Company: CERO
Filing Date: 2025-11-19
Form Type: 10-Q
Source: 0001213900-25-112619
Chunk: 202

Company: CERO THERAPEUTICS HOLDINGS, INC.
Filing Date: 2025-11-19
Form: 10-Q
Item: Item 8
Chunk 202
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 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
$0.80 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 $196.00 and the new exercise price of $0.80. The
deemed dividend increased net loss attributable to common shareholders by $83,083 in the condensed consolidated statement of operations
for the nine months ended September 30, 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 5,
 2025 
  
    Exercise price 
    $0.80 to $196.00 
  
    Term (years) 
    3.0 
  
    Expected stock price volatility 
    109.17% 
  
    Risk-free rate of interest 
    4.19% 

The Company’s Series
C Common Warrants are exercisable into Common Stock and are recorded as equity.

24

December 2024 and January 2025 Common Warrants (Successor)

On December 23, 2024, the
Company issued warrants to purchase an aggregate of 4,203 shares of Common Stock to certain investors affiliated with each other to induce
investors to exercise their Series A Preferred Warrants for cash (the “December 2024 Common Warrants”). The December 2024
Common Warrants are exercisable for cash at an initial exercise price equal to