Company: CERO
Filing Date: 2025-11-19
Form Type: 10-Q
Source: 0001213900-25-112619
Chunk: 185

Company: CERO THERAPEUTICS HOLDINGS, INC.
Filing Date: 2025-11-19
Form: 10-Q
Item: Item 8
Chunk 185
---
 PIPE Financing”) of 2,853 shares of Series C Preferred Stock and warrants to
purchase 4,088 shares of Common Stock (See Note 9 below), pursuant to the Securities Purchase Agreement, dated September 25, 2024, by
and among the Company and certain accredited investors for aggregate gross cash proceeds to the Company of approximately $1.25 million.

The Company accounts for preferred
stock as either equity or debt-like securities based on an assessment of the Preferred Stock rights and preferences and applicable authoritative
guidance in ASC 480 and ASC 815, Derivatives and Hedging. The Company has concluded that the Series C Preferred Stock, which has no cash
redemption features outside of the Company’s control and are treated as equity. The Company has also concluded that the Series C
Common Warrants do not possess redemption features outside of the Company’s control and are treated as equity.

On March 10, 2025, the Company
paid certain investors $395,000 for the redemption of 316 shares of the Series C Preferred Stock, which included $267,856 of the initial
purchase price and a cash redemption premium of $127,144. During the nine months ended September 30, 2025, the $127,144 of excess paid
over the initial purchase price was included in deemed dividend on the accompanying condensed consolidated statement of operations.

During the three months ended
June 30, 2025, 2,477 shares of Series C Preferred Stock were converted into 808,444 shares of Common Stock. The conversion ratios were
agreed upon by the Company and investors and ranged from $1.76 to $5.00 per share, which was lower than the conversion price based on
the Series C Certificate of Designations Alternate Conversion price. As a result, pursuant to ASC 470-20, upon initial down round triggering
events, the Company recorded a stock-based inducement expense of $707,300, which represents the fair value of excess common stock transferred
to the preferred shareholders based on an average per common share price of $7.50 and is reflected as part of other income (expense),
net, on the accompanying condensed consolidated statement of operations during the nine months ended September 30, 2025. Additionally,
subsequent to the initial triggering events, during the three and nine months ended September 30, 2025, Series C Preferred Stock was converted
by investors at a conversion price lower than the contractual conversion price of the Series C