Company: CERO
Filing Date: 2025-02-05
Form Type: S-1/A
Source: 0001213900-25-010230
Chunk: 299

Company: CERO THERAPEUTICS HOLDINGS, INC.
Filing Date: 2025-02-05
Form: S-1/A
Chunk 299
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ation preference by $1,000.00, with the exercise price equal to the total Predecessor warrant exercise amount divided by the number of shares of Common Stock issuable upon exercise.                                                                                                                                                           |
| 8. | The Predecessor’s bridge notes automatically converted into shares of the Company’s Series A Preferred Stock, par value $0.0001 per share (the “Series A Preferred Stock”), at a conversion price equal to $750 per share of Series A Preferred Stock.                                                                                                                                                                                                                                                                                       |

F-7

The Company issued, transferred from the Sponsor,
or reserved for issuance an aggregate of shares of Common Stock to the holders of Predecessor common stock and Predecessor preferred
stock or reserved for issuance upon exercise of rollover (from Predecessor to Successor) options and warrants as consideration in the
Merger.

Asset Acquisition Method of Accounting-
The Merger was accounted for using the asset acquisition method in accordance with U.S. GAAP. Under this method of accounting, PBAX was
considered to be the accounting acquirer based on the terms of the Merger. Upon consummation of the Merger, the cash on hand resulted
in the equity at risk being considered insufficient for Predecessor to finance its activities without additional subordinated financial
support. Therefore, Predecessor was considered a Variable Interest Entity (“VIE”) and the primary beneficiary of Predecessor
was treated as the accounting acquirer. PBAX holds a variable interest in Predecessor and owns % of Predecessor’s equity.
PBAX was considered the primary beneficiary as it has the decision-making rights that gives it the power to direct the most significant
activities. Also, PBAX retained the obligation to absorb the losses and/or receive the benefits of Predecessor that could have potentially
been significant to Predecessor. The Merger was accounted for as an asset acquisition as substantially all of the fair value was concentrated
in IPR&D, an intangible asset. Predecessor’s assets (except for cash) and liabilities were measured at fair value as of the
transaction date. Consistent with authoritative guidance on the consolidation of a VIE that is not considered a business, differences
in the total purchase price and fair value of assets and liabilities are recorded as a gain or loss to the condensed consolidated statement
of operations. The loss reflected below on the consolidation of the VIE is reflected “on the line” (defined below) in the
Company’s opening accumulated deficit.

Costs incurred