Company: CERO
Filing Date: 2025-08-22
Form Type: 424B3
Source: 0001213900-25-080011
Chunk: 63

Company: CERO THERAPEUTICS HOLDINGS, INC.
Filing Date: 2025-08-22
Form: 424B3
Chunk 63
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udited condensed balance sheet as of June 30, 2025. The fair value of Stella’s Series
D Preferred Stock received was determined to be $500,000 as of the transaction date, based on the subsequent sale of the 1,000,279 Stella
Series D Preferred Stock $500,000 in cash, pursuant to a Stock Purchase Agreement dated August 20, 2025 (see Note 14). Accordingly, the
Company recognized the issuance of its Series D Preferred Stock to investors at a cost of $500,000, which represents the fair value of
the consideration received. The difference between the stated value of the Company’s Series D Preferred Stock ($5.0 million) and
the fair value of the consideration received ($500,000) was recorded as a decrease to additional paid-in capital, which amounted to $4.5
million. The investment in Stella’s Series D Preferred Stock is classified as an equity security without a readily determinable
fair value and is accounted for under the measurement alternative in accordance with ASC 321, Investments – Equity Securities.
Under this method, the investment is initially recorded at cost, which was determined to be equal to the fair value of the consideration
received, and is subsequently adjusted for observable price changes in orderly transactions for the same or similar securities and for
impairment, if any. There was no impairment identified on the investment in equity securities during the period ended June 30, 2025.
This non-cash transaction did not impact the Company’s cash flows and is disclosed as a non-cash investing and financing activity
in the condensed consolidated statement of cash flows in accordance with ASC 230, Statement of Cash Flows.

Earnout and warrant liabilities

The Company initially recorded the earnout liability at estimated fair value using a Monte Carlo analysis and has revalued the earnout liability at each subsequent period. The Monte Carlo analysis used the following assumptions:

|                             |     | June 30,   
 2025       |          |   |     | February 14            
 2024 to                
 June 30,               
 2024                   |
|:----------------------------|:----|:-----------|---------:|:--|:----|:-----------------------|
|                             |     | -Successor |          |   |     | -Successor             |
| Starting share price        |     | $          |    14.60 |   |     | $600.00 to $9,800.00   |
| Tranche