Company: CERO
Filing Date: 2025-12-05
Form Type: S-1
Source: 0001213900-25-118817
Chunk: 400

Company: CERO THERAPEUTICS HOLDINGS, INC.
Filing Date: 2025-12-05
Form: S-1
Chunk 400
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 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 predecessor Company’s
convertible preferred stock are considered contingently redeemable and therefore, any preferred stock warrants to purchase preferred shares
was 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.

Earnout liability -As a result of the
Merger in February 2024, the Company recognized an earnout liability of $ million on the merger date. The earnout liability is measured
using unobservable (Level 3) inputs and is included in current liabilities on accompanying balance sheet. The Company estimated
the fair value of the earnout liability by applying a Monte-Carlo simulation method using the Company’s projection of future operating
results and the estimated probability of achievement of the earnout target metrics. The Monte-Carlo simulation is a generally
accepted statistical technique used to generate a defined number of valuation paths in order to develop a reasonable estimate of the
fair value of the earnout liability. The liability is remeasured to fair value using the Monte-Carlo simulation method at each reporting
period, and the change in fair value is recognized in other income (expense) until the contingency is resolved. During the year ended
December 31, 2024, the Company recorded a gain from change of fair value of the earnout liability of $, which is included in
other income, net on the accompanying consolidated statement of operations.

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