CERO THERAPEUTICS HOLDINGS, INC.
For the period ended Mar 31, 2025. Filed May 15, 2025.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Mar 31, 2025 · Filed May 15, 2025
CERO$0.010.0%Stored close · as of Jul 8, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-09-30; filed 2024-11-19.
0001213900-24-100245
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2025-03-31; filed 2025-05-15.
0001213900-25-044335
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 94 previous paragraphs and 71 current paragraphs.
27 unchanged; 11 reworded; 33 added; 55 removed; 1 previous and 0 current paragraphs rearranged.
Tables are not compared: 35 previous and 17 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (33)
Current report
Going concern
Current report
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business. The Company’s ability to continue as a going concern is dependent on its ability to raise additional capital to fund its R&D activities and meet its obligations on a timely basis. As of March 31, 2025, the Company reported $5.1 million of cash and cash equivalents, with an accumulated deficit of $76.0 million.
Current report
On February 5, 2025, we entered into a securities purchase agreement, with participation from a member of the Board and a single institutional investor, for the purchase and sale of (i) 2,551,020 shares of Common Stock or Common Stock equivalents in lieu thereof; and (ii) February 2025 Common Warrants to purchase up to 2,551,020 shares of Common Stock at an exercise price of $1.96. In connection with such offering, we received net proceeds of approximately $4.3 million. Additionally, during the three months ended March 31, 2025, we received net proceeds from the exercise of the remaining Series A Preferred Warrants, the collection of subscriptions receivable and equity line of credit fundings of approximately $2.4 million.
Current report
Further, on April 21, 2025, the Company entered into a Securities Purchase Agreement (the “Securities Purchase Agreement”) with certain accredited investors named therein. Pursuant to the Securities Purchase Agreement, up to 10,000 shares of the Company’s Series D Preferred Stock shall be purchased for an aggregate purchase price of up to $8 million in one or more closings (each a “Closing”). On April 22, 2025, pursuant to the Securities Purchase Agreement, the Company issued and sold, and the investors purchased, in a private placement (the “Private Placement”): 6,250 shares of the Series D Preferred Stock for aggregate proceeds of approximately $5 million, paid through the transfer of certain Transfer Shares (as defined in the Securities Purchase Agreement) in lieu of cash. The date of the first closing is referred to as the “First Closing Date.” Each additional closing of the Private Placement is at the option of the investors upon notice to the Company and subject to satisfaction of customary closing conditions. On April 22, 2025, the Company filed the Certificate of Designations of Rights and Preferences of the Series D Preferred Stock (the “Certificate of Designations”) for the purpose of designating and establishing the Company’s Series D Preferred Stock. Additional funds are necessary to maintain current operations and to continue R&D activities. However, there can be no assurance that sufficient funding will be available to allow the Company to successfully continue its R&D activities and planned regulatory filings with the FDA. If the Company is unable to obtain the necessary funds, significant reductions in spending and the delay or cancellation of planned activities may be necessary. These actions would have a material adverse effect on the Company’s business, results of operations, and prospects. These conditions raise substantial doubt about the Company’s ability to continue as a going concern within one year from the date these accompanying financial statements are issued. The accompanying financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might result from the outcome of this uncertainty.
Current report
Recent Developments
Current report
Reverse Stock Split
Current report
At 12:01 a.m. Eastern time on January 8, 2025, we effected the Reverse Stock Split pursuant to which each 100 shares of our Common Stock outstanding immediately prior thereto was converted into 1 share of our Common Stock outstanding immediately thereafter.
Current report
February 2025 Offering
Current report
On February 7, 2025, we closed our reasonable best efforts public offering, with participation from a member of our board of directors and a single institutional investor, for the purchase and sale of (i) 2,551,020 shares of Common Stock or common stock equivalents in lieu thereof; and (ii) February 2025 Common Warrants to purchase up to 2,551,020 shares of common stock, at a combined public offering price of $1.96 per share and warrant. In connection with the offering, on February 5, 2025, we entered into the SPA with the investors. Such transaction is referred to as the “February 2025 Offering.” The shares of Common Stock and the Warrants described above and the shares of Common Stock underlying the Warrants were offered pursuant to the Registration Statement on Form S-1 (File No. 333-284007), as amended, which was declared effective by the Securities and Exchange Commission on February 5, 2025. In connection with this offering, we received net proceeds of approximately $4.3 million.
Current report
On April 21, 2025, the Company consummated a private placement of 6,250 shares of Series D Preferred Stock pursuant to the Securities Purchase Agreement, for aggregate proceeds of approximately $5 million, paid through the transfer of certain Transfer Shares (as defined in the Securities Purchase Agreement) in lieu of cash, and agreed to issue up to 3,750 additional shares of Series D Preferred Stock for cash proceeds of up to $3 million at one or more additional closings. Each additional closing is at the option of the investors upon notice to the Company and subject to satisfaction of customary closing conditions.
Current report
On April 22, 2025, the Company filed the Certificate of Designations of Rights and Preferences of the Series D Preferred Stock (the “Certificate of Designations”) for the purpose of designating and establishing the Company’s Series D Preferred Stock. The Certificate of Designations was filed pursuant to the Securities Purchase Agreement, dated April 21, 2025, with certain accredited investors named therein. The Certificate of Designations became effective on April 22, 2025.
Current report
On November 15, 2024, the Company received notice from the FDA that the IND for CER-1236 was cleared. The Company began clinical trials in May 2025. We submitted a second IND application for the investigation of CER-T cell therapy in NSCLC and ovarian cancer, which was accepted by the FDA on March 27, 2025.
Current report
As previously disclosed, on January 17, 2025, the Company received a letter setting forth the determination of a panel convened by Nasdaq (the “Nasdaq Panel”) granting the Company’s request for an extension (the “Extension”) to regain compliance with certain continued listing requirements of the Nasdaq Stock Market until April 22, 2025 (the “Extension Date”). The Company presented its plan (the “Plan”) for regaining compliance with such requirements at a hearing conducted on December 17, 2025. The Company’s Plan included completion of a reverse stock split, which occurred on January 8, 2025, and transferring the listing of its securities to the Nasdaq Capital Market, which was completed on February 12, 2025, and certain other conditions, including the satisfaction of the $2.5 million minimum stockholders’ equity requirement for continued listing on the Nasdaq Capital Market.
Current report
In addition, as previously disclosed, from November 2024 through January 2025, the Company raised approximately $2.3 million of net proceeds from its equity line of credit entered into November 2024, and an additional approximately $4.3 million of net proceeds from its public offering of shares of common stock, pre-funded warrants and warrants to purchase shares of common stock that closed on February 7, 2025 (the “February 2025 Offering”). As a result of such capital raising activities and the proceeds of the Private Placement received on the First Closing Date, as well as successful negotiations with certain service providers to reduce outstanding balances payable, the Company received a notification letter from Nasdaq on May 7, 2025, stating that the Company to have regained compliance with the Nasdaq continued listing standard under Nasdaq Listing Rule 5550(b)(1), which requires, among other things, that the Company maintain at least $2.5 million in stockholders’ equity.
Current report
Results of Operations
Current report
Other Income (Expense), Net
Current report
Research and development expenses were $2.9 million for the three months ended March 31, 2025 as compared to $1.7 million for the three months ended March 31, 2024, reflecting an increase of $1.2 million. The increase was primarily attributable to an increase in clinal expenses of approximately $1.3 million and an increase in scientific consulting fees of $0.4 million. During the three months ended March 31, 2025, we began clinical trials related to the IND for CER-1236. This increase was primarily offset by a decrease in lab expenses of approximately $0.3 million and a decrease in research and development salaries and benefits of approximately $0.1 million.
Current report
General and administrative expenses were $2.0 million for the three months ended March 31, 2025 as compared to $2.9 million for the three months ended March 31, 2024, reflecting a decrease of approximately $0.8 million. The decrease during the three months ended March 31, 2025 as compared to the three months ended March 31, 2024, was primarily due to a decrease of $1.8 million in underwriting fees from the PBAX initial public offering, which were incurred upon the consummation of the business combination in February 2024. This decrease was offset by an increase in executive salaries and benefits of $0.4 million, an increase in professional fees of $0.5 million primarily to an increase in auditing, accounting and legal fees which were offset by a decrease in recruiting fees. The additional professional fees were all driven by the increased expenses of operational compliance as a public company.
Current report
Other Income (Expense), Net
Current report
Other expense was $(0.2) million for the three months ended March 31, 2025 as compared to other income of $2.3 million for the three months ended March 31, 2024, reflecting a decrease of $2.4 million. The decrease was primarily due to the recording of a $1.8 million gain from change in value of the Company’s earnout liability and the $0.4 million gain recorded for the change in value of the Predecessor’s preferred stock warrant liability during the three months ended March 31, 2024 as compared to $0 during the three months ended March 31, 2025, and the recording of an inducement expense during the three months ended March 31, 2025. Additionally, settlement of vendor liabilities in 2024 resulted in a $0.1 million increase in other income during the three months ended March 31, 2024.
Current report
Net loss and net loss attributable to common stockholders
Current report
For the three months ended March 31, 2025 and 2024, net loss amounted to $5.1 million and $2.3 million, respectively, which represents an increase in net loss of $2.8 million, or 122.0%. During the three months ended March 31, 2025, in connection with our Series A and Series B preferred stock conversions, and the redemption of Series C Preferred Stock, we recorded deemed dividends of $0.3 million, and in connection with the adjustment in the exercise price of Series C Common Warrants, we recorded deemed dividends of $0.1 million. Accordingly, for the three months ended March 31, 2025 and 2024, net loss attributable to common stockholders amounted to $5.5 million, or $(1.59) per common share, and $2.3 million, or $(16.30) per common share, respectively.
Current report
Net cash used in operating activities for the three months ended March 31, 2025 primarily reflected a net loss of $5.1 million, adjusted for the reconciliation of non-cash items such as depreciation expense of $0.1 million, stock-based compensation of $0.3 million, inducement expense of $0.2 million, and amortization of right-of-use asset of $0.2 million, and changes in operating asset and liabilities primarily consisting of an increase in prepaid expenses and other current assets of $0.3 million, an increase in accounts payable of $0.7 million, a decrease in accrued liabilities of $0.3 million, and a decrease in operating lease liabilities of $0.2 million.
Current report
Net cash used in operating activities for the three months ended March 31, 2024 primarily reflected a net loss of $2.3 million, adjusted for the reconciliation of non-cash items such as a gain of settlement of liabilities with vendors of $0.1 million, depreciation expense of $0.1 million, stock-based compensation of $0.1 million, amortization of right-of-use asset of $0.2 million and a gain on revaluation of earnout liability and the preferred stock warrant liability of $2.1 million, and changes in operating asset and liabilities primarily consisting of an increase in prepaid expenses and other current assets of $0.5 million, a decrease in accounts payable of $0.3 million, an increase in accrued liabilities of $0.1 million, and a decrease in operating lease liabilities of $0.2 million.
Current report
Net cash provided by financing activities for the three months ended March 31, 2025 amounted to $6.3 million as compared to $7.2 million for the three months ended March 31, 2024.
Current report
During the three months ended March 31, 2025, net cash provided by financing activities of $6.3 million was primarily attributable to the receipt of net proceeds of $0.5 million from the exercise of Series A Preferred Warrants, net proceeds of $1.2 million from the sale of common stock under the ELOC, proceeds of $0.7 million from the collection of stock subscriptions receivable from previous sales of common stock under the ELOC, and net proceeds from sale of common stock and pre-funded warrants of $4.3 million. Offset by the cash redemption of Series C Preferred Stock of $0.4 million.
Current report
During the three months ended March 31, 2024, net cash provided by financing activities of $7.2 million was primarily attributable to the receipt of net proceeds of $6.8 million from the sale of Series A Preferred Stock and $0.4 million from short-term borrowings.
Current report
Critical Accounting Estimates
Current report
Earnout liability - As a result of the Merger in February 2024, the Company recognized an earnout liability of $4.9 million on the merger date. The earnout liability is measured using unobservable (Level 3) inputs and was included in current liabilities on balance sheet. The Company estimated the fair value of the earnout liability by applying a Monte-Carlo simulation method using the Company’s projection of future operating results and the estimated probability of achievement of the earnout target metrics. The Monte-Carlo simulation is a generally accepted statistical technique used to generate a defined number of valuation paths in order to develop a reasonable estimate of the fair value of the earnout liability. The liability is remeasured to fair value using the Monte-Carlo simulation method at each reporting period, and the change in fair value is recognized in other income (expense) until the contingency is resolved. During the three months ended March 31, 2024, the Company recorded a gain from change of fair value of the earnout liability of $1,800,000, which is included in other income (expenses), net on the accompanying consolidated statement of operations.
Current report
Stock-based compensation – The Company periodically issues common stock and stock options to officers, directors, and consultants for services rendered. Stock-based compensation accounting requires the recognition of stock-based compensation expense, using a grant date fair value-based method, for costs related to all share-based payments including stock options and restricted stock awards granted to employees and non-employees. Companies are required to estimate the fair value of all share-based payment awards on the date of grant using an option pricing model, and the Company uses a Black-Scholes option pricing model (“Black-Scholes”) to estimate option award fair value. The assumptions used in calculating the fair value of stock-based awards represent management’s best estimates and involve inherent uncertainties and the application of management’s judgment. The fair value of restricted stock awards is based upon the estimated share price of the common shares on the date of grant. Forfeitures are accounted for as they occur, and the Company applies the simplified method to estimate expected term of “plain vanilla” options. All options and restricted stock awards granted since inception are expensed on a straight-line basis over the requisite service period, which is usually the vesting period, or upon the completion of certain performance-based vesting terms and the related amounts are recognized in the consolidated statements of operations.
Current report
The accounting for stock options granted to outside consultants is consistent with the accounting for stock-based payments to officers and directors, as described above, by measuring the cost of services received in exchange for equity awards utilizing the grant date fair value of the awards, with the cost recognized as stock-based compensation expense on the straight-line basis in the Company’s financial statements over the vesting period of the awards.
Current report
Recent Accounting Standards
Current report
See the section titled in Note 2 to the Company’s condensed consolidated financial statements for the quarter ended March 31, 2025, appearing elsewhere herein.
Removed paragraphs (55)
Previous report
In February 2024, the Company consummated the first tranche of a private placement of 10,039 shares of the Series A Preferred Stock, issuance of common warrants to purchase 612,746 shares of Common Stock and warrants to purchase 2,500 shares of Series A Preferred Stock, pursuant to the Amended and Restated Securities Purchase Agreement, dated February 14, 2024, by and among Predecessor, PBAX and certain accredited investors for aggregate cash proceeds to the Company of approximately $10.0 million, including cash previously received for bridge loan proceeds. A portion of the Series A Preferred Stock was issued as consideration for the cancellation of outstanding indebtedness or securities of Predecessor or PBAX, including a promissory note of PBAX and certain convertible bridge notes of Predecessor. Such transactions collectively are referred to as the “February 2024 PIPE Financing.”
Previous report
April 2024 PIPE Financing
Previous report
On April 1, 2024, the Company consummated a private placement of 626 shares of the Series B Preferred Stock, pursuant to the Securities Purchase Agreement, dated March 28, 2024, by and among the Company and certain accredited investors, for aggregate cash proceeds to the Company of approximately $0.5 million (the “April 2024 PIPE Financing”).
Previous report
September 2024 PIPE Financing
Previous report
In September 2024, the Company consummated a private placement of 2,853 shares of the Series C Preferred Stock with common warrants to purchase 8,175,166 shares of Common Stock pursuant to the Securities Purchase Agreement, dated September 25, 2024, by and among certain accredited investors for aggregate cash proceeds to the Company of approximately $1.25 million.
Previous report
On November 15, 2024, the Company received notice from the FDA that the IND for CER-1236 was cleared. The Company continues to believe that it will be able to initiate the planned clinical trial by early 2025.
Previous report
On July 19, 2024, the Company received a letter (the “Bid Price Requirement 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 Bid Price Requirement Letter, the closing bid price for the Common Stock has been below the minimum $1.00 per share required for continued listing on Nasdaq set forth in Nasdaq Listing Rule 450(a)(1), which is required for continued listing of the Common Stock on Nasdaq (the “Bid Price Requirement”). On October 23, 2024, the trading price for CERo common stock closed under $0.10 and was the tenth consecutive trading day to do so. On October 24, 2024, the Company received a letter from the staff at Nasdaq notifying the Company that, because its Common Stock had a closing bid price of $0.10 or less for ten consecutive trading days, it was no longer eligible to rely upon the 180-day cure period set forth in the Bid Price Requirement Letter.
Previous report
On July 19, 2024, the Company also received a letter (the “MVPHS Letter”) from Nasdaq notifying the Company that the “Market Value of Publicly Held Shares” (the “MVPHS”) of the Common Stock had been below the minimum of $15,000,000 for the last 30 consecutive business days prior to the date of the MVPHS Letter, which is required for continued listing of the Common Stock on Nasdaq (the “MVPHS Requirement”).
Previous report
Such letters are in addition to the letter from Nasdaq received by the Company on May 2, 2024 (the “MVLS Letter” and, together with the Bid Price Letter and the MVPHS Letter, the “Letters”) notifying the Company that, for the 30 consecutive trading days prior to the date of such MVLS Letter, the 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 Common Stock on Nasdaq (the “MVLS Requirement” and, together with the Bid Price Requirement and the MVPHS Requirement, the “Requirements”). On October 30, 2024, the Company received a letter from the staff at Nasdaq notifying the Company that it had not regained compliance with the MVLS Requirement within the 180-day compliance period set forth in the MVLS Letter.
Previous report
Each of the Bid Price Requirement and MVLS Requirement deficiencies results in the commencement of delisting proceedings. However, the Company has requested a hearing from Nasdaq and plans to submit a plan to regain compliance with the listing requirements at such hearing. Notwithstanding that applicable Nasdaq rules provide a 180-day compliance period to regain compliance with the MVPHS Requirement, the plan submitted by the Company in connection with such hearing will be required to demonstrate a pathway to compliance with all applicable deficiencies.
Previous report
The Company intends to evaluate available options to resolve these deficiencies and regain compliance with the Requirements. Such options may include seeking to qualify for continued listing under a different continued listing standard of the Nasdaq Global Market or Nasdaq Capital Market, in lieu of the MVPHS and MVLS requirements, including the Equity Standard, if the Company has sufficient stockholders’ equity at such time. While the Company is exercising diligent efforts to maintain the listing of its securities on Nasdaq, there can be no assurance that the Company will be able to regain or maintain compliance with Nasdaq listing standards.
Previous report
On November 11. 2024, the Company’s stockholders approved a reverse stock split ranging from 1:25 to 1:150. On November 15, 2024, the Board of Directors authorized a 1:40 reverse stock split, such split anticipated to be effective on or about November [●], 2024. Although such reverse stock split is expected to enable regaining compliance with the Bid Price Requirement, it is not intended to contribute to regaining compliance with the other Requirements.
Previous report
Factors Affecting Our Performance
Previous report
The Company believes that its performance and future success depend on several factors that present significant opportunities for the Company but also pose risks and challenges. These include, among others:
Previous report
Components of Results of Operations
Previous report
Interest and Other Income, Net
Previous report
Condensed Consolidated****STATEMENTS OF OPERATIONS
Previous report
General and administrative expenses were $2.6 million for the three-month period ended September 30, 2024 compared to $0.3 million for the three-month period ended September 30, 2023, reflecting an increase of $2.4 million. The increase in the three-month period ended September 30, 2024, over the three-month period ended September 30, 2023, was predominantly due to the expenses associated with operating as a publicly traded company. The hiring of senior management in G&A resulted in an increase of $0.4 million in the three-month period ended September 30, 2024, versus the three-month period ended September 30, 2023, and expenses associated with public company filings and financings increased legal expenses $1.0 million, and accounting and filing-associated expenses $0.2 million in the three-month period ended September 30, 2024, versus the three-month period ended September 30, 2023. Business consulting services and directors’ fees increased $0.5 million in the three-month period ended September 30, 2024, versus the three-month period ended September 30, 2023. Public company insurance coverage increased insurance expenses $0.1 million in the three-month period ended September 30, 2024, versus the three-month period ended September 30, 2023. Other expenses, including corporate communication expenses, recruiting expenses, IT expenses, and travel costs increased $0.2 million in the three-month period ended September 30, 2024, versus the three-month period ended September 30, 2023.
Previous report
Research and development expenses were $1.8 million for the three-month period ended September 30, 2024 compared to $1.3 million for the three-month period ended September 30, 2023, reflecting an increase of $0.5 million. The increase was related to increased research and development activity as the Company addressed regulatory questions related to the IND for CER-1236 and prepared for the clinical trial, anticipated to start after the clinical hold for CER-1236 is lifted. Clinical expenses increased $0.2 million, manufacturing increased by $0.1 million and research and development consulting increased by $0.3 million, offset by a reduction of $0.2 million in compensation expenses and the scientific operations were conducted with more consulting and fewer employees in the three-month period ended September 30, 2024, versus the three-month period ended September 30, 2023. The remaining $0.1 million increase in the three-month period ended September 30, 2024, over the three-month period ended September 30, 2023, was related to lab supplies and expenses, additional pre-clinical work and facilities rent escalation.
Previous report
Other Income
Previous report
Other income was $0.2 million for the three-month period ended September 30, 2024 and 2023. The immaterial change was related to higher interest income and slightly lower gain from revaluation of liabilities in the three-month period ended September 30, 2024, versus the three-month period ended September 30, 2023.
Previous report
Results of Operations for the nine-months ended September 30, 2024 and 2023
Previous report
Condensed Consolidated****STATEMENTS OF OPERATIONS
Previous report
General and Administrative Expenses
Previous report
General and administrative expenses were $7.9 million for the nine-month period ended September 30, 2024, compared to $2.3 million for the nine-month period ended September 30, 2023, reflecting an increase of $5.7 million. The increase in the nine-month period ended September 30, 2024, over the nine-month period ended September 30, 2023, was predominantly due to a $1.8 million expense consisting of the remaining underwriting fees from the PBAX initial public offering, which were earned on the consummation of the business combination. Additionally, the hiring of senior management in G&A resulted in an increase of $1.6 million, including recruiting fees. Legal fees increased $0.8 million and business consulting increased $0.3 million in the nine-month period ended September 30, 2024, versus the nine-month period ended September 30, 2023. Expenses related to services required for SEC compliance, such as printing and transfer agency fees, increased $0.4 million and public company insurance coverage increased insurance expenses $0.4 million in the nine-month period ended September 30, 2024, compared to the nine-month period ended September 30, 2023. Corporate communications and director fees each increased $0.2 million in the nine-month period ended September 30, 2024 compared to the nine-month period ended September 30, 2023. The additional expenses are all driven by the increased expenses of operational compliance as a public company.
Previous report
Research and Development Expenses
Previous report
Research and development expenses were $6.2 million for the nine-month period ended September 30, 2024, compared to $4.3 million for the nine-month period ended September 30, 2023, reflecting an increase of $1.9 million. The increase was related to increased R&D activity as the Company prepared and filed the IND for CER-1236, prepared for the clinical trial initiation, and conducted additional experiments in response to the FDA questions related to the IND. Compensation increased $0.1 million, clinical expenses increased $0.2 million, and consulting expenses increased $0.9 million in the nine-month period ended September 30, 2024, due to activities related to the preparation of the IND and responses to questions from FDA, and preparation for the anticipated clinical trial for CER-1236.. To complete the IND application, multiple manufacturing runs were necessary, increasing manufacturing costs by $0.2 million in the nine-month period ended September 30, 2024, versus the nine-month period ended September 30, 2023. Additional studies required to address FDA questions increased pre-clinical study costs by $0.3 million. The remaining $0.2 million increase in the nine-month period ended September 30, 2024, versus the nine-month period ended September 30, 2023, was predominantly related to lab supplies and expenses and facilities rent escalation.
Previous report
Other Income
Previous report
Other income was $5.1 million for the nine-month period ended September 30, 2024, compared to $0.5 million for the nine-month period ended September 30, 2023, reflecting an increase of $4.6 million. The increase in 2024 relative to 2023 was predominantly due to the $4.7 million change in value of the Company’s Earnout Liability in the nine-month period ended September 30, 2024. Settlement of vendor liabilities in 2024 resulted in a $0.6 million increase in income in 2024, offset by an additional $0.1 million less interest income and $0.6 million other expense for the delayed S-1 penalty.
Previous report
Net cash used in operating activities increased $6.6 million from $4.8 million to $11.4 million in the nine-month period ended September 30, 2023 and 2024 respectively. The increase in cash used was largely related to having a $4.8 million increase in the adjustment to net loss related to the gain on the revaluation of derivative liabilities. The difference in net loss reflected $3.0 million more cash being used, offset by a larger non-cash adjustment for stock-based compensation of $1.9 million in the nine-month period ended September 30, 2024 versus 2023. The difference of $0.1 million of cash resulting from increasing accounts payable and accruals was offset by $0.1 million increase in prepaid expenses and $0.6 million in vendor settlements in the nine-month period ended September 30, 2024 versus 2023. The remaining difference was an additional $0.1 million in adjustment to lease liability due to rent escalation.
Previous report
Net cash provided by financing activities increased $11.7 million from $0.6 million in the nine-month period ended September 30, 2023 to $12.2 million in the nine-month period ended September 30, 2024. The increase was related to the net proceeds of $7.3 million from the issuance of Series A and B Preferred Stock, the net proceeds of $0.7 million from the issuance of Series C Preferred Stock and associated warrants, the gross proceeds of $4.3 million for the sale of common stock under the ELOC, and $0.1 million related to net insurance financing. These increases in cash were partially offset by the $0.6 million borrowing under the bridge loan in 2023, for which there was no equivalent in the nine-month period ended September 30, 2024.
Previous report
Contractual Obligations and Other Commitments
Previous report
None.
Previous report
Critical Accounting Policies and Significant Judgments and Estimates
Previous report
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“U.S.”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent liabilities at the date of the financial statements, and the reported amounts of expenses incurred during the reporting period. Significant items subject to such estimates and assumptions include the estimates of the fair values of convertible preferred stock, earnout-related Common Stock, and preferred stock warrant liability, stock-based compensation expense, the fair value of right-to-use assets and lease liabilities, and the valuation allowance associated with deferred tax assets. Actual results could differ from those estimates.
Previous report
Predecessor and the Company define its critical accounting policies as those accounting principles that require it to make subjective estimates and judgments about matters that are uncertain and are likely to have a material impact on its financial condition and results of operations, as well as the specific manner in which it applies those principles. While significant accounting policies are more fully described in Note 2 to the Company’s unaudited financial statements appearing elsewhere in this Form 10-Q, the Company believes the following are the critical accounting policies used in the preparation of its financial statements that require significant estimates and judgments.
Previous report
Fair value measurements – Fair value is the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants on the measurement date. In determining fair value, the assumptions that market participants would use in pricing an asset or liability (the inputs) are based on a tiered fair value hierarchy consisting of three levels, as follows:
Previous report
The categorization of a financial instrument within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement.
Previous report
The carrying amounts of cash, restricted cash, and cash equivalents, prepaid expenses and other current assets, accounts payable, and accrued liabilities approximate fair value due to their relatively short-term maturities.
Previous report
Research and development– R&D costs consist primarily of salaries and benefits, including stock-based compensation, occupancy, materials and supplies, contracted research, consulting arrangements, and other expenses incurred in the pursuit of R&D programs. R&D costs are expensed as incurred.
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Reworded paragraphs (11)
Previous wording
The following Management’s Discussion and Analysis of Financial Condition and Results of Operations provides information which CERo Therapeutics Holdings, Inc. (“the Company”) management believes is relevant to an assessment and understanding of its results of operations and financial condition. The discussion should be read together withthe Company*’s financial statements and related notes that are presented above. This Management’s Discussion and Analysis of Financial Condition and Results of Operations may contain forward-looking statements based upon current expectations that involve risks and uncertainties. Actual results may differ materially from those anticipated in these forward-looking statements resulting from various factors. Please see “Cautionary Note Regarding Forward Looking Statements” and “Risk Factors” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023), filed with the Securities and Exchange Commission (the “SEC”). Unless the context otherwise requires, references in this section to “Predecessor” is intended to mean the business and operations of CERo Therapeutics, Inc. prior to the Merger.*
Current wording
The following Management’s Discussion and Analysis of Financial Condition and Results of Operations provides information that CERo Therapeutics Holdings, Inc. (“the Company”) management believes is relevant to an assessment and understanding of its results of operations and financial condition. The discussion should be read together with (i) the Company’s unaudited condensed consolidated financial statements and related notes that are presented above and (ii) the Company’s audited consolidated financial statements and related notes and management’s discussion and analysis of financial condition and results of operations included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024 filed with the Securities and Exchange Commission (the “SEC”) on April 15, 2025. This Management’s Discussion and Analysis of Financial Condition and Results of Operations may contain forward-looking statements based upon current expectations that involve risks and uncertainties. Actual results may differ materially from those anticipated in these forward-looking statements resulting from various factors. Please see “Cautionary Note Regarding Forward Looking Statements” and “Risk Factors” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024 and the subsequent Quarterly Report on Form 10-Q as filed with the SEC. Unless the context otherwise requires, references in this section to “Predecessor” is intended to mean the business and operations of CERo Therapeutics, Inc. prior to the Merger.
Previous wording
CERo Therapeutics, Inc. (Predecessor) was incorporated in Delaware on September 23, 2016, and is based in South San Francisco, California. Predecessor was focused on developing its therapeutic platform to genetically engineer human immune cells to fight cancer and did not begin clinical development or product commercialization. The Company’s efforts will focus on continued product development, including clinical development, to support regulatory approval to commercialize and subsequent product commercialization.
Current wording
CERo Therapeutics, Inc. (the “Predecessor”) was incorporated in Delaware on September 23, 2016, and is based in South San Francisco, California. Predecessor was focused on developing its therapeutic platform to genetically engineer human immune cells to fight cancer and did not begin clinical development or product commercialization. The Company’s efforts will focus on continued product development, including clinical development, to support regulatory approval to commercialize and subsequent product commercialization.
Previous wording
On June 4, 2023, Predecessor entered into a Business Combination Agreement (as amended by that certain Amendment No. 1 to the Business Combination Agreement, dated as of February 5, 2024 and Amendment No. 2 to the Business Combination Agreement, dated as of February 13, 2024, the “Business Combination Agreement”) by and among PBAX and PBCE Merger Sub, Inc. (“Merger Sub”), pursuant to which Merger Sub merged with and into Predecessor, with Predecessor surviving as a wholly-owned subsidiary of PBAX (the “Merger”). In connection with the consummation of the Business Combination on February 14, 2024, PBAX changed its corporate name to “CERo Therapeutics Holdings, Inc.”
Current wording
On June 4, 2023, Predecessor entered into a Business Combination Agreement (as amended by that certain Amendment No. 1 to the Business Combination Agreement, dated as of February 5, 2024 and Amendment No. 2 to the Business Combination Agreement, dated as of February 13, 2024, the “Business Combination Agreement”) by and among PBAX and PBCE Merger Sub, Inc., pursuant to which Merger Sub merged with and into Predecessor, with Predecessor surviving as a wholly-owned subsidiary of PBAX (the “Merger”). In connection with the consummation of the Business Combination on February 14, 2024, PBAX changed its corporate name to “CERo Therapeutics Holdings, Inc.”
Previous wording
In addition, the holders of Predecessor common stock and Predecessor preferred stock have the contingent right to receive the Earnout Shares. At the Closing, the Company issued three pools of shares of Common Stock subject to forfeiture if the applicable conditions to transferability thereof are not satisfied: (i) 1,200,000 shares of Common Stock, which will be fully vested upon the achievement of certain adjusted stock price-based earnout targets or upon a qualifying transaction (ii) 875,000 shares of Common Stock, pursuant to a Letter Agreement, dated as of February 14, 2024 which were fully vested at Closing of the Merger and which were issued as an offset to the Sponsor Share Forfeiture Agreement, and (iii) 1,000,000 shares of Common Stock, which were fully vested upon the June 28, 2024 achievement of certain regulatory milestone-based earnout targets.
Current wording
In addition, the holders of Predecessor common stock and Predecessor preferred stock have the contingent right to receive the Earnout Shares. At the Closing, the Company issued three pools of shares of Common Stock subject to forfeiture if the applicable conditions to transferability thereof are not satisfied: (i) 12,000 shares of Common Stock (giving retroactive effect to the Reverse Stock Split), which will be fully vested upon the achievement of certain adjusted stock price-based earnout targets or upon a qualifying transaction (ii) 8,750 shares of Common Stock (giving retroactive effect to the Reverse Stock Split), pursuant to a Letter Agreement, dated as of February 14, 2024 which were fully vested at Closing of the Merger and which were issued as an offset to the Sponsor Share Forfeiture Agreement, and (iii) 10,000 shares of Common Stock (giving retroactive effect to the Reverse Stock Split), which were fully vested upon the June 28, 2024 achievement of certain regulatory milestone-based earnout targets.
Previous wording
As consideration for the Merger, the Company issued to Predecessor stockholders an aggregate of 7,597,638 shares of Common Stock, including 2,200,000 Earnout Shares and 382,651 shares issuable upon exercise of rollover options or warrants.
Current wording
As consideration for the Merger, the Company issued to Predecessor stockholders an aggregate of 84,483 shares of Common Stock, including 22,000 Earnout Shares and 3,733 shares issuable upon exercise of rollover options or warrants (giving retroactive effect to the Reverse Stock Split).
Previous wording
Nasdaq Notices of Non-compliance
Current wording
Nasdaq Notices of Non-compliance and Nasdaq Panel Decision
Previous wording
General and administrative expenses consist principally of salaries and related costs for personnel in executive and administrative functions, including stock-based compensation, travel expenses and recruiting expenses. Other general and administrative expenses include professional fees for legal, accounting and tax-related services and insurance costs.
Current wording
General and administrative expenses consist principally of salaries and related costs for personnel in executive and administrative functions, including stock-based compensation, travel expenses and recruiting expenses. Other general and administrative expenses include professional fees for legal, accounting and tax-related services, consulting fees, insurance costs, and investor relations fees.
Previous wording
Interest and other income, net consists predominantly of interest income from interest bearing bank accounts, interest expense on payables, and the gain or loss on the revaluation of derivative liabilities, which represents the change in fair value of earnout liabilities or outstanding warrants between periods.
Current wording
Other income (expense), net consists predominantly of interest income from interest bearing bank accounts, interest expense on payables, gains recorded on settlements reached with vendors on payables, and the gain or loss on the revaluation of earnout and derivative liabilities, which represents the change in fair value of earnout liabilities or outstanding warrants between periods.
Previous wording
The Results of Operations for the nine-month period ended September 30, 2024 arepro forma as the period presented in the following table and discussion includes the Predecessor for the period from January 1, 2024 through February 13, 2024 and the Company for the period from February 14, 2024 through September 30, 2024. This pro forma period from January 1, 2024 to September 30, 2024 does not include the Merger transactions that occurred on-the-line.
Current wording
The results of operations for the three months ended March 31, 2024 arepro forma as the period presented in the following table and discussion includes the Predecessor for the period from January 1, 2024 through February 13, 2024 and the Company for the period from February 14, 2024 through March 31, 2024. This pro forma period from January 1, 2024 to March 31, 2024 does not include the Merger transactions that occurred on-the-line.
Previous wording
The Company, therefore, anticipates that substantial additional funding will be needed in connection with its continuing operations. At September 30, 2024, the Company had $3.4 million in cash, restricted cash and cash equivalents. The Company intends to devote most of the available cash to the preclinical and clinical development of its product candidates and public company compliance costs. Based on current business plans, the Company believes that the cash available at September 30, 2024 will not fund its operations and capital requirements for 12 months after the filing of the unaudited financial statements for the nine-month period ended September 30, 2024. The Company has arranged two equity lines of credit, one providing for the sale of up to 25,000,000 newly issued shares of Common Stock and the other providing for the purchase of up to $25 million of Common Stock on the satisfaction of certain conditions. At September 30, 2024, the Company had 2.8 million shares remaining in the first ELOC, which was fully depleted on October 3, 2024, and $25 million remaining in the second ELOC, which was replaced with a second ELOC arranged with the investor in the first ELOC (see Note 14 – Subsequent Events). The Company has no guarantee that the conditions will be satisfied to require the purchase of all, or any additional amount, of the Equity Line of Credit (“ELOC”) funds. Any estimate as to how long the Company expects the net proceeds from the ELOC funding may fund the Company’s operations is based on assumptions that may prove to be wrong, and the Company could use its available capital resources sooner than its current expectations. Changing circumstances, some of which may be beyond the Company’s control, could result in less cash and cash equivalents available to fund operations or cause the Company to consume capital significantly faster than currently anticipated, and the Company may need to seek additional funds from additional sources sooner than planned.
Current wording
The Company, therefore, anticipates that substantial additional funding will be needed in connection with its continuing operations. At March 31, 2025, the Company had $5.1 million in cash and cash equivalents. The Company intends to devote most of the available cash to the preclinical and clinical development of its product candidates and public company compliance costs. Based on current business plans, the Company believes that the cash available at March 31, 2025 will not fund its operations and capital requirements for 12 months after the filing of these unaudited condensed financial statements for the period ended March 31, 2025. The Company has arranged two equity lines of credit, one providing for the sale of up to 25,000,000 newly issued shares of Common Stock and the other providing for the purchase of up to $20.6 million of Common Stock on the satisfaction of certain conditions. The Company has no guarantee that the conditions will be satisfied to require the purchase of all, or any additional amount, of the ELOC funds. On February 5, 2025, the Company entered into the SPA, with participation from a member of the Company’s Board and a single institutional investor, for the purchase and sale of (i) 2,551,020 shares of our common stock or common stock equivalents in lieu thereof; and (ii) February 2025 Common Warrants to purchase up to 2,551,020 shares of common stock, at a combined public offering price of $1.96 per share and warrant. In connection with this offering, the Company received net proceeds of approximately $4.3 million. Additionally, during the three months ended March 31, 2025, the Company received net proceeds from the exercise of the remaining Series A Preferred Warrants, the collection of subscriptions receivable and ELOC fundings of approximately $2.4 million. Any estimate as to how long the Company expects the net proceeds from the ELOC funding may fund the Company’s operations is based on assumptions that may prove to be wrong, and the Company could use its available capital resources sooner than its current expectations. Changing circumstances, some of which may be beyond the Company’s control, could result in less cash and cash equivalents available to fund operations or cause the Company to consume capital significantly faster than currently anticipated, and the Company may need to seek additional funds from additional sources sooner than planned.
Previous wording
Identifying potential product candidates and conducting preclinical studies and clinical trials is a time-consuming, expensive and uncertain process that takes many years to complete, and the Company may never generate the necessary data or results required to obtain marketing approval and achieve product sales. In addition, the Company‘s product candidates, if approved, may not achieve commercial success. Commercial revenues, if any, will be derived from sales of product candidates that the Company does not expect to be commercially available in the near term, if at all. Accordingly, the Company will need to continue to rely on additional financing to achieve its business objectives. Adequate additional financing may not be available to the Company on acceptable terms, or at all. To the extent that the Company raises additional capital through the sale of equity or convertible debt securities, the terms of these equity securities or this debt may restrict the Company’s ability to operate. Any future debt financing and equity financing, if available, may involve covenants limiting and restricting the ability to take specific actions, such as incurring additional debt, making capital expenditures, entering into profit-sharing or other arrangements or declaring dividends. If the Company raises additional funds through collaborations, strategic alliances or marketing, distribution or licensing arrangements with third parties, it may be required to relinquish valuable rights to its technologies, future revenue streams, research programs or product candidates or to grant licenses on terms that may not be favorable to the Company. If the Company is unable to raise capital when needed or on acceptable terms, the Company could be forced to delay, reduce or eliminate its R&D programs or future commercialization efforts.
Current wording
Identifying potential product candidates and conducting preclinical studies and clinical trials is a time-consuming, expensive and uncertain process that takes many years to complete, and the Company may never generate the necessary data or results required to obtain marketing approval and achieve product sales. In addition, the Company’s product candidates, if approved, may not achieve commercial success. Commercial revenues, if any, will be derived from sales of product candidates that the Company does not expect to be commercially available in the near term, if at all. Accordingly, the Company will need to continue to rely on additional financing to achieve its business objectives. Adequate additional financing may not be available to the Company on acceptable terms, or at all. To the extent that the Company raises additional capital through the sale of equity or convertible debt securities, the terms of these equity securities or this debt may restrict the Company’s ability to operate. Any future debt financing and equity financing, if available, may involve covenants limiting and restricting the ability to take specific actions, such as incurring additional debt, making capital expenditures, entering into profit-sharing or other arrangements or declaring dividends. If the Company raises additional funds through collaborations, strategic alliances or marketing, distribution or licensing arrangements with third parties, it may be required to relinquish valuable rights to its technologies, future revenue streams, research programs or product candidates or to grant licenses on terms that may not be favorable to the Company. If the Company is unable to raise capital when needed or on acceptable terms, the Company could be forced to delay, reduce or eliminate its R&D programs or future commercialization efforts.
Rearranged previous paragraphs (1)
Previous report — wording carried elsewhere
The Company anticipates that its R&D expenses will significantly increase in the future as the Company increases headcount, compensation expense, and contracted services for preclinical and clinical development of its product candidates, as well as for manufacturing of product to be used in clinical development.