Company: CERO
Filing Date: 2025-05-15
Form Type: 10-Q
Source: 0001213900-25-044335
Chunk: 110

Company: CERO THERAPEUTICS HOLDINGS, INC.
Filing Date: 2025-05-15
Form: 10-Q
Item: Item 2
Chunk 110
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, the Company may generate revenue from R&D services, from the achievement of development milestones
or from milestones and royalties related to product sales. However, there can be no assurance as to when any revenues will be generated,
if at all.

32

Operating Expenses

Research and Development Expenses

R&D expenses consist
of discovery activities, manufacturing development and production, preclinical and clinical development, and regulatory filing for product
candidates. R&D expenses are recognized as incurred and payments made prior to the receipt of goods or services to be used in R&D
are capitalized until the goods or services are received. Costs incurred in obtaining technology licenses through asset acquisitions,
if incurred, will be charged to R&D expense if the licensed technology has not reached technological feasibility and has no alternative
future use. R&D expenses include or could include:

●employee-related
expenses, including salaries, bonuses, benefits, stock-based compensation and other related costs for those employees involved in R&D
efforts;

●external
R&D expenses incurred under agreements with preclinical research organizations, clinical research organizations, investigative sites,
centralized clinical laboratories, and consultants to conduct preclinical and clinical studies;

●costs
related to manufacturing material for preclinical studies and clinical trials, including fees paid to contract development and manufacturing
organizations;

●product-liability
insurance for clinical development product(s);

●laboratory
supplies and research materials;

●software
and systems related to R&D activities;

●costs
related to regulatory filing and compliance; and

●facilities,
depreciation and other allocated expenses, which include direct and allocated expenses for rent, maintenance of facilities, and equipment.

Product candidates in later
stages of development generally have higher development costs than those in earlier stages of clinical development, primarily due to the
increased size and duration of later-stage clinical trials. The Company plans to substantially increase its R&D expenses for the foreseeable
future as it continues the development of its product candidates through clinical development. The Company cannot determine with certainty
the timing of initiation, the duration or the costs of current or future preclinical studies and clinical trials required for regulatory
approval due to the inherently unpredictable nature of preclinical and clinical development. Clinical and preclinical development timelines,
the probability of success and development costs can differ materially from expectations. The Company anticipates that it will make determinations
as to which product candidates to pursue and how much funding to direct to each product candidate on an ongoing basis in response to the
results of ongoing and future preclinical