Company: CERO
Filing Date: 2025-08-22
Form Type: 10-Q
Source: 0001213900-25-079898
Chunk: 34

Company: CERO THERAPEUTICS HOLDINGS, INC.
Filing Date: 2025-08-22
Form: 10-Q
Item: Item 1
Chunk 34
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 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 the Alternate Conversion Price described above, applicable
as of each date of conversion plus a 25% premium for penalties due. As a result of the 25% premium, during the six months ended June 30,
2025, the Company recorded the following: 1) for 473 shares of Series A Preferred Stock converted during the continuance of a Trigger
Event as described above, the Company recorded a deemed dividend of $118,250, which represents the fair value of excess common shares
convertible and issuable to the preferred shareholders upon occurrence of the trigger event based on an average per share common share
price of $95.00, the effect of which was an increase in the net loss attributable to common shareholders in the accompanying consolidated
statement of operations for the six months ended June 30