Company: CERO
Filing Date: 2025-08-22
Form Type: 10-Q
Source: 0001213900-25-079898
Chunk: 291

Company: CERO THERAPEUTICS HOLDINGS, INC.
Filing Date: 2025-08-22
Form: 10-Q
Item: Item 2
Chunk 291
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 Preferred Stock contain certain penalties and adjustments to the amount
included in determination of the conversion rate following certain breaches of the Company’s obligations thereunder, including,
among other things, as a result of a failure to file or cause the SEC to declare one or more registration statements relating to the resale
of the shares of Common Stock issuable upon conversion thereof by specified deadlines, certain defaults under indebtedness of the Company
or judgments against the Company and failure to deliver shares of Common Stock upon conversion in a timely manner. For example, the penalties
and adjustments include a 25% premium added to the stated value for determining the conversion rate in connection with breaches other
than the breach of the requirement to redeem the shares of Series A Preferred Stock and Series B Preferred Stock by August 19, 2025, which
results in a 50% premium, and the addition to the stated value of an amount equal to the value of the shares of Common Stock into which
the Series A Preferred Stock or Series B Preferred Stock would have been convertible if the conversion price were equal to 80% of the
lowest volume weighted average price during the five trading days immediately prior to conversion. Such penalties and adjustments, which
applied during the period when substantially all of the conversions since the Business Combination occurred as a result of a failure to
file and cause the SEC to declare a registration statement with respect to the resale of the underlying shares in a timely manner, have
resulted and may in the future result in the issuance of shares of Common Stock at an effective conversion price below the trading price
of our Common Stock at the time of such conversion.

We
cannot assure you that we will remain in compliance with all of the terms of the Series A Preferred Stock, Series C Preferred Stock or
Series D Preferred Stock and that such penalties and adjustments will not apply in the future. In addition, we cannot assure you that
we will not issue additional convertible or other derivative securities with highly dilutive penalty or adjustment provisions. As described
elsewhere in this Quarterly Report, the Company needs to obtain financing to fund its research and development activities and clinical
trials, as well as other operations. Under challenging conditions in the equity capital markets, particularly for pre-commercialization
biotech companies, we may have no viable alternatives to agreeing to inclusion of such provisions in the terms of future financings.

The
                                            impact of recent healthcare reform legislation and other changes in the healthcare industry
                                            and in healthcare spending on us is currently unknown, and may adversely affect