Company: CERO
Filing Date: 2025-08-22
Form Type: 10-Q
Source: 0001213900-25-079898
Chunk: 40

Company: CERO THERAPEUTICS HOLDINGS, INC.
Filing Date: 2025-08-22
Form: 10-Q
Item: Item 1
Chunk 40
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 ASC 470-20, upon initial down round triggering
events, the Company recorded a stock-based inducement expense of $707,300, which represents the fair value of excess common shares transferred
to the preferred shareholders based on an average per share common share price of $7.50 and is reflected as part of other income (expense),
net, on the accompanying condensed consolidated statement of operations for both the three and six months ended June 30, 2025. Additionally,
subsequent to the initial triggering events, during the three and six months ended June 30, 2025, Series C Preferred Stock was converted
by investors at a conversion price lower than the contractual conversion price of the Series C Preferred Stock then in effect. The initial
triggering events lowered the Series C Preferred Stock conversion price from $39.20 per share to $5.00 and from $5.00 per share to $1.76
per share. In connection with these down round triggering events, during the three and six months ended June 30, 2025, the Company recorded
a deemed dividend of $9,340,120, which represents the fair value of excess common shares convertible and issuable to the preferred shareholders
upon the occurrence of the initial trigger event based on an average per share common share price of $10.37, the effect of which was an
increase in the net loss attributable to common shareholders in the accompanying consolidated statement of operations for the three and
six months ended June 30, 2025.

18

As of June 30, 2025, there were 60 remaining shares of Series C Preferred
Stock, which were convertible into approximately 14,577 shares of Common Stock.

Successor
Series D Convertible Preferred Stock

On
April 22, 2025, the Company designated 12,500 shares of our authorized and unissued Preferred Stock as Series D Preferred Stock
and established the rights, preferences and privileges of the Series D Preferred Stock pursuant to the Series D Certificate
of Designations filed with the Secretary of State of the State of Delaware, as summarized below. Except as set forth below, the Series D
Preferred Stock has terms and provisions that are substantially the same as those of the Series A Preferred Stock, Series B
Preferred Stock and Series C Preferred Stock.

General.
Each share of Series D Preferred Stock has a stated value of $1,000 per share and, when issued, the Series D Preferred