Company: CERO
Filing Date: 2025-11-19
Form Type: 10-Q
Source: 0001213900-25-112619
Chunk: 20

Company: CERO THERAPEUTICS HOLDINGS, INC.
Filing Date: 2025-11-19
Form: 10-Q
Item: Item 1
Chunk 20
---

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.

8

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

    September 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 
     (4,870,000)
  
    Balance at September 30, 2024 
    $30,000 

    Earnout liability (Successor): 

    Balance at December 31, 2024 
    $20,000 
  
    Gain on revaluation of earnout liability