Company: CERO
Filing Date: 2025-04-15
Form Type: 10-K
Source: 0001213900-25-032134
Chunk: 809

Company: CERO THERAPEUTICS HOLDINGS, INC.
Filing Date: 2025-04-15
Form: 10-K
Item: Item 9B
Chunk 809
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 control and are treated as equity.

Due to delayed filing and declaration of effectiveness relative to
the deadlines defined in the Registration Rights Agreement, on June 30, 2024, the Company accrued a registration rights penalty amounting
to $645.693, which was payable in cash to the holders of Series A Preferred Stock. On March 27, 2025, the Company entered into a
Waiver of Registration Rights Penalties whereby the Investor agreed to waive registration rights penalty amounting to $568,400 in exchange
for the Company’s forgiveness of the $600,000 Series A warrants exercise price shortfall. In December 2024, the Investor exercised
its Series A Preferred Warrants to purchase shares of Series A Preferred stock of the Company for which the Investor remitted a partial
exercise price amount of $100,000 instead of the exercise price of $700,000.

During the year ended December
31, 2024, 10,023 shares of Series A Preferred Stock were converted into 1,723,880 shares of Common Stock. The conversion ratio was based
on the Series A Certificate of Designations and reflected the application of the Alternate Conversion Price described above, applicable
as of each date of conversion plus a 25% premium for penalties due. As a result of the 25% premium, the Company recorded a deemed dividend
of $2,419,750 which represents the fair value of excess common shares transferred to the preferred shareholders based on an average per
share common share price of $7.10, the effect of which was an increase in the net loss attributable to common shareholders in the statement
of operations for the year ended December 31, 2024. Additionally, certain investors are owed an aggregate of 13,835 shares of Common Stock
of the Company due to shortfall in number of shares issued upon conversion, which represents the 25% premium not received. Accordingly,
the Company reduced additional paid-in capital by $85,500 and recorded a liability of $85,500, which is reflected on the accompanying
consolidated balance sheet as deemed dividend - common stock liability. As of December 31, 2024, there were 1,894 remaining shares of
Series A Preferred Stock, which were convertible into 473,500 shares of Common Stock.

Successor Series B Convertible Preferred Stock

The Company designated 626
shares of its authorized preferred stock as Series B Preferred Stock and established the rights, preferences and privileges of the Series
B