Company: CERO
Filing Date: 2025-11-19
Form Type: 10-Q
Source: 0001213900-25-112619
Chunk: 65

Company: CERO THERAPEUTICS HOLDINGS, INC.
Filing Date: 2025-11-19
Form: 10-Q
Item: Item 1
Chunk 65
---
 21, 2025 was equal to $500,000. Additionally, the Company recognized the issuance of its Series D Preferred Stock to
investors at a cost of $500,000, which represented the fair value of the consideration received. The difference between the stated value
of the Company’s Series D Preferred Stock ($5.0 million) and the fair value of the consideration received ($500,000) was recorded
as a decrease to additional paid-in capital, which amounted to $4.5 million, during the three months ended June 30, 2025. The investment
in Stella’s Series D Preferred Stock was classified as an equity security without a readily determinable fair value and was accounted
for under the measurement alternative in accordance with ASC 321, Investments – Equity Securities. Under this method,
the investment was initially recorded at cost, which was determined to be equal to the fair value of the consideration received, and is
subsequently adjusted for observable price changes in orderly transactions for the same or similar securities and for impairment, if any. This non-cash transaction during the three months ended June 30, 2025 did not impact the Company’s
cash flows and is disclosed as a non-cash investing and financing activity in the condensed consolidated statement of cash flows in accordance
with ASC 230, Statement of Cash Flows.

Earnout and warrant
liabilities

The Company initially recorded
the earnout liability at estimated fair value using a Monte Carlo analysis and has revalued the earnout liability at each subsequent period.
The Monte Carlo analysis used the following assumptions:

    February 14 

    September 30, 2025  
    2024 to September 30, 2024 

    (Successor)  
    (Successor) 
  
    Starting share price 
    $14.60  
     $180.00 to $9,800.00 
  
    Tranche 1 trigger price 
    $2,500.00  
     $2,500.00 to $6,400.00 
  
    Tranche 2 trigger price 
    $3,000.00  
     $3,000.00 to $7,700.00 
  
    Contractual term (in years) 
     2.40  
     3.40 to 4.00 
  
    Volatility 
     100% 
     90%
  
    Risk-free