PHOENIX BIOTECH ACQUISITION CORP.

Pairing a discretionary reverse split with a preferred conversion approval means the company can shrink the share count and then issue against the smaller base, so the percentage of the company the Series C holders end up with is set after the split rather than before it. The adjournment proposal covers all three substantive items, indicating the board expects the vote to be tight. This is the company's second such financing round put to shareholders inside a year of its February 2024 listing.

Because the excerpt does not describe Proposal No. 1, its substance cannot be stated from this document and confidence is set low accordingly; the company convened a second special meeting weeks later, in November 2024, covering a reverse split and a Series C preferred issuance. The sponsor's funding history is visible: on December 13, 2022 PBAX issued the Sponsor an unsecured promissory note with a principal amount of $1,500,000 for working capital during the search.

This is the first of three financing votes CERo put to holders inside eight months — Series A and Series B preferred here in April, an unnamed proposal in September, then a reverse split with Series C preferred in November — each authorising a further tranche of stock at terms set when the last one had already diluted the base. The adjournment proposal covers Proposals 2 and 3, so the board expected the issuance items to be the ones at risk.

A Nasdaq listing condition governs the whole transaction: the proxy states the combination will not be consummated unless it is met, and offers no assurance that it will be. That is a genuine closing risk PBAX holders bear if they do not redeem. The $10.00 conversion reference for CERo preferred means the seller's preferred stock is being valued at the same price public holders paid into trust, so the trust cash is what backs the combined company's balance sheet.

The bridge lenders are paid better than the equity: each Convertible Bridge Note converts into Class A common stock at the volume-weighted average price on the closing date multiplied by 0.75, a quarter below the market price the day the deal closes. CERo preferred stock converts at its liquidation preference divided by $10.00, and the CERo warrants convert on the same $10.00 basis. On top of the closing shares sit earnouts of up to 1,000,000 Class A shares on two price targets and a further 200,000 shares on a change of control.

CERo's preferred stock and preferred warrants convert on a formula anchored to $10.00 — the liquidation preference divided by $10.00 — so those holders' share counts are fixed by contract. The Convertible Bridge Notes are struck differently: principal and unpaid accrued interest convert at the volume weighted average price of the surviving company's Class A stock on the closing date multiplied by 0.75, a discount applied after the price is known. Earnouts add up to 1,000,000 further Class A shares on two price targets plus 200,000 shares on a change of control.

The conversion terms for the preferred are anchored to $10.00: each CERo preferred share becomes Class A stock equal to its liquidation preference divided by $10.00, and each CERo preferred warrant converts on the same divisor. The Convertible Bridge Notes convert at the closing-date volume weighted average price of the surviving company's Class A stock multiplied by 0.75, so those holders' share count is struck at a discount after the price is observed. Earnouts add up to 1,000,000 Class A shares across two price targets plus 200,000 shares on a change of control.

Three conversion mechanics sit behind that number and two are priced off $10.00: CERo preferred stock converts at its liquidation preference divided by $10.00, and each CERo warrant converts at the aggregate liquidation preference of the preferred it covers divided by $10.00. The Convertible Bridge Notes are different — principal and unpaid accrued interest convert at the closing-date volume weighted average price multiplied by 0.75, so a weaker price at closing issues more shares. Earnout adds up to 1,000,000 shares on two targets plus 200,000 on a change of control.

CERo's preferred stock converts by dividing its liquidation preference by $10.00, and CERo warrants over preferred convert on the aggregate liquidation preference divided by that same $10.00 — so the preference stack, not a negotiated equity value, sets what the preferred holders receive. As of May 1, 2023 the Exchange Ratio is approximately 0.026. On top of the closing shares sit earnouts of up to 1,000,000 further Class A shares if the First and Second Level Earnout Targets occur, and 200,000 more on a Change of Control.

PBAX expects to issue approximately 5.0 million Class A shares to CERo's equity owners including shares issuable on option exercise, well below the 10,493,945 registered on the cover. CERo's preferred stock and its preferred warrants convert by reference to liquidation preference divided by $10.00 rather than to any market price, so preferred holders' entitlement is fixed in dollars. On top of the closing consideration, CERo holders may receive up to 1,000,000 further Class A shares if trading milestones occur and 200,000 more on a change of control.

What changed: CERo Therapeutics Holdings, Inc., successor to Phoenix Biotech Acquisition Corp., entered an amended and restated promissory note on June 23, 2026 with SRX Health Solutions, Inc., replacing a note issued May 28, 2026. The company may borrow up to $1,413,600 in aggregate, of which $750,000 was funded under the original note and a further $663,600 on June 23, 2026. The note bears 10% interest and matures on May 28, 2027. Why it matters: The conversion terms are the point. The lender may convert principal and accrued interest at any time at the lesser of $0.05 and 80% of the average of the five lowest intraday trading prices over the preceding twenty days. A conversion price that floats downward with the share price means the number of shares issued rises as the stock falls, so the dilution is unbounded from this filing alone and worsens precisely when the company is weakest.