Company: CERO
Filing Date: 2025-08-22
Form Type: 10-Q
Source: 0001213900-25-079898
Chunk: 55

Company: CERO THERAPEUTICS HOLDINGS, INC.
Filing Date: 2025-08-22
Form: 10-Q
Item: Item 1
Chunk 55
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 obligations under the Series C Common Warrants under a written agreement before the transaction is completed. Upon specified corporate
events, a holder of Series C Common Warrants will thereafter have the right to receive upon an exercise such shares, securities, cash,
assets or any other property whatsoever which the holder would have been entitled to receive upon the happening of the applicable corporate
event had the Series C Common Warrants been exercised immediately prior to the applicable corporate event. When there is a transaction
involving specified changes of control, a holder of Series C Common Warrants can request the Company to exchange the then unexercised
portion of their Series C Common Warrants for 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 six months ended June 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