Company: CERO
Filing Date: 2025-05-15
Form Type: 10-Q
Source: 0001213900-25-044335
Chunk: 16

Company: CERO THERAPEUTICS HOLDINGS, INC.
Filing Date: 2025-05-15
Form: 10-Q
Item: Item 1
Chunk 16
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 prices for similar assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are not active.

    Level 3
    – 
    Unobservable inputs for which there is little or no market data and which require the Company to develop its own assumptions about how market participants would price the asset or liability. Consideration is given to the risk inherent in the valuation technique and the risk inherent in the inputs to the model.

Carrying amounts of certain
of the Company’s financial instruments, including cash, restricted cash, and cash equivalents, prepaid expenses and other current
assets, accounts payable, accrued liabilities, and short-term notes payable approximate fair value due to their relatively short maturities.

Non-financial assets such as property and equipment and operating lease
right-of-use assets are evaluated for impairment and adjusted to fair value using Level 3 inputs only when impairment is recognized.
Fair values are considered Level 3 when management makes significant assumptions in developing a discounted cash flow model based
upon a number of considerations including projections of revenues, earnings, and a discount rate. To date, the Company has not recorded
any adjustments to fair value related to impairment on property and equipment or operating lease right-of-use assets. On March 31, 2025
and December 31, 2024, the fair value of the Company’s earnout liability (see Note 10 for details) was classified as follows:

    March 31, 2025 

    Level 1  
    Level 2  
    Level 3  
    Total 
  
    Earnout liability 
    $      -  
    $      -  
    $20,000  
    $20,000 

    December 31, 2024 

    Level 1  
    Level 2  
    Level 3  
    Total 
  
    Earnout liability 
    $      -  
    $      -  
    $20,000  
    $20,000 

The change in the fair value measurement using
significant inputs (Level 3) is summarized below:

    Preferred stock warrant liability (Predecessor): 

    Balance at December 31, 2023 
    $320,117 
  
    Gain on revaluation of warrant liability 
     (320,117)
  
    Balance at February 14, 2024 
    $- 

    Earnout liability (