Company: CERO
Filing Date: 2025-11-19
Form Type: 10-Q
Source: 0001213900-25-112619
Chunk: 159

Company: CERO THERAPEUTICS HOLDINGS, INC.
Filing Date: 2025-11-19
Form: 10-Q
Item: Item 8
Chunk 159
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2024, for the three months ended September 30, 2024, and for the three and nine months
ended September 30, 2025. A black line between the Successor and Predecessor periods has been placed in the unaudited condensed consolidated
financial statements and in the tables to the notes to the condensed consolidated financial statements to highlight the lack of comparability
between these two periods.

Use of estimates –
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the
reported amounts of assets and liabilities, disclosure of contingent liabilities at the date of the financial statements, and the reported
amounts of expenses incurred during the reporting period. Items subject to such estimates and assumptions include the estimates of the
fair value of investments in equity securities, estimates in recording accrued liabilities and expenses for research and development activities,
the fair value of convertible preferred stock, common stock, and preferred stock warrant liability, the fair value of stock-based compensation
expense, the present value of right-to-use assets and lease liabilities, the valuation of earnout liability, the value of deemed dividends,
and the valuation allowance associated with deferred tax assets. Actual results could differ from those estimates.

Cash, restricted cash,
and cash equivalents – The Company considers all highly liquid investments with an original maturity from the date of purchase
of three months or less to be cash equivalents. As of September 30, 2025 and December 31, 2024, cash and cash equivalents consist
of cash deposited with banks, including a money market sweep account, and restricted cash of $74,756 and $74,756, respectively, held on
account by a financial institution as collateral for a demand letter of credit issued as a real estate security deposit.

Investment in equity securities
- The Company’s investment in equity securities consisted of Series D Preferred Stock of Stella Diagnostics, Inc. (“Stella”),
which was held by the Company as of June 30, 2025 and sold during the three months ended September 30, 2025. Investments in equity securities
are initially measured at cost. Cost is based upon either the cost of the investment or the estimated market value of the investment at
the time it was acquired, whichever can be more clearly determined. The Company has elected the measurement alternative for equity securities
without readily determinable fair values. Under this alternative, if the Company identifies an observable price change in an orderly transaction
for an identical or similar investment of the same issuer,