Company: CERO
Filing Date: 2025-08-22
Form Type: 10-Q
Source: 0001213900-25-079898
Chunk: 162

Company: CERO THERAPEUTICS HOLDINGS, INC.
Filing Date: 2025-08-22
Form: 10-Q
Item: Item 8
Chunk 162
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,500 shares of Series A Preferred Stock (the “Preferred Warrants”) (See Note 9 below), pursuant to the Amended and Restated
Securities Purchase Agreement, dated February 14, 2024, by and among the Company, PBAX and certain accredited investors for aggregate
cash proceeds to the Company of approximately $10.0 million, including cash previously received for convertible bridge note proceeds.

A
portion of such Series A Preferred Stock was issued as consideration for the cancellation of outstanding indebtedness, including a promissory
note of PBAX amounting to $1,555,000 and the Predecessor’s convertible bridge notes amounting to $627,154.

The Company accounts for preferred stock as either equity or debt-like
securities based on an assessment of the Preferred Stock rights and preferences and applicable authoritative guidance in ASC 480 and ASC
815, Derivatives and Hedging. The Company has concluded that  Series A, Series B Preferred Stock, Series C Preferred Stock, and Series
D Preferred Stock, which have no cash redemption features outside of the Company’s control, are treated as equity. The Company has
also concluded that the Series A Common Warrants and Series C Common Warrants do not possess redemption features outside of the Company’s
control and are treated as equity.

Due to delayed filing and declaration of effectiveness relative to
the deadlines defined in the Registration Rights Agreement, as of June 30, 2024, the Company accrued a registration rights penalty amounting
to $645,693, which was payable in cash to the holders of Series A Preferred Stock. On March 27, 2025, the Company entered into a
Waiver of Registration Rights Penalties whereby the Investor agreed to waive all Series A registration rights penalty amounting to $645,693
in exchange for the Company’s forgiveness of a $600,000 shortfall in the exercise price of the Series A Preferred Warrants that
was unpaid. In December 2024, the Investor exercised its Series A Preferred Warrants to purchase shares of Series A Preferred stock of
the Company for which such investor remitted a partial exercise price amount of $100,000 instead of the exercise price of $700,000.

16

During the six months ended
June 30, 2025, 1,090 shares of Series A Preferred Stock were converted into 14,447 shares of Common Stock. The conversion ratio was based
on the Series A Certificate of Designations and reflected the application of