Company: CERO
Filing Date: 2025-08-22
Form Type: 10-Q
Source: 0001213900-25-079898
Chunk: 20

Company: CERO THERAPEUTICS HOLDINGS, INC.
Filing Date: 2025-08-22
Form: 10-Q
Item: Item 1
Chunk 20
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 and consultants for services
rendered. Stock-based compensation accounting requires the recognition of stock-based compensation expense, using a grant date fair value-based
method, for costs related to all share-based payments including stock options and restricted stock awards granted to employees and non-employees.
Companies are required to estimate the fair value of all share-based payment awards on the date of grant using an option pricing model,
and the Company uses a Black-Scholes option pricing model (“Black-Scholes”) to estimate option award fair value. The assumptions
used in calculating the fair value of stock-based awards represent management’s best estimates and involve inherent uncertainties
and the application of management’s judgment:

●The Common Stock expected dividend yield assumption of 0.0% is based on the expectation of no dividend payouts to Common Stock.

●The
                                            risk-free interest rate assumption is based on the U.S. Department of Treasury instruments
                                            whose term was most consistent with the expected life of the Company’s stock options.

●The
                                            expected stock price volatility assumption was determined by examining the historical volatilities
                                            for industry peers, as the Company does not have sufficient public trading history for the
                                            Company’s Common Stock. The Company will continue to analyze the historical stock price
                                            volatility and expected term assumption as more historical price data for the Company’s
                                            Common Stock becomes available.

●The
                                            expected lives of the Company’s stock options are estimated based on the type of award
                                            issued using approaches that do not rely on the historical data of the Company, as management
                                            has concluded there is insufficient data to provide a reasonable forward-looking estimate.
                                            The expected life of an incentive stock option is estimated using the simplified method described
                                            in Staff Accounting Bulletin Topic 14 – Share-Based Payment. All incentive stock options
                                            awarded by the Company have terms consistent with this approach, which is to calculate the
                                            weighted average midpoint between the vesting date of each vesting tranche and the termination
                                            date of the option. Non-qualified stock options are valued using the contractual life as
                                            the expected term.

The
fair value of restricted stock awards is based upon the estimated share price of the common shares on the date of grant.

Forfeitures
are accounted for as they occur. All options and restricted stock awards granted since inception are expensed on a straight-line basis
over the requisite service period, which is usually the vesting period, or upon the completion of certain performance-based vesting terms.
The related amounts are recognized