Company: CERO
Filing Date: 2025-05-27
Form Type: POS AM
Source: 0001213900-25-047469
Chunk: 357

Company: CERO THERAPEUTICS HOLDINGS, INC.
Filing Date: 2025-05-27
Form: POS AM
Chunk 357
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 3 instrument in the fair value measurements hierarchy. The Company has not included the effect of the preferred
stock warrants in the calculation of diluted loss per share since the inclusion of such warrants would be anti-dilutive.

Earnout liability -As a result of the
Merger in February 2024, the Company recognized an earnout liability of $ million on the merger date. The earnout liability is measured
using unobservable (Level 3) inputs and is included in current liabilities on accompanying 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 method at each reporting
period, and the change in fair value is recognized in other income (expense) until the contingency is resolved. During the year ended
December 31, 2024, the Company recorded a gain from change of fair value of the earnout liability of $, which is included in
other income, net on the accompanying consolidated statement of operations.

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