CERO THERAPEUTICS HOLDINGS, INC.

Previous wording

In addition, the holders of Predecessor common stock and Predecessor preferred stock have the contingent right to receive the Earnout Shares. At the Closing, the Company issued three pools of shares of Common Stock subject to forfeiture if the applicable conditions to transferability thereof are not satisfied: (i) 12,000 shares of Common Stock (giving retroactive effect to the Reverse Stock Split), which will be fully vested upon the achievement of certain adjusted stock price-based earnout targets or upon a qualifying transaction (ii) 8,750 shares of Common Stock (giving retroactive effect to the Reverse Stock Split), pursuant to a Letter Agreement, dated as of February 14, 2024 which were fully vested at Closing of the Merger and which were issued as an offset to the Sponsor Share Forfeiture Agreement, and (iii) 10,000 shares of Common Stock (giving retroactive effect to the Reverse Stock Split), which were fully vested upon the June 28, 2024 achievement of certain regulatory milestone-based earnout targets.

Current wording

In addition, the holders of Predecessor common stock and Predecessor preferred stock have the contingent right to receive the Earnout Shares. At the Closing, the Company issued three pools of shares of Common Stock subject to forfeiture if the applicable conditions to transferability thereof are not satisfied: (i) 600 shares of Common Stock (giving retroactive effect to the Reverse Stock Splits), which will be fully vested upon the achievement of certain adjusted stock price-based earnout targets or upon a qualifying transaction (ii) 438 shares of Common Stock (giving retroactive effect to the Reverse Stock Splits), pursuant to a Letter Agreement, dated as of February 14, 2024 which were fully vested at Closing of the Merger and which were issued as an offset to the Sponsor Share Forfeiture Agreement, and (iii) 500 shares of Common Stock (giving retroactive effect to the Reverse Stock Splits), which were fully vested upon the June 28, 2024 achievement of certain regulatory milestone-based earnout targets.

Previous wording

As consideration for the Merger, the Company issued to Predecessor stockholders an aggregate of 84,483 shares of Common Stock, including 22,000 Earnout Shares and 3,733 shares issuable upon exercise of rollover options or warrants (giving retroactive effect to the Reverse Stock Split).

Current wording

As consideration for the Merger, the Company issued to Predecessor stockholders an aggregate of 4,038 shares of Common Stock, including 1,100 Earnout Shares and 187 shares issuable upon exercise of rollover options or warrants (giving retroactive effect to the Reverse Stock Splits).

Previous wording

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business. The Company’s ability to continue as a going concern is dependent on its ability to raise additional capital to fund its R&D activities and meet its obligations on a timely basis. As of June 30, 2025, the Company reported approximately $3.2 million of cash and cash equivalents, with an accumulated deficit of approximately $81.4 million.

Current wording

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business. The Company’s ability to continue as a going concern is dependent on its ability to raise additional capital to fund its R&D activities and meet its obligations on a timely basis. As of September 30, 2025, the Company reported approximately $1.9 million of cash and cash equivalents, with an accumulated deficit of approximately $86.3 million.

Previous wording

On February 5, 2025, we entered into a securities purchase agreement, with participation from a member of the Board and a single institutional investor, for the purchase and sale of (i) 127,551 shares of Common Stock or Common Stock equivalents in lieu thereof; and (ii) February 2025 Common Warrants to purchase up to 127,551 shares of Common Stock at an exercise price of $39.20. In connection with such offering, we received net proceeds of approximately $4.2 million. Additionally, during the six months ended June 30, 2025, we received net proceeds from the exercise of the remaining Series A Preferred Warrants, the collection of subscriptions receivable and equity line of credit fundings of approximately $2.4 million.

Current wording

On February 5, 2025, we entered into a securities purchase agreement, with participation from a member of the Board and a single institutional investor, for the purchase and sale of (i) 127,551 shares of Common Stock or Common Stock equivalents in lieu thereof; and (ii) February 2025 Common Warrants to purchase up to 127,551 shares of Common Stock at an exercise price of $39.20. In connection with such offering, we received net proceeds of approximately $4.2 million. Additionally, during the nine months ended September 30, 2025, we received net proceeds from the exercise of the remaining Series A Preferred Warrants, the collection of subscriptions receivable and equity line of credit fundings of approximately $4.2 million.

Previous wording

On April 22, 2025, the Company issued 6,250 shares of its Series D preferred stock to investors in exchange for 1,000,279 shares of Series D preferred stock of Stella Diagnostics. The transaction was completed in lieu of a cash payment. The value of Stella’s Series D Preferred Stock received was determined to be $500,000 as of the transaction date, based on the subsequent sale of the 1,000,279 Stella Series D Preferred Stock for $500,000 in cash, pursuant to a Stock Purchase Agreements dated August 20, 2025. Accordingly, the Company recognized the issuance of its Series D preferred stock to investors at a cost of $500,000, which represents the fair value of the consideration received. The difference between the stated value of the Company Series D Preferred Stock ($5.0 million) and the fair value of the consideration received ($500,000) was recorded as a decrease to additional paid-in capital, which amounted to $4.5 million. The investment in Stella’s Series D Preferred Stock is classified as an equity security without a readily determinable fair value and is accounted for under the measurement alternative in accordance with ASC 321,Investments – Equity Securities. Under this method, the investment is initially recorded at cost, which was determined to be equal to the fair value of the consideration received, and is subsequently adjusted for observable price changes in orderly transactions for the same or similar securities and for impairment, if any. There was no impairment identified on the investment in equity securities during the period ended June 30, 2025.This non-cash transaction did not impact the Company’s cash flows and is disclosed as a non-cash investing and financing activity in the condensed consolidated statement of cash flows in accordance with ASC 230,Statement of Cash Flows. As of June 30, 2025, the value of Stella’s Series D Preferred Stock received was determined to be $500,000, based on the subsequent sale of the 1,000,279 Stella Series D Preferred Stock for $500,000 in cash, pursuant to a Stock Purchase Agreements dated August 20, 2025.

Current wording

On April 22, 2025, the Company issued 6,250 shares of its Series D preferred stock to investors in exchange for 1,000,279 shares of Series D preferred stock of Stella Diagnostics. The transaction was completed in lieu of a cash payment. The value of Stella’s Series D Preferred Stock received was determined to be $500,000 as of the transaction date, based on the subsequent sale of the 1,000,279 Stella Series D Preferred Stock for $500,000 in cash, pursuant to a Stock Purchase Agreements dated August 20, 2025. Accordingly, the Company recognized the issuance of its Series D preferred stock to investors at a cost of $500,000, which represents the fair value of the consideration received. The difference between the stated value of the Company Series D Preferred Stock ($5.0 million) and the fair value of the consideration received ($500,000) was recorded as a decrease to additional paid-in capital, which amounted to $4.5 million. The investment in Stella’s Series D Preferred Stock is classified as an equity security without a readily determinable fair value and is accounted for under the measurement alternative in accordance with ASC 321,Investments – Equity Securities. Under this method, the investment is initially recorded at cost, which was determined to be equal to the fair value of the consideration received, and is subsequently adjusted for observable price changes in orderly transactions for the same or similar securities and for impairment, if any. There was no impairment identified on the investment in equity securities during the period ended September 30, 2025. This non-cash transaction did not impact the Company’s cash flows and is disclosed as a non-cash investing and financing activity in the condensed consolidated statement of cash flows in accordance with ASC 230,Statement of Cash Flows. As of September 30, 2025, the value of Stella’s Series D Preferred Stock received was determined to be $500,000, based on the subsequent sale of the 1,000,279 Stella Series D Preferred Stock for $500,000 in cash, pursuant to Stock Purchase Agreements dated August 20, 2025.

Previous wording

On June 25, 2025, the Company entered into an amendment to the Fourth Securities Purchase Agreement pursuant to which the Company added certain new institutional investors to the schedule of buyers in the Fourth Securities Purchase Agreement, to issue and sell to such investors, in one or more closings shares of the Company’s Series D Preferred Stock. Also, on June 25, 2025, the Company sold an additional 2,315 shares of Series D Preferred Stock for gross cash proceeds of $1,852,000 in an additional closing of the Fourth PIPE Financing. On July 18, 2025, the Company sold an additional 497 shares of Series D Preferred Stock for gross cash proceeds of $432,600 in an additional closing of the Fourth PIPE Financing.

Current wording

On June 5, 2025, we sold an additional 938 shares of Series D Preferred Stock for gross cash proceeds of $750,400 in an additional closing of the Fourth PIPE Financing. On June 25, 2025, we entered into an amendment (the “Amendment”) to the Fourth Securities Purchase Agreement pursuant to which the Company added certain new institutional investors to the schedule of buyers in the Fourth Securities Purchase Agreement, to issue and sell to such investors, in one or more closings shares of the Company’s Series D Preferred Stock. Also, on June 25, 2025, we sold an additional 2,315 shares of Series D Preferred Stock for gross cash proceeds of $1,852,000 in an additional closing of the Fourth PIPE Financing. On July 18, 2025, the Company sold an additional 497 shares of Series D Preferred Stock for gross cash proceeds of $432,600 in an additional closing, and the Company received net proceeds of $320,801.

Previous wording

Each additional closing of the Private Placement is at the option of the investors upon notice to the Company and subject to satisfaction of customary closing conditions. Additional funds are necessary to maintain current operations and to continue R&D activities. However, there can be no assurance that sufficient funding will be available to allow the Company to successfully continue its R&D activities and planned regulatory filings with the FDA. If the Company is unable to obtain the necessary funds, significant reductions in spending and the delay or cancellation of planned activities may be necessary. These actions would have a material adverse effect on the Company’s business, results of operations, and prospects. These conditions raise substantial doubt about the Company’s ability to continue as a going concern within one year from the date these accompanying financial statements are issued. The accompanying financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might result from the outcome of this uncertainty.

Current wording

Each additional closing of the PIPE Financings is at the option of the investors upon notice to the Company and subject to satisfaction of customary closing conditions. Additional funds are necessary to maintain current operations and to continue R&D activities. However, there can be no assurance that sufficient funding will be available to allow the Company to successfully continue its R&D activities and planned regulatory filings with the FDA. If the Company is unable to obtain the necessary funds, significant reductions in spending and the delay or cancellation of planned activities may be necessary. These actions would have a material adverse effect on the Company’s business, results of operations, and prospects. These conditions raise substantial doubt about the Company’s ability to continue as a going concern within one year from the date these accompanying financial statements are issued. The accompanying financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might result from the outcome of this uncertainty.

Previous wording

As discussed above, on April 21, 2025, the Company entered into the Fourth Securities Purchase Agreement, pursuant to which the Company agreed to issue and sell up to 10,000 shares of Series D Preferred Stock for an aggregate purchase price of up to $8 million in one or more closings. On April 22, 2025, the Company consummated a private placement of 6,250 shares of Series D Preferred Stock pursuant to the Fourth Securities Purchase Agreement, by and among the Company and certain investors in exchange for the receipt of 1,000,279 shares of the Stella Series D Preferred in lieu of cash, which is included in investment in equity securities on the accompanying unaudited condensed balance sheet as of June 30, 2025. The fair value of Stella’s Series D Preferred Stock received was determined to be $500,000 as of the transaction date, based on the subsequent sale of the 1,000,279 Stella Series D Preferred Stock for $500,000 in cash, pursuant to a Stock Purchase Agreement dated August 20, 2025. On August 20, 2025, the Company and certain investors entered into a Stock Purchase Agreement, pursuant to which the Company sold 1,000,279 Stella Series D Preferred Stock for cash proceeds of $500,000. In accordance with ASC 855-10,Subsequent Events, the Company evaluated this event under ASC 855-10-25-1 and determined that it represents a Type I subsequent event (recognized subsequent event) because the sale provided additional evidence about conditions that existed at the balance sheet date. Accordingly, the Company determined that the fair value of the equity securities on the date of the Fourth Securities Purchase Agreement of April 21, 2025 and June 30, 2025 was equal to $500,000.

Current wording

As discussed above, on April 21, 2025, the Company entered into the Fourth Securities Purchase Agreement, pursuant to which the Company agreed to issue and sell up to 10,000 shares of Series D Preferred Stock for an aggregate purchase price of up to $8 million in one or more closings which were completed between April 22, 2025 through July 18, 2025.

Previous wording

In July 2025, CER-1236 received an FDA Orphan Drug Designation for the treatment of acute myeloid leukemia.

Current wording

In July 2025, CER-1236 received an FDA Orphan Drug Designation for the treatment of acute myeloid leukemia. In September 2025, the FDA granted Fast Track Designation to our lead investigational compound, CER-1236 for acute myeloid leukemia, which is in addition to the existing Orphan Drug Designation for the same compound. The FDA’s Fast Track Designation is designed to accelerate the development and review of therapies for serious or life-threatening conditions with unmet medical need. The designation provides us with the opportunity for increased FDA interactions, potential eligibility for priority review, and the ability to submit data on a rolling basis. Further, it also requires us to potentially provide expanded access to the investigational drug on an as approved basis under pre-specified conditions.

Previous wording

In addition, as previously disclosed, from November 2024 through June 30, 2025, the Company raised approximately $3.1 million of net proceeds from its equity line of credit entered into November 2024, and an additional approximately $4.3 million of net proceeds from its public offering of shares of common stock, pre-funded warrants and warrants to purchase shares of common stock that closed on February 7, 2025 (the “February 2025 Offering”). As a result of such capital raising activities and the proceeds of the Private Placement received on the First Closing Date, as well as successful negotiations with certain service providers to reduce outstanding balances payable, the Company received a notification letter from Nasdaq on May 7, 2025, stating that the Company had regained compliance with the Nasdaq continued listing standard under Nasdaq Listing Rule 5550(b)(1), which requires, among other things, that the Company maintain at least $2.5 million in stockholders’ equity.

Current wording

In addition, as previously disclosed, from November 2024 through September 30, 2025, the Company raised approximately $4.4 million of net proceeds from its equity line of credit entered into November 2024, and an additional approximately $4.2 million of net proceeds from its public offering of shares of common stock, pre-funded warrants and warrants to purchase shares of common stock that closed on February 7, 2025 (the “February 2025 Offering”). As a result of such capital raising activities and the proceeds of the Private Placement received on the First Closing Date, as well as successful negotiations with certain service providers to reduce outstanding balances payable, the Company received a notification letter from Nasdaq on May 7, 2025, stating that the Company had regained compliance with the Nasdaq continued listing standard under Nasdaq Listing Rule 5550(b)(1), which requires, among other things, that the Company maintain at least $2.5 million in stockholders’ equity.

Previous wording

The Company anticipates that its general and administrative expenses will increase in the future as the Company increases headcount and contracted services for operational support for expanded operations and infrastructure. The Company also anticipates that general and administrative expenses will increase as a result of expenses for accounting, audit, legal and consulting services, as well as costs associated with maintaining compliance with Nasdaq listing rules and SEC requirements, director and officer liability insurance, investor and public relations activities and other expenses associated with operating as a public company.

Current wording

The Company anticipates that its general and administrative expenses will increase in the future as the Company increases headcount and contracted services for operational support for expanded operations and infrastructure. The Company also anticipates that general and administrative expenses will increase as a result of expenses for accounting, audit, legal and consulting services, as well as costs associated with maintaining compliance with SEC requirements, director and officer liability insurance, investor and public relations activities and other expenses associated with operating as a public company.

Previous wording

Research and development expenses were $2,754,000 for the three months ended June 30, 2025 as compared to $2,714,000 for the three months ended June 30, 2024, reflecting an increase of $40,000. The increase was primarily attributable to an increase in clinical expenses of approximately $1,056,000 and an increase in scientific consulting fees of $93,000, offset by a decrease in salaries and benefits of $893,000 primarily due to a decrease in stock-based compensation of $728,000 attributable to a decrease in accretion of stock option expense, and a decrease in lab and other expenses of $216,000. During the first quarter of 2025, we began clinical trials related to the IND for CER-1236.

Current wording

Research and development expenses were $2,386,000 for the three months ended September 30, 2025 as compared to $1,774,000 for the three months ended September 30, 2024, reflecting an increase of $612,000. The increase was primarily attributable to an increase in clinical expenses of approximately $202,000, an increase in scientific consulting fees of $210,000, and an increase in drug manufacturing costs of $278,000, offset by a decrease in lab and other expenses of $19,000, a decrease in depreciation expense of $43,000 and a decrease in other research and development expenses of $16,000. During the first quarter of 2025, we began clinical trials related to the IND for CER-1236.

Previous wording

General and administrative expenses were $1,970,000 for the three months ended June 30, 2025 as compared to $2,434,000 for the three months ended June 30, 2024, reflecting a decrease of approximately $464,000. The decrease during the three months ended June 30, 2025 as compared to the three months ended June 30, 2024, was primarily due to a decrease in salaries and benefits of $505,000 primarily due to a decrease in stock-based compensation of $478,000 attributable to a decrease in accretion of stock option expense. This decrease was offset by an increase in other general and administrative expenses of $41,000.

Current wording

General and administrative expenses were $1,976,000 for the three months ended September 30, 2025 as compared to $2,628,000 for the three months ended September 30, 2024, reflecting a decrease of approximately $652,000. The decrease during the three months ended September 30, 2025 as compared to the three months ended September 30, 2024, was primarily due to a decrease in professional fees of $869,000 related to a decrease in legal fees of $561,000 and a decrease in consulting fees of $464,000, offset by an increase in accounting fees of $149,000 and an increase in director fees of $7,000. Additionally, during the three months ended September 30, 2025 as compared to the three months ended September 30, 2024, salaries and benefits increased by $50,000, and other general and administrative expenses increased by $167,000 primarily attributable to an increase in transfer agent and filing fees.

Previous wording

Other expense was $693,000 for the three months ended June 30, 2025 as compared to other income of $2,700,000 for the three months ended June 30, 2024, reflecting a negative change of $3,393,000. The negative change was primarily due to (1) the recording of a $2.9 million gain from change in value of the Company’s earnout liability during the three months ended June 30, 2024 as compared to $0 during the three months ended June 30, 2025, (2) the recording of a gain on settlement of vendor liabilities of $447,000 during the three months ended June 30, 2024 as compared to $0 during the three months ended June 30, 2025, and (3) the recording of stock-based inducement expense of $707,300 during the three months ended June 30, 2025 related to the conversion of Series C Preferred Stock as compared to $0 during the three months ended June 30, 2024. These negative changes in other expenses, net were offset by the recording of other expense of $631,000 during the three months ended June 30, 2024 related to registration rights penalties recorded compared to $0 during the three months ended June 30, 2025, and an increase in interest income, net of $30,000.

Current wording

Other expenses was $(494,000) for the three months ended September 30, 2025 as compared to other income of $174,000 for the three months ended September 30, 2024, reflecting a negative change of $668,000. The negative change was primarily due to the recording of a $170,000 gain from change in value of the Company’s earnout liability during the three months ended September 30, 2024 as compared to $0 during the three months ended September 30, 2025 and the recording of a $500,000 write off of deferred offering costs during the three months ended September 30, 2025 as compared to $0 during the three months ended September 30, 2024.

Previous wording

For the three months ended June 30, 2025 and 2024, net loss amounted to $5,417,000 and $2,449,000, respectively, which represents an increase in net loss of $2,968,000, or 121.2%. During the three months ended June 30, 2025, in connection with our Series A, Series B and Series C preferred stock conversions, we recorded deemed dividends of $24,700,000. Accordingly, for the three months ended June 30, 2025 and 2024, net loss attributable to common stockholders amounted to $30,117,000, or $(61.71) per common share, and $2,449,000, or $(302.32) per common share, respectively.

Current wording

For the three months ended September 30, 2025 and 2024, net loss amounted to $4,856,000 and $4,228,000, respectively, which represents an increase in net loss of $628,000, or 14.9%. During the three months ended September 30, 2025, in connection with our Series D Preferred Stock down round triggering event, we recorded deemed dividends of $6,650,000. Accordingly, for the three months ended September 30, 2025 and 2024, net loss attributable to common stockholders amounted to $11,506,000, or $(9.10) per common share, and $4,228,000, or $(170.22) per common share, respectively.

Previous wording

The results of operations for the six months ended June 30, 2024 arepro forma as the period presented in the following table and discussion includes the Predecessor for the period from January 1, 2024 through February 13, 2024 and the Company for the period from February 14, 2024 through June 30, 2024. This pro forma period from January 1, 2024 to June 30, 2024 does not include the Merger transactions that occurred on-the-line.

Current wording

The results of operations for the nine months ended September 30, 2024 arepro forma as the period presented in the following table and discussion includes the Predecessor for the period from January 1, 2024 through February 13, 2024 and the Company for the period from February 14, 2024 through September 30, 2024. This pro forma period from January 1, 2024 to September 30, 2024 does not include the Merger transactions that occurred on-the-line.

Previous wording

Research and development expenses were $5,662,000 for the six months ended June 30, 2025 as compared to $4,383,000 for the six months ended June 30, 2024, reflecting an increase of $1,279,000. The increase was primarily attributable to an increase in clinical expenses of $2,362,000, and an increase in scientific consulting fees of $496,000. In the first quarter of 2025, we began clinical trials related to the IND for CER-1236. This increase was primarily offset by a decrease in lab expenses of $461,000 primarily attributable to a decrease in toxicology studies performed in the 2025 period as compared to the 2024 period, a decrease in research and development salaries and benefits of approximately $989,000 which included a decrease in stock-based compensation expense of $723,000 primarily attributable to a decrease in accretion in stock-based option expense and a decrease in bonuses paid of $132,000, and a decrease in other research and development costs of $129,000.

Current wording

Research and development expenses were $8,048,000 for the nine months ended September 30, 2025 as compared to $6,157,000 for the nine months ended September 30, 2024, reflecting an increase of $1,891,000. The increase was primarily attributable to an increase in clinical expenses of $2,564,000, an increase in scientific consulting fees of $706,000 and an increase in drug manufacturing costs of $276,000. In the first quarter of 2025, we began clinical trials related to the IND for CER-1236. This increase was primarily offset by a decrease in lab expenses of $481,000 primarily attributable to a decrease in toxicology studies performed in the 2025 period as compared to the 2024 period, a decrease in research and development salaries and benefits of approximately $973,000 which included a decrease in stock-based compensation expense of $775,000 primarily attributable to a decrease in accretion in stock-based option expense and a decrease in other development salaries and benefits of $198,000, a decrease in depreciation expense of $120,000 and a decrease in other research and development costs of $81,000.

Previous wording

General and administrative expenses were $4,013,000 for the six months ended June 30, 2025 as compared to $5,318,000 for the six months ended June 30, 2024, reflecting a decrease of $1,305,000. The decrease during the six months ended June 30, 2025 as compared to the six months ended June 30, 2024, was primarily due to a decrease of $1,750,000 in underwriting fees from the PBAX initial public offering, which were incurred upon the consummation of the business combination in February 2024, and a decrease in executive salaries and benefits of $68,000. This decrease was offset by an increase in professional fees of $516,000 primarily due to an increase in auditing, accounting and legal fees which were offset by a decrease in recruiting fees. The additional professional fees were all driven by the increased expenses of operational compliance as a public company.

Current wording

General and administrative expenses were $5,989,000 for the nine months ended September 30, 2025 as compared to $7,946,000 for the nine months ended September 30, 2024, reflecting a decrease of $1,957,000. The decrease during the nine months ended September 30, 2025 as compared to the nine months ended September 30, 2024, was primarily due to a decrease of $1,750,000 in underwriting fees from the PBAX initial public offering, which were incurred upon the consummation of the business combination in February 2024, a decrease in professional fees of $343,000 attributable to a decrease in legal fees of $377,000 and consulting fees of $415,000, offset by an increase in accounting fees of $399,000, and an increase in director fees of $50,000. Additionally, during the nine months ended September 30, 2025 as compared to the nine months ended September 30, 2024, we had a decrease in outside services of $299,000 primarily due to a decrease in recruitment fees, an increase in other general and administrative expenses of $332,000 primarily attributable to transfer agent and proxy fees, and an increase in public communications of $103,000.

Previous wording

Other expense was $(849,000) for the six months ended June 30, 2025 as compared to other income of $4,952,000 for the six months ended June 30, 2024, reflecting a negative change in other income, net of $5,801,000. The negative change was primarily due to (1) the recording of a $4,700,000 gain from change in value of the Company’s earnout liability and a $320,000 gain recorded for the change in value of the Predecessor’s preferred stock warrant liability during the six months ended June 30, 2024 as compared to $0 during the six months ended June 30, 2025, (2) the recording of a gain on settlement of vendor liabilities of $589,000 during the six months ended June 30, 2024 compared to $0 during the six months ended June 30, 2025, and (3) the recording of stock-based inducement expense of $864,000 during the six months ended June 30, 2025 as compared to $0 during the six months ended June 30, 2024. These decreases in other income, net were offset by the recording of other expense of $631,000 during the six months ended June 30, 2024 related to registration rights penalties recorded compared to $0 during the six months ended June 30, 2025, and an increase in interest income, net of $41,000.

Current wording

Other expenses, net was $(1,343,000) for the nine months ended September 30, 2025 as compared to other income of $5,126,000 for the nine months ended September 30, 2024, reflecting a negative change in other income, net of $6,469,000. The negative change was primarily due to (1) the recording of a $4,870,000 gain from change in value of the Company’s earnout liability and a $320,000 gain recorded for the change in value of the Predecessor’s preferred stock warrant liability during the nine months ended September 30, 2024 as compared to $0 during the nine months ended September 30, 2025, (2) the recording of a gain on settlement of vendor liabilities of $589,000 during the nine months ended September 30, 2024 compared to $0 during the nine months ended September 30, 2025, (3) the recording of stock-based inducement expense of $864,000 during the nine months ended September 30, 2025 as compared to $0 during the nine months ended September 30, 2024, and (4) the recording of a $500,000 write off of deferred offering costs during the nine months ended September 30, 2025 as compared to $0 during the nine months ended September 30, 2024. These decreases in other income and increases in other expenses, net were offset by the recording of other expense of $631,000 during the nine months ended September 30, 2024 related to registration rights penalties recorded compared to $0 during the nine months ended September 30, 2025, and an increase in interest income, net of $43,000.

Previous wording

For the six months ended June 30, 2025 and 2024, net loss amounted to $10,523,000 and $4,748,000, respectively, which represents an increase in net loss of $5,775,000, or 121.6%. During the six months ended June 30, 2025, in connection with our Series A, Series B and Series C preferred stock conversions, and the redemption of Series C Preferred Stock, we recorded deemed dividends of $24,965,000, and in connection with the adjustment in the exercise price of Series C Common Warrants, we recorded deemed dividends of $84,000. Accordingly, for the six months ended June 30, 2025 and 2024, net loss attributable to common stockholders amounted to $35,572,000, or $(107.60) per common share, and $4,748,348, or $(604.19) per common share, respectively.

Current wording

For the nine months ended September 30, 2025 and 2024, net loss amounted to $15,380,000 and $8,976,000, respectively, which represents an increase in net loss of $6,403,000, or 71.3%. During the nine months ended September 30, 2025, in connection with our Series A, Series B and Series C preferred stock conversions and the redemption of Series C Preferred Stock, we recorded deemed dividends of $31,614,000, in connection with the triggering of a down round provision in connection with our Series D Preferred Stock, we recorded a deemed dividend of $6,650,000, and in connection with the adjustment in the exercise price of Series C Common Warrants, we recorded deemed dividends of $84,000. Accordingly, for the nine months ended September 30, 2025 and 2024, net loss attributable to common stockholders amounted to $47,078,000, or $(72.94) per common share, and $8,976,000, or approximately $(587.00) per common share, respectively.

Previous wording

The Company, therefore, anticipates that substantial additional funding will be needed in connection with its continuing operations. As of June 30, 2025, the Company had approximately $3.2 million in cash and cash equivalents. The Company intends to devote most of the available cash to the preclinical and clinical development of its product candidates and public company compliance costs. Based on current business plans, the Company believes that the cash available as of June 30, 2025 will not fund its operations and capital requirements for 12 months after the filing of these unaudited condensed financial statements for the period ended June 30, 2025. The Company has arranged two equity lines of credit, one providing for the sale of up to 25,000,000 newly issued shares of Common Stock and the other providing for the purchase of up to $17.5 million of Common Stock on the satisfaction of certain conditions. The Company has no guarantee that the conditions will be satisfied to require the purchase of all, or any additional amount, of the ELOC funds. On February 5, 2025, the Company entered into the SPA, with participation from a member of the Company’s Board and a single institutional investor, for the purchase and sale of (i) 127,551 shares of our common stock or common stock equivalents in lieu thereof; and (ii) February 2025 Common Warrants to purchase up to 127,551 shares of common stock, at a combined public offering price of $39.20 per share and warrant. In connection with this offering, the Company received net proceeds of approximately $4.2 million. Additionally, during the six months ended June 30, 2025, the Company received net proceeds from the exercise of the remaining Series A Preferred Warrants, the collection of subscriptions receivable and ELOC fundings of approximately $2.9 million. Furthermore, during the six months ended June 30, 2025, we received net proceeds from the sales of Series D Preferred Stock of $2.2 million. Any estimate as to how long the Company expects the net proceeds from the ELOC and Series D Preferred Stock funding may fund the Company’s operations is based on assumptions that may prove to be wrong, and the Company could use its available capital resources sooner than its current expectations. Changing circumstances, some of which may be beyond the Company’s control, could result in less cash and cash equivalents available to fund operations or cause the Company to consume capital significantly faster than currently anticipated, and the Company may need to seek additional funds from additional sources sooner than planned.

Current wording

The Company, therefore, anticipates that substantial additional funding will be needed in connection with its continuing operations. As of September 30, 2025, the Company had approximately $1.9 million in cash and cash equivalents. The Company intends to devote most of the available cash to the preclinical and clinical development of its product candidates and public company compliance costs. Based on current business plans, the Company believes that the cash available as of September 30, 2025 will not fund its operations and capital requirements for 12 months after the filing of these unaudited condensed financial statements for the period ended September 30, 2025. The Company has arranged two equity lines of credit, one providing for the sale of up to 25,000,000 newly issued shares of Common Stock and the other providing for the purchase of up to $17.5 million of Common Stock on the satisfaction of certain conditions. The Company has no guarantee that the conditions will be satisfied to require the purchase of all, or any additional amount, of the ELOC funds. On February 5, 2025, the Company entered into the SPA, with participation from a member of the Company’s Board and a single institutional investor, for the purchase and sale of (i) 127,551 shares of our common stock or common stock equivalents in lieu thereof; and (ii) February 2025 Common Warrants to purchase up to 127,551 shares of common stock, at a combined public offering price of $39.20 per share and warrant. In connection with this offering, the Company received net proceeds of approximately $4.2 million. Additionally, during the nine months ended September 30, 2025, the Company received net proceeds from the exercise of the remaining Series A Preferred Warrants, the collection of subscriptions receivable and ELOC fundings of approximately $4.2 million. Furthermore, during the nine months ended September 30, 2025, we received net proceeds from the sales of Series D Preferred Stock of $2.6 million.

Previous wording

Net cash used in operating activities for the six months ended June 30, 2025 primarily reflected a net loss of $10,523,000, adjusted for the reconciliation of non-cash items such as depreciation expense of $146,000, stock-based compensation of $488,000, stock-based inducement expense of $864,000, and amortization of right-of-use asset of $391,000, and changes in operating asset and liabilities primarily consisting of an increase in prepaid expenses and other current assets of $169,000, an increase in accounts payable of $562,000, a decrease in accrued liabilities of $404,000, and a decrease in operating lease liabilities of $423,000.

Current wording

Net cash used in operating activities for the nine months ended September 30, 2025 primarily reflected a net loss of $15,380,000, adjusted for the reconciliation of non-cash items such as depreciation expense of $215,000, stock-based compensation of $836,000, stock-based inducement expense of $864,000, write off of deferred offering costs of $500,000, and amortization of right-of-use asset of $595,000, and changes in operating asset and liabilities primarily consisting of an increase in prepaid expenses and other current assets of $257,000, an increase in accounts payable of $1,426,000, a decrease in accrued liabilities of $429,000, and a decrease in operating lease liabilities of $644,000.

Previous wording

Net cash used in operating activities for the six months ended June 30, 2024 primarily reflected a net loss of $4,748,000, adjusted for the reconciliation of non-cash items such as a gain of settlement of liabilities with vendors of $589,000, depreciation expense of $228,000, stock-based compensation of $1,489,000, amortization of right-of-use asset of $353,000 and a gain on revaluation of earnout liability and the preferred stock warrant liability of $5,020,000, and changes in operating asset and liabilities primarily consisting of an increase in prepaid expenses and other current assets of $269,000, a decrease in accounts payable of $551,000, an increase in accrued liabilities of $941,000, and a decrease in operating lease liabilities of $450,000.

Current wording

Net cash used in operating activities for the nine months ended September 30, 2024 primarily reflected a net loss of $8,976,000, adjusted for the reconciliation of non-cash items such as a gain of settlement of liabilities with vendors of $589,000, depreciation expense of $342,000, stock-based compensation of $1,904,000, amortization of right-of-use asset of $537,000 and a gain on revaluation of earnout liability and the preferred stock warrant liability of $5,190,000, and changes in operating asset and liabilities primarily consisting of a decrease in accounts payable of $232,000, an increase in accrued liabilities of $1,476,000, and a decrease in operating lease liabilities of $642,000.

Previous wording

Net cash provided by financing activities for the six months ended June 30, 2025 amounted to $9,045,000 as compared to $9,749,000 for the six months ended June 30, 2024.

Current wording

Net cash provided by financing activities for the nine months ended September 30, 2025 amounted to $10,469,000 as compared to $12,241,000 for the nine months ended September 30, 2024.

Previous wording

During the six months ended June 30, 2025, net cash provided by financing activities of $9,045,000 was primarily attributable to the receipt of net proceeds of $500,000 from the exercise of Series A Preferred Warrants, net proceeds of $2,426,000 from the sale of common stock under the ELOC, net proceeds of $2,240,000 from the sale of Series D Preferred Stock, and net proceeds from sale of common stock and pre-funded warrants of $4,273,000, offset by the cash redemption of Series C Preferred Stock of $395,000.

Current wording

During the nine months ended September 30, 2025, net cash provided by financing activities of $10,469,000 was primarily attributable to the receipt of net proceeds of $500,000 from the exercise of Series A Preferred Warrants, net proceeds of $3,704,000 from the sale of common stock under the ELOC and collection of stock subscription receivables, net proceeds of $2,561,000 from the sale of Series D Preferred Stock, and net proceeds from sale of common stock and pre-funded warrants of $4,273,000, offset by the cash redemption of Series C Preferred Stock of $395,000 and the payment of offering costs of $174,000.

Previous wording

During the six months ended June 30, 2024, net cash provided by financing activities of $9,749,000 was primarily attributable to the receipt of net proceeds of $6,758,000 from the sale of Series A Preferred Stock, $408,000 from short-term borrowings, net proceeds of $500,000 from the sale of Series B Preferred Stock, and net proceeds of $2,238,000 from the sale of common stock under the ELOC, offset by the repayment of short-term borrowings of $149,000.

Current wording

During the nine months ended September 30, 2024, net cash provided by financing activities of $12,241,000 was primarily attributable to the receipt of net proceeds of $6,758,000 from the sale of Series A Preferred Stock, $408,000 from short-term borrowings, net proceeds of $500,000 from the sale of Series B Preferred Stock, net proceeds of $704,000 from the sale of Series C Preferred Stock and net proceeds of $4,139,000 from the sale of common stock under the ELOC, offset by the repayment of short-term borrowings of $300,000.

Previous wording

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 method at each reporting period, and the change in fair value is recognized in other income (expense) until the contingency is resolved. During the three and six months ended June 30, 2024, the Company recorded a gain from change of fair value of the earnout liability of $2,900,000 and $4,700,000, which is included in other income (expenses), net on the accompanying consolidated statement of operations, respectively.

Current wording

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 method at each reporting period, and the change in fair value is recognized in other income (expense) until the contingency is resolved. During the three and nine months ended September 30, 2024, the Company recorded a gain from change of fair value of the earnout liability of $170,000 and $4,870,000, which is included in other income (expenses), net on the accompanying condensed consolidated statement of operations, respectively.

Previous wording

Stock-based compensation – The Company periodically issues common stock and stock options to officers, directors, and consultants for services rendered. Stock-based compensation accounting requires the recognition of stock-based compensation expense, using a grant date fair value-based method, for costs related to all share-based payments including stock options and restricted stock awards granted to employees and non-employees. Companies are required to estimate the fair value of all share-based payment awards on the date of grant using an option pricing model, and the Company uses a Black-Scholes option pricing model (“Black-Scholes”) to estimate option award fair value. The assumptions used in calculating the fair value of stock-based awards represent management’s best estimates and involve inherent uncertainties and the application of management’s judgment. The fair value of restricted stock awards is based upon the estimated share price of the common shares on the date of grant. Forfeitures are accounted for as they occur, and the Company applies the simplified method to estimate expected term of “plain vanilla” options. All options and restricted stock awards granted since inception are expensed on a straight-line basis over the requisite service period, which is usually the vesting period, or upon the completion of certain performance-based vesting terms and the related amounts are recognized in the consolidated statements of operations.

Current wording

Stock-based compensation – The Company periodically issues common stock and stock options to officers, directors, and consultants for services rendered. Stock-based compensation accounting requires the recognition of stock-based compensation expense, using a grant date fair value-based method, for costs related to all share-based payments including stock options and restricted stock awards granted to employees and non-employees. Companies are required to estimate the fair value of all share-based payment awards on the date of grant using an option pricing model, and the Company uses a Black-Scholes option pricing model (“Black-Scholes”) to estimate option award fair value. The assumptions used in calculating the fair value of stock-based awards represent management’s best estimates and involve inherent uncertainties and the application of management’s judgment. The fair value of restricted stock awards is based upon the estimated share price of the common stock on the date of grant. Forfeitures are accounted for as they occur, and the Company applies the simplified method to estimate expected term of “plain vanilla” options. All options and restricted stock awards granted since inception are expensed on a straight-line basis over the requisite service period, which is usually the vesting period, or as certain performance-based vesting terms become probable and the related amounts are recognized in the condensed consolidated statements of operations.