Company: CERO
Filing Date: 2025-08-22
Form Type: 10-Q
Source: 0001213900-25-079898
Chunk: 146

Company: CERO THERAPEUTICS HOLDINGS, INC.
Filing Date: 2025-08-22
Form: 10-Q
Item: Item 8
Chunk 146
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 would price the asset or liability. Consideration is given to the risk inherent in the valuation technique and the risk
    inherent in the inputs to the model.

Carrying
amounts of certain of the Company’s financial instruments, including cash, restricted cash, and cash equivalents, prepaid
expenses and other current assets, accounts payable, and accrued liabilities approximate fair value due to their relatively short
maturities.

Non-financial
assets such as property and equipment and operating lease right-of-use assets are evaluated for impairment and adjusted to fair value
using Level 3 inputs only when impairment is recognized. Fair values are considered Level 3 when management makes significant
assumptions in developing a discounted cash flow model based upon a number of considerations including projections of revenues, earnings,
and a discount rate. To date, the Company has not recorded any adjustments to fair value related to impairment on property and equipment
or operating lease right-of-use assets.

On June 30, 2025 and December 31,
2024, the fair value of the Company’s earnout liability (see Note 10 for details) was classified as follows: 

    June
    30, 2025 

    Level
    1  
    Level
    2  
    Level
    3  
    Total 
  
    Earnout liability 
    $        -  
    $           -  
    $20,000  
    $20,000 

    December
    31, 2024 

    Level
    1  
    Level
    2  
    Level
    3  
    Total 
  
    Earnout liability 
    $          -  
    $          -  
    $20,000  
    $20,000 

The
change in the fair value measurement using significant inputs (Level 3) is summarized below:

    Preferred stock warrant liability (Predecessor): 

    Balance at December 31, 2023 
    $320,117 
  
    Gain
    on revaluation of warrant liability 
     (320,117)
  
    Balance at February 14, 2024 
    $- 

    Earnout liability (Successor): 

    Balance at February 14, 2024 
    $4,900,000 
  
    Gain
    on revaluation of earnout liability 
     (4,