CERO Therapeutics (CERO) details $2,085,200 10% convertible note deal
Rhea-AI Filing Summary
CERO Therapeutics Holdings, Inc. entered into a second amended and restated convertible promissory note with SRX Global Inc., allowing borrowings up to a maximum aggregate principal of $2,085,200. This amount has been funded in three tranches of $750,000, $663,600, and $671,600.
The note bears 10% annual interest, matures on May 28, 2027, and is convertible at the lender’s option into common stock at the lesser of $0.05 per share or 80% of the average of the five lowest intraday trading prices over the prior 20 days, subject to a 4.99% beneficial ownership limitation. The company plans to register the resale of conversion shares and relied on Securities Act private offering exemptions for this financing.
Positive
- None.
Negative
- None.
Filing Explained
The financing remains debt with conditional equity conversion: shares are issuable, but the conversion shares are not yet registered.
The filing leaves the equity effect conditional: the lender has a conversion right, but the disclosure describes conversion shares as issuable rather than reporting a completed stock issuance.
If conversion occurs, issuing additional common shares would increase the total share count and reduce existing holders’ percentage ownership.
The note and the shares issuable upon conversion have not been registered under the Securities Act, and the company is required to prepare and file a resale registration statement.
An S-1 or S-3 would register securities for potential future resale; registration itself would not sell shares or complete the conversion.
8-K Event Classification
4 items: 1.01, 2.03, 3.02, 9.01
4 items
Item 1.01
Entry into a Material Definitive Agreement
Business
The company signed a significant contract such as a merger agreement, credit facility, or major partnership.
Item 2.03
Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement
Financial
The company incurred a new significant debt or off-balance-sheet obligation.
Item 3.02
Unregistered Sales of Equity Securities
Securities
The company sold equity securities in a private placement or other unregistered transaction.
Item 9.01
Financial Statements and Exhibits
Exhibits
Financial statements, pro forma financial information, and exhibit attachments filed with this report.
Key Figures
Maximum Loan Amount: $2,085,200
Original Note Funding: $750,000
Second Tranche Funding: $663,600
+5 more
8 metrics
Maximum Loan Amount
$2,085,200
Maximum aggregate principal available under the second amended and restated note
Original Note Funding
$750,000
Principal funded under the original promissory note on May 23, 2026
Second Tranche Funding
$663,600
Additional principal funded on June 23, 2026
Third Tranche Funding
$671,600
Additional principal funded on July 14, 2026
Interest Rate
10% per annum
Annual interest rate on outstanding principal under the note
Maturity Date
May 28, 2027
Date on which the note matures
Fixed Conversion Price Cap
$0.05 per share
Upper bound of conversion price, before applying 80% of trading price formula
Beneficial Ownership Limitation
4.99%
Cap on lender’s post-conversion beneficial ownership of common stock
Key Terms
second amended and restated promissory note, beneficial ownership limitation, Section 4(a)(2) of the Securities Act, Rule 506(b), +1 more
5 terms
second amended and restated promissory note financial
"entered into a second amended and restated promissory note (the "Note")"
beneficial ownership limitation regulatory
"subject to certain adjustments and limitations, including a beneficial ownership limitation of 4.99%"
A beneficial ownership limitation is a rule that caps the percentage of a company’s shares an investor can be treated as owning or controlling for voting, regulatory or tax purposes. It matters to investors because it can restrict how many shares a person or group can buy or vote, affect takeover chances, and influence share liquidity and value — like a speed limit that prevents any single driver from taking over the whole road.
Section 4(a)(2) of the Securities Act regulatory
"reliance upon the exemption from registration provided by Section 4(a)(2) of the Securities Act"
A legal exemption that allows a company to sell securities directly to a limited group of buyers without registering the offering with the Securities and Exchange Commission. Think of it like a private sale among known parties rather than a public auction: it can speed fundraising and reduce disclosure requirements, but it also means less public information, lower liquidity and resale restrictions—factors investors should consider when weighing risk and exit options.
Rule 506(b) regulatory
"and Rule 506(b) promulgated thereunder"
Rule 506(b) is a U.S. securities exemption that lets companies sell shares or debt privately without full public registration, provided sales are primarily to accredited investors, up to 35 non‑accredited but financially knowledgeable buyers, and there is no public advertising or solicitation. It matters to investors because offerings under 506(b) usually include less public disclosure than registered securities—like buying from a private seller rather than a retail store—so buyers must do more of their own fact‑checking and rely on their financial sophistication.
Section 3(a)(9) regulatory
"shares of Common Stock issuable upon conversion of the Note will be issued in reliance on the exemption from registration provided by Section 3(a)(9)"
Section 3(a)(9) is a provision of U.S. securities law that exempts certain exchanges of an issuer’s own securities with its existing holders from the usual public registration rules, typically when the swap doesn’t involve a public offering or outside buyers. For investors, it matters because such exchanges can change who holds what, affect dilution and liquidity, and may occur with less public disclosure than a registered sale — think of it like swapping old coupons for new ones behind the scenes rather than selling them in a public marketplace.
AI-generated analysis. How Rhea-AI works. Not financial advice.
FAQ
What type of financing did CERO (CERO) arrange with SRX Global Inc.?
CERO entered a second amended and restated convertible promissory note with SRX Global Inc. for up to $2,085,200. The note is fully funded and can be converted into CERO common stock at the lender’s option under specified pricing terms.
How much capital is available to CERO (CERO) under the new note and how was it funded?
The note provides a maximum principal of $2,085,200, all of which has been funded. Funding occurred in three tranches: $750,000 on May 23, 2026, $663,600 on June 23, 2026, and $671,600 on July 14, 2026.
What are the interest rate and maturity of CERO’s (CERO) convertible note?
The note carries a fixed interest rate of 10% per annum and matures on May 28, 2027. Until maturity, interest accrues on the outstanding principal and, along with principal, can be converted into common stock at the lender’s option.
How is the conversion price determined for CERO’s (CERO) new convertible note?
The lender may convert at the lesser of a fixed price of $0.05 per share or 80% of the average of the five lowest intraday trading prices during the 20 days before a conversion request, subject to anti-dilution adjustments.
Is there a beneficial ownership cap on conversions under the CERO (CERO) note?
Yes. Conversions are subject to a 4.99% beneficial ownership limitation, preventing the lender from converting if it would own more than 4.99% of CERO’s outstanding common stock after the conversion, unless otherwise adjusted as permitted by the agreement.
Under which securities law exemptions was CERO’s (CERO) note financing completed?
The issuance of the note relied on Section 4(a)(2) of the Securities Act and Rule 506(b) for a private offering to an accredited investor. Any conversion shares may rely on Section 3(a)(9) or Section 4(a)(2) exemptions, subject to applicable conditions.