Company: CERO
Filing Date: 2025-02-07
Form Type: 424B3
Source: 0001213900-25-011071
Chunk: 412

Company: CERO THERAPEUTICS HOLDINGS, INC.
Filing Date: 2025-02-07
Form: 424B3
Chunk 412
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 a result,
the shares of the Company’s convertible preferred stock are considered contingently redeemable. The Company has elected to present
its convertible preferred stock as mezzanine equity in its balance sheet. Further, the Company has elected not to adjust the carrying
values of its convertible preferred stock to the redemption value of such shares, since it is uncertain whether or when a redemption
event will occur. Subsequent adjustments to increase the carrying values to the redemption values will be made when it becomes probable
that such redemption will occur. The Company has not included the effect of convertible preferred stock in the calculation of diluted
loss per share, since the inclusion of such convertible preferred stock would be anti-dilutive.

<div align='center'>F-56

CERo Therapeutics, Inc.

Notes to Financial Statements</div>

Preferred stock warrant liability –
Warrant accounting requires liability classification of warrants when the warrants include a conditional obligation, once the warrant
is exercised, that would require the Company to redeem its equity shares. As stated above, the shares of the Company’s convertible
preferred stock are considered contingently redeemable and therefore, any preferred stock warrants to purchase preferred shares are classified
as a liability in the Company’s balance sheets. The warrants are analyzed to determine whether the warrant is a freestanding instrument
and if so, whether the warrant was issued in a transaction with other instrument(s). If a freestanding warrant is issued with other instruments
in a single transaction, then the proceeds of the transaction are allocated first to the fair value of the warrant, with the remainder
being allocated to the other instruments. The warrants are remeasured as of each reporting period end, with any changes in fair value
recognized as interest and other income, net in the statement of operations. The Company has determined that the warrant liability is
a Level 3 instrument in the fair value measurements hierarchy. The Company has not included the effect of the preferred stock warrants
in the calculation of diluted loss per share since the inclusion of such warrants would be anti-dilutive.

Fair value measurements – The Company’s
assets and liabilities are carried at fair value. Fair value is the amount that would be received to sell an asset or paid to transfer
a liability in an orderly transaction between market participants on the measurement date. In determining fair value, the assumptions
that market participants would use in pricing an asset or liability (the inputs) are based on a tiered fair value hierarchy consisting
of three levels, as follows:

| Level