Company: CERO
Filing Date: 2025-08-22
Form Type: 10-Q
Source: 0001213900-25-079898
Chunk: 148

Company: CERO THERAPEUTICS HOLDINGS, INC.
Filing Date: 2025-08-22
Form: 10-Q
Item: Item 8
Chunk 148
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 in Staff Accounting Bulletin Topic 14 – Share-Based Payment. All incentive stock options
                                            awarded by the Company have terms consistent with this approach, which is to calculate the
                                            weighted average midpoint between the vesting date of each vesting tranche and the termination
                                            date of the option. Non-qualified stock options are valued using the contractual life as
                                            the expected term.

The
fair value of restricted stock awards is based upon the estimated share price of the common shares on the date of grant.

Forfeitures
are accounted for as they occur. All options and restricted stock awards granted since inception are expensed on a straight-line basis
over the requisite service period, which is usually the vesting period, or upon the completion of certain performance-based vesting terms.
The related amounts are recognized in the consolidated statements of operations.

Income
taxes – The Company accounts for income taxes under the liability method. Under this method, deferred tax assets and liabilities
are determined based on the difference between the financial statement and tax bases of assets and liabilities using enacted tax rates
in effect for the year in which the differences are expected to affect taxable income. Valuation allowances are established when necessary
to reduce deferred tax assets to the amounts expected to be realized.

The
Company follows tax accounting requirements for the recognition, measurement, presentation, and disclosure in the financial statements
of any uncertain tax positions that have been taken or expected to be taken on a tax return. No liability related to uncertain tax positions
is recorded in the financial statements. It is the Company’s policy to include penalties and interest expense related to income
taxes as a component of income tax expense, as necessary. The Company has not recorded any interest or penalties associated with income
tax. Tax years subsequent to 2021 are subject to examination by federal and state authorities.

Earnings
per share – The Company reports both basic and diluted earnings per share. Basic earnings per share is calculated based on
the weighted average number of shares of common stock outstanding and excludes the dilutive effect of convertible preferred stock, warrants
for convertible preferred stock or common stock, stock options or any other type of convertible securities. Diluted earnings per share
is calculated based on the weighted average number of shares of common stock outstanding and when the effect of stock options, warrants
and other types of convertible securities is dilutive, they are included in the calculation. Dilutive securities are excluded from the
diluted earnings per share calculation if their effect is anti-dilutive, such as