Company: CERO
Filing Date: 2025-08-22
Form Type: 10-Q
Source: 0001213900-25-079898
Chunk: 147

Company: CERO THERAPEUTICS HOLDINGS, INC.
Filing Date: 2025-08-22
Form: 10-Q
Item: Item 8
Chunk 147
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700,000)
  
    Balance at June 30, 2024 
    $200,000 

    Earnout liability (Successor): 

    Balance at December 31, 2024 
    $20,000 
  
    Gain on revaluation of earnout liability 
     - 
  
    Balance at June 30, 2025 
    $20,000 

9

Research
and development – R&D costs consist primarily of salaries and benefits, including stock-based compensation, occupancy,
materials and supplies, contracted research, consulting arrangements, and other expenses incurred in the pursuit of the Company’s
R&D programs. R&D costs are expensed as incurred.

Stock-based
compensation – The Company periodically issues common stock and stock options to officers, directors, and consultants for services
rendered. Stock-based compensation accounting requires the recognition of stock-based compensation expense, using a grant date fair value-based
method, for costs related to all share-based payments including stock options and restricted stock awards granted to employees and non-employees.
Companies are required to estimate the fair value of all share-based payment awards on the date of grant using an option pricing model,
and the Company uses a Black-Scholes option pricing model (“Black-Scholes”) to estimate option award fair value. The assumptions
used in calculating the fair value of stock-based awards represent management’s best estimates and involve inherent uncertainties
and the application of management’s judgment:

●The Common Stock expected dividend yield assumption of 0.0% is based on the expectation of no dividend payouts to Common Stock.

●The
                                            risk-free interest rate assumption is based on the U.S. Department of Treasury instruments
                                            whose term was most consistent with the expected life of the Company’s stock options.

●The
                                            expected stock price volatility assumption was determined by examining the historical volatilities
                                            for industry peers, as the Company does not have sufficient public trading history for the
                                            Company’s Common Stock. The Company will continue to analyze the historical stock price
                                            volatility and expected term assumption as more historical price data for the Company’s
                                            Common Stock becomes available.

●The
                                            expected lives of the Company’s stock options are estimated based on the type of award
                                            issued using approaches that do not rely on the historical data of the Company, as management
                                            has concluded there is insufficient data to provide a reasonable forward-looking estimate.
                                            The expected life of an incentive stock option is estimated using the simplified method described