Company: CERO
Filing Date: 2025-11-19
Form Type: 10-Q
Source: 0001213900-25-112619
Chunk: 169

Company: CERO THERAPEUTICS HOLDINGS, INC.
Filing Date: 2025-11-19
Form: 10-Q
Item: Item 8
Chunk 169
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 when the Company filed an investigational new drug (“IND”) application with the Food and Drug Administration (“FDA”). The earning of these shares was accompanied by a forfeiture of 500 restricted shares of Common Stock held by the sponsor following receipt of an acknowledgement notice by the Sponsor. 

    6.
    Each outstanding Predecessor option was converted into an option to purchase a number of shares of Common Stock, equal to the Predecessor’s common stock underlying the option multiplied by the Exchange Ratio factor of 0.064452, at an exercise price per share equal to the Predecessor option exercise price divided by the Exchange Ratio factor.

    7. Each warrant to purchase the Predecessor’s preferred stock was converted into a warrant to acquire a number of shares of Common Stock obtained by dividing the warrant as-if-exercised liquidation preference by $1,000.00, with the exercise price equal to the total Predecessor warrant exercise amount divided by the number of shares of Common Stock issuable upon exercise. 

    8. The Predecessor’s bridge notes automatically converted into shares of the Company’s Series A Preferred Stock, par value $0.0001 per share (the “Series A Preferred Stock”), at a conversion price equal to $750 per share of Series A Preferred Stock. 

The Company issued, transferred
from the Sponsor, or reserved for issuance an aggregate of 4,200 shares of Common Stock to the holders of Predecessor common stock and
Predecessor preferred stock or reserved for issuance upon exercise of rollover (from Predecessor to Successor) options and warrants as
consideration in the Merger.

Asset Acquisition Method
of Accounting - The Merger was accounted for using the asset acquisition method in accordance with GAAP. Under this method of accounting,
PBAX was considered to be the accounting acquirer based on the terms of the Merger. Upon consummation of the Merger, the cash on hand
resulted in the equity at risk being considered insufficient for Predecessor to finance its activities without additional subordinated
financial support. Therefore, Predecessor was considered a Variable Interest Entity (“VIE”) and the primary beneficiary of
Predecessor was treated as the accounting acquirer. PBAX holds a variable interest in Predecessor and owns 100% of Predecessor’s
equity. PBAX was considered the primary beneficiary as it has the decision-making rights that gives it the power to direct the most significant
activities. Also,