Company: CERO
Filing Date: 2025-11-19
Form Type: 10-Q
Source: 0001213900-25-112619
Chunk: 163

Company: CERO THERAPEUTICS HOLDINGS, INC.
Filing Date: 2025-11-19
Form: 10-Q
Item: Item 8
Chunk 163
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ited condensed consolidated statement of operations. During
the three and nine months ended September 30, 2025, the Company did not record a gain or loss from the change in fair value of the earnout
liability.

Fair value measurements
– The Company’s assets and liabilities are carried at fair value. Fair value is the amount that would be received to sell
an asset or paid to transfer a liability in an orderly transaction between market participants on the measurement date. In determining
fair value, the assumptions that market participants would use in pricing an asset or liability (the inputs) are based on a tiered fair
value hierarchy consisting of three levels, as follows:

    Level 1
    – 
    Observable inputs such as unadjusted, quoted prices in active markets for identical assets or liabilities at the measurement date.

    Level 2
    – 
    Inputs (other than quoted prices included in Level 1) that are either directly or indirectly observable for the asset or liability. These include quoted prices for similar assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are not active.

    Level 3
    – 
    Unobservable inputs for which there is little or no market data and which require the Company to develop its own assumptions about how market participants would price the asset or liability. Consideration is given to the risk inherent in the valuation technique and the risk inherent in the inputs to the model.

Carrying amounts of certain
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