016,
the FASB issued clarifying updates to the new standard including changing the effective date for smaller reporting companies. The guidance
is effective for fiscal years beginning after December 15, 2022, and interim periods within those fiscal years, with early adoption permitted.
The Company adopted ASU 2016-13 on January 1, 2023. The adoption of ASU 2016-13 did not have an impact on its unaudited condensed financial
statements.
Management
does not believe that any other recently issued, but not yet effective, accounting standards if currently adopted would have a material
effect on the accompanying unaudited condensed financial statements.
Note
3 — Initial Public Offering and Over-Allotment
Pursuant
to the IPO, the Company sold 17,500,000 units (including 2,000,000 units as part of the underwriter’s partial exercise of the over-allotment
option) at a price of $10.00 per Unit. Each Unit consists of one share of Class A common stock (such shares of Class A common
stock included in the Units being offered, the “Public Shares”), and one-half a redeemable warrant (each, a “Public
Warrant”). Each Public Warrant entitles the holder to purchase one share of Class A common stock at a price of $11.50 per
share, subject to adjustment (see Note 7).
Note
4 — Private Placement Warrants
On
October 8, 2021, simultaneously with the consummation of the IPO, the Company consummated the issuance and sale (“Private
Placement”) of 885,000 Units (the “Private Placement Units”) in a private placement transaction at a price of $10.00
per Private Placement Unit, generating gross proceeds of $8,850,000. The Private Placement Units were purchased by Cantor (155,000 Units),
CCM (30,004 Units) and the Sponsor (699,996 Units). Each whole Private Placement Unit consists of one Private Placement Share and
one-half of a redeemable warrant (“Private Placement Warrant”). Each whole Private Placement Warrant will be exercisable
to purchase one share of Class A common stock at a price of $11.50 per share, subject to adjustment. A portion of the proceeds from
the Private Placement Units was added to the proceeds from the IPO to be held in the Trust Account. If the Company does not complete
a Business Combination within the Combination Period, the proceeds from the sale of the Private Placement Units will be used to fund
the redemption of the Public Shares (subject to the requirements of applicable law), and the Private Placement Units and all underlying
securities will be worthless.
Note
5 — Related Party Transactions
Founder
Shares
On
September 18, 2021, the Sponsor provided funds to pay for certain costs totaling $25,000 on behalf of the Company as consideration
for 4,598,750 Founder Shares. Later in September 2021, the Company effected a 0.017 for 1 stock dividend for each Founder Share
outstanding, and, as a result, the Sponsor held 4,679,125 Founder Shares following the stock dividend. As a result, the Company’s
shares have been retroactively adjusted for this stock dividend; however, due to the shares being closely held the corresponding earnings
have not been capitalized from retained earnings. The Sponsor agreed to forfeit up to 592,875 Founder Shares to the extent that the 45-day
over-allotment option was not exercised in full by the underwriter. Since the underwriter exercised the over-allotment option only in
part, the Sponsor forfeited 82,875 Founder Shares.
The
Sponsor has agreed, subject to limited exceptions, not to transfer, assign or sell any of the Founder Shares until the earliest of: (a) one
year after the completion of a Business Combination and (b) subsequent to a Business Combination, (x) if the closing price
of the shares of Class A common stock equals or exceeds $12.00 per share (as adjusted) for any 20 trading days within any 30-trading day
period commencing at least 150 days after a Business Combination, or (y) the date on which the Company completes a liquidation,
merger, share exchange or other similar transaction that results in all of the Public Stockholders having the right to exchange their
shares of Class A common stock for cash, securities or other property.
On
July 3, 2023, the Sponsor delivered notice of conversion of an aggregate of 4,596,250 Founder Shares into an equal number of shares of
Class A common stock (the “Conversion”). The Sponsor shares have been converted to Class B common shares.
Related
Party Loans
On
June 18, 2021, the Sponsor agreed to loan the Company an aggregate of up to $300,000 to cover expenses related to the IPO pursuant
to a promissory note which was amended on September 10, 2021 (as amended, the “Note”). This loan is non-interest-bearing.
There was no balance on the Note as of September 30, 2023 and December 31, 2022.
In
addition, in order to finance transaction costs in connection with a Business Combination, the Sponsor or an affiliate of the Sponsor,
or certain of the Company’s officers and directors may, but are not obligated to, loan the Company funds as may be required (“Working
Capital Loans”). If the Company completes a Business Combination, the Company would repay the Working Capital Loans out of the
proceeds of the Trust Account released to the Company. Otherwise, the Working Capital Loans would be repaid only out of funds held outside
the Trust Account. In the event that a Business Combination does not close, the Company may use a portion of proceeds held outside the
Trust Account to repay the Working Capital Loans but no proceeds held in the Trust Account would be used to repay the Working Capital
Loans. The Working Capital Loans will either be repaid upon consummation of a Business Combination, without interest, or, at the lender’s
discretion, up to $1.5 million of such Working Capital Loans may be convertible into units of the post Business Combination entity
at a price of $10.00 per unit. The units would be identical to the Private Placement Units. On December 13, 2022, the Company entered
into a promissory note with the Sponsor. In order to fund ongoing operations, the Sponsor will loan up to $1,500,000 to the Company. The
Promissory Note does not bear interest and matures upon the earlier of (a) the closing of an initial business combination and (b) the
Company’s liquidation. In the event that the Company does not consummate an initial business combination, the Promissory Note will
be repaid only from amounts remaining outside of the Trust Account, if any. On May 8, 2023, June 9, 2023 and September 12,
2023, the sponsor loaned the company $250,000, $275,000 and $220,000 under the Promissory Note in connection with extensions of the Company’s
liquidation date, respectively. As of September 30, 2023 and December 31, 2022, there was $1,395,000 and $650,000 in borrowings
under the Working Capital Loans, respectively.
Consulting
Services
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 $15,000 for assisting the Company in identifying and evaluating potential acquisition targets. Upon completion
of our initial business combination or our liquidation, we will cease paying these monthly fees. The payments ended on December 31, 2022
in connection with the approval of the Charter Amendment. For the three and nine months ended September 30, 2023, $0 has been incurred
under this agreement. For the three and nine months ended September 30, 2022, $45,000 and $90,000 has been incurred under this agreement,
respectively.
Support
Services
The
Company entered into an agreement, commencing on the date of its listing on NASDAQ through the earlier of the consummation of a Business
Combination and the Company’s liquidation, to pay an affiliate of the Sponsor a monthly fee of $20,000 for office space, secretarial
and administrative services. Payments under the agreement were suspended on December 31, 2022 and reinstated on March 31, 2023. For the
three and nine months ended September 30, 2023, $60,000 and $140,000 has been incurred under this agreement, respectively. For the three
and nine months ended September 30, 2022, $60,000 and $180,000 has been incurred under this agreement, respectively. As of September
30, 2023, there was a $35,000 outstanding balance owed to the Sponsor.
Note
6 — Commitments and Contingencies
Registration
Rights
Pursuant
to a registration rights agreement entered into on October 5, 2021, the holders of the Founder Shares, Private Placement Warrants
and warrants that may be issued upon conversion of Working Capital Loans (and any Class A common stock issuable upon the exercise
of the Private Placement Warrants and warrants that may be issued upon conversion of Working Capital Loans and upon conversion of the
Founder Shares) are entitled to registration rights, requiring the Company to register such securities and any other securities of the
Company acquired by them prior to the consummation of a Business Combination for resale. The holders of these securities are entitled
to make up to three demands, excluding short form demands, that the Company register such securities. In addition, the holders have certain
“piggy-back” registration rights with respect to registration statements filed subsequent to the completion of a Business
Combination. The registration rights agreement does not contain liquidated damages or other cash settlement provisions resulting from
delays in registering the securities. The Company will bear the expenses incurred in connection with the filing of any such registration
statements.
Underwriting
Agreement
The
Company granted the underwriter a 45-day option from the date of the final prospectus relating to the IPO to purchase up to
2,325,000 additional Units to cover over-allotments, if any, at the IPO price less the underwriting discounts and commissions. On October 8,
2021, the underwriter partially exercised its over-allotment option and purchased 2,000,000 units at $10.00 per unit.
The
underwriter was paid a cash underwriting discount of $0.20 per unit, or $3,100,000 in the aggregate at the closing of the IPO, of which
$465,000 was reimbursed to the Company to pay for additional advisors. The underwriter agreed to defer any additional fees related to
the exercise of the over-allotment option until the Company completes a Business Combination. As such, $400,000 of additional underwriting
fees related to the over-allotment have been deferred. In addition, the underwriter is entitled to deferred underwriting commissions
of $0.50 per unit, or $8,750,000 ($9,150,000 in the aggregate when including the $400,000 noted above) from the closing of the IPO. The
deferred fee will become payable to the underwriter from the amounts held in the Trust Account solely in the event that the Company completes
a Business Combination, subject to the terms of the underwriting agreement.
Business
Combination Agreement
On
June 4, 2023, the Company entered into a business combination agreement and plan of reorganization (the “Business Combination
Agreement”), by and among the Company, PBCE Merger Sub, Inc., a Delaware corporation (“Merger Sub”), and CERo Therapeutics,
Inc., a Delaware corporation (“CERo”).
At
the effective time of the Business Combination (the “Effective Time”), (i) each outstanding share of CERo common stock,
par value $0.0001 per share (the “CERo common stock”) will be cancelled and converted into (a) the right to receive
a number of shares of PBAX Class A common stock, par value $0.0001 per share (“Class A common stock”), equal to
$50,000,000, minus the Aggregate Liquidation Preference (as defined in the Business Combination Agreement), divided by
the Fully Diluted Company Capitalization (as defined in the Business Combination Agreement), divided by $10.00 (the
“Exchange Ratio”) and (b) the right to receive a portion of up to 1,200,000 additional shares of Class A common
stock if certain trading price hurdles are achieved or a Change of Control (as defined in the Business Combination Agreement) occurs
within four years after the Closing (“Earnout Shares”); (ii) each outstanding option to purchase CERo common stock (each,
a “CERo option”) will be converted into an option to purchase a number of shares of Class A common stock, equal to (A) the
number of shares of CERo common stock subject to such option immediately prior to the Effective Time, multiplied by
(B) the Exchange Ratio, at an exercise price per share equal to the current exercise price per share for such option divided by
the Exchange Ratio; in each case, rounded down to the nearest whole share, and rounded up to the nearest whole cent in the case of the
exercise price of the CERo options; (iii) each outstanding share of CERo preferred stock, par value $0.0001 per share (the “CERo
preferred stock”), will be converted into a number of shares of Class A common stock, equal to the number of shares of Class A
common stock obtained by dividing the liquidation preference thereof by $10.00 and the contingent right to receive such
holder’s Earn-Out Pro Rata Portion (as defined in the Business Combination Agreement), and (iv) each warrant to
purchase CERo preferred stock (each, a “CERo warrant”) outstanding as of immediately prior to the Effective Time will be
converted into a warrant to acquire a number of shares of Class A common stock equal to the number of shares of CERo preferred stock
subject to the corresponding warrant immediately prior to the Effective Time, multiplied by the Aggregate Liquidation
Preference of such underlying shares of CERo preferred stock, and divided by $10.00, with the exercise price per share
for such warrant equal to (A) the current aggregate exercise price of such warrant (the current exercise price per share of CERo
preferred stock applicable to the corresponding warrant immediately prior to the Effective Time, multiplied by the number
of shares of CERo preferred stock issuable upon exercise thereof), divided by (B) the number of shares of Class A
common stock issuable upon exercise thereof. Subject to certain exceptions, such terms and conditions applicable to a New CERo warrant
will be the same terms and conditions as were applicable to a CERo warrant immediately prior to the Effective Time. The Company will
issue an aggregate of approximately 5.0 million shares of Class A common stock to the holders of CERo common stock and CERo
preferred stock as consideration in the Business Combination.
Sponsor
Support Agreement
In connection with the execution of the Business Combination Agreement,
the Sponsor, as the sole holder of the Class B common stock, and each of the Company’s officers and directors entered into
a support agreement with the Company and CERo (the “Sponsor Support Agreement”). Under the Sponsor Support Agreement, the
Sponsor agreed to vote, at any meeting of the stockholders of the Company and in any action by written consent of the stockholders of
the Company, all of its shares of Class B common stock (together with any other equity securities of the Company that it holds of
record or beneficially, as of the date of the Sponsor Support Agreement, or of which it acquires record or beneficial ownership after
the date thereof, the “Subject Company Shares”) (i) in favor of (a) the Business Combination Agreement and the transactions
contemplated thereby and (b) the other proposals that the Company and CERo agreed in the Business Combination Agreement shall be
submitted at such meeting for approval by the Company’s stockholders (together with the proposal to obtain the Company Stockholder
Approval, the “Required Transaction Proposals”) and (ii) against any proposal that conflicts or materially impedes or
interferes with any Required Transaction Proposals or that would adversely affect or delay the Business Combination. The Sponsor Support
Agreement also prohibits the Sponsor from, among other things and subject to certain exceptions, transferring any Subject Company Shares
held by the Sponsor or taking any action that would have the effect of preventing or materially delaying the Sponsor from performing its
obligations under the Sponsor Support Agreement, until the earlier of the Closing or the termination of the Sponsor Support Agreement
according to its terms. On July 3, 2023, the Sponsor delivered notice of conversion of an aggregate
of 4,596,250 shares of Class B common stock into an equal number of shares of Class A common stock. Following the Conversion, the Sponsor
held an aggregate of 5,296,246 shares of Class A common stock, all of which are subject to the Sponsor Support Agreement.
CERo
Support Agreements
In
connection with the execution of the Business Combination Agreement, certain CERo stockholders (the “CERo Supporting Stockholders”)
entered into support agreements with CERo (the “CERo Support Agreements”). Under the CERo Support Agreements, each CERo Supporting
Stockholder agreed as promptly as practicable following the time at which the Registration Statement/Proxy Statement shall have been
declared effective and made available to such CERo Supporting Stockholders, to execute and deliver a written consent with respect to
all outstanding shares of CERo common stock and CERo preferred stock held by such CERo Supporting Stockholder (the “Subject CERo
Shares”) approving the Business Combination Agreement and the transactions contemplated thereby (including the Business Combination).
In addition to the foregoing, each CERo Supporting Stockholder agreed that, at any meeting of the holders of CERo capital stock, each
such CERo Supporting Stockholder will appear at the meeting, in person or by proxy, and cause its Subject CERo Shares to be counted as
present thereat for purposes of calculating a quorum and voted (i) to approve and adopt the Business Combination Agreement, the
transactions contemplated thereby (including the Business Combination), and any other matters necessary or reasonably requested by CERo
for consummation of the Business Combination, and (ii) against any proposal that conflicts or materially impedes or interferes with,
or would adversely affect or delay, the consummation of the transactions contemplated by the Business Combination Agreement (including
the Business Combination).
Note
7 — Stockholders’ Deficit
Common
Stock
Class A
common stock — The Company is authorized to issue 60,000,000 shares of Class A common stock with a par value of $0.0001
per share. As of September 30, 2023 and December 31, 2022, there were 5,481,250 and 885,000 shares of Class A common stock
issued and outstanding (excluding 764,957 and 1,288,298 shares subject to possible redemption), respectively.
Class B
common stock — The Company is authorized to issue 10,000,000 shares of Class B common stock with a par value of $0.0001
per share. Holders of Class B common stock are entitled to one vote for each share. On July 3, 2023, the Sponsor delivered notice
of conversion of an aggregate of 4,596,250 shares of Class B common stock into an equal number of shares of Class A common stock (the
“Conversion”). As of September 30, 2023 and December 31, 2022, there were 0 and 4,596,250 shares of Class B common
stock issued and outstanding.
Prior
to the consummation of an initial Business Combination, only holders of shares of Class B common stock will have the right to vote
on the election of directors. Holders of shares of Class A common stock and shares of Class B common stock will vote together
as a single class on all other matters submitted to a vote of stockholders.
Preferred
stock — The Company is authorized to issue 1,000,000 shares of preferred stock with such designations,
voting and other rights and preferences as may be determined from time to time by the Company’s board of directors. As of September
30, 2023 and December 31, 2022, there were no shares of preferred stock issued or outstanding.
Warrants
— At September 30, 2023 and December 31, 2022, there were 8,750,000 Public Warrants and 442,500 Private Placement
Warrants outstanding. The Public Warrants will become exercisable 30 days after the completion of a Business Combination. No warrants
will be exercisable for cash unless the Company has an effective and current registration statement covering the common stock issuable
upon exercise of the warrants and a current prospectus relating to such common stock.
Notwithstanding
the foregoing, if a registration statement covering the common stock issuable upon exercise of the Public Warrants is not effective within
a specified period following the consummation of a Business Combination, warrant holders may, until such time as there is an effective
registration statement and during any period when the Company shall have failed to maintain an effective registration statement, exercise
warrants on a cashless basis pursuant to the exemption provided by Section 3(a)(9) of the Securities Act, provided that such exemption
is available. If that exemption, or another exemption, is not available, holders will not be able to exercise their warrants on a cashless
basis. The Public Warrants will expire five years after the completion of a Business Combination or earlier upon redemption or liquidation.
Once
the warrants become exercisable, the Company may redeem the Public Warrants:
|
● |
in
whole and not in part; |
| ● | at a price of $0.01 per warrant; |
|
● |
upon
not less than 30 days’ prior written notice of redemption; |
|
● |
if,
and only if, the reported last sale price of Class A common stock equals or exceeds $18.00 per share (as adjusted for stock
splits, stock dividends, reorganizations and recapitalizations), for any 20 trading days within a 30-trading-day period commencing
at any time after the warrants become exercisable and ending on the third business day prior to the notice of redemption to warrant
holders; and |
|
● |
if,
and only if, there is a current registration statement in effect with respect to the shares of Class A common stock underlying
the warrants. |
If
the Company calls the Public Warrants for redemption, management will have the option to require all holders that wish to exercise the
Public Warrants to do so on a “cashless basis,” as described in the warrant agreement.
The
Private Placement Warrants are identical to the Public Warrants underlying the Units sold in the IPO, except that the Private Placement
Warrants and the common stock issuable upon the exercise of the Private Placement Warrants will not be transferable, assignable, or salable
until after the completion of a Business Combination, subject to certain limited exceptions. The Private Placement Warrants will be redeemable
by the Company and exercisable by such holders on the same basis as the Public Warrants.
The
exercise price and number of shares of common stock issuable upon exercise of the warrants may be adjusted in certain circumstances including
in the event of a stock dividend, extraordinary dividend or recapitalization, reorganization, merger, or consolidation. However, the
warrants will not be adjusted for issuances of common stock at a price below their respective exercise prices, other than as set forth
below. Additionally, in no event will the Company be required to net cash settle the warrants. If the Company is unable to complete a
Business Combination within the Combination Period and the Company liquidates the funds held in the Trust Account, holders of warrants
will not receive any of such funds with respect to their warrants, nor will they receive any distribution from the Company’s assets
held outside of the Trust Account with respect to such warrants. Accordingly, the warrants may expire worthless.
In
addition, if the Company issues additional common stock or equity-linked securities for capital raising purposes in connection with the
closing of a Business Combination at an issue price or effective issue price of less than $9.20 per share of common stock (with such
issue price or effective issue price to be determined in good faith by the Company’s board of directors, and in the case of any
such issuance to the Initial Stockholders or their affiliates, without taking into account any Founder Shares held by them prior to such
issuance) (the “Newly Issued Price”), and (y) the aggregate gross proceeds from such issuances represent more than 60%
of the total equity proceeds, and interest thereon, available for the funding of a Business Combination on the date of the consummation
of a Business Combination (net of redemptions), and (z) the volume weighted-average trading price of the Company’s common
stock during the 20-trading-day period starting on the trading day prior to the day on which the Company consummates a Business
Combination (such price, the “Market Value”) is below $9.20 per share, the exercise price of the warrants will be adjusted
(to the nearest cent) to be equal to 115% of the greater of (i) the Market Value or (ii) the Newly Issued Price, and the $18.00
per share redemption trigger price will be adjusted (to the nearest cent) to be equal to 180% of the higher of the Market Value and the
Newly Issued Price.
Note
8 — Fair Value Measurements
The
fair value of the Company’s financial assets and liabilities reflects management’s estimate of amounts that the Company would
have received in connection with the sale of the assets or paid in connection with the transfer of the liabilities in an orderly transaction
between market participants at the measurement date. In connection with measuring the fair value of its assets and liabilities, the Company
seeks to maximize the use of observable inputs (market data obtained from independent sources) and to minimize the use of unobservable
inputs (internal assumptions about how market participants would price assets and liabilities). The following fair value hierarchy is
used to classify assets and liabilities based on the observable inputs and unobservable inputs used in order to value the assets and
liabilities:
Level 1:
Quoted prices in active markets for identical assets or liabilities. An active market for an asset or liability is a market in which
transactions for the asset or liability occur with sufficient frequency and volume to provide pricing information on an ongoing basis.
Level 2:
Observable inputs other than Level 1 inputs. Examples of Level 2 inputs include quoted prices in active markets for similar
assets or liabilities and quoted prices for identical assets or liabilities in markets that are not active.
Level 3:
Unobservable inputs based on our assessment of the assumptions that market participants would use in pricing the asset or liability.
At
September 30, 2023, the assets held in the Trust Account were held in money market funds. All of the Company’s investments held
in the Trust Account are classified as trading securities.
The
following table presents information about the Company’s assets and liabilities that are measured at fair value on a recurring
basis at September 30, 2023, and indicates the fair value hierarchy of the valuation inputs the Company utilized to determine such fair
value. At December 31, 2022 there were no assets or liabilities measured at fair value.
September
30, 2023 (Unaudited)
| |
Level | | |
Quoted Prices in Active Markets (Level 1) | | |
Significant Other Observable Inputs (Level 2) | | |
Significant Other Unobservable Inputs (Level 3) | |
Assets: | |
| | |
| | |
| | |
| |
Money Market Funds | |
1 | | |
$ | 8,329,792 | | |
| — | | |
| — | |
Note
9 — Subsequent Events
The
Company evaluated subsequent events and transactions that occurred up to the date the unaudited condensed financial statements were issued.
Based upon this review, other than described below, the Company did not identify any other subsequent events that would have required
adjustment or disclosure in the unaudited condensed financial statements.
On
October 4, 2023, the Sponsor deposited $22,949 in the Trust Account in connection with the extension of the business combination
deadline.
ITEM 2.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
References
in this report (this “Quarterly Report”) to “we,” “us” or the “Company” refer to Phoenix
Biotech Acquisition Corp. References to our “management” or our “management team” refer to our officers and directors,
and references to the “Sponsor” refer to Phoenix Biotech Sponsor, LLC. The following discussion and analysis of the Company’s
financial condition and results of operations should be read in conjunction with the financial statements and the notes thereto contained
elsewhere in this Quarterly Report. Certain information contained in the discussion and analysis set forth below includes forward-looking
statements that involve risks and uncertainties.
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 U.S. Securities and Exchange Commission (the “SEC”).
The Company’s securities filings can be accessed on the EDGAR section of the SEC’s website at www.sec.gov. Except as expressly
required by applicable securities law, the Company disclaims any intention or obligation to update or revise any forward-looking statements
whether as a result of new information, future events or otherwise.
Overview
Phoenix
Biotech Acquisition Corp. is a blank check company incorporated in Delaware on June 8, 2021. We were formed for the purpose of effecting
a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more
target businesses. We intend to effectuate our business combination using cash from the proceeds of our initial public offering and the
sale of the placement units that occurred simultaneously with the completion of our initial public offering, our capital stock, debt
or a combination of cash, stock and debt.
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
On
June 4, 2023, the Company entered into a business combination agreement and plan of reorganization (the “Business Combination
Agreement”), by and among the Company, PBCE Merger Sub, Inc., a Delaware corporation (“Merger Sub”), and CERo Therapeutics,
Inc., a Delaware corporation (“CERo”).
At
the effective time of the Business Combination (the “Effective Time”), (i) each outstanding share of CERo common stock,
par value $0.0001 per share (the “CERo common stock”) will be cancelled and converted into (a) the right to receive
a number of shares of PBAX Class A common stock, par value $0.0001 per share (“Class A common stock”), equal to
$50,000,000, minus the Aggregate Liquidation Preference (as defined in the Business Combination Agreement), divided by
the Fully Diluted Company Capitalization (as defined in the Business Combination Agreement), divided by $10.00 (the
“Exchange Ratio”) and (b) the right to receive a portion of up to 1,200,000 additional shares of Class A common
stock if certain trading price hurdles are achieved or a Change of Control (as defined in the Business Combination Agreement) occurs
within four years after the Closing (“Earnout Shares”); (ii) each outstanding option to purchase CERo common stock (each,
a “CERo option”) will be converted into an option to purchase a number of shares of Class A common stock, equal to (A) the
number of shares of CERo common stock subject to such option immediately prior to the Effective Time, multiplied by
(B) the Exchange Ratio, at an exercise price per share equal to the current exercise price per share for such option divided by
the Exchange Ratio; in each case, rounded down to the nearest whole share, and rounded up to the nearest whole cent in the case of the
exercise price of the CERo options; (iii) each outstanding share of CERo preferred stock, par value $0.0001 per share (the “CERo
preferred stock”), will be converted into a number of shares of Class A common stock, equal to the number of shares of Class A
common stock obtained by dividing the liquidation preference thereof by $10.00 and the contingent right to receive such
holder’s Earn-Out Pro Rata Portion (as defined in the Business Combination Agreement), and (iv) each warrant to
purchase CERo preferred stock (each, a “CERo warrant”) outstanding as of immediately prior to the Effective Time will be
converted into a warrant to acquire a number of shares of Class A common stock equal to the number of shares of CERo preferred stock
subject to the corresponding warrant immediately prior to the Effective Time, multiplied by the Aggregate Liquidation
Preference of such underlying shares of CERo preferred stock, and divided by $10.00, with the exercise price per share
for such warrant equal to (A) the current aggregate exercise price of such warrant (the current exercise price per share of CERo
preferred stock applicable to the corresponding warrant immediately prior to the Effective Time, multiplied by the number
of shares of CERo preferred stock issuable upon exercise thereof), divided by (B) the number of shares of Class A
common stock issuable upon exercise thereof. Subject to certain exceptions, such terms and conditions applicable to a New CERo warrant
will be the same terms and conditions as were applicable to a CERo warrant immediately prior to the Effective Time. The Company will
issue an aggregate of approximately 5.0 million shares of Class A common stock to the holders of CERo common stock and CERo
preferred stock as consideration in the Business Combination.
On
July 3, 2023, the Sponsor delivered notice of conversion of an aggregate of 4,596,250 shares of Class B common stock into an equal number
of shares of Class A common stock (the “Conversion”).
On
July 7, 2023, we held a special meeting of stockholders to approve a proposal to amend (the “Trust Agreement Amendment”)
the IMTA, as amended by the IMTA Amendment, and a proposal to adopt the Second Charter Amendment, to extend the business combination
period up to six times for one month each time from July 8, 2023 to August 8, 2023, September 8, 2023, October 8, 2023, November 8, 2023,
December 8, 2023 or January 8, 2024. On July 7, 2023, the Company and CST entered into the Trust Agreement Amendment.
On
July 7, 2023, the Sponsor deposited $37,051.83 in the Trust Account in connection with the extension of the business combination deadline,
of which $22,948.71 was required in connection with the extension to August 8, 2023 and the remainder was credited towards a portion
of the extension payment for the period from August 8, 2023 to September 8, 2023. On July 28, 2023, September 1, 2023 and October 4 2023,
the Sponsor deposited $8,845.59, $22,949 and $22,949 in the trust account in connection with the extension of the business combination
deadline.
In
connection with the approval of the Second Charter Amendment, holders of 523,341 shares of Class A common stock exercised redemption
rights. On July 18, 2023, the Company made a series of payments of an aggregate of $5,638,879.48 to holders of redeemed Class A Shares
(an aggregate of $10.77 per redeemed Class A Share). As a result of the deposit described above, such payments and accrual of interest,
the balance in the Trust Account as of September 30, 2023 is approximately $8.3 million.
Results
of Operations
As
of September 30, 2023, the Company had not commenced any operations. All activity through September 30, 2023 relates to the Company’s
formation, the initial public offering (the “IPO”), and since the IPO, the search for a prospective initial Business Combination.
The Company will not generate any operating revenues until after the completion of a Business Combination, at the earliest. The Company
generates non-operating income in the form of interest income from the proceeds derived from the IPO placed in the Trust Account (defined
below).
For
the three months ended September 30, 2023, we had a net loss of $334,028, which consisted of general and administrative expenses and
franchise taxes of $429,801and provision for income taxes of $25,751, partially offset by interest earned on marketable securities held
in Trust Account of $121,524.
For
the three months ended September 30, 2022, we had net income of $84,505, which consisted of unrealized gain on marketable securities
held in Trust Account of $661,176 and interest earned on marketable securities held in Trust Account of $320,475, partially offset by
general and administrative expenses and franchise taxes of $836,685.
For
the nine months ended September 30, 2023, we had a net loss of $2,253,473, which consisted of general and administrative expenses and
franchise taxes of $2,563,647 and provision for income taxes of $70,409, partially offset by interest earned on marketable securities
held in Trust Account of $380,583.
For
the nine months ended September 30, 2022, we had a net loss of $405,061, which consisted of general and administrative expenses and franchise
taxes of $1,618,042, partially offset by unrealized gain on marketable securities held in Trust Account of $915,859 and interest earned
on marketable securities held in Trust Account of $357,583.
Liquidity
and Going Concern
On
October 8, 2021, we consummated the IPO of 17,500,000 Units, at a price of $10.00 per Unit, which included the partial exercise
by the underwriter of its over-allotment option in the amount of 2,000,000 Units, generating gross proceeds of $175,000,000. Simultaneously
with the closing of the IPO, we consummated the sale of 885,000 Placement Units to the Sponsor, Cantor Fitzgerald and CCM at a price
of $10.00 per Placement Unit generating gross proceeds of $8,850,000.
Following
the IPO, the partial exercise of the over-allotment option and the sale of the Placement Units, a total of $178,500,000 was placed in
the Trust Account ($10.20 per Unit). We incurred $12,729,318 in transaction costs, including $2,635,000 of underwriting fees, $9,150,000
of deferred underwriting fees and $944,318 of other offering costs.
As
of September 30, 2023, the Company had $119,014 in its operating bank accounts, $8,329,792 in money market funds held in Trust Account
to be used for a Business Combination or to repurchase or redeem its Public Shares in connection therewith and a working capital deficit
of $4,568,584.
For
the nine months ended September 30, 2023, there was $1,336,995 of cash used in operating activities.
For
the nine months ended September 30, 2022, there was $719,147 of cash used in operating activities.
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.
In
order to finance transaction costs in connection with a Business Combination, our Sponsor or an affiliate of our Sponsor or certain of
our officers and directors may, but are not obligated to, loan us funds as may be required. If we complete a Business Combination, we
may repay such loaned amounts out of the proceeds of the Trust Account released to us. In the event that a Business Combination does
not close, we may use a portion of the working capital held outside the Trust Account to repay such loaned amounts, but no proceeds from
our Trust Account would be used for such repayment. Up to $1,500,000 of such loans may be converted into units of the post Business Combination
entity, at a price of $10.00 per unit, at the option of the lender. The units would be identical to the Placement Units. On December 13,
2022, the Company entered into a promissory note with the Sponsor. In order to fund ongoing operations, the Sponsor will loan up to $1,500,000
to the Company. As of September 30, 2023 and December 31, 2022, there was $1,395,000 and $650,000 of outstanding borrowings under
the working capital loan arrangement, respectively.
We
monitor the adequacy of our working capital in order to meet the expenditures required for operating our business prior to our initial
business combination. However, if our estimates of the costs of identifying a target business, undertaking in-depth due diligence
and negotiating an initial business combination are less than the actual amount necessary to do so, we may have insufficient funds available
to operate our business prior to our business combination. Moreover, we may need to obtain additional financing either to complete our
business combination or because we become obligated to redeem a significant number of our Public Shares upon completion of our business
combination, in which case we may issue additional securities or incur debt in connection with such business combination. If we are unable
to complete our initial business combination because we do not have sufficient funds available to us, we will be forced to cease operations
and liquidate the Trust Account.
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 September 30, 2023. We do
not participate in transactions that create relationships with entities or financial partnerships, often referred to as variable interest
entities, which would have been established for the purpose of facilitating off-balance sheet arrangements. We have not entered into
any off-balance sheet financing arrangements, established any special purpose entities, guaranteed any debt or commitments of other entities,
or purchased any non-financial assets.
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 $20,000 for office space, administrative and shared personnel support
services to the Company. We began incurring these fees on October 6, 2021 and incurred these fees monthly through December 31,
2022. The payment of these fees was suspended on December 31, 2022 and reinstated on March 31, 2022. As of September 30, 2023,
there was a $35,000 outstanding balance owed to the Sponsor.
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 fees of $15,000 for assisting the Company in identifying and evaluating potential acquisition targets. Payment of
the consulting fees ended on December 31, 2022 as part of the Charter Amendment approval.
In
addition, we have an agreement to pay the underwriter a deferred fee of $9,150,000. The deferred fee will become payable to the representative
from the amounts held in the Trust Account solely in the event that we complete a Business Combination, subject to the terms of the underwriting
agreement.
Critical
Accounting Policies
The
preparation of unaudited condensed financial statements and related disclosures in conformity with accounting principles generally accepted
in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and
liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and income and expenses during
the periods reported. Actual results could materially differ from those estimates. We have identified the following critical accounting
policies:
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’ deficit 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
(Loss) Income per Common Share
Net
(loss) income per share is computed by dividing net 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 September 30, 2023, the Company did not have
any dilutive securities and/or other contracts that could, potentially, be exercised or converted into shares of common stock and then
share in the earnings of the Company. As a result, diluted net (loss) income per share is the same as basic net (loss) income per share
for the period presented.
Recent
Accounting Standards
In
June 2016, the Financial Accounting Standard Board (“FASB”) issued Accounting Standards Update (“ASU 2016-13”)
[Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (“ASU
2016-13”)]. This update requires financial assets measured at amortized cost basis to be presented at the net amount expected
to be collected. The measurement of expected credit losses is based on relevant information about past events, including historical experience,
current conditions, and reasonable and supportable forecasts that affect the collectability of the reported amount. Since June 2016,
the FASB issued clarifying updates to the new standard including changing the effective date for smaller reporting companies. The guidance
is effective for fiscal years beginning after December 15, 2022, and interim periods within those fiscal years, with early adoption
permitted. The Company adopted ASU 2016-13 on January 1, 2023. The adoption of ASU 2016-13 did not have an impact on its
financial statements.
Management
does not believe that any other recently issued, but not yet effective, accounting standards if currently adopted would have a material
effect on the accompanying financial statements.
Item 3.
Quantitative and Qualitative Disclosures About Market Risk
As
a smaller reporting company, we are not required to provide the information required by this Item.
Item 4.
Controls and Procedures
Disclosure
controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed in our
reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in
the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to
ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act is accumulated and communicated
to our management, including our Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure.
Evaluation
of Disclosure Controls and Procedures
As
required by Rules 13a-15 and 15d-15 under the Exchange Act, our Chief Executive Officer and Chief Financial Officer carried out an evaluation
of the effectiveness of the design and operation of our disclosure controls and procedures as of September 30, 2023. Based upon their
evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures (as defined
in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) were effective.
Changes
in Internal Control Over Financial Reporting
During
the most recently completed fiscal quarter, there has been no change in our internal control over financial reporting that has materially
affected, or is reasonably likely to materially affect, our internal control over financial reporting.
PART
II - OTHER INFORMATION
ITEM 1.
LEGAL PROCEEDINGS
None.
ITEM 1A.
RISK FACTORS
There
have been no material changes to the risk factors disclosed in our Annual Report on Form 10-K for the year ended December 31,
2022, filed with the SEC on March 24, 2023. Any of these factors could result in a significant or material adverse effect on our
results of operations or financial condition. Additional risk factors not presently known to us or that we currently deem immaterial
may also impair our business or results of operations.
ITEM 2.
UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
Unregistered
Sale of Securities
None.
Use
of Proceeds from IPO
The
securities in the IPO were registered under the Securities Act on a registration statement on Form S-1 (No. 333-259491). The registration
statement for the Company’s IPO was declared effective on October 5, 2021. On October 8, 2021, the Company consummated
the IPO of 15,500,000 units (“Units”) (with respect to the Class A common stock included in the Units being offered
(the “Public Shares”)) at $10.00 per Unit generating gross proceeds of $155,000,000. Cantor Fitzgerald & Co. (“Cantor”)
acted as sole book-running manager of the IPO.
Simultaneously
with the closing of the IPO, the Company consummated the sale of 845,000 units (“Private Placement Units”) at a price of
$10.00 per Private Placement Unit in a private placement to the Company’s sponsor, Phoenix Biotech Sponsor, LLC (the “Sponsor”),
Cantor and Cohen & Company Capital Markets, a division of J.V.B. Financial Group, LLC (“CCM”), generating gross
proceeds of $8,450,000. The issuance was made pursuant to the exemption from registration contained in Section 4(a)(2) of the Securities
Act.
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
$20,000,000 and incurring additional offering costs of $1,400,000 in underwriting fees, all of which are deferred until the completion
of the Company’s initial Business Combination. Simultaneously with the exercise of the over-allotment, the Company consummated
the Private Placement of an additional 40,000 Private Placement Units to the Sponsor and CCM, generating gross proceeds of $400,000.
The issuance was made pursuant to the exemption from registration contained in Section 4(a)(2) of the Securities Act.
Offering
costs for the IPO amounted to $12,729,318, consisting of $2,635,000 of underwriting fees (after reimbursement of $465,000 to the Company
to pay for additional advisors), $9,150,000 of deferred underwriting fees payable (which are held in the Trust Account (defined below))
and $944,318 of other costs. The $9,150,000 of deferred underwriting fee payable is contingent upon the consummation of a Business Combination
by January 8, 2024, subject to the terms of the underwriting agreement.
Following
the closing of the IPO, $178,500,000 ($10.20 per Unit) from the net proceeds of the sale of the Units in the IPO, the Over-allotment
Units and the Private Placement Units was placed in a trust account (“Trust Account”) and invested in U.S. government securities,
within the meaning set forth in Section 2(a)(16) of the Investment Company Act of 1940, as amended (the “Investment Company
Act”), with a maturity of 185 days or less or in money market funds meeting the conditions of the Investment Company Act, as determined
by the Company, until the earlier of: (i) the completion of a Business Combination and (ii) the distribution of the Trust Account.
As a result of the redemptions and extension deposits described in this Quarterly Report and accrual of interest, the balance in the
Trust Account as of September 30, 2023 is approximately $8.3 million.
For
a description of the use of the proceeds generated in our IPO, see Part I, Item 2 of this Quarterly Report.
ITEM 3.
DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4.
MINE SAFETY DISCLOSURES
Not
applicable.
ITEM 5.
OTHER INFORMATION
None.
ITEM 6.
EXHIBITS
The
following exhibits are filed as part of, or incorporated by reference into, this Quarterly Report on Form 10-Q.
EXHIBITS
The
following exhibits are filed as part of, or incorporated by reference into, this Quarterly Report on Form 10-Q.
No. | |
Description of Exhibit |
| |
|
1.1 | |
Underwriting Agreement, dated October 5, 2021, between the Company and Cantor Fitzgerald & Co.(1) |
| |
|
2.1 | |
Business Combination Agreement, dated as of June 4, 2023, by and among Phoenix Biotech Acquisition Corp., PBCE Merger Sub, Inc. and CERo Therapeutics, Inc. (7). |
| |
|
3.1 | |
Amended and Restated Certificate of Incorporation (incorporated by reference to Exhibit 3.1 of the Company’s Current Report on Form 8-K filed with the SEC on October 12, 2021). |
| |
|
3.2 | |
Amended and Restated Bylaws (incorporated by reference to Exhibit 3.2(b) filed with the Form S-1 filed by the Registrant on September 13, 2021). |
| |
|
3.3 | |
Amendment to Amended and Restated Certificate of Incorporation, filed with the Secretary of State of the State of Delaware on December 20, 2022(4) |
| |
|
3.4 | |
Amendment to Amended and Restated Certificate of Incorporation, filed with the Secretary of State of the State of Delaware on July 7, 2023(6) |
| |
|
4.1 | |
Specimen Unit Certificate(2) |
| |
|
4.2 | |
Specimen
Common Stock Certificate(2) |
| |
|
4.3 | |
Specimen Warrant Certificate(2) |
| |
|
4.4 | |
Warrant Agreement, dated October 5, 2021, between Continental Stock Transfer & Trust Company and the Company(1) |
No. | |
Description of Exhibit |
| |
|
10.1 | |
Form of Sponsor Support Agreement (5) |
| |
|
10.2 | |
Form of CERo Support Agreement (5) |
| |
|
10.3 | |
Investment Management Trust Agreement, dated October 5, 2021 between Continental Stock Transfer & Trust Company and the Company(1) |
| |
|
10.4 | |
Amendment No. 1 to the Investment Management Trust Agreement, dated December 20, 2022, by and between the Company and Continental Stock Transfer & Trust Company(4) |
| |
|
10.5 | |
Amendment No. 2 to the Investment Management Trust Agreement, dated July 7, 2023, by and between the Company and Continental Stock Transfer & Trust Company(6) |
| |
|
10.6 | |
Registration Rights Agreement, dated October 5, 2021, between the Company and certain security holders of the Company(1) |
| |
|
10.7 | |
Form of Indemnity Agreement(2) |
| |
|
10.8 | |
Form of Engagement Letter with Cohen & Company Capital Markets(2) |
| |
|
10.9 | |
Promissory Note, dated December 20, 2022, issued to Phoenix Biotech Sponsor, LLC(4) |
| |
|
31.1* | |
Certification of Principal Executive Officer Pursuant to Securities Exchange Act Rule 13a-14(a), as adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 |
| |
|
31.2* | |
Certification of Principal Financial Officer Pursuant to Securities Exchange Act Rule 13a-14(a), as adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 |
| |
|
32.1^ | |
Certification of Principal Executive Officer Pursuant to 18 U.S.C. Section 1350, as adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 |
| |
|
32.2^ | |
Certification of Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 |
| |
|
101.INS* | |
XBRL Instance Document |
| |
|
101.SCH* | |
XBRL Taxonomy Extension Schema Document |
| |
|
101.CAL* | |
XBRL Taxonomy Extension Calculation Linkbase Document |
| |
|
101.DEF* | |
XBRL Taxonomy Extension Definition Linkbase Document |
| |
|
101.LAB* | |
XBRL Taxonomy Extension Labels Linkbase Document |
| |
|
101.PRE* | |
XBRL Taxonomy Extension Presentation Linkbase Document |
| |
|
104 | |
Cover Page Interactive Data File—the cover page interactive data is embedded within the Inline XBRL document or included within the Exhibit 101 attachments. |
* |
Filed
herewith. |
^ |
Furnished
herewith. |
(1) |
Previously
filed as an exhibit to our Current Report on Form 8-K filed on October 12, 2021 |
(2) |
Previously
filed as an exhibit to our Registration Statement on Form S-1, as amended (File No. 333-259491) |
(3) |
Previously
filed as an exhibit to our Current Report on Form 8-K filed with the SEC on December 7, 2022 |
(4) |
Previously
filed as an exhibit to our Current Report on Form 8-K filed on December 20, 2022 |
(5) |
Previously
filed as an exhibit to our Current Report on Form 8-K filed on June 5, 2023 |
(6) |
Previously
filed as an exhibit to our Current Report on Form 8-K filed on July 10, 2023 |
(7) |
Previously
filed as an exhibit to our Current Report on Form 8-K filed on June 5, 2023 |
SIGNATURES
In
accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
|
PHOENIX
BIOTECH ACQUISITION CORP. |
|
|
|
Date:
November 9, 2023 |
By: |
/s/
Chris Ehrlich |
|
Name: |
Chris
Ehrlich |
|
Title: |
Chief
Executive Officer and Director |
|
|
(Principal
Executive Officer) |
|
|
|
Date:
November 9, 2023 |
By: |
/s/
Daniel Geffken |
|
Name: |
Daniel Geffken |
|
Title: |
Chief
Financial Officer and Director |
|
|
(Principal
Financial and Accounting Officer) |
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