DEFM14A 1 defm14a0124_phoenix.htm PROXY STATEMENT

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

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SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
(Amendment No.      )

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Filed by the Registrant

 

Filed by a Party other than the Registrant

 

Check the appropriate box:

 

Preliminary Proxy Statement

 

Confidential, for the use of the Commission only (as permitted by Rule 14a-6(e)(2))

 

Definitive Proxy Statement

 

Definitive Additional Materials

 

Soliciting Material Pursuant to §240.14a-12

PHOENIX BIOTECH ACQUISITION CORP.

(Name of Registrant as Specified in its Charter)

_________________________________________________________________

(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)

Payment of Filing Fee (Check the appropriate box):

 

No fee required.

 

Fee paid previously with preliminary materials.

 

Fee computed on table in exhibit required by Item 25(b) per Exchange Act Rules 14a-6(i)(1) and 0-11.

 

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PROXY STATEMENT FOR SPECIAL MEETING OF PHOENIX BIOTECH ACQUISITION CORP.

PROSPECTUS FOR 10,493,945 SHARES OF CLASS A COMMON STOCK AND 324,999 SHARES OF COMMON STOCK UNDERLYING THE CERO WARRANTS

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On June 4, 2023, Phoenix Biotech Acquisition Corp., a Delaware corporation (“PBAX”) entered into a Business Combination Agreement (as it may be amended, supplemented or otherwise modified from time to time in accordance with its terms, the “Business Combination Agreement”) with CERo Therapeutics, Inc., a Delaware corporation (“CERo”), and PBCE Merger Sub, Inc., a Delaware corporation and wholly-owned subsidiary of PBAX (“Merger Sub”), pursuant to which Merger Sub will merge with and into CERo, with CERo surviving as a wholly-owned subsidiary of PBAX (the “Business Combination” or the “Merger”). In connection with the consummation of the Business Combination, PBAX will change its corporate name to “CERo Therapeutics Holdings, Inc.” The respective boards of directors of PBAX and CERo have unanimously approved the Business Combination Agreement and the transactions. In this proxy statement/prospectus, when we refer to “CERo,” we mean CERo Therapeutics, Inc. prior to the consummation of the Business Combination, and when we refer to “New CERo” or the “Combined Company” we mean PBAX, under its new corporate name after the consummation of the Business Combination.

At the effective time of the Business Combination (the “Effective Time”), (i) each outstanding share of 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 the Exchange Ratio (as defined in this proxy statement/prospectus) and (b) the right to receive (x) a pro rata portion of up to 1,000,000 additional shares of Class A Common Stock if the First Level Earnout Target and the Second Level Earnout Target (each, as defined in this proxy statement/prospectus) occur and (y) 200,000 additional shares of Class A Common Stock in the event of a Change of Control (as defined in this proxy statement/prospectus) (together, “Earnout Shares”); (ii) each outstanding 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 (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; (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 obtained by dividing the aggregate liquidating preference of the shares of CERo preferred stock for which such CERo warrant is exercisable by $10.00, with the exercise price per share for such warrant equal to the current aggregate exercise price of such CERo warrant (the current exercise price per share multiplied by the number of shares of CERo preferred stock issuable upon exercise thereof) divided by the number of shares of Class A Common Stock issuable upon exercise thereof and (v) each outstanding Convertible Bridge Note (as defined below) will automatically convert all outstanding principal and any unpaid accrued interest into Class A Common Stock of the surviving company at a conversion price equal to (A) the dollar volume-weighted average price for the Class A Common Stock of the surviving company on the date of the closing of the Business Combination, (B) multiplied by 0.75. 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 the CERo warrant immediately prior to the Effective Time, respectively. PBAX will issue an aggregate of approximately 5.0 million shares of Class A Common Stock to the equity owners of CERo as consideration in the Merger, including shares issuable upon exercise of options following the Merger. Following the Merger, it is contemplated that New CERo will have a single class of Common Stock. See the section titled “The Business Combination” for further information.

As of September 30, 2023, the Exchange Ratio is approximately 0.026 (the calculation of which is described on page 126 of this proxy statement/prospectus). Based on this Exchange Ratio, the total number of shares of Class A Common Stock expected to be issued at the Effective Time in connection with the Business Combination (including the conversion of the convertible promissory notes and excluding shares that will be issuable upon exercise of outstanding stock options and warrants), is approximately 4,813,038 shares and, assuming that (i) no additional

 

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PBAX shares are issued prior to the Effective Time, (ii) there is no exercise of any options to purchase shares of Class A Common Stock that will be outstanding immediately following the Business Combination, and (iii) no shares are issued in connection with the Incentive Plan or the ESPP (each as defined in this proxy statement/prospectus) following the Business Combination, these shares are expected to represent between approximately 44% and 47% of the issued and outstanding shares of Class A Common Stock (which would be New CERo Common Stock) and voting power in New CERo immediately following the closing of the Business Combination. These percentages assume, at the low end of the range, that no redemptions from our Trust Account (as defined in this proxy statement/prospectus) occur, and, at the high end of the range, that maximum redemptions from our Trust Account occur. Please see the section of this proxy statement/prospectus entitled “Unaudited Pro Forma Condensed Combined Financial Information” for further information regarding what constitutes a “maximum redemptions” scenario.

Subject to the same assumptions set forth in the preceding paragraph and with no redemptions from our Trust Account, (i) holders of shares of Class A Common Stock (the “Public Shares”) issued in PBAX’s initial public offering (the “Initial Public Offering”) are expected to hold approximately 7% of the issued and outstanding New CERo common stock, (ii) PBAX’s sponsor, Phoenix Biotech Sponsor, LLC (the “Sponsor”), is expected to hold approximately 48% of the issued and outstanding New CERo common stock, (iii) CERo stockholders are expected to hold approximately 44% of the issued and outstanding New CERo common stock. The Sponsor has indicated willingness to transfer a portion of its Founder Shares to investors in a potential PIPE transaction (a “PIPE transaction”), CERo stockholders and/or holders of Public Shares (the “Public Stockholders”) who do not exercise their redemption rights (such shares, the “Reallocation Shares”). However, as of the date of this proxy statement/prospectus, the Company has not obtained any binding commitments for a PIPE transaction or entered into any agreements pursuant to which Public Stockholders would not exercise redemption rights and the Sponsor has not entered into any agreements with respect to the transfer (which may be accomplished through a forfeiture coupled with a concurrent new issuance by New CERo of an offsetting number of shares) of any Reallocation Shares. In addition, the Sponsor has indicated that it intends to effectuate a distribution-in-kind of all of the shares of Class A Common Stock and Private Placement Warrants held thereby to its members immediately prior to the completion of the Business Combination and the listing of the New CERo common stock on Nasdaq (the “Distribution-in-Kind”). Upon completion of the Distribution-in-Kind, Sponsor would no longer hold any of our issued and outstanding securities.

Subject to the same assumptions set forth in the preceding paragraph and with maximum possible redemptions from our Trust Account, (i) the Public Stockholders are expected to hold none of the issued and outstanding New CERo common stock, (ii) the Sponsor is expected to hold approximately 51% of the issued and outstanding New CERo common stock, (iii) CERo stockholders are expected to hold approximately 47% of the issued and outstanding New CERo common stock. The Sponsor has indicated willingness to transfer a portion of its Founder Shares to investors in a potential PIPE transaction, CERo stockholders and/or Public Stockholders who do not exercise their redemption rights. However, as of the date of this proxy statement/prospectus, the Company has not obtained any binding commitments for a PIPE transaction or entered into any agreements pursuant to which Public Stockholders would not exercise redemption rights and the Sponsor has not entered into any agreements with respect to the transfer (which may be accomplished through a forfeiture coupled with a concurrent new issuance by New CERo of an offsetting number of shares) of any Reallocation Shares. However, upon completion of the Distribution-in-Kind described above, Sponsor would no longer hold any of our issued and outstanding securities.

These pro forma ownership percentages do not reflect (i) any issuance of shares in connection with the Incentive Plan and the ESPP following the Business Combination, (ii) any issuance of shares of New CERo common stock in a PIPE transaction or (iii) any transfer of the Reallocation Shares to investors in a PIPE transaction, CERo stockholders and Public Stockholders. No subscription agreements and non-redemption agreements have been executed as of the date of this proxy statement/prospectus and any such financing and arrangement, respectively, is currently uncertain. If the actual facts are different from the assumptions stated above, then the levels of ownership interest set forth above will be different. For more information, please see the section entitled “Unaudited Pro Forma Condensed Combined Financial Information.”

Proposals to approve the Business Combination Agreement and the other matters discussed in this proxy statement/prospectus will be presented for approval by PBAX’s stockholders at a special meeting in lieu of annual meeting of stockholders of PBAX (the “Special Meeting”) scheduled to be held on February 8, 2024, in virtual format.

The Sponsor and PBAX’s directors and officers (collectively, “PBAX’s initial stockholders”) have agreed to vote any Founder Shares, Private Placement Shares, and Public Shares they hold in favor of each of the proposals described herein. As of January 4, 2024, the Sponsor owns approximately 85.0% of the outstanding PBAX Common Stock and

 

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PBAX’s directors and officers collectively own no shares of the outstanding PBAX Common Stock. In particular, because the PBAX’s initial stockholders have agreed to vote in favor of each of the proposals described herein, the Business Combination will be approved even if none of the outstanding Class A Common Stock is voted in favor of the Business Combination. In considering the recommendation of the Board to approve the Business Combination Agreement, PBAX stockholders should be aware that PBAX’s officers and directors, as well as the Sponsor, have interests in the Business Combination that are different from, or in addition to, those of PBAX stockholders generally. These interests, which create actual and potential conflicts of interest, are, to the extent material, described in the section titled “The Business Combination — Interests of Certain Persons in the Business Combination” beginning on page 148 of this proxy statement/prospectus.

Moreover, after the Closing, the Sponsor may hold more than 50% of the voting power of New CERo. Chris Ehrlich, the current Chief Executive Officer and a director and shareholder of PBAX, is the manager of the Sponsor and will serve as Vice Chairman of the New CERo Board following the Closing. As a result, New CERo may be a “controlled company” within the meaning of the rules of Nasdaq. However, New CERo does not intend to utilize the exemptions from the Nasdaq corporate governance standards available to controlled companies. For more information regarding the risks of New CERo being a “controlled company,” see “Risk Factors — Risks Related to New CERo’s Common Stock — If New CERo is successful in listing its Common Stock on Nasdaq, it expects to be a “controlled company” within the meaning of the Nasdaq rules upon such listing and, as a result, would qualify for, and could elect to rely on, exemptions from certain corporate governance requirements. If New CERo relies on these exemptions, its stockholders will not have the same protections afforded to stockholders of companies that are subject to such requirements.” Nevertheless, as described elsewhere in this proxy statement/prospectus, the Sponsor has indicated willingness to transfer the Reallocation Shares to investors in a PIPE transaction, CERo stockholders and Public Stockholders in such relative proportions to be determined. Furthermore, upon completion of the Distribution-in-Kind, Sponsor would no longer hold any of our issued and outstanding securities.

PBAX’s Class A Common Stock, warrants to purchase one share of Class A Common Stock and units, each consisting of one share of Class A Common Stock and one-half of one warrant, are currently listed on Nasdaq under the symbols “PBAX,” “PBAXW” and “PBAXU,” respectively. PBAX has applied to continue the listing on Nasdaq of (i) the shares of the Class A Common Stock to be issued in connection with the Business Combination, together with the Class A Common Stock previously issued in the Initial Public Offering, and the Common Stock underlying the warrants previously issued in the Initial Public Offering, and (ii) the warrants issued in the Initial Public Offering, under the proposed symbols “CERO” and “CEROW,” respectively. No shares will trade on Nasdaq under the symbol “PBAX” following the consummation of the Business Combination. It is a condition of the consummation of the Business Combination that the Class A Common Stock is approved for listing on Nasdaq (subject only to official notice of issuance thereof), but there can be no assurance such listing condition will be met. If such listing condition is not met, the Business Combination will not be consummated unless the listing condition set forth in the Business Combination Agreement is waived by the parties to that agreement.

On December 16, 2022, the stockholders of PBAX approved proposals to (a) extend the date by which PBAX has to consummate a business combination (the “business combination period”) for an additional three months, from January 8, 2023 to April 8, 2023 (such date, as so extended, the “PBAX Termination Date”) and (b) provide the Board the ability to further extend the business combination period up to three additional times for one month each time, for a maximum of six additional months (collectively, the “First Extension”). In connection with such stockholder vote, an aggregate of 16,211,702 shares of Class A Common Stock were redeemed, representing approximately 92.6% of the Public Shares outstanding as of December 16, 2022, resulting in a payment of $167,693,708.48 from the Trust Account and leaving 2,173,298 shares of Class A Common Stock issued and outstanding and entitled to vote. In connection with the extensions of the business combination period from January 8, 2023 to June 8, 2023, the Sponsor deposited an aggregate of $550,000 to the Trust Account.

On April 3, 2023, PBAX received a letter (the “Nasdaq Letter”) from the listing qualifications department staff of The Nasdaq Stock Market LLC (“Nasdaq”) notifying PBAX that, for the 30 consecutive trading days prior to the date of the letter, the Class A 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 Class A Common Stock on Nasdaq. The Nasdaq Letter was only a notification of deficiency, not of imminent delisting, and had no immediate 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 of all then-outstanding Class B Common Stock to Class A Common Stock.

 

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On July 7, 2023, the stockholders of PBAX approved proposals to further extend the business combination period up to six additional times for one month each time (collectively, the “Second Extension”), from July 8, 2023 to August 8, 2023, September 8, 2023, October 8, 2023, November 8, 2023, December 8, 2023 or January 8, 2024. In connection with such stockholder vote, an aggregate of 523,341 shares of Class A Common Stock were redeemed, representing approximately 40.6% of the Public Shares outstanding as of July 7, 2023, resulting in a payment of $5,638,879.48 and leaving 6,246,207 shares of Class A Common Stock issued and outstanding and entitled to vote. In connection with the business combination deadline, the Sponsor deposited an aggregate of $137,692 in connection with each extension from July 8, 2023 to January 8, 2024.

On January 3, 2024, the stockholders of PBAX approved proposals to further extend the business combination period up to three additional times for one month each time (collectively, the “Third Extension”), from January 8, 2024 to February 8, 2024, March 8, 2024 or April 8, 2024. In connection with such stockholder vote, an aggregate of 11,625 shares of Class A Common Stock were redeemed, representing approximately 1.5% of the Public Shares outstanding as of January 3, 2024, resulting in a payment of $128,133 and leaving 6,234,582 shares of Class A Common Stock issued and outstanding and entitled to vote. In connection with the business combination deadline, the Sponsor deposited an aggregate of $22,600 in connection with the extension from January 8, 2024 to February 8, 2024. As of January 4, 2024, a total of 16,746,668 shares have been redeemed, representing approximately 95.7% of the Public Shares then-outstanding following the Initial Public Offering. As of January 4, 2024, there are 6,234,582 shares of Class A Common Stock and no shares of Class B Common Stock issued and outstanding and entitled to vote.

As of January 4, 2024, there was approximately $8.3 million available in the Trust Account. If PBAX does not complete the Business Combination or another business combination by April 8, 2024 (or such later date as may be approved by PBAX’s stockholders), assuming the provision of loans by Sponsor to PBAX in accordance with the requirements set forth in PBAX’s amended and restated certificate of incorporation, as amended by the first amendment dated December 20, 2022 and the second amendment dated July 7, 2023 (the “Current Charter”) (or such later date as may be approved by PBAX stockholders in an amendment to its Current Charter), PBAX must redeem 100% of 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 PBAX to pay its franchise and income taxes on such amounts (less up to $100,000 of such net interest to pay dissolution expenses), divided by the number of then-outstanding Public Shares. The Sponsor and each of PBAX’s directors and officers (together, “PBAX’s initial stockholders”) have waived any rights it may have with respect to any monies held in the Trust Account as a result of any liquidation of PBAX with respect to the Founder Shares and Private Placement Shares and, accordingly, in the event a business combination is not effected by PBAX by April 8, 2024 (or such later date as may be approved by PBAX’s stockholders), the Founder Shares and Private Placement Shares held by PBAX’s initial stockholders would be worthless.

The funds held in the Trust Account are held in money market funds that invest in U.S. Treasury securities. There is uncertainty under the Investment Company Act of 1940, as amended (the “Investment Company Act”), whether certain special purpose acquisition companies, or “SPACs,” with trust account assets held in securities would fall under the definition of “investment company” under Section 3(a)(1)(A) of the Investment Company Act. Section 3(a)(1)(A) of the Investment Company Act provides that an “investment company” includes any issuer that “is or holds itself out as being engaged primarily, or proposes to engage primarily, in the business of investing, reinvesting, or trading in securities.” Although PBAX believes that it does not meet the definition of “investment company” because it does not hold itself out as an investment company, there is substantial uncertainty as to whether PBAX’s investment of the funds held in the Trust Account may be deemed to cause PBAX to “engage primarily, in the business of investing” in securities. The registration statement for the Initial Public Offering became effective on October 5, 2021. Accordingly, the funds held in the Trust Account have been invested by PBAX in cash or various securities from time to time during the past 26 months, including the current investment thereof in money market funds that invest in U.S. Treasury securities. The risk of being considered to be primarily engaged in investing in securities may increase as the period of time during which the funds held in the Trust Account are invested in securities becomes longer. Additionally, PBAX does not believe that it is an “investment company” under Section 3(a)(1)(C) of the Investment Company Act because it does not own “investment securities” having a value exceeding 40% of its total assets. Rather, PBAX has invested the funds held in the Trust Account in money market funds that seek to maintain a stable net asset value of $1 per share. Although many other SPACs have determined to

 

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mitigate the risk of being deemed an “investment company” by investing the funds held in their trust accounts solely in cash, PBAX does not currently intend to withdraw such funds from the money market funds and reinvest such funds in cash.

Nevertheless, if PBAX were to meet the definition of investment company, PBAX would be required to register under Investment Company Act. Registration would subject PBAX to substantial regulation and restrictions with respect to, among other things, its capital structure, management, operations, transactions and portfolio composition. PBAX would also be subject to significant compliance and disclosure requirements. This would adversely impact its ability to operate in accordance with its business plan. If, as a result of such challenges, PBAX were to abandon its efforts to complete the Business Combination, PBAX would be required to redeem the public shares, liquidate the Trust Account and dissolve. Such liquidation and dissolution would cause the Public Stockholders to lose the investment opportunity associated with an investment in the combined company, including any potential price appreciation of its securities. Upon such dissolution, the warrants would expire worthless.

We encourage you to read this entire document, including the annexes and other documents referred to herein, carefully and in their entirety. In particular, when you consider the recommendation regarding these proposals by the Board, you should keep in mind that the Sponsor and PBAX’s directors and officers have interests in the Business Combination that are different from or in addition to, or may conflict with, your interests as a stockholder. For instance, the Sponsor and PBAX’s officers and directors will benefit from the completion of a business combination and may be incentivized to complete an acquisition of a less favorable target company or on terms less favorable to stockholders rather than liquidating PBAX. See the section of this proxy statement/prospectus entitled “The Business Combination — Interests of Certain Persons in the Business Combination — Interests of PBAX’s Directors and Officers in the Business Combination” for a further discussion of these considerations. You should also carefully consider the risk factors described under the heading “Risk Factors” beginning on page 25 of this proxy statement/prospectus.

If you have any questions regarding the accompanying proxy statement/prospectus, you may contact Okapi Partners LLC, PBAX’s proxy solicitor, toll free at (877) 259-6290 (banks and brokers call collect at (212) 297-0720).

Neither the SEC nor any state securities commission has approved or disapproved of the transactions described in this proxy statement/prospectus or the securities referenced herein, passed upon the merits or fairness of the Business Combination or related transactions, or passed upon the adequacy or accuracy of this proxy statement/prospectus. Any representation to the contrary is a criminal offense.

This proxy statement/prospectus is dated January 22, 2024, and is first being mailed to stockholders of PBAX on or about January 22, 2024.

 

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NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
OF PHOENIX BIOTECH ACQUISITION CORP.
TO BE HELD ON FEBRUARY 8, 2024

To the Stockholders of Phoenix Biotech Acquisition Corp.:

NOTICE IS HEREBY GIVEN that a special meeting of stockholders in lieu of annual meeting (the “Special Meeting”) of Phoenix Biotech Acquisition Corp., a Delaware corporation (“PBAX,” “we,” “our” or “us”), will be held on February 8, 2024, at 11:00 a.m. Eastern time, via live webcast at the following address: www.cstproxy.com/phoenixbiotech/2024. You will need the 12-digit meeting control number that is printed on your proxy card to enter the Special Meeting. PBAX recommends that you log in at least 15 minutes before the Special Meeting to ensure you are logged in when the Special Meeting starts. Please note that you will not be able to attend the Special Meeting in person. You are cordially invited to attend the Special Meeting to consider the following proposals (the “Proposals”):

1.      to (a) adopt and approve the Business Combination Agreement, dated as of June 4, 2023 (the “Business Combination Agreement”), among PBAX, CERo Therapeutics, Inc., a Delaware corporation (“CERo”), and PBCE Merger Sub, Inc., a Delaware corporation and wholly-owned subsidiary of PBAX (“Merger Sub”), pursuant to which Merger Sub will merge with and into CERo, with CERo surviving the merger as a wholly-owned subsidiary of PBAX (“New CERo”) and (b) approve such merger and the other transactions contemplated by the Business Combination Agreement (the “Business Combination”), and (c) adopt and approve each Ancillary Document (as defined in the Business Combination Agreement) to which PBAX is a party and approve all transactions contemplated therein. Subject to the terms and conditions set forth in the Business Combination Agreement, at the effective time of the Business Combination (the “Effective Time”):

(i)     each outstanding share of CERo Common Stock will be cancelled and converted into the right to receive a number of shares of Class A Common Stock (rounded down to the nearest whole share) equal to the Exchange Ratio (as defined in the accompanying proxy statement/prospectus);

(ii)    each outstanding CERo option (whether vested or unvested) will be converted into an option to purchase a number of shares of Class A Common Stock (rounded down to the nearest whole share) 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 (rounded up to the nearest whole cent);

(iii)   each outstanding share of CERo preferred stock will be converted into a number of shares of Class A Common Stock, equal to the number of shares of CERo preferred stock obtained by dividing the liquidation preference thereof by $10.00;

(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 obtained by dividing the aggregate liquidating preference of the shares of CERo preferred stock for which such CERo warrant is exercisable by $10.00, with the exercise price per share for such warrant equal to the current aggregate exercise price of such CERo warrant (the current exercise price per share multiplied by the number of shares of CERo preferred stock issuable upon exercise thereof) divided by the number of shares of Class A Common Stock issuable upon exercise thereof; and

(v)    each outstanding Convertible Bridge Note (as defined below) will automatically convert all outstanding principal and any unpaid accrued interest into Class A Common Stock of the surviving company at a conversion price equal to (i) the dollar volume-weighted average price for the Class A Common Stock of the surviving company on the date of the closing of the Business Combination, (ii) multiplied by 0.75.

 

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In addition, holders of CERo Common Stock, CERo preferred stock and Convertible Bridge Notes (as defined below) will have the right to receive a (x) a portion of up to 1,000,000 additional shares of Class A Common Stock if the First Level Earnout Target and the Second Level Earnout Target occur and (y) 200,000 additional shares of Class A Common Stock in the event of a Change of Control (“Earnout Shares”) in such proportions as set forth in the Business Combination Agreement.

Following the Merger, it is contemplated that New CERo will have a single class of Common Stock. We refer to this proposal as the “Business Combination Proposal.” A copy of the Business Combination Agreement is attached to the accompanying proxy statement/prospectus as Annex A;

2.      to approve, assuming the Business Combination Proposal is approved and adopted, a proposed second amended and restated certificate of incorporation (the “Proposed Charter,” a copy of which is attached to the accompanying proxy statement/prospectus as Annex B), which will amend and restate the Current Charter and second amended and restated bylaws for New CERo (the “Proposed Bylaws,” a copy of which is also attached to the accompanying proxy statement/prospectus at Annex C), which will be in effect upon the closing (the “Closing”) of the Business Combination (the “Charter Amendment Proposal”);

3.      to approve, on a non-binding advisory basis, the following material differences between the Proposed Charter and the Current Charter, which are being presented pursuant to guidance of the Securities and Exchange Commission as seven separate sub-proposals (the “Advisory Charter Amendment Proposals”):

(a)     Advisory Charter Proposal A — to change the corporate name of New CERo to “CERo Therapeutics Holdings, Inc.” on and from the time of the Business Combination;

(b)    Advisory Charter Proposal B — to increase New CERo’s capitalization so that it will have 1,000,000,000 authorized shares of a single class of Common Stock and 10,000,000 authorized shares of preferred stock, as opposed to PBAX having 60,000,000 authorized shares of Class A Common Stock, 10,000,000 authorized shares of Class B Common Stock and 1,000,000 authorized shares of preferred stock. Following the Merger, it is contemplated that New CERo will have a single class of Common Stock;

(c)     Advisory Charter Proposal C — to create a classified board of directors consisting of three classes, Class I, Class II and Class III, with members of each class elected for three-year terms expiring in sequential years;

(d)    Advisory Charter Proposal D — to provide that certain amendments to provisions of the Proposed Charter will require the approval of at least 66 2/3% of New CERo’s then-outstanding shares of capital stock entitled to vote on such amendment and of each class entitled to vote thereon as a class;

(e)     Advisory Charter Proposal E — to make New CERo’s corporate existence perpetual instead of requiring PBAX to be dissolved and liquidated by April 8, 2024 (or such later date as may be approved by PBAX’s stockholders), and to omit from the Proposed Charter the various provisions applicable only to special purpose acquisition companies; and

(f)     Advisory Charter Proposal F — to remove the provision that allows stockholders to act by written consent as opposed to holding a stockholders meeting.

4.      to approve, assuming the Business Combination Proposal is approved and adopted, for purposes of complying with the applicable provisions of Nasdaq Listing Rule 5635, the issuance of shares of Class A Common Stock to CERo shareholders pursuant to the Business Combination Agreement, including the potential issuance of the Earnout Shares and (the “Nasdaq Stock Issuance Proposal”);

5.      to approve, assuming the Business Combination Proposal is approved and adopted, the appointment of five directors who, upon consummation of the Business Combination, will become directors of New CERo (the “Director Election Proposal”);

 

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6.      to approve, assuming the Business Combination Proposal is approved and adopted, the Incentive Plan, a copy of which is attached to the accompanying proxy statement/prospectus as Annex D, which will become effective as of and contingent on the consummation of the Business Combination (the “Incentive Plan Proposal”);

7.      to approve, assuming the Business Combination Proposal is approved and adopted, the ESPP, a copy of which is attached to the accompanying proxy statement/prospectus as Annex E, which will become effective as of and contingent on the consummation of the Business Combination (the “ESPP Proposal”); and

8.      to approve a proposal to adjourn the Special Meeting to a later date or dates if it is determined that more time is necessary or appropriate, in the judgment of the board of directors of PBAX or the officer presiding over the Special Meeting, for PBAX to consummate the Business Combination (the “Adjournment Proposal”).

Only holders of record of Class A Common Stock and Class B Common Stock of PBAX (collectively, the “PBAX Common Stock”) at the close of business on January 17, 2024 (the “Record Date”) are entitled to notice of the Special Meeting and to vote at the Special Meeting and any adjournments or postponements of the Special Meeting. A complete list of PBAX stockholders of record entitled to vote at the Special Meeting will be available for ten (10) days before the Special Meeting at the principal executive offices of PBAX for inspection by stockholders during ordinary business hours for any purpose germane to the Special Meeting.

Pursuant to the Current Charter, PBAX is providing its Public Stockholders with the opportunity to redeem, upon the Closing, the Public Shares then held by them for cash equal to their pro rata share of the aggregate amount on deposit (as of two business days prior to the Closing) in the trust account (the “Trust Account”) that holds the proceeds (including interest but less franchise and income taxes payable on such amounts) of the Initial Public Offering. For illustrative purposes, based on funds in the Trust Account of approximately $8.3 million on January 4, 2024, the estimated per share redemption price would have been approximately $11.06.

Public Stockholders may elect to redeem Public Shares even if they vote “FOR” the Business Combination Proposal.

On December 16, 2022, the stockholders of PBAX approved proposals to (a) extend the date by which PBAX has to consummate a business combination (the “business combination period”) for an additional three months, from January 8, 2023 to April 8, 2023 (such date, as so extended, the “PBAX Termination Date”) and (b) provide the Board the ability to further extend the business combination period up to three additional times for one month each time, for a maximum of six additional months (collectively, the “First Extension”). In connection with such stockholder vote, an aggregate of 16,211,702 shares of Class A Common Stock were redeemed, representing approximately 92.6% of the Public Shares outstanding as of December 16, 2022, resulting in a payment of $167,693,708.48 from the Trust Account and leaving 2,173,298 shares of Class A Common Stock issued and outstanding and entitled to vote. In connection with the extensions of the business combination period from January 8, 2023 to June 8, 2023, the Sponsor deposited an aggregate of $550,000 to the Trust Account.

On July 3, 2023, the Sponsor elected to convert all 4,596,250 of its shares of Class B Common Stock into 4,596,250 shares of Class A Common Stock. As a result, no shares of Class B Common Stock remain outstanding.

On July 7, 2023, the stockholders of PBAX approved proposals to further extend the business combination period up to six additional times for one month each time (collectively, the “Second Extension”), from July 8, 2023 to August 8, 2023, September 8, 2023, October 8, 2023, November 8, 2023, December 8, 2023 or January 8, 2024. In connection with such stockholder vote, an aggregate of 523,341 shares of Class A Common Stock were redeemed, representing approximately 40.6% of the Public Shares outstanding as of July 7, 2023, resulting in a payment of $5,638,879.48 and leaving 6,246,207 shares of Class A Common Stock issued and outstanding and entitled to vote. In connection with the business combination deadline, the Sponsor deposited an aggregate of $137,692 in connection with each extension from July 8, 2023 to January 8, 2024.

On January 3, 2024, the stockholders of PBAX approved proposals to further extend the business combination period up to three additional times for one month each time (collectively, the “Third Extension”), from January 8, 2024 to February 8, 2024, March 8, 2024 or April 8, 2024. In connection with such stockholder vote, an aggregate of 11,625 shares of Class A Common Stock were redeemed, representing approximately 1.5% of the Public Shares outstanding as of January 3, 2024, resulting in a payment of $128,133 and leaving 6,234,582 shares of Class A

 

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Common Stock issued and outstanding and entitled to vote. In connection with the business combination deadline, the Sponsor deposited an aggregate of $22,600 in connection with the extension from January 8, 2024 to February 8, 2024. As of January 4, 2024, a total of 16,746,668 shares have been redeemed, representing approximately 95.7% of the Public Shares then-outstanding following the Initial Public Offering. As of January 4, 2024, there are 6,234,582 shares of Class A Common Stock and no shares of Class B Common Stock issued and outstanding and entitled to vote.

As of January 4, 2024, there was approximately $8.3 million available in the Trust Account. If PBAX does not complete the Business Combination or another business combination by April 8, 2024 (or such later date as may be approved by PBAX’s stockholders), assuming the provision of loans by Sponsor to PBAX in accordance with the requirements set forth in the Current Charter (or such later date as may be approved by PBAX stockholders in an amendment to its Current Charter), PBAX must redeem 100% of 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 PBAX to pay its franchise and income taxes on such amounts (less up to $100,000 of such net interest to pay dissolution expenses), divided by the number of then-outstanding Public Shares. The Sponsor and each of PBAX’s directors and officers (together, “PBAX’s initial stockholders”) have waived any rights it may have with respect to any monies held in the Trust Account as a result of any liquidation of PBAX with respect to the Founder Shares and Private Placement Shares and, accordingly, in the event a business combination is not effected by PBAX by April 8, 2024 (or such later date as may be approved by PBAX’s stockholders), the Founder Shares and Private Placement Shares held by PBAX’s initial stockholders would be worthless.

The funds held in the Trust Account are held in money market funds that invest in U.S. Treasury securities. There is uncertainty under the Investment Company Act of 1940, as amended (the “Investment Company Act”), whether certain special purpose acquisition companies, or “SPACs,” with trust account assets held in securities would fall under the definition of “investment company” under Section 3(a)(1)(A) of the Investment Company Act. Section 3(a)(1)(A) of the Investment Company Act provides that an “investment company” includes any issuer that “is or holds itself out as being engaged primarily, or proposes to engage primarily, in the business of investing, reinvesting, or trading in securities.” Although PBAX believes that it does not meet the definition of “investment company” because it does not hold itself out as an investment company, there is substantial uncertainty as to whether PBAX’s investment of the funds held in the Trust Account may be deemed to cause PBAX to “engage primarily, in the business of investing” in securities. The registration statement for the Initial Public Offering became effective on October 5, 2021. Accordingly, the funds held in the Trust Account have been invested by PBAX in cash or various securities from time to time during the past 26 months, including the current investment thereof in money market funds that invest in U.S. Treasury securities. The risk of being considered to be primarily engaged in investing in securities may increase as the period of time during which the funds held in the Trust Account are invested in securities becomes longer. Additionally, PBAX does not believe that it is an “investment company” under Section 3(a)(1)(C) of the Investment Company Act because it does not own “investment securities” having a value exceeding 40% of its total assets. Rather, PBAX has invested the funds held in the Trust Account in money market funds that seek to maintain a stable net asset value of $1 per share. Although many other SPACs have determined to mitigate the risk of being deemed an “investment company” by investing the funds held in their trust accounts solely in cash, PBAX does not currently intend to withdraw such funds from the money market funds and reinvest such funds in cash.

Nevertheless, if PBAX were to meet the definition of investment company, PBAX would be required to register under Investment Company Act. Registration would subject PBAX to substantial regulation and restrictions with respect to, among other things, its capital structure, management, operations, transactions and portfolio composition. PBAX would also be subject to significant compliance and disclosure requirements. This would adversely impact its ability to operate in accordance with its business plan. If, as a result of such challenges, PBAX were to abandon its efforts to complete the Business Combination, PBAX would be required to redeem the public shares, liquidate the Trust Account and dissolve. Such liquidation and dissolution would cause the Public Stockholders to lose the investment opportunity associated with an investment in the combined company, including any potential price appreciation of its securities. Upon such dissolution, the warrants would expire worthless.

A Public Stockholder, together with any of his, her or its affiliates or any other person with whom he, she or it 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 in the aggregate his, her or its shares or, if part of such a group, the group’s shares, with respect to 20% or more of the Public Shares issued in the Initial Public Offering. PBAX’s initial

 

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stockholders (including the Sponsor) have agreed to waive their redemption rights with respect to any Founder Shares, Private Placement Shares (as defined in the accompanying proxy statement/prospectus) and Public Shares they may hold in connection with the Business Combination, and such shares will be excluded from the pro rata calculation used to determine the per-share redemption price. PBAX’s initial stockholders have also agreed to vote any Founder Shares, Private Placement Shares and Public Shares owned by them in favor of the Business Combination Proposal, which represent approximately 85.0% of the voting power of PBAX as of January 4, 2024. These holders have also agreed to vote their shares in favor of all other Proposals being presented at the Special Meeting.

Pursuant to the Current Bylaws, a majority of the shares of PBAX Common Stock entitled to vote, represented at the Special Meeting or by proxy, will constitute a quorum for the transaction of business at the Special Meeting. The approval of the Business Combination Proposal, the Nasdaq Stock Issuance Proposal, the Incentive Plan Proposal, the ESPP Proposal, the Adjournment Proposal and each of the Advisory Charter Amendment Proposals requires the affirmative vote of the holders of a majority of the shares of PBAX Common Stock cast in respect of that Proposal and entitled to vote thereon at the Special Meeting. The approval of the Charter Amendment Proposal requires the affirmative vote of a majority of the issued and outstanding shares of each of the Class A Common Stock and Class B Common Stock, voting separately, as well as the vote of a majority of the issued and outstanding shares of Class A Common Stock and Class B Common Stock, voting together as a single class. Because PBAX’s initial stockholders have agreed to vote in favor of each of the Proposals, all of the Proposals will be approved even if none of the outstanding Class A Common Stock held by the Public Stockholders is voted in favor of any of the Proposals.

Under the DGCL, shares that are voted “abstain” or “withheld” are counted as present for purposes of determining whether a quorum is present at the Special Meeting. Abstentions and withheld votes will have no effect on any of the Proposals, except that it will have the same effect as a vote “AGAINST” the Charter Amendment Proposal. Because the Proposals are “non-discretionary” items, your broker will not be able to vote uninstructed shares for any of the Proposals. If there are any proposals that are “discretionary” items, then the broker may cast a vote on such proposals, resulting in the shares being counted for purposes of determining whether a quorum is present and a broker “non-vote” is deemed to occur with respect to each “non-discretionary” item. However, since none of the Proposals are “discretionary” items, if you do not provide voting instructions, your shares will not be voted and will not be counted as present for purposes of determining whether a quorum is present.

The approval of the election of each director pursuant to the Director Election Proposal requires a plurality vote of the shares of PBAX Class B Common Stock cast in respect of that Proposal and entitled to vote thereon at the Special Meeting. “Plurality” means that the individuals who receive the largest number of votes cast “FOR” are elected as directors. Consequently, any shares not voted “FOR” a particular nominee (whether as a result of an abstention, a direction to withhold authority or a broker non-vote) will not be counted in the nominee’s favor.

If the Business Combination Proposal is not approved, the Charter Amendment Proposal, the Advisory Charter Amendment Proposals, the Nasdaq Stock Issuance Proposal, the Director Election Proposal, the Incentive Plan Proposal and the ESPP Proposal will not be presented to the PBAX stockholders for a vote. The approval of the Business Combination Proposal, the Charter Amendment Proposal, the Nasdaq Stock Issuance Proposal, the Director Election Proposal, the Incentive Plan Proposal and the ESPP Proposal are preconditions to the Closing.

As of January 4, 2024, there was approximately $8.3 million in the Trust Account, the estimated per share redemption price would have been approximately $11.06. Each redemption of Public Shares by Public Stockholders will decrease the amount in the Trust Account. PBAX will not redeem Public Shares in an amount that would cause New CERo to have net tangible assets of less than $5,000,001.

YOUR VOTE IS VERY IMPORTANT, REGARDLESS OF THE NUMBER OF SHARES OF PBAX COMMON STOCK YOU OWN. To ensure your representation at the Special Meeting, please complete and return the enclosed proxy card or submit your proxy by following the instructions contained in this proxy statement/prospectus and on your proxy card. Please submit your proxy promptly whether or not you expect to attend the Special Meeting. Submitting a proxy now will NOT prevent you from being able to vote in person (which would include presence at a virtual meeting) at the meeting. If you hold your shares in “street name,” you should instruct your broker, bank or other nominee how to vote in accordance with the voting instruction form you receive from your broker, bank or other nominee.

 

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The board of directors of PBAX (the “Board”) has unanimously approved the Business Combination Agreement and the transactions contemplated thereby and recommends that PBAX stockholders vote “FOR” each of the proposals in this proxy statement/prospectus.

TO EXERCISE YOUR REDEMPTION RIGHTS, YOU MUST DEMAND IN WRITING THAT YOUR PUBLIC SHARES BE REDEEMED FOR A PRO RATA PORTION OF THE FUNDS HELD IN THE TRUST ACCOUNT AND TENDER YOUR SHARES TO PBAX’S TRANSFER AGENT AT LEAST TWO BUSINESS DAYS PRIOR TO THE VOTE AT THE SPECIAL MEETING. IN ORDER TO EXERCISE YOUR REDEMPTION RIGHT, YOU NEED TO IDENTIFY YOURSELF AS A BENEFICIAL HOLDER AND PROVIDE YOUR LEGAL NAME, PHONE NUMBER AND ADDRESS IN YOUR WRITTEN DEMAND. YOU MAY TENDER YOUR SHARES BY EITHER DELIVERING YOUR SHARE CERTIFICATE TO THE TRANSFER AGENT OR BY DELIVERING YOUR SHARES ELECTRONICALLY USING THE DEPOSITORY TRUST COMPANY’S DWAC (DEPOSIT WITHDRAWAL AT CUSTODIAN) SYSTEM. IF THE BUSINESS COMBINATION IS NOT COMPLETED, THEN THESE SHARES WILL BE RETURNED TO YOU OR YOUR ACCOUNT. IF YOU HOLD THE SHARES IN STREET NAME, YOU WILL NEED TO INSTRUCT THE ACCOUNT EXECUTIVE AT YOUR BANK OR BROKER TO WITHDRAW THE SHARES FROM YOUR ACCOUNT IN ORDER TO EXERCISE YOUR REDEMPTION RIGHTS.

Your attention is directed to the proxy statement/prospectus accompanying this notice (including the annexes thereto) for a more complete description of the proposed Business Combination and related transactions and each of the Proposals. We encourage you to read this proxy statement/prospectus carefully. If you have any questions or need assistance voting your shares, please contact our proxy solicitor at (877) 259-6290 or email at info@okapipartners.com.

 

By Order of the Board of Directors

January 22, 2024

 

/s/ Chris Ehrlich

   

Chris Ehrlich

   

Chief Executive Officer and Director

 

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Page

ABOUT THIS PROXY STATEMENT/PROSPECTUS

 

ii

MARKET AND INDUSTRY DATA

 

ii

TRADEMARKS

 

ii

FREQUENTLY USED TERMS

 

iii

QUESTIONS AND ANSWERS ABOUT THE PROPOSALS

 

vii

SUMMARY OF THE PROXY STATEMENT/PROSPECTUS

 

1

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

 

23

RISK FACTORS

 

25

SPECIAL MEETING OF PBAX STOCKHOLDERS

 

97

PROPOSAL 1 — THE BUSINESS COMBINATION PROPOSAL

 

103

PROPOSAL 2 — THE CHARTER AMENDMENT PROPOSAL

 

104

PROPOSAL 3 — THE ADVISORY CHARTER AMENDMENT PROPOSALS

 

106

PROPOSAL 4 — THE NASDAQ STOCK ISSUANCE PROPOSAL

 

109

PROPOSAL 5 — THE DIRECTOR ELECTION PROPOSAL

 

111

PROPOSAL 6 — THE INCENTIVE PLAN PROPOSAL

 

113

PROPOSAL 7 — THE ESPP PROPOSAL

 

121

PROPOSAL 8 — THE ADJOURNMENT PROPOSAL

 

125

THE BUSINESS COMBINATION

 

126

THE BUSINESS COMBINATION AGREEMENT AND RELATED AGREEMENTS

 

156

BUSINESS OF PBAX AND CERTAIN INFORMATION ABOUT PBAX

 

172

PBAX MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

 

182

BUSINESS OF CERO AND INFORMATION ABOUT CERO

 

187

CERO MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

 

222

MATERIAL U.S. FEDERAL INCOME TAX CONSIDERATIONS

 

234

UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION

 

242

BENEFICIAL OWNERSHIP

 

253

CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS

 

255

DESCRIPTION OF NEW CERO’S SECURITIES AFTER THE BUSINESS COMBINATION

 

263

SECURITIES ACT RESTRICTIONS ON RESALE OF COMMON STOCK

 

272

COMPARISON OF GOVERNANCE AND STOCKHOLDERS’ RIGHTS

 

273

TRADING SYMBOL, MARKET PRICE AND DIVIDEND POLICY

 

283

MANAGEMENT OF NEW CERO

 

284

APPRAISAL RIGHTS

 

292

STOCKHOLDER COMMUNICATIONS AND PROPOSALS

 

293

LEGAL MATTERS

 

296

EXPERTS

 

296

WHERE YOU CAN FIND MORE INFORMATION

 

296

Annex A

 

Business Combination Agreement by and among Phoenix Biotech Acquisition Corp., PBCE Merger Sub, Inc., and CERo Therapeutics, Inc., dated as of June 4, 2023

 

A-1

Annex B

 

Form of Phoenix Biotech Acquisition Corp. Second Amended and Restated Certificate of Incorporation

 

B-1

Annex C

 

Form of Phoenix Biotech Acquisition Corp. Second Amended and Restated Bylaws

 

C-1

Annex D

 

CERo Therapeutics, Inc. 2023 Equity Incentive Plan

 

D-1

Annex E

 

CERo Therapeutics, Inc. 2023 Employee Stock Purchase Plan

 

E-1

Annex F

 

RNA Advisors, LLC Fairness Opinion

 

F-1

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ABOUT THIS PROXY STATEMENT/PROSPECTUS

This document, which forms part of a Registration Statement on Form S-4 filed with the SEC by PBAX (the “Registration Statement”), constitutes a prospectus of PBAX under Section 5 of the Securities Act, with respect to the Class A Common Stock to be issued to CERo stockholders if the Business Combination described below is consummated. This document also constitutes a notice of meeting and a proxy statement under Section 14(a) of the Exchange Act with respect to the Special Meeting, at which PBAX stockholders will be asked to consider and vote upon a proposal to approve the Business Combination by the approval and adoption of the Business Combination Agreement, among other matters.

You should rely only on the information contained or incorporated by reference into this proxy statement/prospectus. No one has been authorized to provide you with information that is different from that contained in, or incorporated by reference into, this proxy statement/prospectus. This proxy statement/prospectus is dated as of the date set forth on the cover hereof. You should not assume that the information contained in this proxy statement/prospectus is accurate as of any date other than that date. You should not assume that the information incorporated by reference into this proxy statement/prospectus is accurate as of any date other than the date of such incorporated document. Neither the mailing of this proxy statement/prospectus to PBAX stockholders nor the issuance of shares of Class A Common Stock in connection with the Business Combination will create any implication to the contrary.

All information contained in this proxy statement/prospectus relating to PBAX has been supplied by PBAX, and all such information relating to CERo has been supplied by CERo. Information provided by one another does not constitute any representation, estimate or projection of the other.

This proxy statement/prospectus does not constitute an offer to sell or a solicitation of an offer to buy any securities, or the solicitation of a proxy, in any jurisdiction to or from any person to whom it is unlawful to make any such offer or solicitation in such jurisdiction.

PBAX files reports and other information with the SEC as required by the Exchange Act. You may access information on PBAX at the SEC website containing reports and other information at: www.sec.gov.

If you would like additional copies of this proxy statement/prospectus or if you have questions about the Business Combination, you should contact PBAX’s proxy solicitor, Okapi Partners LLC, via phone or in writing at: (877) 259-6290 (banks and brokers call (212) 297-0720), or info@okapipartners.com. To obtain timely delivery of the documents, you must request them no later than five business days before the date of the Special Meeting or no later than February 1, 2024.

MARKET AND INDUSTRY DATA

Certain information contained in this document relates to or is based on studies, publications, surveys and other data obtained from third-party sources and PBAX’s or CERo’s own internal estimates and research. We believe these third-party sources to be reliable as of the date of this proxy statement/prospectus and we are responsible for such information. Such information and data involves risks and uncertainties and is subject to change based on various factors, including, potentially, those discussed under the section of this proxy statement/prospectus entitled “Risk Factors.” Furthermore, such information and data cannot always be verified with complete certainty due to limits on the availability and reliability of raw data, the voluntary nature of the data gathering process and other limitations and uncertainties inherent in any statistical survey. Additionally, while our own internal research has not been verified by any independent source, we believe such research to be reliable and are responsible for any information disclosed in this proxy statement/prospectus based upon such internal research.

TRADEMARKS

This document contains references to trademarks, trade names and service marks belonging to other entities. Solely for convenience, trademarks, trade names and service marks referred to in this proxy statement/prospectus may appear without the ® or TM symbols, but such references are not intended to indicate, in any way, that the applicable licensor will not assert, to the fullest extent under applicable law, its rights to these trademarks and trade names. We do not intend our use or display of other entities’ trade names, trademarks or service marks to imply a relationship with, or endorsement or sponsorship of us by, any other entities.

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FREQUENTLY USED TERMS

As used in this proxy statement/prospectus, unless otherwise noted or the context otherwise requires, references to:

        “Advisors” means Cantor and CCM, collectively.

        “Board” means PBAX’s board of directors.

        “Business Combination” means the transactions contemplated by the Business Combination Agreement, including the merger between Merger Sub and CERo.

        “Business Combination Agreement” means the Business Combination Agreement, dated as of June 4, 2023, by and among PBAX, Merger Sub and CERo.

        “Cantor” means Cantor Fitzgerald & Co., the representative of the underwriters of the Initial Public Offering.

        “CCM” means Cohen & Company Capital Markets, a division of J.V.B. Financial Group, LLC, whom PBAX engaged as financial advisor in connection with the Initial Public Offering, capital markets advisor in connection with the Business Combination and placement agent in connection with a potential PIPE transaction.

        “CERo” means CERo Therapeutics, Inc., a Delaware corporation.

        “CERo Common Stock” means the Common Stock, par value $0.0001 per share, of CERo.

        “CERo options” means options to purchase CERo Common Stock, whether vested or unvested.

        “CERo stockholders” means the holders of CERo Common Stock immediately prior to the Effective Time.

        “Change of Control” means, solely for purposes of an issuance of Earnout Shares: (a) a direct or indirect sale, lease, transfer or other disposition of all or substantially all of the assets of PBAX in any transaction or series of related transactions to a person or a “group” (as such term is defined under Regulation 13D under the Securities Exchange Act), or (b) any transaction with a person or “group,” pursuant to which such person or group acquires, directly or indirectly, in any single transaction or series of related transactions, more than 50% of the total voting power or economic rights of the equity securities of PBAX (whether by merger, consolidation, sale, exchange, issuance, transfer or redemption of equity securities or otherwise); in each case, occurring at any time during the period following the Closing and expiring on the fourth anniversary of the Closing Date (and, for the avoidance of doubt, Sponsor and Mr. Ehrlich ceasing to own more than 50% of the total voting power or economic rights of the equity securities of PBAX shall not be considered a Change of Control).

        “Class A Common Stock” means the Class A Common Stock of PBAX, par value $0.0001.

        “Class B Common Stock” means the Class B Common Stock of PBAX, par value $0.0001, which is convertible into shares of Class A Common Stock on a one-for-one basis. Effective July 6, 2023, all of the outstanding shares of Class B Common Stock were converted into an equal number of shares of Class A Common Stock.

        “Closing” means the closing of the Business Combination.

        “Closing Date” has the meaning given in the Business Combination Agreement.

        “Code” means the Internal Revenue Code of 1986, as amended.

        “Combined Company” means PBAX subsequent to the Business Combination, to be renamed CERo Therapeutics Holdings, Inc. (also referred to herein as “New CERo”).

        “Common Stock” means the Class A Common Stock and the Class B Common Stock.

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        “Concurrent Private Placement” means the private placement of Private Placement Units, which was consummated simultaneously with the Initial Public Offering.

        “Continental” means Continental Stock Transfer & Trust Company, transfer agent for PBAX.

        “Convertible Bridge Notes” means that $1,200,000 aggregate principal amount of senior secured convertible notes issued or issuable by CERo to certain CERo stockholders which senior convertible notes will automatically convert into shares of Class A Common Stock of New CERo upon Closing at a conversion price equal to 75% of the closing price of the Class A Common Stock on the Closing Date.

        “Current Bylaws” means PBAX’s amended and restated bylaws.

        “Current Charter” means PBAX’s amended and restated certificate of incorporation, as amended by the first amendment dated December 20, 2022 and the second amendment dated July 7, 2023.

        “DGCL” means the Delaware General Corporation Law, as amended.

        “Dollars” or “$” means U.S. dollars.

        “Effective Time” means the effective time of the Business Combination.

        “ESPP” means the CERo Therapeutics, Inc. 2023 Employee Stock Purchase Plan, approved by the Board and the holders of PBAX Common Stock, effective as of and contingent on the consummation of the Business Combination.

        “Exchange Act” means the Securities Exchange Act of 1934, as amended.

        “Exchange Ratio” means $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.

        “FDA” means the U.S. Food and Drug Administration.

        “First Level Earnout Target” means if at any time during the period following the Closing and expiring on the fourth anniversary of the Closing Date, the volume-weighted average price of the shares of the Class A Common Stock equals or exceeds $12.50 for any 20 trading days within a period of 30 consecutive trading days (upon which 500,000 shares of Class A Common Stock will be released to CERo stockholders).

        “Founder Shares” mean the shares of Class B Common Stock initially purchased by the Sponsor, and the shares of Class A Common Stock issuable upon conversion thereof.

        “HSR Act” means the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended.

        “Incentive Plan” means the CERo Therapeutics, Inc. 2023 Equity Incentive Plan, approved by the Board and the holders of PBAX Common Stock, effective as of and contingent on the consummation of the Business Combination.

        “Initial Public Offering” means the initial public offering of PBAX, which closed on October 8, 2021.

        “Investor Rights Agreement” means the investor rights agreement into which PBAX, certain of the CERo stockholders and certain of the PBAX stockholders will enter at the Effective Time.

        “JOBS Act” means the Jumpstart Our Business Startups Act of 2012, as amended.

        “Merger Sub” means PBCE Merger Sub, Inc., a Delaware corporation and wholly-owned subsidiary of PBAX.

        “Nasdaq” means the Nasdaq Stock Market LLC.

        “New CERo” refers to the Combined Company following the consummation of the Business Combination.

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        “New CERo Board” means the board of directors of New CERo.

        “New CERo common stock” refers to the common stock, par value $0.0001 per share, of New CERo.

        “New CERo preferred stock” refers to the preferred stock, par value $0.0001 per share, of New CERo.

        “New CERo warrants” refers to warrants to purchase shares of New CERo common stock.

        “PBAX” means Phoenix Biotech Acquisition Corp., a Delaware corporation.

        “PBAX Common Stock” means the Class A Common Stock and Class B Common Stock.

        “PBAX’s initial stockholders” means the Sponsor, PBAX’s directors and officers, and any other holders of Founder Shares prior to our Initial Public Offering (or their permitted transferees).

        “PBAX Units” means the Public Units and the Private Placement Units.

        “PBAX Warrants” means the Public Warrants and the Private Placement Warrants.

        “Private Placement Shares” means the shares of Class A Common Stock that were issued to the Sponsor, Cantor and CCM as part of the Private Placement Units.

        “Private Placement Units” means the private placement units that were issued to the Sponsor, Cantor and CCM in a private placement simultaneously with the closing of the Initial Public Offering, which are identical to the units sold in the Initial Public Offering, subject to certain limited exceptions.

        “Private Placement Warrants” means the private placement warrants that were issued to the Sponsor, Cantor and CCM as part of the Private Placement Units, which are substantially identical to the public warrants sold as part of the units in the Initial Public Offering, subject to certain limited exceptions.

        “Proposals” means each of the Proposals to be considered for approval at the Special Meeting, as set forth in the section entitled “Summary Term Sheet” below.

        “Proposed Bylaws” means the second amended and restated bylaws of PBAX, attached to this proxy statement/prospectus as Annex C.

        “Proposed Charter” means the second amended and restated certificate of incorporation of PBAX, attached to this proxy statement/prospectus as Annex B.

        “Public Shares” means the shares of Class A Common Stock issued in the Initial Public Offering, whether acquired in the Initial Public Offering or acquired in the secondary market.

        “Public Stockholders” means the holders of the Public Shares.

        “Public Units” means the units of PBAX, each unit representing one share of Class A Common Stock and one-half of one warrant to acquire one share of Class A Common Stock, that were offered and sold by PBAX in the Initial Public Offering or acquired in the secondary market.

        “Public Warrants” means the redeemable warrants to purchase shares of Class A Common Stock that were issued by PBAX in the Initial Public Offering.

        “Record Date” means January 17, 2024.

        “Reallocation Shares” means a portion of the Founder Shares initially purchased by the Sponsor, which the Sponsor has indicated willingness to transfer to investors in connection with, and to the extent that, such investors agree to enter into financial arrangements in connection with the Business Combination (excluding debt), including, but not limited to, entry into any non-redemption agreements or participation in any PIPE transaction; provided that a portion of such Reallocation Shares that are not allocated to investors in a PIPE transaction or Public Stockholders who enter into non-redemption agreements may be transferred to CERo stockholders or retained by the Sponsor in amounts to be determined. However, as of the date of this proxy statement/prospectus, the Company has not obtained any binding commitments for a PIPE transaction or entered into any agreements pursuant to which

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Public Stockholders would not exercise redemption rights and the Sponsor has not entered into any agreements with respect to the transfer (which may be accomplished through a forfeiture coupled with a concurrent new issuance by New CERo of an offsetting number of shares) of any Reallocation Shares.

        “Sarbanes-Oxley Act” means the Sarbanes-Oxley Act of 2002.

        “SEC” means the U.S. Securities and Exchange Commission.

        “Second Level Earnout Target” means if at any time during the period following the Closing and expiring on the fourth anniversary of the Closing Date, the volume-weighted average price of the shares of Class A Common Stock equals or exceeds $15.00 for any 20 trading days within a period of 30 consecutive trading days (upon which 500,000 shares of Class A Common Stock that will be released to CERo stockholders).

        “Securities Act” means the Securities Act of 1933, as amended.

        “Special Meeting” means the special meeting in lieu of annual meeting of stockholders of PBAX, scheduled to be held on February 8, 2024.

        “Sponsor” means Phoenix Biotech Sponsor, LLC, a Delaware limited liability company.

        “Trust Account” means the trust account maintained by Continental, acting as trustee, established for the benefit of Public Stockholders in connection with the Initial Public Offering.

        “Units” means the Public Units and the Private Placement Units.

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QUESTIONS AND ANSWERS ABOUT THE PROPOSALS

The questions and answers below highlight only selected information from this proxy statement/prospectus and only briefly address some commonly asked questions about the Special Meeting and the Proposals to be presented at the Special Meeting, including with respect to the proposed Business Combination. The following questions and answers do not include all the information that may be important to PBAX stockholders. PBAX stockholders are urged to read this proxy statement/prospectus, including the annexes and the other documents referred to herein, in its entirety.

Questions and Answers About the Business Combination

Q:     Why am I receiving this proxy statement/prospectus?

A:     PBAX and CERo have agreed to a Business Combination under the terms of the Business Combination Agreement that is described in this proxy statement/prospectus. A copy of the Business Combination Agreement is attached to this proxy statement/prospectus as Annex A, and PBAX encourages its stockholders to read it in its entirety. PBAX’s stockholders are being asked to consider and vote upon a proposal to approve the Business Combination Agreement, which, among other things, provides for the Business Combination whereby Merger Sub will merge with and into CERo, with CERo surviving the Business Combination as a wholly-owned subsidiary of PBAX. See the section entitled “The Business Combination.”

This document is a proxy statement because the Board is soliciting proxies using this proxy statement/prospectus from PBAX stockholders. It is a prospectus because PBAX, in connection with the Business Combination, is offering shares of Class A Common Stock in exchange for the outstanding shares of CERo Common Stock. See the section entitled “The Business Combination.

Q:     What is the Business Combination?

A:     PBAX and CERo have entered into the Business Combination Agreement, pursuant to which Merger Sub will merge with and into CERo, with CERo surviving the Business Combination as a wholly-owned subsidiary of PBAX. See “The Business Combination Agreement” beginning on page 156. In addition, a copy of the Business Combination Agreement is attached to this proxy statement/prospectus as Annex A. We urge you to read this proxy statement/prospectus, including the annexes and the other documents referred to herein, carefully and in their entirety.

Q:     What will CERo stockholders and holders of CERo options and CERo warrants receive in the Business Combination?

A:     If the Business Combination is completed:

        Each outstanding share of CERo Common Stock will be cancelled and converted into (i) the right to receive a number of shares of Class A Common Stock equal to the Exchange Ratio (rounded down to the nearest whole share) and (ii) the right to receive a pro rata portion of up to 1,000,000 additional shares of Class A Common Stock if the First Level Earnout Target and the Second Level Earnout Target occur and 200,000 additional shares of Class A Common Stock if a Change of Control occurs.

        Each outstanding CERo option (whether vested or unvested) will be converted into an option to purchase a number of shares of Class A Common Stock (rounded down to the nearest whole share) 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 (rounded up to the nearest whole cent).

        Each outstanding share of CERo preferred stock will be converted into a number of shares of Class A Common Stock, equal to the number of shares of CERo preferred stock obtained by dividing the liquidation preference thereof by $10.00.

        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 obtained by dividing the aggregate liquidating preference of the shares of CERo preferred stock for which such CERo warrant is exercisable by $10.00, with the exercise price per share

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for such warrant equal to the current aggregate exercise price of such CERo warrant (the current exercise price per share multiplied by the number of shares of CERo preferred stock issuable upon exercise thereof) divided by the number of shares of Class A Common Stock issuable upon exercise thereof.

        Each outstanding Convertible Bridge Note will automatically convert all outstanding principal and any unpaid accrued interest into Class A Common Stock of the surviving company at a conversion price equal to (i) the dollar volume-weighted average price for the Class A Common Stock of the surviving company on the date of the closing of the Business Combination, (ii) multiplied by 0.75.

The consideration described in the foregoing bullets and as set forth in the table below is referred to collectively as the “Business Combination Consideration.” The Business Combination Consideration value is estimated to total $62.4 million, comprised of $50.0 million of Class A Common Stock issued to CERo shareholders on the Business Combination closing date, an estimated value of $1.2 million related to the conversion of the Convertible Bridge Notes, and 1.2 million additional shares of Class A Common Stock with a current estimated value of $10.8 million related to the Earnout shares.

Business Combination Consideration

Type of Security

 

Number Issuable

 

Recipients

Class A Common Stock (issued at Closing)

 

236,210

 

 

Holders of CERo Common Stock

Class A Common Stock (issued at Closing)

 

4,415,494

(1)

 

Holders of CERo Preferred Stock

Class A Common Stock (upon attainment of First Level Earnout Target)

 

500,000

 

 

Holders of CERo Common Stock

Class A Common Stock (upon attainment of Second Level Earnout Target)

 

500,000

 

 

Holders of CERo Common Stock

Class A Common Stock (upon a Change of Control)

 

200,000

 

 

Holders of CERo Common Stock

Options to purchase shares of Class A Common Stock

 

23,298

 

 

Holders of CERo options

Warrants to purchase shares of Class A Common Stock

 

324,999

 

 

Holders of CERo warrants

Convertible Bridge Note automatic conversion

 

161,334

(2)

 

Holders of CERo Convertible Bridge Notes

____________

(1)      Comprised of 415,498 shares to holders of Series Seed preferred stock and 3,999,996 shares to holders of Series A preferred stock.

(2)      Reserved 161,334 shares for a total of approximately $1.2 million of Convertible Bridge Notes. Convertible Bridge Notes totaling $605,230 were sold to eligible CERo stockholders on June 6, 2023.

As of September 30, 2023, the Exchange Ratio is approximately 0.026 (the calculation of which is described on page 126 of this proxy statement/prospectus). Based on this Exchange Ratio, the total number of shares of Class A Common Stock expected to be issued at the Effective Time in connection with the Business Combination (including the conversion of approximately $1.2 million of convertible promissory notes into 161,334 shares and excluding 1,200,000 Earnout Shares, 324,999 shares that will be issuable upon exercise of outstanding warrants and 23,298 shares that will be issuable upon exercise of outstanding stock options), is approximately 4,813,038 shares and, assuming that (i) no additional PBAX shares are issued prior to the Effective Time, (ii) there is no exercise of any options to purchase shares of Class A Common Stock that will be outstanding immediately following the Business Combination, and (iii) no shares are issued in connection with the Incentive Plan or the ESPP (each as defined in this proxy statement/prospectus) following the Business Combination, these shares are expected to represent between approximately 44% and 47% of the issued and outstanding shares of Class A Common Stock (which would be New CERo common stock) and voting power in New CERo immediately following the closing of the Business Combination. These percentages assume, at the low end of the range, that no redemptions from our Trust Account (as defined in this proxy statement/prospectus) occur, and, at the high end of the range, that maximum redemptions from our Trust Account occur. Please see the section of this proxy statement/prospectus entitled “Unaudited Pro Forma Condensed Combined Financial Information” for further information regarding what constitutes a “maximum redemptions” scenario. Following the Merger, it is contemplated that New CERo will have a single class of Common Stock.

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Subject to the same assumptions set forth in the preceding paragraph and with no redemptions from our Trust Account, (i) Public Stockholders are expected to hold approximately 7% of the issued and outstanding New CERo common stock, (ii) the Sponsor is expected to hold approximately 48% of the issued and outstanding New CERo common stock, (iii) CERo stockholders are expected to hold approximately 44% of the issued and outstanding New CERo common stock.

Subject to the same assumptions set forth in the preceding paragraph and with maximum possible redemptions from our Trust Account, (i) Public Stockholders are expected to hold none of the issued and outstanding New CERo common stock, (ii) the Sponsor is expected to hold approximately 51% of the issued and outstanding New CERo common stock, (iii) CERo stockholders are expected to hold approximately 47% of the issued and outstanding New CERo common stock. The Sponsor has indicated willingness to transfer a portion of its Founder Shares to investors in a potential PIPE transaction, CERo stockholders and/or Public Stockholders who do not exercise their redemption rights. However, as of the date of this proxy statement/prospectus, the Company has not obtained any binding commitments for a PIPE transaction or entered into any agreements pursuant to which Public Stockholders would not exercise redemption rights and the Sponsor has not entered into any agreements with respect to the transfer (which may be accomplished through a forfeiture coupled with a concurrent new issuance by New CERo of an offsetting number of shares) of any Reallocation Shares. In addition, the Sponsor has indicated that it intends to effectuate a distribution-in-kind of all of the shares of Class A Common Stock and Private Placement Warrants held thereby to its members immediately prior to the completion of the Business Combination and the listing of the New CERo common stock on Nasdaq (the “Distribution-in-Kind”). Upon completion of the Distribution-in-Kind, Sponsor would no longer hold any of our issued and outstanding securities.

These pro forma ownership percentages do not reflect (i) any issuance of shares in connection with the Incentive Plan and the ESPP following the Business Combination, (ii) any issuance of shares of New CERo common stock in a PIPE transaction or (iii) any transfer of the Reallocation Shares to investors in a PIPE transaction, CERo stockholders and Public Stockholders. No subscription agreements and non-redemption agreements have been executed as of the date of this proxy statement/prospectus and any such financing and arrangement, respectively, is currently uncertain. If the actual facts are different from the assumptions stated above, then the levels of ownership interest set forth above will be different. For more information, please see the section entitled “Unaudited Pro Forma Condensed Combined Financial Information.”

After the Closing, the Sponsor may hold more than 50% of the voting power of New CERo. Chris Ehrlich, the current Chief Executive Officer and a director and shareholder of PBAX, is the manager of the Sponsor and will serve as Vice Chairman of the New CERo Board following the Closing. As a result, New CERo may be a “controlled company” within the meaning of the rules of Nasdaq. However, New CERo does not intend to utilize the exemptions from the Nasdaq corporate governance standards available to controlled companies. For more information regarding the risks of New CERo being a “controlled company,” see “Risk Factors — Risks Related to New CERo’s Common Stock — If New CERo is successful in listing its Common Stock on Nasdaq, it expects to be a “controlled company” within the meaning of the Nasdaq rules upon such listing and, as a result, would qualify for, and could elect to rely on, exemptions from certain corporate governance requirements. If New CERo relies on these exemptions, its stockholders will not have the same protections afforded to stockholders of companies that are subject to such requirements.” Nevertheless, as described elsewhere in this proxy statement/prospectus, the Sponsor intends to transfer the Reallocation Shares to investors in a PIPE transaction, CERo stockholders and Public Stockholders in such relative proportions to be determined. Furthermore, upon completion of the Distribution-in-Kind, Sponsor would no longer hold any of our issued and outstanding securities.

For further information, please see the section titled “The Business Combination — Structure of the Business Combination.”

Q:     When do you expect the Business Combination to be completed?

A:     It is currently anticipated that the Business Combination will be consummated promptly following the Special Meeting, which is set for February 8, 2024; however, the Special Meeting could be adjourned, as described herein. PBAX cannot assure you of when or if the Business Combination will be completed, and it is possible that factors outside of the control of PBAX and CERo could result in the Business Combination being completed at a different time or not at all. PBAX must first obtain the approval of its stockholders for certain of the Proposals set forth in this proxy statement/prospectus.

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Q:     What happens if the Business Combination is not consummated?

A:     If PBAX does not complete the Business Combination with CERo, for whatever reason, PBAX will either search for another target business with which to complete a business combination or determine not to extend the expiration date for the completion of an initial business combination.

On December 16, 2022, the stockholders of PBAX approved the First Extension. In connection with such stockholder vote, an aggregate of 16,211,702 shares of Class A Common Stock were redeemed, representing approximately 92.6% of the Public Shares outstanding as of December 16, 2022, resulting in a payment of $167,693,708.48 from the Trust Account and leaving 2,173,298 shares of Class A Common Stock issued and outstanding and entitled to vote. In connection with the extensions of the business combination period from January 8, 2023 to June 8, 2023, the Sponsor deposited an aggregate of $550,000 to the Trust Account. On July 7, 2023, the stockholders of PBAX approved the Second Extension from July 8, 2023 to January 8, 2024. In connection with such stockholder vote, an aggregate of 523,341 shares of Class A Common Stock were redeemed, representing approximately 40.6% of the Public Shares outstanding as of July 7, 2023, resulting in a payment of $5,638,879.48 and leaving 6,246,207 shares of Class A Common Stock issued and outstanding and entitled to vote. In connection with the business combination deadline, the Sponsor deposited $22,948.71 in connection with each extension from July 8, 2023 to January 8, 2024.

On January 3, 2024, the stockholders of PBAX approved the Third Extension. In connection with such stockholder vote, an aggregate of 11,625 shares of Class A Common Stock were redeemed, representing approximately 1.5% of the Public Shares outstanding as of January 3, 2024, resulting in a payment of $128,133 and leaving 6,234,582 shares of Class A Common Stock issued and outstanding and entitled to vote. In connection with the business combination deadline, the Sponsor deposited an aggregate of $22,600 in connection with the extension from January 8, 2024 to February 8, 2024. As of January 4, 2024, a total of 16,746,668 shares have been redeemed, representing approximately 95.7% of the Public Shares then-outstanding following the Initial Public Offering.

As of January 4, 2024, there is approximately $8.3 million available in the Trust Account. If PBAX does not complete the Business Combination or another business combination by April 8, 2024 (or such later date as may be approved by PBAX’s stockholders), assuming the provision of loans by Sponsor to PBAX in accordance with the requirements set forth in the Current Charter (or such later date as may be approved by PBAX stockholders in an amendment to its Current Charter), PBAX must redeem 100% of 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 PBAX to pay its franchise and income taxes on such amounts (less up to $100,000 of such net interest to pay dissolution expenses), divided by the number of then-outstanding Public Shares. PBAX’s initial stockholders (including the Sponsor) have waived any rights it may have with respect to any monies held in the Trust Account as a result of any liquidation of PBAX with respect to the Founder Shares and Private Placement Shares and, accordingly, in the event a business combination is not effected by PBAX by April 8, 2024 (or such later date as may be approved by PBAX’s stockholders), the Founder Shares and Private Placement Shares held by PBAX’s initial stockholders would be worthless.

Q:     Did the Board obtain a fairness opinion in determining whether or not to proceed with the Business Combination?

A:     Yes. PBAX retained RNA Advisors, LLC (“RNA”) to provide a fairness opinion to the Board. The RNA fairness opinion is attached to this proxy statement/prospectus as Annex F. On June 4, 2023, RNA delivered its opinion to the Board as to the fairness, from a financial point of view, of the consideration to be issued by PBAX pursuant to the Business Combination Agreement to PBAX. RNA did not evaluate, or take into account, the Earnout Shares as part of its analysis due to the contingent nature of the issuance of such shares. For a description of the opinion issued by RNA to the Board, please see the section entitled “The Business Combination — Opinion of PBAX’s Financial Advisor.”

Q:     Will the management of New CERo change in the Business Combination?

A:     Following the Closing, the management of New CERo will consist of Daniel Corey, the current Chief Executive Officer of CERo, who will become the Chief Technical Officer of New CERo; Charles Carter, who will become the Chief Financial Officer of New CERo; and Brian Atwood, the current Chairman of the Board, who will become the Chief Executive Officer of New CERo.

For additional information, please see the section entitled “Management of New CERo.”

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Q:     Will New CERo obtain new financing in connection with the Business Combination and are there any arrangements to help ensure that New CERo will have sufficient funds to consummate the Business Combination?

A:     New CERo intends to obtain new equity financing through a private placement of PBAX Common Stock. However, New CERo has not yet entered into subscription agreements for such financing. As such, there is no such financing currently in place in connection with the Business Combination and there is no guarantee that New CERo will obtain such financing, on acceptable terms or at all. Unless waived by PBAX or CERo, the Business Combination Agreement provides that each party’s obligation to consummate the Business Combination is conditioned on New CERo having net tangible assets worth at least $5,000,001 immediately after the Closing after giving effect to the amount of cash in the Trust Account (net of the Cash Redemption Amount) together with the proceeds from any additional financing. Unless waived by CERo, the Business Combination Agreement provides that CERo’s obligation to consummate the Business Combination is conditioned on there being at least $30.0 million in cash available at Closing (“Available Closing Cash”), such amount calculated, as of the Closing:

a)      the amount of funds contained in the Trust Account (after reduction for the aggregate amount of payments made or required to be made in connection with the SPAC Stockholder Redemption), plus

b)      the amount of funds available to consummate the Merger pursuant to a PIPE transaction, minus

c)      Unpaid SPAC Expenses and Unpaid Company Expenses totaling $15.2 million and comprised of $1.6 million of convertible loans, $3.1 million of deferred legal fees, $1.5 million in deferred advisory fees, and $9.15 million of deferred underwriting fees. The Company and CERo are in active negotiation to significantly reduce the total amount of cash payable at Closing to vendors for these expenses, which reduction of cash payments at Closing may be accomplished through a combination of a reduction in the amounts owed, issuance of equity consideration in lieu of cash or deferral of amounts owed. However, the Company and CERo have not entered into any agreements with such vendors to reduce the amounts payable thereto at Closing and we cannot assure you that such negotiations will be successful.

Although PBAX and CERo will seek to obtain additional financing and to ensure the receipt of proceeds of the Trust Account through the execution of non-redemption agreements, providing that certain stockholders will not redeem the shares of Class A Common Stock beneficially owned thereby and not, among other things, sell, encumber or otherwise transfer such shares, we cannot assure that PBAX and CERo will obtain such financing or non-redemption agreements. As of the date of this proxy statement/prospectus, PBAX and CERo have not obtained any subscriptions for a PIPE transaction or entered into any non-redemption agreements. In the event that PBAX obtains such subscriptions or enters into non-redemption agreements prior to the Closing, PBAX will disclose such subscriptions and/or non-redemption agreements in a supplement to this proxy statement/prospectus.

Even if there are no redemptions and PBAX and CERo successfully negotiate the deferral, reduction or payment in equity in lieu of cash all of the transaction expenses described above, PBAX and CERo would need to obtain more than $21.7 million of additional financing in order to satisfy the Available Closing Cash condition. Accordingly, PBAX may not be able to guarantee there being at least $30.0 million in Available Closing Cash, which is a condition PBAX is required to perform in order to consummate the Business Combination Agreement. Pursuant to the Business Combination Agreement, CERo may (a) extend the time for the performance of any of the obligations or other acts required of PBAX as set forth in the Business Combination Agreement or (b) waive compliance by PBAX with any of the agreements or conditions set forth in the Business Combination Agreement. PBAX would announce any such extension or waiver on a Current Report on Form 8-K and supplement to this proxy statement/prospectus prior to the Special Meeting. However, PBAX cannot guarantee that CERo will grant such an extension or waiver. If CERo did waive the Available Closing Cash condition in these circumstances, it is possible that New CERo would have insufficient capital to conduct and grow its business after Closing in the manner described in this proxy statement/prospectus. See “Unaudited Pro Forma Condensed Combined Financial Information.”

Although the terms of such financing have not yet been finalized, PBAX and CERo remain in active discussions with existing CERo stockholders, including investors in the Convertible Bridge Notes, certain PBAX stockholders and third-party investors regarding a potential investment in convertible preferred stock to be issued by New CERo at closing of the Business Combination, accompanied by warrants to purchase additional shares of New CERo Common Stock. Holders of Convertible Bridge Notes may be provided an

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opportunity to exchange their Convertible Bridge Notes and/or their commitments to purchase additional Convertible Bridge Notes for the securities offered in the PIPE transaction. The PIPE transaction is expected to be accompanied by an equity line provided by an institutional investor. Although we cannot assure you that such financing transactions will be completed on such terms, or at all, each of PBAX and CERo currently expects that the total proceeds of such financing transactions upon closing of the Business Combination will constitute a majority of the $30 million minimum cash condition and that PBAX and CERo will successfully negotiate the reduction or deferral of certain cash expenses payable to third-party vendors at Closing, it is likely that the net cash available to New CERo after the payment of any such expenses not deferred will be less than the minimum cash condition and that CERo would waive such condition to the extent of such shortfall.

Should the Business Combination transaction be consummated with a waiver of the Closing Cash Condition, but in the absence of additional PIPE funding or proceeds from the Trust Account, the surviving entity will hold $1.6 million in PBAX working capital debt.

If we are unable to secure such financing and such closing conditions are not waived by PBAX or CERo, as applicable, CERo may terminate the Merger Agreement and the Business Combination may not be consummated. In such event, PBAX will need to seek for an alternative business combination to complete its initial business combination within the prescribed time period. For more information, see “Risk Factors — Risks Related to PBAX, the Business Combination and Redemptions — The consummation of the Business Combination is conditioned on, among other things, there being at least $30.0 million in Available Closing Cash, after the payment of any transaction expenses. As this condition is for CERo’s benefit, it is possible that CERo could waive it prior to Closing, although there is no guarantee that it would. If CERo did waive the condition in these circumstances, it is possible that New CERo would have insufficient capital to conduct and grow its business after Closing in the manner described in this proxy statement/prospectus and New CERo would have $1.6 million of debt from PBAX’s working capital loans.”

If PBAX is unable to complete the Business Combination with CERo or another initial business combination by April 8, 2024 (or such later date as may be approved by PBAX’s stockholders), PBAX will cease all operations except for the purpose of winding up, redeeming 100% of the outstanding Public Shares for cash and, subject to the approval of its remaining stockholders and its Board, dissolving and liquidating. For more information, see “Risk Factors — Risks Related to PBAX, the Business Combination and Redemptions — If PBAX is unable to complete the Business Combination with CERo or another initial business combination by April 8, 2024 (or such later date as may be approved by PBAX’s stockholders), PBAX will cease all operations except for the purpose of winding up, redeeming 100% of the outstanding Public Shares for cash and, subject to the approval of its remaining stockholders and its Board, dissolving and liquidating. In such event, third parties may bring claims against PBAX and, as a result, the proceeds held in the Trust Account could be reduced and the per-share liquidation price received by stockholders could be less than $10.79 per Public Share.”

Q:     Is it possible for either party to the Business Combination Agreement to waive the applicability of the condition that there by at least $30.0 million in Available Closing Cash?

A:     Yes, either party to the Business Combination Agreement may waive the applicability of the $30.0 million minimum cash condition with respect to the other party. PBAX would announce any such waiver on a Current Report on Form 8-K and supplement to this proxy statement/prospectus prior to the Special Meeting. However, pursuant to the PBAX Charter, New CERo must have at least $5,000,001 of net tangible assets upon consummation of the Business Combination. If this condition was waived, it is possible that New CERo would have insufficient capital to conduct and grow its business after Closing in the manner described in this proxy statement/prospectus and New CERo would have $1.6 million of debt from PBAX’s working capital loans.

Questions and Answers About the Special Meeting

Q:     How do I attend a virtual meeting?

A:     As a registered stockholder, along with this proxy statement/prospectus, you received a proxy card from Continental, PBAX’s transfer agent, which contains instructions on how to attend the virtual Special Meeting, including the URL address and your control number. You will need your control number for access. If you do not have your control number, contact Continental at (917) 262-2373, or email Continental at proxy@continentalstock.com.

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You can pre-register to attend the virtual Special Meeting starting on February 8, 2024 (five business days prior to the meeting). Enter the following URL address into your browser: https://www.cstproxy.com/phoenixbiotech/2024, then enter your control number, name and email address. Once you pre-register, you can vote or enter questions in the chat box. At the start of the Special Meeting, you will need to re-login using the same control number and, if you want to vote during the meeting, you will be prompted to enter your control number again.

Beneficial owners who own their Class A Common Stock through a bank, broker or other nominee will need to contact Continental to receive a control number. If you plan to vote at the Special Meeting, you will need to have a legal proxy from your broker, bank or other nominee or, if you would like to join and not vote, Continental can issue you a guest control number with proof of ownership. Either way, you must contact Continental at the number or email address above for specific instructions on how to receive the control number. Please allow up to 72 hours prior to the meeting for processing your control number.

If you do not have internet capabilities, you can only listen to the Special Meeting by dialing (toll-free, within the U.S. and Canada) or (with toll, outside the U.S. or Canada) and when prompted, enter the pin 7853797#. This method supports listening only, so you will not be able to vote or enter questions during the Special Meeting.

Q:     What matters are being presented to PBAX stockholders at the Special Meeting?

A:     PBAX will hold the Special Meeting to consider and vote upon the following Proposals:

        Proposal 1 — The “Business Combination Proposal” to approve the Business Combination, including the Business Combination Agreement, attached to this proxy statement/prospectus as Annex A.

        Proposal 2 — The “Charter Amendment Proposal” to approve the Proposed Charter, attached to this proxy statement/prospectus as Annex B.

        Proposal 3 — The “Advisory Charter Amendment Proposals” to approve certain material differences between the Proposed Charter and the Current Charter.

        Proposal 4 — The “Nasdaq Stock Issuance Proposal” to approve the issuances of Class A Common Stock pursuant to the Business Combination Agreement, as required by Nasdaq Listing Rule 5635.

        Proposal 5 — “Director Election Proposal” to approve the appointment of five directors who, upon consummation of the Business Combination, will become directors of New CERo.

        Proposal 6 — “Incentive Plan Proposal” to approve the Incentive Plan, attached to this proxy statement/prospectus as Annex D.

        Proposal 7 — The “ESPP Proposal” to approve the ESPP, attached to this proxy statement/prospectus as Annex E.

        Proposal 8 — The “Adjournment Proposal” to approve the adjournment of the Special Meeting.

Consummation of the Business Combination is conditioned on, among other things, approval of each of the Business Combination Proposal, the Charter Amendment Proposal, the Nasdaq Stock Issuance Proposal, the election of each director pursuant to the Director Election Proposal, Incentive Plan Proposal and the ESPP Proposal (and each such Proposal is cross-conditioned on the approval of such other Proposals). If any of these Proposals is not approved, the remaining Proposals will not be presented to stockholders for a vote.

YOUR VOTE IS IMPORTANT. YOU ARE ENCOURAGED TO SUBMIT YOUR PROXY AS SOON AS POSSIBLE AFTER CAREFULLY REVIEWING THIS PROXY STATEMENT/PROSPECTUS AND ITS ANNEXES AND CAREFULLY CONSIDERING EACH OF THE PROPOSALS BEING PRESENTED AT THE SPECIAL MEETING.

Q:     What is the vote required to approve the Proposals?

A:     Proposal 1 — The Business Combination Proposal requires the affirmative vote of a majority of the votes cast by the stockholders present by virtual attendance or represented by proxy at the Special Meeting and entitled to vote at the Special Meeting. Abstentions and broker non-votes will have no effect on the vote for Proposal 1.

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Proposal 2 — The Charter Amendment Proposal requires the affirmative vote of the majority of the issued and outstanding shares of each of PBAX’s Class A and Class B Common Stock, voting separately, as well as the vote of a majority of the issued and outstanding shares of Class A Common Stock and Class B Common Stock, voting together as a single class. Abstentions and broker non-votes will have the effect of a vote “AGAINST” Proposal 2.

Proposal 3 — The Advisory Charter Amendment Proposals require the affirmative vote of the majority of the votes cast by holders of shares of each of PBAX’s Class A Common Stock and Class B Common Stock entitled to vote thereon, voting separately. Abstentions and broker non-votes will have no effect on the vote for Proposal 3.

Proposal 4 — The Nasdaq Stock Issuance Proposal requires the affirmative vote of a majority of the votes cast by the stockholders present by virtual attendance or represented by proxy at the Special Meeting and entitled to vote at the Meeting. Abstentions and broker non-votes will have no effect on the vote for Proposal 4.

Proposal 5 — The election of each director pursuant to the Director Election Proposal requires the plurality vote of the shares of PBAX Class B Common Stock cast in respect of that Proposal and entitled to vote at the Special Meeting. Abstentions and broker non-votes will have no effect on the vote for Proposal 5.

Proposal 6 — The Incentive Plan Proposal requires the affirmative vote of a majority of the votes cast by the stockholders present by virtual attendance or represented by proxy at the Special Meeting and entitled to vote at the Meeting. Abstentions and broker non-votes will have no effect on the vote for Proposal 6.

Proposal 7 — The ESPP Proposal requires the affirmative vote of a majority of the votes cast by the stockholders present by virtual attendance or represented by proxy at the Special Meeting and entitled to vote at the Meeting. Abstentions and broker non-votes will have no effect on the vote for Proposal 7.

Proposal 8 — The Adjournment Proposal requires the affirmative vote of a majority of the votes cast by the stockholders present by virtual attendance or represented by proxy at the Special Meeting and entitled to vote at the Meeting. Abstentions and broker non-votes will have no effect on the vote for Proposal 8.

Certain of PBAX’s existing stockholders, including the Sponsor and PBAX’s directors and officers, have agreed to vote any Founder Shares, Private Placement Shares, and Public Shares they hold in favor of each Proposal. As of January 4, 2024, the Sponsor owns approximately 85.0% of the outstanding PBAX Common Stock and PBAX’s directors and officers collectively own no shares of the outstanding PBAX Common Stock. Accordingly, it is more likely that the necessary stockholder approval will be received than would be the case if such persons agreed to vote their shares in accordance with the majority of the votes cast by the Public Stockholders. In particular, because PBAX’s initial stockholders have agreed to vote in favor of each of the Proposals, all of the Proposals will be approved even if none of the outstanding Class A Common Stock held by the Public Stockholders is voted in favor of any of the Proposals.

Q:     What will happen to PBAX’s securities upon consummation of the Business Combination?

A:    The Public Units, Class A Common Stock and Public Warrants are currently listed on Nasdaq under the symbols “PBAXU,” “PBAX” and “PBAXW,” respectively. Upon the Closing, New CERo will have one class of common stock and warrants, which will be listed on Nasdaq under the symbol “CERO” and “CEROW,” respectively. Public Stockholders who do not elect to have their Public Shares redeemed for a pro rata share of the Trust Account need not submit Public Shares, and such shares of stock (which will be New CERo common stock upon the Closing) will remain outstanding. Each outstanding share of Class B Common Stock, by its terms, will automatically convert into one share of Class A Common Stock upon the Closing. Following the Merger, it is contemplated that New CERo will have a single class of common stock.

Q:     Will New CERO’s common stock and warrants be listed on Nasdaq upon consummation of the Business Combination?

A:     PBAX has applied to list New CERo’s common stock and warrants on Nasdaq under the symbol “CERO” and “CEROW,” respectively. The listing of such securities is a condition to each party’s obligation to consummate the Business Combination pursuant to the Merger Agreement. Neither PBAX nor CERo intends to waive such closing condition.

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Nevertheless, on April 3, 2023, PBAX received the Nasdaq Letter from the listing qualifications department staff of Nasdaq notifying PBAX that, for the 30 consecutive trading days prior to the date of the letter, the Class A Common Stock had traded at a value below the minimum $50,000,000 MVLS requirement set forth in Nasdaq Listing Rule 5450(b)(2)(A), which is required for continued listing of the Class A Common Stock on Nasdaq. The Nasdaq Letter was only a notification of deficiency, not of imminent delisting, and had no immediate 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 of all then-outstanding Class B Common Stock to Class A Common Stock.

Q:     How do the Public Warrants differ from the Private Placement Warrants and what are the related risks for any Public Warrant holders post Business Combination?

A:     The Private Placement Warrants (including the New CERo common stock issuable upon exercise of the Private Placement Warrants) are not transferable, assignable or salable until 30 days after the completion of the Business Combination (subject to limited exceptions). In addition, for as long as Private Placement Warrants are held by Cantor and/or its designees or affiliates, such Private Placement Warrants will be subject to a lock-up in compliance with FINRA Rule 5110(e) and may not be exercised after five years from the commencement of sales of the Initial Public Offering in accordance with FINRA Rule 5110(g)(8)(A). The Private Placement Warrants will be redeemable by us and exercisable by the holders on the same basis as the Public Warrants included in the Public Units sold in the Initial Public Offering. The Sponsor, which holds an aggregate of 349,998 Private Placement Warrants, has agreed not to transfer, assign or sell any of the Private Placement Warrants, including the Class A Common Stock issuable upon exercise of the Private Placement Warrants (except to certain permitted transferees), until 30 days after the completion of an initial business combination.

As a result, following the Business Combination, New CERo may redeem your New CERo warrants prior to their exercise at a time that is disadvantageous to you, thereby making such warrants worthless. New CERo has the ability to redeem outstanding New CERo warrants at any time after they become exercisable and prior to their expiration, at a price of $0.01 per New CERo warrant, provided that the reported last sales price of the New CERo common stock equals or exceeds $18.00 per share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations and the like) for any 20 trading days within a 30 trading day period ending three business days before New CERo sends the notice of redemption to the warrantholders. If and when the New CERo warrants become redeemable by New CERo, it may exercise its redemption right even if it is unable to register or qualify the underlying securities for sale under all applicable state securities laws. New CERo will use its commercially reasonable efforts to register or qualify such shares under the blue sky laws of the state of such residence in those states in which the New CERo warrants were offered. Redemption of the outstanding New CERo warrants could force you (i) to exercise your New CERo warrants and pay the exercise price therefor at a time when it may be disadvantageous for you to do so, (ii) to sell your New CERo warrants at the then-current market price when you might otherwise wish to hold your New CERo warrants or (iii) to accept the nominal redemption price which, at the time the outstanding New CERo warrants are called for redemption, is likely to be substantially less than the market value of your New CERo warrants.

New CERo may only call the New CERo warrants for redemption upon a minimum of 30 days’ prior written notice of redemption to each warrantholder, provided that holders will be able to exercise their New CERo warrants prior to the time of redemption and, at New CERo’s election, any such exercise may be required to be on a cashless basis. Please see “Description of New CERo’s Securities After the Business Combination — Warrants” for more information.

Q:     Why is PBAX proposing the Business Combination?

A:     PBAX was organized to effect a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or other similar business combination with one or more businesses.

On October 8, 2021, PBAX completed its Initial Public Offering of shares of Class A Common Stock, at a price of $10.00 per share, raising total gross proceeds of $175 million. Since its Initial Public Offering, PBAX’s activity has been limited to the evaluation of business combination candidates.

CERo is an innovative immunotherapy company advancing the development of next generation engineered T cell therapeutics for the treatment of cancer.

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Based on its due diligence investigations of CERo and the industry in which CERo operates, including the financial and other information provided by CERo in the course of the negotiations in connection with the Business Combination Agreement, PBAX believes that CERo has an appealing market opportunity and growth profile and a compelling valuation. As a result, PBAX believes that the Business Combination with CERo will provide PBAX stockholders with an opportunity to participate in the ownership of a company with significant value. See the section entitled “The Business Combination — The Board’s Reasons for Approval of the Business Combination.”

Q:     Do I have redemption rights?

A:     If you are a PBAX stockholder holding Public Shares, you have the right to demand that PBAX redeem your Public Shares for a pro rata portion of the cash held in the Trust Account. We sometimes refer to these rights to demand redemption of the Public Shares as “redemption rights.”

Notwithstanding the foregoing, a PBAX stockholder, together with any affiliate or any other person with whom such holder is acting in concert or as a “group” (as defined in Section 13(d)(3) of the Exchange Act), will be restricted from exercising redemption rights with respect to 20% or more of the Public Shares without the prior consent of PBAX.

Please see the section of this proxy statement/prospectus entitled “Summary of the Proxy Statement/Prospectus — Underwriting Fees as a Percentage of Initial Public Offering Proceeds Net of Redemptions.

Q:     How do I exercise my redemption rights?

A:     A Public Stockholder may exercise redemption rights regardless of whether they vote on the Business Combination Proposal or if they are a stockholder on the Record Date. If you are a Public Stockholder and wish to exercise your redemption rights, you must demand that PBAX redeem your Public Shares for cash and deliver your Public Shares to Continental, PBAX’s transfer agent, at Continental Stock Transfer & Trust Company, One State Street Plaza, 30th Floor, New York, New York 10004, Attn: SPAC Redemption Team, physically or electronically at spacredemptions@continentalstock.com, at least two business days before the Special Meeting, or February 6, 2024. Rather than delivering your Public Shares directly to Continental, you may also deliver your Public Shares either physically or electronically through DTC to Continental at least two business days before the Special Meeting. Any Public Stockholder seeking redemption will be entitled to a full pro rata portion of the amount then in the Trust Account (which, for illustrative purposes, was $8.3 million, or $11.06 per share, as of January 4, 2024), less any owed but unpaid franchise and income taxes. Such amount will be paid promptly upon consummation of the Business Combination. There is currently a total of approximately $10,000 in owed but unpaid franchise or income taxes within the Trust Account funds.

Any request for redemption, once made by a Public Stockholder, may be withdrawn at any time prior to the time the vote is taken with respect to the Business Combination Proposal at the Special Meeting. If you deliver your Public Shares for redemption directly to Continental, or deliver your Public Shares either physically or electronically through DTC to Continental, and later decide prior to the Special Meeting not to elect redemption, you may request that Continental return the shares (physically or electronically). You may make such request by contacting Continental at the phone number or address set forth in this proxy statement/prospectus.

Any written demand of redemption rights must be received by Continental at least two business days prior to the vote taken on the Business Combination Proposal at the Special Meeting. No demand for redemption will be honored unless the holder’s stock has been delivered (either physically or electronically) to Continental.

Q:     Do I have appraisal rights if I object to the proposed Business Combination?

A:     No. PBAX stockholders do not have appraisal rights in connection with the proposed Business Combination under Delaware law.

Q:     What happens if a substantial number of stockholders vote in favor of the Business Combination Proposal and exercise redemption rights?

A:     Public Stockholders may vote in favor of the Business Combination and still exercise their redemption rights and are not required to vote in any way to exercise their redemption rights. Accordingly, the Business Combination may be consummated even though the funds available from the Trust Account and the number of

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Public Shares are substantially reduced as a result of redemptions by Public Stockholders (however, pursuant to the PBAX Charter, New CERo must have at least $5,000,001 of net tangible assets upon consummation of the Business Combination). Also, with fewer Public Shares and Public Stockholders, the trading markets for Class A Common Stock following the closing of the Business Combination may be less liquid than the market for Class A Common Stock was prior to the Business Combination and New CERo may not be able to meet the listing standards of a national securities exchange, including Nasdaq. In addition, with fewer funds available from the Trust Account, the capital infusion from the Trust Account into New CERo’s business will be reduced and New CERo may not be able to achieve its business plans. In addition, without additional funds from a PIPE transaction that the parties intend to complete in connection with the closing of the Business Combination, it is possible that a maximum redemption scenario would result in a cash deficit, in which event the parties would need to find additional sources of funding in order for the Business Combination to become effective.

The table below presents the Trust Account value per share to a Public Stockholder that elects not to redeem its shares across a range of varying redemption scenarios. This Trust Account value per share includes the per share cost of the deferred underwriting commission of $9,150,000. The Trust Account value was $8.3 million at January 4, 2024.

 

As of
January 4, 
2024

Trust Account Value

 

$

8,330,779

Total shares of Redeemable Class A Common Stock(1)

 

 

753,332

Trust Account Value per share of Redeemable Class A Common Stock

 

$

11.06

____________

(1)      Excludes 885,000 private placement shares not included in the Trust Balance.

 

Assuming no
Redemptions

 

Assuming 25%
Redemptions

 

Assuming 75%
Redemptions

 

Assuming
Maximum
Possible
Redemptions
(1)

Redemptions ($)

 

$

 

 

$

(2,082,963

)

 

$

(6,248,889

)

 

$

(8,330,779

)

Redemptions (Shares)

 

 

 

 

 

(188,333

)

 

 

(564,999

)

 

 

(753,332

)

Deferred underwriting commission

 

$

(9,150,000

)

 

$

(9,150,000

)

 

$

(9,150,000

)

 

$

(9,150,000

)

Cash left in the Trust Account post redemptions less deferred underwriting commission

 

$

(2)

 

$

(2)

 

$

(2)

 

$

(2)

Class A Common Stock post redemptions

 

 

753,332

 

 

 

564,999

 

 

 

188,333

 

 

 

 

Remaining Trust Proceeds Per Share

 

$

(2)

 

$

(2)

 

$

(2)

 

$

(2)

____________

(1)      Assumes that 753,332 shares of Class A Common Stock, which represents approximately 12.1% of PBAX’s currently outstanding Class A Common Stock, are redeemed. The maximum redemption scenario represents the maximum level of allowable redemptions, without consideration of Available Closing Cash or minimum net tangible asset value requirements. A key closing condition for the completion of the Business Combination is the availability of additional cash from the proceeds from the sale of shares of New CERo common stock to investors in a PIPE transaction, which financing remains uncertain. Given the current uncertainties around timing, amount, structure, and other variables with respect to the additional funds, PBAX has elected to present the scenario without additional funds, which results in a pro forma cash deficit. This cash deficit must be sufficiently augmented by the additional funds for the Business Combination to become effective unless the applicable closing conditions are waived, which are uncertain and may not be available. As of the date of this proxy statement/prospectus, PBAX has not obtained any binding commitments for a PIPE transaction or entered into any agreements pursuant to which Public Stockholders would not exercise redemption rights. If PBAX enters into a PIPE transaction or non-redemption agreements after the date of this proxy statement/prospectus, PBAX will present a scenario that incorporates the additional funds that would permit completion of the Business Combination, including satisfying the Available Closing Cash requirement. See “Unaudited Pro Forma Condensed Combined Financial Information.”

(2)      The redemptions and deferred underwriting commissions exceed the amount held in Trust Account.

Furthermore, to the extent that holders of shares of Class A Common Stock redeem their shares in connection with the Business Combination, their Public Warrants will remain issued and outstanding notwithstanding the redemption of their shares of Class A Common Stock. The Sponsor, Cantor and CCM collectively hold an aggregate of 885,000 Private

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Placement Shares and 442,500 Private Placement Warrants underlying the Private Placement Units. Following the consummation of the Business Combination, all of PBAX’s outstanding warrants will become warrants to acquire shares of New CERo common stock on the same terms as PBAX’s currently outstanding warrants.

The table below shows the relative ownership levels of holders of outstanding shares of New CERo common stock following the Business Combination under varying redemption scenarios and assuming that no warrants to purchase New CERo common stock have been exercised at the Closing.

 

Assuming No
Redemptions

 

Assuming 25%
Redemptions

 

Assuming 75%
Redemptions

 

Assuming Maximum
Redemptions

   

Shares

 

%

 

Shares

 

%

 

Shares

 

%

 

Shares

 

%

Public shares(1)

 

753,332

 

6.8

%

 

564,999

 

5.2

%

 

188,333

 

1.8

%

 

 

0.0

%

Shares issued to CERo stockholders(2)

 

4,813,038

 

43.6

%

 

4,813,038

 

44.3

%

 

4,813,038

 

45.9

%

 

4,813,038

 

46.8

%

Non-sponsor held private placement shares(3)

 

185,004

 

1.7

%

 

185,004

 

1.7

%

 

185,004

 

1.8

%

 

185,004

 

1.8

%

Shares held by Sponsor(4)

 

5,296,246

 

47.9

%

 

5,296,246

 

48.8

%

 

5,296,246

 

50.5

%

 

5,296,246

 

51.4

%

Shares outstanding

 

11,047,620

 

100.0

%

 

10,859,287

 

100.0

%

 

10,482,621

 

100.0

%

 

10,294,288

 

100.0

%

____________

(1)      Maximum redemption scenario assumes that 753,332 shares of Class A common stock, which represents approximately 12.1% of PBAX’s currently outstanding Class A common stock, are redeemed. The maximum redemption scenario represents the maximum level of allowable redemptions, without consideration of Available Closing Cash or minimum net tangible asset value requirements. A key closing condition for the completion of the Business Combination is the availability of additional cash from the proceeds from the sale of shares of New CERo common stock to investors in a PIPE transaction. Given the current uncertainties around timing, amount, structure, and other variables with respect to the additional funds, PBAX has elected to present the scenario without additional funds, which results in a pro forma cash deficit. This cash deficit must be sufficiently augmented by the additional funds for the Business Combination to become effective unless the applicable closing conditions are waived, which funds are uncertain and may not be available. As of the date of this proxy statement/prospectus, PBAX has not obtained any binding commitments for a PIPE transaction or entered into any agreements pursuant to which Public Stockholders would not exercise redemption rights. If PBAX enters into a PIPE transaction or non-redemption agreements after the date of this proxy statement/prospectus, PBAX will present a scenario that incorporates the additional funds that would permit completion of the Business Combination, including satisfying the Available Closing Cash requirement. See “Unaudited Pro Forma Condensed Combined Financial Information.”

(2)      The Business Combination Consideration shares outstanding immediately following the Business Combination include 4,651,704 shares for outstanding CERo equity and 161,334 shares issued in the conversion of approximately $1.2 million of promissory notes purchased by CERo shareholders.

(3)      Cantor holds 155,000 private placement shares and 77,500 private placement warrants and CCM holds 30,004 private placement shares and 15,002 private placement warrants.

(4)      Sponsor holds 4,596,250 founder shares, 699,996 private placement shares and 349,998 private placement warrants.

The table below shows the fully diluted relative ownership levels of holders of shares of New CERo common stock following the Business Combination under varying redemption scenarios.

 

Assuming No
Redemptions

 

Assuming 25%
Redemptions

 

Assuming 75%
Redemptions

 

Assuming Maximum
Redemptions

   

Shares

 

%

 

Shares

 

%

 

Shares

 

%

 

Shares

 

%

Public shares(1)

 

753,332

 

3.5

%

 

564,999

 

2.6

%

 

188,333

 

0.9

%

 

 

0.0

%

Shares issued to CERo
stockholders
(2)

 

4,813,038

 

22.1

%

 

4,813,038

 

22.3

%

 

4,813,038

 

22.7

%

 

4,813,038

 

22.9

%

Non-Sponsor held private placement shares(3)

 

185,004

 

0.8

%

 

185,004

 

0.9

%

 

185,004

 

0.9

%

 

185,004

 

0.9

%

Shares held by Sponsor(4)

 

5,296,246

 

24.3

%

 

5,296,246

 

24.5

%

 

5,296,246

 

25.0

%

 

5,296,246

 

25.2

%

Shares underlying public warrants

 

8,750,000

 

40.2

%

 

8,750,000

 

40.5

%

 

8,750,000

 

41.2

%

 

8,750,000

 

41.6

%

Shares underlying private placement warrants

 

442,500

 

2.0

%

 

442,500

 

2.0

%

 

442,500

 

2.1

%

 

442,500

 

2.1

%

Shares underlying CERo warrants

 

324,999

 

1.5

%

 

324,999

 

1.5

%

 

324,999

 

1.5

%

 

324,999

 

1.5

%

Shares underlying CERo options

 

23,298

 

0.1

%

 

23,298

 

0.1

%

 

23,298

 

0.1

%

 

23,298

 

0.1

%

Shares underlying earnout consideration

 

1,200,000

 

5.5

%

 

1,200,000

 

5.6

%

 

1,200,000

 

5.7

%

 

1,200,000

 

5.7

%

Fully diluted shares

 

21,788,417

 

100.0

%

 

21,600,084

 

100.0

%

 

21,223,418

 

100.0

%

 

21,035,085

 

100.0

%

__________

(1)      Maximum redemption scenario assumes that 753,332 shares of Class A Common Stock, which represents approximately 12.1% of PBAX’s currently outstanding Class A Common Stock, are redeemed. The maximum redemption scenario represents the maximum level of allowable redemptions, without consideration of Available Closing Cash or minimum net tangible asset value requirements. A key closing condition for the completion of the Business Combination is the availability of additional cash from the proceeds from the sale of shares of New CERo common stock to investors in a

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PIPE transaction. Given the current uncertainties around timing, amount, structure, and other variables with respect to the additional funds, PBAX has elected to present the scenario without additional funds, which results in a pro forma cash deficit. This cash deficit must be sufficiently augmented by the additional funds for the Business Combination to become effective unless the applicable closing conditions are waived, which funds are uncertain and may not be available. As of the date of this proxy statement/prospectus, PBAX has not obtained any binding commitments for a PIPE transaction or entered into any agreements pursuant to which Public Stockholders would not exercise redemption rights. If PBAX enters into a PIPE transaction or non-redemption agreements after the date of this proxy statement/prospectus, PBAX will present a scenario that incorporates the additional funds that would permit completion of the Business Combination, including satisfying the Available Closing Cash requirement. See “Unaudited Pro Forma Condensed Combined Financial Information.”

(2)      The Business Combination Consideration shares outstanding immediately following the Business Combination include 4,651,704 shares for outstanding CERo equity and 161,334 shares issued in the conversion of approximately $1.2 million of promissory notes purchased by CERo shareholders.

(3)      Cantor holds 155,000 private placement shares and 77,500 private placement warrants and CCM holds 30,004 private placement shares and 15,002 private placement warrants.

(4)      Sponsor holds 4,596,250 founder shares, 699,996 private placement shares and 349,998 private placement warrants.

Q:     Do the Sponsor or any of PBAX’s directors or officers have interests that may conflict with my interests with respect to the Business Combination?

A:     In considering the recommendation of the Board to approve the Business Combination Agreement, PBAX stockholders should be aware that the PBAX executive officers and directors, as well as the Sponsor, have interests in the Business Combination that are different from, or in addition to, those of PBAX stockholders generally. These interests include, among other things:

        If the Business Combination with CERo or another business combination is not consummated by April 8, 2024 (or such later date as may be approved by PBAX’s stockholders), PBAX will cease all operations except for the purpose of winding up, redeeming 100% of the outstanding Public Shares for cash and, subject to the approval of its remaining stockholders and the Board, dissolving and liquidating. In such event, (i) the 4,596,250 Founder Shares held by the Sponsor, which were acquired for a purchase price of approximately $0.005 per share, or $25,000 in the aggregate, prior to the Initial Public Offering, and (ii) the 699,996 Private Placement Shares and 349,998 Private Placement Warrants underlying the Private Placement Units held by the Sponsor, which were acquired for a purchase price of $10.00 per unit, or $7.0 million in the aggregate, in the Concurrent Private Placement, would be worthless because the holders are not entitled to participate in any redemption or distribution from the Trust Account with respect to such securities. Such securities had an aggregate market value of approximately $59.6 million based upon the closing price of $11.25 per share of Class A Common Stock and $0.025 per warrant on Nasdaq on January 4, 2024;

        Given the differential in the purchase price that the Sponsor paid for the Founder Shares, as compared to the price of the Public Shares sold in the Initial Public Offering and the shares of Class A Common Stock that the Sponsor will receive upon conversion of the Founder Shares in connection with the Business Combination, the Sponsor may earn a positive rate of return on its investment even if the Class A Common Stock trades below the price initially paid for the Public Shares in the Initial Public Offering and the Public Stockholders experience a negative rate of return following the completion of the Business Combination;

        If PBAX is unable to complete a business combination within the required time period, the Sponsor will be personally liable under certain circumstances described herein to ensure that the proceeds in the Trust Account are not reduced by the claims of target businesses or claims of vendors or other entities that are owed money by PBAX for services rendered or contracted for or products sold to PBAX. If PBAX consummates a business combination, on the other hand, PBAX will be liable for all such claims;

        On December 20, 2022, PBAX issued an unsecured promissory note to Sponsor in the principal amount of $1,500,000, portions of which may be withdrawn by PBAX from time to time (the “Promissory Note”). On December 8, 2023, the Promissory Note was amended to increase the total principal amount to $1,600,000. As of January 4, 2024, PBAX has submitted drawdown requests in an aggregate amount of $1,555,000. The Promissory Note bears no interest and outstanding principal is due and payable upon the earlier of the consummation of the initial business combination or the date of the liquidation of PBAX.

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        If the Business Combination with CERo or another business combination is not consummated by April 8, 2024 (or such later date as may be approved by PBAX’s stockholders), the Sponsor and its affiliates will be liable for the $550,000 deposited to the Trust Account in connection with the First Extension, $137,692 deposited to the Trust Account in connection with the Second Extension to January 8, 2024 and $22,600 deposited to the Trust Account in connection with the Third Extension to April 8, 2024, as well as the $1,555,000 outstanding borrowing in connection with the Promissory Note between PBAX and the Sponsor and the $15,000 monthly consulting fee PBAX paid to the spouse of its Chief Executive Officer through December 31, 2022, which monthly payments ended on December 31, 2022;

        On July 3, 2023, the Sponsor elected to convert all 4,596,250 of its shares of Class B Common Stock into 4,596,250 shares of Class A Common Stock. As of January 4, 2024, the Sponsor holds approximately 85.0% of the outstanding shares of Class A Common Stock. Because the Sponsor has agreed to vote in favor of each of the Proposals, all of the Proposals (and therefore, the Business Combination) will be approved even if none of the outstanding Class A Common Stock held by the Public Stockholders is voted in favor of any of the Proposals;

        The Business Combination Agreement provides for the continued indemnification of PBAX’s current directors and officers and the continuation of directors’ and officers’ liability insurance covering PBAX’s current directors and officers from and after the Effective Time for a period of six years;

        The fact that Brian Atwood, the current Chairman of the Board, had served as a consultant to CERo since 2019, and suggested that PBAX discuss a potential transaction with CERo, which culminated in the Business Combination. Mr. Atwood may have conflicts of interest in determining to present CERo as a target for an initial business combination and in determining that CERo is an appropriate business with which to effectuate an initial business combination;

        Certain of PBAX’s current directors and officers are expected to be directors and officers of New CERo after the consummation of the Business Combination. In particular, Chris Ehrlich, the current Chief Executive Officer and a director and shareholder of PBAX, will become Vice Chairman of New CERo; and Mr. Atwood will become the Chief Executive Officer of New CERo. As such, in the future, they may receive cash fees, stock options, stock awards or other remuneration that the New CERo Board determines to pay to them and any other applicable compensation as described under sections “CERo Executive and Director Compensation — Director Compensation” and “CERo Executive and Director Compensation — Employment Arrangements”;

        None of PBAX’s officers or directors will be required to commit his or her full time to the affairs of CERo prior to the completion of the Business Combination and, accordingly, may have conflicts of interest in allocating his or her time among various business activities. In addition, the Sponsor and PBAX’s directors and officers are not prohibited from sponsoring, or otherwise becoming involved with, any other blank check companies prior to PBAX completing its initial business combination;

        The fact that the Sponsor, PBAX’s officers and directors, and their respective affiliates will not be reimbursed for any out-of-pocket expenses (none have been incurred as of January 4, 2024) if an initial business combination is not consummated by April 8, 2024 (or such later date as may be approved by PBAX’s stockholders);

        The fact that CCM, in addition to acting as capital markets advisor in connection with the Business Combination and placement agent in connection with a potential PIPE transaction, acted as financial advisor on the Initial Public Offering and will receive a fee of $1,162,500 upon consummation of the Business Combination in connection therewith. In addition, CCM holds an aggregate of 699,996 Private Placement Shares and 349,998 Private Placement Warrants underlying the Private Placement Units held by CCM, which were acquired for a purchase price of $10.00 per unit, or $7.0 million in the aggregate, in the Concurrent Private Placement, and would be worthless if the Business Combination with CERo or another business combination is not consummated by April 8, 2024 (or such later date as may be approved by PBAX’s stockholders) because CCM is not entitled to participate in any redemption or distribution from the Trust Account with respect to such securities. Such securities had an aggregate market value of approximately $7.9 million based upon the closing price of $11.25 per share of Class A Common Stock and $0.025 per warrant on Nasdaq on January 4, 2024;

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        In the course of their other business activities, PBAX’s officers and directors may become aware of investment and business opportunities which may be appropriate for presentation to New CERo as well as the other entities with which they are affiliated. PBAX’s management may have conflicts of interest in determining to which entity a particular business opportunity should be presented;

        The Sponsor and PBAX’s officers and directors have agreed to waive their redemption rights with respect to any Public Shares they may hold in connection with the Business Combination. Additionally, the Sponsor and PBAX’s officers and directors have agreed to waive their redemption rights with respect to any Founder Shares and Public Shares held by them if PBAX fails to consummate an initial business combination within the completion window. If PBAX does not complete an initial business combination within such applicable time period, the proceeds of the sale of the Private Placement Shares held in the Trust Account will be used to fund the redemption of the Public Shares, and the Private Placement Warrants purchased in the Concurrent Private Placement will expire worthless. Such securities had an aggregate market value of approximately $59.6 million based upon the closing price of $11.25 per share of Class A Common Stock and $0.025 per warrant on Nasdaq on January 4, 2024. Since the Sponsor and PBAX’s officers and directors may directly or indirectly own PBAX Common Stock following the Initial Public Offering, PBAX’s officers and directors may have a conflict of interest in determining whether a particular target business is an appropriate business with which to effectuate the initial business combination;

        The Sponsor (including its representatives and affiliates) and PBAX’s officers and directors, are, or may in the future become, affiliated with entities that are engaged in a similar business to New CERo. The representatives and affiliates of the Sponsor, and certain of PBAX’s officers and directors, are in the business of making investments in companies, and may acquire and hold interests in businesses that compete directly or indirectly with New CERo. Certain of PBAX’s officers and directors also have time and attention requirements for investment funds of which they and affiliates of the Sponsor are the investment managers; and

        The Sponsor, certain stockholders of PBAX, and certain stockholders of CERo will be party to the Investor Rights Agreement, which will come into effect at the Effective Time. Pursuant to the Investor Rights Agreement, each stockholder thereto will be granted customary registration rights with respect to their respective shares of Class A Common Stock, including demand and piggy-back registration rights. Additionally, the Investor Rights Agreement prohibits each stockholder thereto from transferring their shares of Class A Common Stock (or any securities convertible into or exercisable or exchangeable for shares of Class A Common Stock), subject to certain permitted transfers, during the Lock-Up Period. The terms of the Investor Rights Agreement are further described in the section entitled “The Business Combination Agreement and Related Agreements — Related Agreements — Investor Rights Agreement.”

These interests, which create actual and potential conflicts of interest, are, to the extent material, described in the section titled “The Business Combination — Interests of Certain Persons in the Business Combination” beginning on page 148 of this proxy statement/prospectus. Accordingly, the Sponsor and PBAX’s officers and directors will benefit from the completion of a business combination and may be incentivized to complete an acquisition of a less favorable target company or on terms less favorable to stockholders rather than liquidating PBAX. The PBAX Board was aware of and may have been influenced by these interests in evaluating and unanimously approving the Business Combination and in recommending that you vote in favor of the approval of the Business Combination.

For additional information about the risks associated with these interests, see “Risk Factors — Risks Related to PBAX, the Business Combination and Redemptions — The Sponsor and PBAX’s officers and directors own PBAX Common Stock that will be worthless, may incur reimbursable expenses that may not be reimbursed or repaid if the Business Combination is not approved and certain directors and officers of PBAX will serve as directors and officers of New CERo. Such interests may have influenced their decision to approve and, in the case of the Board, recommend, the Business Combination with CERo.

The Sponsor beneficially owns and is entitled to vote an aggregate of approximately 85.0% of the outstanding PBAX Common Stock as of January 4, 2024. The Sponsor, as well as PBAX’s directors and officers (who hold no shares of PBAX Common Stock as of January 4, 2024), have agreed to vote their shares in favor of all Proposals being presented at the Special Meeting.

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As a result of the aforementioned actual or potential conflicts of interest, among other things, (i) the Board created the Special Committee, (ii) the Board and Special Committee also determined to consider the engagement of a compensation consultant to review the proposed terms of the employment of Mr. Atwood and (iii) PBAX retained RNA to provide a fairness opinion to the Board in connection with the Business Combination. On June 4, 2023, RNA delivered its opinion to the Board, as to the fairness, from a financial point of view, of the consideration to be issued by PBAX pursuant to the Business Combination Agreement to PBAX. For a description of the opinion issued by RNA to the Board, please see the section entitled “The Business Combination — Opinion of PBAX’s Financial Advisor.”

See the section entitled “The Business Combination — Interests of Certain Persons in the Business Combination — Interests of PBAX’s Directors and Officers in the Business Combination” for a further discussion of additional considerations in connection with the Business Combination.

Q:     What do I need to do now?

A:     PBAX urges you to carefully read and consider the information contained in this proxy statement/prospectus, including the annexes, and to consider how the Business Combination will affect you as a stockholder of PBAX. PBAX stockholders should then vote as soon as possible in accordance with the instructions provided in this proxy statement/prospectus and on the enclosed proxy card.

Q:     How do I vote?

A:     If you are a holder of record of PBAX Common Stock on the Record Date, you may vote virtually at the Special Meeting or by submitting a proxy for the Special Meeting. You may submit your proxy by completing, signing, dating and returning the enclosed proxy card in the accompanying pre-addressed postage paid envelope. If you hold your shares in “street name,” which means your shares are held of record by a broker, bank or nominee, you should contact your broker, bank or nominee to ensure that votes related to the shares you beneficially own are properly counted. In this regard, you must provide the broker, bank or nominee with instructions on how to vote your shares or, if you wish to attend the meeting and vote in person (which would include presence at a virtual meeting), obtain a legal proxy from your broker, bank or nominee.

Because the Proposals are “non-discretionary” items, your broker will not be able to vote uninstructed shares for any of the Proposals. As a result, if you do not provide voting instructions, your shares will not be voted and will not be counted as present for purposes of determining whether a quorum is present.

After obtaining a valid legal proxy from your broker, bank or nominee, to register to attend the Special Meeting, you must submit proof of your legal proxy reflecting the number of your shares along with your name and email address to Continental at proxy@continentalstock.com. Beneficial owners who e-mail a valid legal proxy will be issued a 12-digit meeting control number that will allow them to register to attend and participate in the Special Meeting. Beneficial owners who wish to attend the Special Meeting online should contact Continental no later than February 1, 2024 to obtain this information. Written requests can be emailed to proxy@continentalstock.com.

Q:     If my shares are held in “street name,” will my broker, bank or nominee automatically vote my shares for me?

A:     No. Your broker, bank or nominee cannot vote your shares unless you provide instructions on how to vote in accordance with the information and procedures provided to you by your broker, bank or nominee.

Q:     May I change my vote after I have mailed my signed proxy card?

A:     Yes. PBAX stockholders may send a later-dated, signed proxy card to Continental at the address set forth above so that it is received prior to the vote at the Special Meeting or attend the Special Meeting virtually and vote. PBAX stockholders also may revoke their proxy by sending a notice of revocation to Continental, which must be received prior to the vote at the Special Meeting.

Q:     What happens if I fail to take any action with respect to the Special Meeting?

A:     If you fail to take any action with respect to the Special Meeting and the Business Combination is approved by stockholders and consummated, you will continue to be a holder of Class A Common Stock. As a corollary, failure to deliver (either physically or electronically) your stock certificate(s) to PBAX’s transfer agent,

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Continental, no later than two business days prior to the Special Meeting, means you will not have any right in connection with the Business Combination to exchange your Public Shares for a pro rata share of the funds held in the Trust Account. If you fail to take any action with respect to the Special Meeting and the Business Combination is not approved, you will continue to be a stockholder of PBAX.

Q:     What should I do with my share certificate(s)?

A:     Those Public Stockholders who do not elect to have their Public Shares redeemed for a pro rata share of the funds held in the Trust Account need not submit their certificate(s). Public Stockholders who exercise their redemption rights must deliver their share certificate(s) to Continental (either physically or electronically) or through DTC to Continental at least two business days before the Special Meeting, as described above.

Q:     What should I do if I receive more than one set of voting materials?

A:     PBAX stockholders may receive more than one set of voting materials, including multiple copies of this proxy statement/prospectus and multiple proxy cards or voting instruction cards. For example, if you hold your PBAX shares in more than one brokerage account, you will receive a separate voting instruction card for each brokerage account in which you hold such shares. If you are a holder of record and your PBAX shares are registered in more than one name, you will receive more than one proxy card. Please complete, sign, date and return each proxy card and voting instruction card that you receive in order to cast a vote with respect to all of your PBAX shares.

Q:     Who can help answer my questions?

A:     If you have questions about the Business Combination or if you need additional copies of this proxy statement/prospectus or the enclosed proxy card, you should contact:

Okapi Partners LLC

Individuals call toll-free: (877) 259-6290

Banks and brokers call: (212) 297-0720

E-mail: info@okapipartners.com

You may also obtain additional information about PBAX from documents filed with the SEC by following the instructions in the section entitled “Where You Can Find More Information.” If you are a PBAX stockholder and you intend to seek redemption of your shares, you will need to deliver your Public Shares (either physically or electronically) to Continental (or through DTC to Continental) at the address listed below at least two business days prior to the vote at the Special Meeting. If you have questions regarding the certification of your position or delivery of your stock, please contact:

Continental Stock Transfer & Trust Company

One State Street Plaza, 30th Floor

New York, New York 10004
Attn: SPAC Redemption Team
E-mail: spacredemptions@continentalstock.com

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SUMMARY OF THE PROXY STATEMENT/PROSPECTUS

This summary highlights selected information from this proxy statement/prospectus and does not contain all of the information that is important to you. To better understand the proposals to be submitted for a vote at the Special Meeting, including the Business Combination Proposal, you should read this entire document carefully, including the annexes attached to this proxy statement/prospectus. The Business Combination Agreement is the primary legal document that governs the Business Combination and other transactions that will be undertaken in connection with the Business Combination. It is described in detail in this proxy statement/prospectus in the section entitled “The Business Combination Agreement and Related Agreements.”

The Business Combination

On June 4, 2023, PBAX entered into a Business Combination Agreement with CERo and Merger Sub, pursuant to which Merger Sub will merge with and into CERo, with CERo surviving as a wholly-owned subsidiary of PBAX. In connection with the consummation of the Business Combination, PBAX will change its corporate name to “CERo Therapeutics Holdings, Inc.” The respective boards of directors of PBAX and CERo have unanimously approved the Business Combination Agreement and the transactions.

The Parties to the Business Combination

PBAX

Phoenix Biotech Acquisition Corp. is a blank check company incorporated on June 8, 2021 for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses. On October 8, 2021, PBAX consummated its Initial Public Offering of 17,500,000 Units. The Units were sold at an offering price of $10.00 per unit, generating gross proceeds of $175 million. Simultaneously with the consummation of the Initial Public Offering, PBAX consummated the Concurrent Private Placement of 885,000 Private Placement Units at $10.00 per unit, generating gross proceeds of $8.85 million.

The Public Units, Class A Common Stock and Public Warrants are currently listed on Nasdaq under the symbols “PBAXU,” “PBAX” and “PBAXW,” respectively.

The mailing address of PBAX’s principal executive office is 2201 Broadway, Suite 705, Oakland, CA 94612, and its telephone number is (215) 731-9450. After the consummation of the Business Combination, PBAX’s principal executive office will be that of CERo.

For additional information about PBAX, see the section entitled “Information about PBAX.”

Business Combination Period Extensions

On December 16, 2022, the stockholders of PBAX approved a proposal to (a) extend the business combination period for an additional three months, from January 8, 2023 to April 8, 2023 and (b) provide the Board the ability to further extend the business combination period up to three additional times for one month each time, for a maximum of six additional months (collectively, the “First Extension”). In connection with such stockholder vote, an aggregate of 16,211,702 shares of Class A Common Stock were redeemed, representing approximately 92.6% of the Public Shares outstanding as of December 16, 2022, resulting in a payment of approximately $167.7 million from the Trust Account and leaving 2,173,298 shares issued and outstanding and entitled to vote. In connection with the extensions of the business combination period from January 8, 2023 to June 8, 2023 (such date, as so extended, the “PBAX Termination Date”), the Sponsor deposited an aggregate of $550,000 to the Trust Account.

On July 7, 2023, the stockholders of PBAX approved proposals to further extend the business combination period up to six additional times for one month each time (collectively, the “Second Extension”), from July 8, 2023 to August 8, 2023, September 8, 2023, October 8, 2023, November 8, 2023, December 8, 2023 or January 8, 2024. In connection with such stockholder vote, an aggregate of 523,341 shares of Class A Common Stock were redeemed, representing approximately 40.6% of the Public Shares outstanding as of July 7, 2023, resulting in a payment of $5,638,879.48 and leaving 6,246,207 shares of Class A Common Stock issued and outstanding and entitled to vote. In connection with the business combination deadline, the Sponsor deposited an aggregate of $137,692 in connection with each extension from July 8, 2023 to January 8, 2024.

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On January 3, 2024, the stockholders of PBAX approved proposals to further extend the business combination period up to three additional times for one month each time (collectively, the “Third Extension”), from January 8, 2024 to February 8, 2024, March 8, 2024 or April 8, 2024. In connection with such stockholder vote, an aggregate of 11,625 shares of Class A Common Stock were redeemed, representing approximately 1.5% of the Public Shares outstanding as of January 3, 2024, resulting in a payment of $128,133 and leaving 6,234,582 shares of Class A Common Stock issued and outstanding and entitled to vote. In connection with the business combination deadline, the Sponsor deposited an aggregate of $22,600 in connection with the extension from January 8, 2024 to February 8, 2024. As of January 4, 2024, a total of 16,746,668 shares have been redeemed, representing approximately 95.7% of the Public Shares then-outstanding following the Initial Public Offering. As of January 4. 2024, there are 6,234,582 shares of Class A Common Stock and no shares of Class B Common Stock issued and outstanding and entitled to vote.

As of January 4, 2024, there was approximately $8.3 million available in the Trust Account. If PBAX does not complete the Business Combination or another business combination by April 8, 2024 (or such later date as may be approved by PBAX’s stockholders), assuming the provision of loans by Sponsor to PBAX in accordance with the requirements set forth in the Current Charter (or such later date as may be approved by PBAX stockholders in an amendment to its Current Charter), PBAX must redeem 100% of 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 PBAX to pay its franchise and income taxes on such amounts (less up to $100,000 of such net interest to pay dissolution expenses), divided by the number of then-outstanding Public Shares. PBAX’s initial stockholders (including the Sponsor) have waived any rights it may have with respect to any monies held in the Trust Account as a result of any liquidation of PBAX with respect to the Founder Shares and Private Placement Shares and, accordingly, in the event a business combination is not effected by PBAX by April 8, 2024 (or such later date as may be approved by PBAX’s stockholders), the Founder Shares and Private Placement Shares held by PBAX’s initial stockholders would be worthless.

Nasdaq Letter

On April 3, 2023, PBAX received a letter (the “Nasdaq Letter”) from the listing qualifications department staff of The Nasdaq Stock Market LLC (“Nasdaq”) notifying PBAX that, for the 30 consecutive trading days prior to the date of the letter, the Class A 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 Class A Common Stock on Nasdaq. The Nasdaq Letter was only a notification of deficiency, not of imminent delisting, and had no immediate 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 of all then-outstanding Class B Common Stock to Class A Common Stock.

Merger Sub

Merger Sub is a wholly-owned subsidiary of PBAX, formed solely for the purpose of effectuating the Business Combination described herein. Merger Sub was incorporated under the laws of the State of Delaware on October 25, 2022. Merger Sub owns no material assets and does not operate any business. As part of the Business Combination, Merger Sub will merge with and into CERo, with CERo surviving the Merger as a wholly-owned subsidiary of PBAX.

The mailing address of Merger Sub’s principal executive office is 2201 Broadway, Suite 705, Oakland, CA 94612, and its telephone number is (215) 731-9450. After the consummation of the Business Combination, Merger Sub will cease to exist.

CERo

CERo is an innovative immunotherapy company advancing the development of next generation engineered T cell therapeutics for the treatment of cancer. Its proprietary approach to T cell engineering, which enables it to integrate certain desirable characteristics of both innate and adaptive immunity into a single therapeutic construct, is designed to engage the body’s full immune repertoire to achieve optimized cancer therapy. This novel cellular immunotherapy platform is expected to redirect patient-derived T cells to eliminate tumors by building in engulfment pathways that employ phagocytic mechanisms to destroy cancer cells, creating what CERo refers to as Chimeric Engulfment Receptor T cells (“CER-T”). CERo believes the differentiated activity of CER-T cells will afford them greater

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therapeutic application than currently approved chimeric antigen receptor (“CAR-T”) cell therapy, as the use of CER-T may potentially span both hematological malignancies and solid tumors. CERo is nearing completion of extensive preclinical testing and studies which are needed obtain regulatory clearance to initiate human clinical trials with CER 1236, and has engaged in a pre-IND meeting with the FDA. CERo anticipates filing an IND application and initiating clinical trials for its lead product candidate, CER-1236, in 2024 for hematological malignancies. However, manufacturing delays or other delays with IND-enabling studies, among other factors, may impact the timing and approval of such trials.

The mailing address of CERo’s principal executive office is 201 Haskings Way, Suite 230, South San Francisco, CA 94080, and its telephone number is (650) 407-2376.

For additional information about CERo, see the section entitled “Business of CERo and Information About CERo.

Consideration to CERo’s Stockholders

Pursuant to the Business Combination Agreement, at the Effective Time:

        Each outstanding share of CERo Common Stock will be cancelled and converted into (i) the right to receive a number of shares of Class A Common Stock equal to the Exchange Ratio (rounded down to the nearest whole share) and (ii) the right to receive a pro rata portion of up to 1,000,000 additional shares of Class A Common Stock if the First Level Earnout Target and the Second Level Earnout Target occur and 200,000 additional shares of Class A Common Stock if a Change of Control occurs.

        Each outstanding CERo option (whether vested or unvested) will be converted into an option to purchase a number of shares of Class A Common Stock (rounded down to the nearest whole share) 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 (rounded up to the nearest whole cent).

        Each outstanding share of CERo preferred stock will be converted into a number of shares of Class A Common Stock, equal to the number of shares of CERo preferred stock obtained by dividing the liquidation preference thereof by $10.00.

        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 obtained by dividing the aggregate liquidating preference of the shares of CERo preferred stock for which such CERo warrant is exercisable by $10.00, with the exercise price per share for such warrant equal to the current aggregate exercise price of such CERo warrant (the current exercise price per share multiplied by the number of shares of CERo preferred stock issuable upon exercise thereof) divided by the number of shares of Class A Common Stock issuable upon exercise thereof.

        Each outstanding Convertible Bridge Note will automatically convert all outstanding principal and any unpaid accrued interest into Class A Common Stock of the surviving company at a conversion price equal to (i) the dollar volume-weighted average price for the Class A Common Stock of the surviving company on the date of the closing of the Business Combination, (ii) multiplied by 0.75.

As of September 30, 2023, the Exchange Ratio was approximately 0.026. Based on this Exchange Ratio, the total number of shares of Class A Common Stock expected to be issued at the Closing of the Business Combination is 4,813,038, shares, and these shares are expected to represent approximately 44% or 47% of the issued and outstanding shares of Class A Common Stock immediately following the closing of the Business Combination, assuming no redemptions occur and maximum redemptions occur, respectively. Following the Merger, it is contemplated that New CERo will have a single class of common stock. Please see the section entitled “Unaudited Pro Forma Condensed Combined Financial Information” for further information regarding what constitutes a “minimum redemption” and “maximum redemption” scenario.

Subject to certain stock-price based milestones, CERo stockholders will have the right to receive an aggregate of up to an additional 1,200,000 shares of PBAX Common Stock (the “Earnout Shares”). 500,000 Earnout Shares will be released and granted if, on or prior to the fourth anniversary of the closing of the Business Combination, the volume weighted share price of the New CERo common stock equals or exceeds $12.50 during at least 20 trading

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days within a 30-day trading period, 500,000 Earnout Shares will be released and granted if, on or prior to the fourth anniversary of the closing of the Business Combination, the volume weighted share price of the New CERo common stock equals or exceeds $15.00 during at least 20 trading days within a 30-day trading period, and an additional 200,000 Earnout Shares in the event of a Change of Control.

Pro Forma Ownership of New CERo Upon Closing

As of September 30, 2023, the Exchange Ratio is approximately 0.026 (the calculation of which is described on page 126 of this proxy statement/prospectus). Based on this Exchange Ratio, the total number of shares of Class A Common Stock expected to be issued at the Effective Time in connection with the Business Combination (including the conversion of the convertible promissory notes and excluding 1,200,000 Earnout Shares, 324,999 shares that will be issuable upon exercise of outstanding warrants and 23,298 shares that will be issuable upon exercise of outstanding stock options), is approximately 4,813,038 shares and, assuming that (i) no additional PBAX shares are issued prior to the Effective Time, (ii) there is no exercise of any options to purchase shares of Class A Common Stock that will be outstanding immediately following the Business Combination, and (iii) no shares are issued in connection with the Incentive Plan or the ESPP (each as defined in this proxy statement/prospectus) following the Business Combination, these shares are expected to represent between approximately 44% and 47% of the issued and outstanding shares of Class A Common Stock (which would be New CERo common stock) and voting power in New CERo immediately following the closing of the Business Combination. These percentages assume, at the low end of the range, that no redemptions from our Trust Account (as defined in this proxy statement/prospectus) occur, and, at the high end of the range, that maximum redemptions from our Trust Account occur. Please see the section of this proxy statement/prospectus entitled “Unaudited Pro Forma Condensed Combined Financial Information” for further information regarding what constitutes a “maximum redemptions” scenario. Following the Merger, it is contemplated that New CERo will have a single class of Common Stock.

Subject to the same assumptions set forth in the preceding paragraph and with no redemptions from our Trust Account, (i) Public Stockholders are expected to hold approximately 7% of the issued and outstanding New CERo common stock, (ii) the Sponsor is expected to hold approximately 48% of the issued and outstanding New CERo common stock, (iii) CERo stockholders are expected to hold approximately 44% of the issued and outstanding New CERo common stock.

Subject to the same assumptions set forth in the preceding paragraph and with maximum possible redemptions from our Trust Account, (i) Public Stockholders are expected to hold none of the issued and outstanding New CERo common stock, (ii) the Sponsor, is expected to hold approximately 51% of the issued and outstanding New CERo common stock, (iii) CERo stockholders are expected to hold approximately 47% of the issued and outstanding New CERo common stock. The Sponsor has indicated willingness to transfer a portion of its Founder Shares to investors in a potential PIPE transaction, CERo stockholders and/or Public Stockholders who do not exercise their redemption rights. However, as of the date of this proxy statement/prospectus, the Company has not obtained any binding commitments for a PIPE transaction or entered into any agreements pursuant to which Public Stockholders would not exercise redemption rights and the Sponsor has not entered into any agreements with respect to the transfer (which may be accomplished through a forfeiture coupled with a concurrent new issuance by New CERo of an offsetting number of shares) of any Reallocation Shares. In addition, the Sponsor has indicated that it intends to effectuate a distribution-in-kind of all of the shares of Class A Common Stock and Private Placement Warrants held thereby to its members immediately prior to the completion of the Business Combination and the listing of the New CERo common stock on Nasdaq (the “Distribution-in-Kind”). Upon completion of the Distribution-in-Kind, Sponsor would no longer hold any of our issued and outstanding securities.

These pro forma ownership percentages do not reflect (i) any issuance of shares in connection with the Incentive Plan and the ESPP following the Business Combination, (ii) any issuance of shares of New CERo common stock in a PIPE transaction or (iii) any transfer of the Reallocation Shares to investors in a PIPE transaction, CERo stockholders and Public Stockholders. No subscription agreements and non-redemption agreements have been executed as of the date of this proxy statement/prospectus and any such financing and arrangement, respectively, is currently uncertain. If the actual facts are different from the assumptions stated above, then the levels of ownership interest set forth above will be different. For more information, please see the section entitled “Unaudited Pro Forma Condensed Combined Financial Information.”

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Moreover, after the Closing, the Sponsor may hold more than 50% of the voting power of New CERo. Chris Ehrlich, the current Chief Executive Officer and a director and shareholder of PBAX, is the manager of the Sponsor and will serve as Vice Chairman of the New CERo Board following the Closing. As a result, New CERo may be a “controlled company” within the meaning of the rules of Nasdaq. However, New CERo does not intend to utilize the exemptions from the Nasdaq corporate governance standards available to controlled companies. For more information regarding the risks of New CERo being a “controlled company,” see “Risk Factors — Risks Related to New CERo’s Common Stock — If New CERo is successful in listing its common stock on Nasdaq, it expects to be a “controlled company” within the meaning of the Nasdaq rules upon such listing and, as a result, would qualify for, and could elect to rely on, exemptions from certain corporate governance requirements. If New CERo relies on these exemptions, its stockholders will not have the same protections afforded to stockholders of companies that are subject to such requirements.” Nevertheless, as described elsewhere in this proxy statement/prospectus, the Sponsor intends to transfer the Reallocation Shares to investors in a PIPE transaction, CERo stockholders and Public Stockholders in such relative proportions to be determined. Furthermore, upon completion of the Distribution-in-Kind, Sponsor would no longer hold any of our issued and outstanding securities.

Liquidity Position after the Business Combination

Sources and Uses of Funds for the Business Combination

The following table summarizes the sources and uses for funding the transactions contemplated by the Business Combination Agreement, assuming (i) none of the Public Shares are redeemed in connection with the Business Combination and (ii) the maximum number of Public Shares are redeemed in connection with the Business Combination. The following table does not include funds resulting from additional PIPE funding as there are no binding documents at this time. If the Available Closing Cash condition in the Business Combination Agreement is waived, it is possible that New CERo would have insufficient capital to conduct and grow its business after Closing in the manner described in this proxy statement/prospectus and New CERo would have $1.6 million of debt from PBAX’s working capital loans. See “Unaudited Pro Forma Condensed Combined Financial Information.” In the event that PBAX obtains such funding or enters into non-redemption agreements prior to the Closing, PBAX will disclose such funding and/or non-redemption agreements in a supplement to this proxy statement/prospectus.

Should the Business Combination transaction be consummated with a waiver of the Closing Cash Condition, but in the absence of additional PIPE funding, the surviving entity will hold $1.6 million in PBAX working capital debt.

Where actual amounts are not known or knowable, the figures below represent PBAX’s good faith estimate of such amounts assuming a Closing as of January 4, 2024.

(in millions)

 

Assuming
No Redemption

 

Assuming
Maximum
Contractual
Redemption
(1)

Sources

 

 

   

 

 

Cash held in Trust Account

 

$

8,330,779

 

$

New CERo’s Equity

 

 

15,000,000

 

 

15,000,000

CERo Convertible Bridge Notes

 

 

1,210,460

 

 

1,210,460

Total Sources

 

$

24,541,239

 

$

16,210,460

Uses

 

 

   

 

 

New CERo’s Equity

 

 

16,210,460

 

 

16,210,460

Transaction Costs(2)

 

 

8,330,779

 

 

Total Uses

 

$

24,541,239

 

$

16,210,460

____________

(1)      This presentation assumes that 753,332 Public Shares are redeemed, resulting in an aggregate cash payment of approximately $8.3 million out of the Trust Account based on an assumed redemption price of $11.06 per share. After a redemption of approximately $8.3 million out of the $8.3 million Trust Account, the Available Closing Cash would be approximately $0.

    

(2)      The scenarios above do not include additional funding sources and unless there is a sufficient source of funds, the transaction costs paid in cash will represent only a portion or none of the total transaction costs. The balance of non-recurring, transaction-related costs incurred in conjunction with the Business Combination, includes $9.15 million of deferred underwriting fees, $1.6 million of PBAX working capital loan repayment, $3.1 million of deferred legal fees, and

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$1.5 million of deferred advisory fees. The Company and CERo are in active negotiation to significantly reduce the total amount of cash payable at Closing to vendors for these expenses. However, the Company and CERo have not entered into any agreements with such vendors to reduce the amounts payable thereto at Closing and we cannot assure you that such negotiations will be successful.

Although the terms of any potential financing have not yet been finalized, PBAX and CERo remain in active discussions with existing CERo stockholders, including investors in the Convertible Bridge Notes, certain PBAX stockholders and third-party investors regarding a potential investment in convertible preferred stock to be issued by New CERo at closing of the Business Combination, accompanied by warrants to purchase additional shares of New CERo Common Stock. Holders of Convertible Bridge Notes may be provided an opportunity to exchange their Convertible Bridge Notes and/or their commitments to purchase additional Convertible Bridge Notes for the securities offered in the PIPE transaction. The PIPE transaction is expected to be accompanied by an equity line provided by an institutional investor. Although we cannot assure you that such financing transactions will be completed on such terms, or at all, each of PBAX and CERo currently expects that the total proceeds of such financing transactions upon closing of the Business Combination will constitute a majority of the $30 million minimum cash condition and that PBAX and CERo will successfully negotiate the reduction or deferral of certain cash expenses payable to third-party vendors at Closing, it is likely that the net cash available to New CERo after the payment of any such expenses not deferred will be less than the minimum cash condition and that CERo would waive such condition to the extent of such shortfall. As stated elsewhere in this proxy statement/prospectus, PBAX expects to file a Current Report on Form 8-K and supplement to this proxy statement/prospectus to disclose the receipt of any such financing and any waiver of the minimum cash condition and reflect the impact of such financing on the unaudited pro forma financial information contained herein.

Conditions to the Business Combination

Conditions to Each Party’s Obligations

The respective obligations of each party to the Business Combination Agreement to consummate the transactions contemplated by the Business Combination are subject to the satisfaction (or, if permitted by applicable law, waiver by the party for whose benefit such condition exists) of the following conditions:

        each applicable waiting period (and any extensions thereof, or any timing agreements, understandings or commitments obtained by request or other action of the United States Federal Trade Commission or the Antitrust Division of the United States Department of Justice, as applicable) or consent under the HSR Act shall have expired, been terminated or obtained (or deemed, by applicable law, to have been obtained), as applicable;

        no order or law issued by any court of competent jurisdiction or other governmental entity or other legal restraint or prohibition preventing the consummation of the transactions contemplated by the Business Combination Agreement (including the Closing) being in effect;

        this proxy statement/prospectus becoming effective in accordance with the provisions of the Securities Act, no stop order being issued by the SEC and remaining in effect with respect to this proxy statement/prospectus, and no proceeding seeking such a stop order being threatened or initiated by the SEC and remaining pending;

        the approval of the Business Combination Agreement, the ancillary documents and the transactions contemplated thereby (including the Merger) by the requisite vote of CERo’s stockholders in accordance with the DGCL and CERo’s governing documents (the “CERo Stockholder Approval”);

        adoption and approval of the Business Combination Agreement, the ancillary documents, and the transactions and proposals contemplated thereby, in each case by the requisite vote of PBAX’s stockholders in accordance with the DGCL and PBAX’s governing documents (the “PBAX Stockholder Approval”);

        PBAX’s initial listing application with Nasdaq in connection with the transactions contemplated by the Business Combination Agreement being approved and, immediately following the Effective Time, PBAX satisfying any applicable initial and continuing listing requirements of Nasdaq, and PBAX not having received any notice of non-compliance in connection therewith that has not been cured or would not be

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cured at or immediately following the Effective Time, and the Class A Common Stock (including the shares of Class A Common Stock to be issued in connection with the Business Combination) having been approved for listing on Nasdaq; and

        after giving effect to the transactions contemplated by the Business Combination Agreement (including any PBAX stockholder redemption), New CERo having at least $5,000,001 of net tangible assets (as determined in accordance with Rule 3a51-1(g)(1) of the Exchange Act) immediately after the Effective Time.

Other Conditions to the Obligations of the SPAC Parties

The obligations of PBAX and Merger Sub (together, the “SPAC Parties”) to consummate the transactions contemplated by the Business Combination Agreement (including the Closing) are subject to the satisfaction (or, if permitted by applicable law, waiver by PBAX on behalf of itself and Merger Sub) of the following further conditions:

        the Company Fundamental Representations (as defined in the Business Combination Agreement) shall be true and correct in all material respects (without giving effect to any limitation as to “materiality” or “Company Material Adverse Effect” or any similar limitation set forth therein) (except for de minimis inaccuracies) as of the Closing Date, as though made on and as of the Closing Date (except to the extent that any such representation and warranty is made as of an earlier date, in which case such representation and warranty shall be true and correct (without giving effect to any limitation as to “materiality” or “Company Material Adverse Effect” or any similar limitation set forth therein) (except for de minimis inaccuracies) in all material respects as of such earlier date), (ii) the other representations and warranties of the Company shall be true and correct (without giving effect to any limitation as to “materiality” or “Company Material Adverse Effect” or any similar limitation set forth therein) in all respects as of the Closing Date, as though made on and as of the Closing Date (except to the extent that any such representation and warranty is made as of an earlier date, in which case such representation and warranty shall be true and correct (without giving effect to any limitation as to “materiality” or “Company Material Adverse Effect” or any similar limitation set forth therein) in all respects as of such earlier date), except, in the case of this clause (ii), where the failure of such representations and warranties to be true and correct, taken as a whole, does not, and would not reasonably be expected to, cause a Company Material Adverse Effect (as defined in the Business Combination Agreement);

        CERo having performed and complied in all material respects with the covenants and agreements required to be performed or complied with by it under the Business Combination Agreement at or prior to the Closing;

        since the date of the Business Combination Agreement, no Company Material Adverse Effect having occurred that is continuing; and

        at or prior to the Closing, PBAX having received a certificate duly executed by an authorized officer of CERo, dated as of the Closing Date, to the effect that the conditions specified in Section 6.2(a), Section 6.2(b) and Section 6.2(c) of the Business Combination Agreement are satisfied.

Other Conditions to the Obligations of CERo

The obligations of CERo to consummate the transactions contemplated by the Business Combination Agreement (including the Closing) are subject to the satisfaction (or, if permitted by applicable law, waiver by CERo) of the following further conditions:

        (i) the SPAC Fundamental Representations (as defined in the Business Combination Agreement) shall be true and correct in all material respects (without giving effect to any limitation as to “materiality” or “SPAC Material Adverse Effect” or any similar limitation set forth therein) (except for de minimis inaccuracies) as of the Closing Date, as though made on and as of the Closing Date (except to the extent that any such representation and warranty is made as of an earlier date, in which case such representation and warranty shall be true and correct in all material respects (without giving effect to any limitation as to “materiality” or “SPAC Material Adverse Effect” or any similar limitation set forth therein) as of such earlier date), (ii) the representations and warranties of the SPAC Parties (as defined in the Business Combination Agreement) contained in Article 4 of this Agreement shall be true and correct (without

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giving effect to any limitation as to “materiality” or “SPAC Material Adverse Effect” or any similar limitation set forth therein) in all respects as of the Closing Date, as though made on and as of the Closing Date (except to the extent that any such representation and warranty is made as of an earlier date, in which case such representation and warranty shall be true and correct in all respects (without giving effect to any limitation as to “materiality” or “SPAC Material Adverse Effect” or any similar limitation set forth therein) as of such earlier date), except, in the case of this clause (ii), where the failure of such representations and warranties to be true and correct, taken as a whole, does not, and would not reasonably be expected to, cause a SPAC Material Adverse Effect (as defined in the Business Combination Agreement);

        the SPAC Parties having performed and complied in all material respects with the covenants and agreements required to be performed or complied with by them under the Business Combination Agreement at or prior to the Closing;

        there being at least $30.0 million in Available Closing Cash;

        since the date of the Business Combination Agreement, no SPAC Material Adverse Effect having occurred that is continuing; and

        at or prior to the Closing, PBAX shall have delivered, or caused to be delivered, to CERo a certificate duly executed by an authorized officer of PBAX, dated as of the Closing Date, to the effect that the conditions specified in Section 6.3(a), Section 6.3(b) and Section 6.3(d) of the Business Combination Agreement are satisfied.

Related Agreements

Sponsor Support Agreement

In connection with the execution of the Business Combination Agreement, the Sponsor and each of our officers and directors entered into the Sponsor Support Agreement with PBAX and CERo. Under the Sponsor Support Agreement, the Sponsor agreed to vote, at any meeting of the stockholders of PBAX and in any action by written consent of the stockholders of PBAX, all of its shares of Class B Common Stock (together with any other equity securities of PBAX 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 PBAX Equity Securities”) (i) in favor of (a) the Business Combination Agreement and the transactions contemplated thereby and (b) the other proposals that PBAX and CERo agreed in the Business Combination Agreement shall be submitted at such meeting for approval by PBAX’s stockholders (together with the proposal to obtain the PBAX stockholders’ approval for the Business Combination, 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 PBAX Equity Securities 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. In addition, in the Sponsor Support Agreement, the Sponsor agrees to waive, and not to assert or perfect, among other things, any rights to adjustment or other anti-dilution protections with respect to the rate at which the shares of Class B Common Stock held by the Sponsor convert into shares of Class A Common Stock in connection with the transactions contemplated by the Business Combination Agreement. An aggregate of 5,296,246 shares of Class A Common Stock are subject to the Sponsor Support Agreement.

The foregoing description of the Sponsor Support Agreement does not purport to be complete and is qualified in its entirety by the terms and conditions of the Sponsor Support Agreement, a form of which is attached as an exhibit to the Business Combination Agreement, the terms of which are incorporated herein by reference.

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, within 48 hours after the date that the proxy statement/prospectus is disseminated by CERo to its stockholders following the effectiveness of the Registration

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Statement, 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).

The CERo Support Agreement also prohibits the CERo Supporting Stockholders from, prior to the Effective Time, among other things, (i) selling, assigning, transferring (including by operation of law), placing a lien on, pledging, disposing of or otherwise encumbering any of the Subject CERo Shares, except if such transaction is in compliance with applicable securities laws, the governing documents of CERo and the Business Combination Agreement, and the transferee agrees to be bound by the terms of the CERo Support Agreement, (ii) pledging, encumbering or creating a Lien on any Subject CERo Shares or entering into any contract, option, commitment or other arrangement or understanding with respect to the foregoing, (iii) granting any proxies or powers of attorney or entering into a voting agreement or other arrangement with respect to any Subject CERo Shares, or (iv) taking any action in furtherance of the foregoing. In addition, under the CERo Support Agreement, each CERo Supporting Stockholder agreed (i) not to exercise any rights of appraisal or dissenter’s rights relating to the Business Combination Agreement and the transactions contemplated thereby (including the Business Combination) and (ii) not to commence or participate in any claim or action against CERo, PBAX or any of their affiliates relating to the negotiation, execution or delivery of the CERo Support Agreement or the Business Combination Agreement.

The foregoing description of the CERo Support Agreement does not purport to be complete and is qualified in its entirety by the terms and conditions of the CERo Support Agreement, a form of which is attached as an exhibit to the Business Combination Agreement, the terms of which are incorporated herein by reference.

Investor Rights Agreement

In connection with the Closing, PBAX, certain stockholders of PBAX (including the Sponsor) and certain stockholders of CERo will enter into an Investor Rights and Lock-up Agreement (the “Investor Rights Agreement”). In total, a number of shares equal to (i) the 4,813,038 shares issuable to CERo stockholders at Closing, including shares issuable upon conversion of the Convertible Bridge Notes, but excluding any shares issuable upon exercise of options or warrants and (ii) 4,596,250 Founder Shares less any Reallocation Shares transferred to investors in any PIPE transaction or who enter into non-redemption agreements, will be outstanding and subject to the Investor Rights and Lock-up Agreement. Additional shares issuable upon exercise of New CERo options and New CERo warrants issued in exchange for CERo warrants will also be subject to the Investor Rights and Lock-Up Agreement upon issuance. Pursuant to the Investor Rights Agreement, each stockholder who is a party thereto will be granted customary registration rights with respect to their respective shares of Class A Common Stock, including demand and piggy-back registration rights.

The Investor Rights Agreement will also restrict the ability of such stockholders to transfer their shares of Class A Common Stock (or any securities convertible into or exercisable or exchangeable for shares of Class A Common Stock), including shares of Class A Common Stock issued in connection with the Business Combination, subject to certain permitted transfers, for a certain period of time. These restrictions will begin at Closing and end on the earlier of (x) the 180-day anniversary of the Closing and (y) the date on which the volume weighted average price of New CERo Common Stock equals or exceeds $12.50 per share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations and the like) for any twenty trading days within any thirty consecutive trading day period beginning on the Closing date.

The Investor Rights and Lock-up Agreement has not been finalized as of the date of this proxy statement/prospectus, as such agreement is expected to include the allocation of registration rights to investors in a potential PIPE transaction, the terms of which have not yet been determined, and registration rights with respect to Reallocation Shares, the terms of the allocation of which have not yet been determined.

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The Proposals

The Business Combination Proposal

PBAX stockholders will vote on a proposal to (a) adopt and approve the Business Combination Agreement, (b) approve the Business Combination, and (c) adopt and approve each Ancillary Document to which PBAX is a party and approve all transactions contemplated therein. The terms and conditions of the Business Combination are contained in the Business Combination Agreement, which is attached to this proxy statement/prospectus as Annex A and is incorporated by reference herein in its entirety. PBAX encourages you to read the Business Combination Agreement carefully, as it is the legal document that governs the Business Combination. For more information on the Business Combination Agreement, see the section entitled “The Business Combination Agreement.

The Charter Amendment Proposal

Assuming the Business Combination Proposal is approved and adopted, PBAX stockholders will vote on a proposal to approve the Proposed Charter, which will amend and restate the Current Charter, and the Proposed Bylaws, which will amend and restate the Current Bylaws. If approved, the Proposed Charter and Proposed Bylaws will be in effect upon the closing of the Business Combination. See the section entitled “Proposal 2 — The Charter Amendment Proposal.” A copy of the Proposed Charter and the Proposed Bylaws is attached to this proxy statement/prospectus as Annex B and Annex C respectively.

The Advisory Charter Amendment Proposals

On a non-binding advisory basis, PBAX stockholders will vote on a proposal to approve the Advisory Charter Amendment Proposals, which are being presented pursuant to guidance of the SEC as six separate sub-proposals. See the section entitled “Proposal 3 — The Advisory Charter Amendment Proposals.

The Nasdaq Stock Issuance Proposal

Assuming the Business Combination Proposal is approved and adopted, for purposes of complying with the applicable provisions of Nasdaq Listing Rule 5635, PBAX stockholders will vote on the issuance of shares of Class A Common Stock to CERo shareholders pursuant to the Business Combination Agreement, including the potential issuance of the Earnout Shares. See the section entitled “Proposal 4 — The Nasdaq Stock Issuance Proposal.

The Director Election Proposal

Assuming the Business Combination Proposal is approved and adopted, PBAX stockholders of Class B Common Stock will vote on a proposal to approve of the appointment of five directors who, upon consummation of the Business Combination, will become the directors of New CERo. See the section entitled “Proposal 5 — The Director Election Proposal.”

The Incentive Plan Proposal

Assuming the Business Combination Proposal is approved and adopted, PBAX stockholders will vote on a proposal to approve the Incentive Plan, which will become effective as of and contingent on the consummation of the Business Combination. See the section entitled “Proposal 6 — The Incentive Plan Proposal.

The ESPP Proposal

Assuming the Business Combination Proposal is approved and adopted, PBAX stockholders will vote on a proposal to approve the ESPP, which will become effective as of and contingent on the consummation of the Business Combination. See the section entitled “Proposal 7 — The ESPP Proposal.”

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The Adjournment Proposal

PBAX stockholders will be asked to consider and vote upon a proposal to adjourn the Special Meeting to a later date or dates if it is determined that more time is necessary or appropriate, in the judgment of the Board or the officer presiding over the Special Meeting, for PBAX to consummate the Business Combination (including to solicit additional votes in favor of any of the Proposals). See the section entitled “Proposal 8 — The Adjournment Proposal.”

Recommendation to PBAX Stockholders

After careful consideration, the Board unanimously determined that each of the Business Combination Proposal, the Charter Amendment Proposal, the Advisory Charter Amendment Proposals, the Nasdaq Stock Issuance Proposal, the election of each director pursuant to the Director Election Proposal, the Incentive Plan Proposal, the ESPP Proposal and the Adjournment Proposal, if presented, is fair to and in the best interests of PBAX and its stockholders. The Board has approved and declared advisable and unanimously recommends that you vote or give instructions to vote “FOR” each of these Proposals.

For a description of various factors considered by the Board in reaching its decision to recommend in favor of voting for each of the Proposals to be presented at the Special Meeting, see the sections herein regarding each of the Proposals.

The Board’s Reasons for Approval of the Business Combination

The Board considered a wide variety of factors in connection with its evaluation of the Business Combination. In light of the complexity of those factors, the Board, as a whole, did not consider it practicable to, nor did it attempt to, quantify or otherwise assign relative weights to the specific factors it took into account in reaching its decision. Individual members of the Board may have given different weight to different factors.

For a more complete description of the Board’s reasons for the approval of the Business Combination and its recommendations in favor of the Business Combination Proposal, please see the section entitled “The Business Combination — The Board’s Reasons for Approval of the Business Combination.

Interests of PBAX’s Directors and Officers in the Business Combination

In considering the recommendation of the Board to vote in favor of approval of the Business Combination Proposal, the Charter Amendment Proposal and the other Proposals, PBAX stockholders should keep in mind that the Sponsor (which is affiliated with certain of PBAX’s officers and directors) and PBAX’s officers and directors have interests in such Proposals that are different from, or in addition to, your interests as a PBAX stockholder. These interests include, among other things:

        If the Business Combination with CERo or another business combination is not consummated by April 8, 2024 (or such later date as may be approved by PBAX’s stockholders), PBAX will cease all operations except for the purpose of winding up, redeeming 100% of the outstanding Public Shares for cash and, subject to the approval of its remaining stockholders and the Board, dissolving and liquidating. In such event, (i) the 4,596,250 Founder Shares held by the Sponsor, which were acquired for a purchase price of approximately $0.005 per share, or $25,000 in the aggregate, prior to the Initial Public Offering, and (ii) the 699,996 Private Placement Shares and 349,998 Private Placement Warrants underlying the Private Placement Units held by the Sponsor, which were acquired for a purchase price of $10.00 per unit, or $7.0 million in the aggregate, in the Concurrent Private Placement, would be worthless because the holders are not entitled to participate in any redemption or distribution from the Trust Account with respect to such securities. Such securities had an aggregate market value of approximately $59.6 million based upon the closing price of $11.25 per share of Class A Common Stock and $0.025 per warrant on Nasdaq on January 4, 2024;

        Given the differential in the purchase price that the Sponsor paid for the Founder Shares, as compared to the price of the Public Shares sold in the Initial Public Offering and the shares of Class A Common Stock that the Sponsor will receive upon conversion of the Founder Shares in connection with the Business Combination, the Sponsor may earn a positive rate of return on its investment even if the

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Class A Common Stock trades below the price initially paid for the Public Shares in the Initial Public Offering and the Public Stockholders experience a negative rate of return following the completion of the Business Combination;

        If PBAX is unable to complete a business combination within the required time period, the Sponsor will be personally liable under certain circumstances described herein to ensure that the proceeds in the Trust Account are not reduced by the claims of target businesses or claims of vendors or other entities that are owed money by PBAX for services rendered or contracted for or products sold to PBAX. If PBAX consummates a business combination, on the other hand, PBAX will be liable for all such claims;

        On December 20, 2022, PBAX issued an unsecured promissory note to Sponsor in the principal amount of $1,500,000, portions of which may be withdrawn by PBAX from time to time (the “Promissory Note”). On December 8, 2023, the Promissory Note was amended to increase the total principal amount to $1,600,000. As of January 4, 2024, PBAX has submitted drawdown requests in an aggregate amount of $1,555,000. The Promissory Note bears no interest and outstanding principal is due and payable upon the earlier of the consummation of the initial business combination or the date of the liquidation of PBAX.

        If the Business Combination with CERo or another business combination is not consummated by April 8, 2024 (or such later date as may be approved by PBAX’s stockholders), the Sponsor and its affiliates will be liable for the $550,000 deposited to the Trust Account in connection with the First Extension, $137,692 deposited to the Trust Account in connection with the Second Extension to January 8, 2024 and $22,600 deposited to the Trust Account in connection with the Third Extension to April 8, 2024, as well as the $1,555,000 outstanding borrowing in connection with the Promissory Note between PBAX and the Sponsor and the $15,000 monthly consulting fee PBAX paid to the spouse of its Chief Executive Officer through December 31, 2022, which payments ended on December 31, 2022;

        On July 3, 2023, the Sponsor elected to convert all 4,596,250 of its shares of Class B Common Stock into 4,596,250 shares of Class A Common Stock. As of January 4, 2024, the Sponsor holds approximately 85.0% of the outstanding shares of Class A Common Stock. Because the Sponsor has agreed to vote in favor of each of the Proposals, all of the Proposals (and therefore, the Business Combination) will be approved even if none of the outstanding Class A Common Stock held by the Public Stockholders is voted in favor of any of the Proposals;

        The Business Combination Agreement provides for the continued indemnification of PBAX’s current directors and officers and the continuation of directors’ and officers’ liability insurance covering PBAX’s current directors and officers from and after the Effective Time for a period of six years;

        The fact that Brian Atwood, the current Chairman of the Board, had served as a consultant to CERo since 2019, and suggested that PBAX discuss a potential transaction with CERo, which culminated in the Business Combination. Mr. Atwood may have conflicts of interest in determining to present CERo as a target for an initial business combination and in determining that CERo is an appropriate business with which to effectuate an initial business combination;

        Certain of PBAX’s current directors and officers are expected to be directors and officers of New CERo after the consummation of the Business Combination. In particular, Chris Ehrlich, the current Chief Executive Officer and a director and shareholder of PBAX, will become Vice Chairman of New CERo; and Mr. Atwood will become the Chief Executive Officer of New CERo. As such, in the future, they may receive cash fees, stock options, stock awards or other remuneration that the New CERo Board determines to pay to them and any other applicable compensation as described under sections “CERo Executive and Director Compensation — Director Compensation” and “CERo Executive and Director Compensation — Employment Arrangements”;

        None of PBAX’s officers or directors will be required to commit his or her full time to the affairs of CERo prior to the completion of the Business Combination and, accordingly, may have conflicts of interest in allocating his or her time among various business activities. In addition, the Sponsor and PBAX’s directors and officers are not prohibited from sponsoring, or otherwise becoming involved with, any other blank check companies prior to PBAX completing its initial business combination;

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        The fact that the Sponsor, PBAX’s officers and directors, and their respective affiliates will not be reimbursed for any out-of-pocket expenses (none have been incurred as of January 4, 2024) if an initial business combination is not consummated by April 8, 2024 (or such later date as may be approved by PBAX’s stockholders);

        The fact that CCM, in addition to acting as capital markets advisor in connection with the Business Combination and placement agent in connection with a potential PIPE transaction, acted as financial advisor on the Initial Public Offering and will receive a fee of $1,162,500 upon consummation of the Business Combination in connection therewith. In addition, CCM holds an aggregate of 699,996 Private Placement Shares and 349,998 Private Placement Warrants underlying the Private Placement Units held by CCM, which were acquired for a purchase price of $10.00 per unit, or $7.0 million in the aggregate, in the Concurrent Private Placement, and would be worthless if the Business Combination with CERo or another business combination is not consummated by April 8, 2024 (or such later date as may be approved by PBAX’s stockholders) because CCM is not entitled to participate in any redemption or distribution from the Trust Account with respect to such securities. Such securities had an aggregate market value of approximately $7.9 million based upon the closing price of $11.25 per share of Class A Common Stock and $0.025 per warrant on Nasdaq on January 4, 2024;

        In the course of their other business activities, PBAX’s officers and directors may become aware of investment and business opportunities which may be appropriate for presentation to New CERo as well as the other entities with which they are affiliated. PBAX’s management may have conflicts of interest in determining to which entity a particular business opportunity should be presented;

        The Sponsor and PBAX’s officers and directors have agreed to waive their redemption rights with respect to any Public Shares they may hold in connection with the Business Combination. Additionally, the Sponsor and PBAX’s officers and directors have agreed to waive their redemption rights with respect to any Founder Shares and Public Shares held by them if PBAX fails to consummate an initial business combination within the completion window. If PBAX does not complete an initial business combination within such applicable time period, the proceeds of the sale of the Private Placement Shares held in the Trust Account will be used to fund the redemption of the Public Shares, and the Private Placement Warrants purchased in the Concurrent Private Placement will expire worthless. Such securities had an aggregate market value of approximately $59.6 million based upon the closing price of $11.25 per share of Class A Common Stock and $0.025 per warrant on Nasdaq on January 4, 2024. Since the Sponsor and PBAX’s officers and directors may directly or indirectly own PBAX Common Stock following the Initial Public Offering, PBAX’s officers and directors may have a conflict of interest in determining whether a particular target business is an appropriate business with which to effectuate the initial business combination;

        The Sponsor (including its representatives and affiliates) and PBAX’s officers and directors, are, or may in the future become, affiliated with entities that are engaged in a similar business to New CERo. The representatives and affiliates of the Sponsor, and certain of PBAX’s officers and directors, are in the business of making investments in companies, and may acquire and hold interests in businesses that compete directly or indirectly with New CERo. Certain of PBAX’s officers and directors also have time and attention requirements for investment funds of which they and affiliates of the Sponsor are the investment managers; and

        The Sponsor, certain stockholders of PBAX, and certain stockholders of CERo will be party to the Investor Rights Agreement, which will come into effect at the Effective Time. Pursuant to the Investor Rights Agreement, each stockholder thereto will be granted customary registration rights with respect to their respective shares of Class A Common Stock, including demand and piggy-back registration rights. Additionally, the Investor Rights Agreement prohibits each stockholder thereto from transferring their shares of Class A Common Stock (or any securities convertible into or exercisable or exchangeable for shares of Class A Common Stock), subject to certain permitted transfers, during the Lock-Up Period. The terms of the Investor Rights Agreement are further described in the section entitled “The Business Combination Agreement and Related Agreements — Related Agreements — Investor Rights Agreement.”

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In addition, in connection with the execution of the Business Combination Agreement, PBAX and CERo entered into the Sponsor Support Agreement with the Sponsor and each of PBAX’s directors and officers, pursuant to which the Sponsor agreed to vote (i) in favor of (a) the Business Combination Agreement and the transactions contemplated thereby and (b) the other proposals that PBAX and CERo agreed in the Business Combination Agreement shall be submitted at such meeting for approval by PBAX’s stockholders (together with the proposal to obtain the PBAX stockholders’ approval for the Business Combination, 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. As of January 4, 2024, the Sponsor owns approximately 85.0% of the issued and outstanding PBAX Common Stock.

The foregoing interests present a risk that the Sponsor will benefit from the completion of a business combination, including in a manner that may not be aligned with the interests of the Public Stockholders. Accordingly, the Sponsor and PBAX’s officers and directors will benefit from the completion of a business combination and may be incentivized to complete an acquisition of a less favorable target company or on terms less favorable to stockholders rather than liquidating PBAX. The PBAX Board was aware of and may have been influenced by these interests in evaluating and unanimously approving the Business Combination and in recommending that you vote in favor of the approval of the Business Combination.

As a result of the aforementioned actual or potential conflicts of interest, among other things, (i) the Board created the Special Committee, (ii) the Board and Special Committee determined to consider the engagement of a compensation consultant to review the proposed terms of the employment of Mr. Atwood and (iii) PBAX retained RNA to provide a fairness opinion to the Board in connection with the Business Combination. On June 4, 2023, RNA delivered its opinion to the Board, as to the fairness, from a financial point of view, of the consideration to be issued by PBAX pursuant to the Business Combination Agreement to PBAX. For a description of the opinion issued by RNA to the Board, please see the section entitled “The Business Combination — Opinion of PBAX’s Financial Advisor.”

See the section entitled “The Business Combination — Interests of Certain Persons in the Business Combination — Interests of PBAX’s Directors and Officers in the Business Combination” for a further discussion of additional considerations in connection with the Business Combination.