Company: CERO
Filing Date: 2025-08-22
Form Type: 10-Q
Source: 0001213900-25-079898
Chunk: 153

Company: CERO THERAPEUTICS HOLDINGS, INC.
Filing Date: 2025-08-22
Form: 10-Q
Item: Item 8
Chunk 153
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 acquired IPR&D, the Company
used the avoided cost method, which calculates a present value of a 45% return on research and development effort applied to research
and development expenditures over the life of the Predecessor. The determination of the fair value requires management to make a significant
estimate of the return on research and development expenditures. Changes in these assumptions could have a significant impact on the
fair value of the IPR&D. The estimate of the return on research and development expenditures was based on multiple published studies
analyzing actual returns of research and development expenditures.

The
following is a summary of the purchase price calculation:

    Number
    of shares of Common Stock 
     2,500 
  
    Multiplied
    by PBAX’s share price, as of the Closing 
    $11,700.00 
  
    Total 
    $29,250,000 
  
    Fair
    value of PBAX founder’s shares converted to shares of Common Stock and transferred to Predecessor stockholders 
    $5,118,750 
  
    Fair
    value of contingent Common Stock consideration 
    $12,870,000 
  
    Total
    Common Stock consideration 
    $47,238,750 
  
    Assumed
    liabilities 
     3,311,153 
  
    Total
    purchase price 
    $50,549,903 

The
allocation of the purchase price was as follows:

    Cash 
    $963,855 
  
    Net working capital deficit (excluding cash
    and cash equivalents) 
     (1,819,514)
  
    Fixed assets 
     929,346 
  
    Acquired in-process
    research and development 
     45,640,000 
  
    Net assets acquired 
     45,713,687 
  
    Loss on consolidation
    of VIE 
     4,836,216 
  
    Total purchase price 
    $50,549,903 

12

In
connection with the Merger, the transactions that occurred concurrently with the closing date of the Merger were reflected “on
the line”. “On the line” describes those transactions triggered by the consummation of the Merger that are not recognized
in the consolidated financial statements of the Predecessor nor the Company as they are not directly attributable to either period but
instead were contingent on the Merger. The opening cash balance in the consolidated statement of cash flow of $1.