Company: CERO
Filing Date: 2025-05-15
Form Type: 10-Q
Source: 0001213900-25-044335
Chunk: 44

Company: CERO THERAPEUTICS HOLDINGS, INC.
Filing Date: 2025-05-15
Form: 10-Q
Item: Item 1
Chunk 44
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 Warrants are entitled
to receive any dividends paid or distributions made to our holders of Common Stock on an “as if converted” basis.

The Series C Common Warrants
prohibit us from entering into specified fundamental transactions unless the successor entity assumes all of our obligations under the
Series C Common Warrants under a written agreement before the transaction is completed. Upon specified corporate events, a holder of Series
C Common Warrants will thereafter have the right to receive upon an exercise such shares, securities, cash, assets or any other property
whatsoever which the holder would have been entitled to receive upon the happening of the applicable corporate event had the Series C
Common Warrants been exercised immediately prior to the applicable corporate event. When there is a transaction involving specified changes
of control, a holder of Series C Common Warrants can request the Company to exchange the then unexercised portion of their Series C Common
Warrants for consideration equal to the Black-Scholes value thereof, which shall be settled, at the option of the Company, in either (i)
the form of rights convertible into the consideration receivable by holders of the underlying shares of common stock, based upon the value
of the shares of the successor entity over a specified period or (ii) cash in an amount equal to the Black-Scholes value.

On February 5, 2025, in connection with the sale of pre-funded warrants
and common stock (See Note 8), the exercise price of the Series C Common Warrants was lowered to $0.04 per warrant share. Upon the trigger
of the down-round provision of the Series C Common Warrants, on February 5, 2025, the Company recorded a deemed dividend of $83,083 which
represents the fair value transferred to the warrant holders from the down-round feature being triggered. The Company calculated the difference
between the Series C Common Warrant’s fair value on February 5, 2025, the date the down-round feature was triggered, using the current
exercise price at the time of $9.80 and the new exercise price of $0.04. The deemed dividend increased net loss attributable to common
shareholders by $83,083 in the condensed consolidated statement of operations for the three months ended March 31, 2025. The fair value
of the Series C Common Warrants immediately prior to and immediately after the exercise price adjustment, were estimated using the Black-Scholes
option-pricing model with the following assumptions:

    February