Company: CERO
Filing Date: 2025-08-22
Form Type: 10-Q
Source: 0001213900-25-079898
Chunk: 21

Company: CERO THERAPEUTICS HOLDINGS, INC.
Filing Date: 2025-08-22
Form: 10-Q
Item: Item 1
Chunk 21
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 in the consolidated statements of operations.

Income
taxes – The Company accounts for income taxes under the liability method. Under this method, deferred tax assets and liabilities
are determined based on the difference between the financial statement and tax bases of assets and liabilities using enacted tax rates
in effect for the year in which the differences are expected to affect taxable income. Valuation allowances are established when necessary
to reduce deferred tax assets to the amounts expected to be realized.

The
Company follows tax accounting requirements for the recognition, measurement, presentation, and disclosure in the financial statements
of any uncertain tax positions that have been taken or expected to be taken on a tax return. No liability related to uncertain tax positions
is recorded in the financial statements. It is the Company’s policy to include penalties and interest expense related to income
taxes as a component of income tax expense, as necessary. The Company has not recorded any interest or penalties associated with income
tax. Tax years subsequent to 2021 are subject to examination by federal and state authorities.

Earnings
per share – The Company reports both basic and diluted earnings per share. Basic earnings per share is calculated based on
the weighted average number of shares of common stock outstanding and excludes the dilutive effect of convertible preferred stock, warrants
for convertible preferred stock or common stock, stock options or any other type of convertible securities. Diluted earnings per share
is calculated based on the weighted average number of shares of common stock outstanding and when the effect of stock options, warrants
and other types of convertible securities is dilutive, they are included in the calculation. Dilutive securities are excluded from the
diluted earnings per share calculation if their effect is anti-dilutive, such as in periods where the Company reports a net loss.

Segment
reporting - Operating segments are defined as components of a business for which separate discrete financial information is
available for evaluation by the chief operating decision maker in deciding how to allocate resources and assess performance. The Company
operates as a single operating and reporting segment, reflecting our sole focus in developing next generation engineered T cell
therapeutics for the treatment of cancer. Our Chief Executive Officer serves as the Chief Operating Decision Maker (CODM), responsible
for assessing the Company’s performance and making resource allocation decisions. The CODM evaluates financial information on a
consolidated basis, focusing on key metrics such as research and development expense, general and administrative expenses, and other
income/expenses, which is reflected on the face of the Company’s