Company: CERO
Filing Date: 2025-05-15
Form Type: 10-Q
Source: 0001213900-25-044335
Chunk: 118

Company: CERO THERAPEUTICS HOLDINGS, INC.
Filing Date: 2025-05-15
Form: 10-Q
Item: Item 2
Chunk 118
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2 million and a gain on revaluation of earnout liability and the
preferred stock warrant liability of $2.1 million, and changes in operating asset and liabilities primarily consisting of an increase
in prepaid expenses and other current assets of $0.5 million, a decrease in accounts payable of $0.3 million, an increase in accrued liabilities
of $0.1 million, and a decrease in operating lease liabilities of $0.2 million.

37

Net cash provided by financing activities

Net cash provided by financing activities
for the three months ended March 31, 2025 amounted to $6.3 million as compared to $7.2 million for the three months ended March 31, 2024.

During the three months ended
March 31, 2025, net cash provided by financing activities of $6.3 million was primarily attributable to the receipt of net proceeds of
$0.5 million from the exercise of Series A Preferred Warrants, net proceeds of $1.2 million from the sale of common stock under the ELOC,
proceeds of $0.7 million from the collection of stock subscriptions receivable from previous sales of common stock under the ELOC, and
net proceeds from sale of common stock and pre-funded warrants of $4.3 million. Offset by the cash redemption of Series C Preferred Stock
of $0.4 million.

During the three months ended
March 31, 2024, net cash provided by financing activities of $7.2 million was primarily attributable to the receipt of net proceeds of
$6.8 million from the sale of Series A Preferred Stock and $0.4 million from short-term borrowings.

Critical Accounting Estimates

Earnout liability
- As a result of the Merger in February 2024, the Company recognized an earnout liability of $4.9 million on the merger date. The
earnout liability is measured using unobservable (Level 3) inputs and was included in current liabilities on balance sheet. The Company
estimated the fair value of the earnout liability by applying a Monte-Carlo simulation method using the Company’s projection of
future operating results and the estimated probability of achievement of the earnout target metrics.  The Monte-Carlo simulation
is a generally accepted statistical technique used to generate a defined number of valuation paths in order to develop a reasonable estimate
of the fair value of the earnout liability. The liability is remeasured to fair value using the Monte-Carlo simulation