Company: CERO
Filing Date: 2025-11-19
Form Type: 10-Q
Source: 0001213900-25-112619
Chunk: 36

Company: CERO THERAPEUTICS HOLDINGS, INC.
Filing Date: 2025-11-19
Form: 10-Q
Item: Item 1
Chunk 36
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 to $627,154.

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 Series A, Series B Preferred Stock, Series C
Preferred Stock, and Series D Preferred Stock, which have no cash redemption features outside of the Company’s control, and are
treated as equity. The Company has also concluded that the Series A Common Warrants and Series C Common Warrants do not possess redemption
features outside of the Company’s control and are treated as equity.

Due to delayed filing and
declaration of effectiveness relative to the deadlines defined in the Registration Rights Agreement, as of September 30, 2024, the Company
accrued a registration rights penalty amounting to $645,693, which was payable in cash to the holders of Series A Preferred Stock.
On March 27, 2025, the Company entered into a Waiver of Registration Rights Penalties whereby the Investor agreed to waive all Series
A registration rights penalty amounting to $645,693 in exchange for the Company’s forgiveness of a $600,000 shortfall in the exercise
price of the Series A Preferred Warrants that was unpaid. In December 2024, the Investor exercised its Series A Preferred Warrants to
purchase shares of Series A Preferred stock of the Company for which such investor remitted a partial exercise price amount of $100,000
instead of the exercise price of $700,000.

During the three months ended
September 30, 2024, 7,005 shares of Series A Preferred Stock were converted into 54,474 shares of Common Stock.

During the nine months ended
September 30, 2025, 1,090 shares of Series A Preferred Stock were converted into 14,447 shares of Common Stock. The conversion ratio was
based on the Series A Certificate of Designations and reflected the application of the Alternate Conversion Price described above, applicable
as of each date of conversion plus a 25% premium for penalties due. As a result of the 25% premium, during the nine months ended September
30, 2025, the Company recorded the following: 1) for 473 shares of Series A Preferred Stock converted during the continuance of a Trigger
Event as described above, the Company recorded a deemed dividend of $118,250, which represents the fair