CERO THERAPEUTICS HOLDINGS, INC.

Previous wording

The accompanying unaudited condensed consolidated 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 research and development (“R&D”) activities and meet its obligations on a timely basis. As of March 31, 2026, the Company reported approximately $857,489 of cash, restricted cash, and cash equivalents, a working capital deficit of approximately $9.8 million, and an accumulated deficit and stockholders’ deficit of approximately $96.7 million and $9.3 million, respectively. Additionally, during the three months ended March 31, 2026, the Company used approximately $2.8 million of net cash in operating activities, has a net loss of $5.9 million and has no revenues. During the three months ended March 31, 2026, we received net proceeds from the sale of common stock in connection with ELOC fundings. 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 unaudited condensed consolidated financial statements are issued. These unaudited condensed consolidated 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

The accompanying unaudited condensed consolidated 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 research and development (“R&D”) activities and meet its obligations on a timely basis. As of June 30, 2026, the Company reported approximately $937,512 of cash, restricted cash, and cash equivalents, a working capital deficit of approximately $30.9 million, and an accumulated deficit and stockholders’ deficit of approximately $97.8 million and $30.5 million, respectively. Additionally, during the six months ended June 30, 2026, the Company used approximately $5.1 million of net cash in operating activities, has a net loss of $6.9 million and has no revenues. During the six months ended June 30, 2026, we received net proceeds from the sale of common stock in connection with ELOC fundings. 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 unaudited condensed consolidated financial statements are issued. These unaudited condensed consolidated 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

During the three months ended March 31, 2026, we received net proceeds of $456,166 from the sale of our common stock from ELOC fundings. Furthermore, on February 9, 2026 and on March 6, 2026, we issued and sold Convertible Notes for an aggregate purchase price of $1,500,000 ($750,000 each), having an aggregate principal face value of $1,875,000 ($937,500 each) to Keystone. 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 the unaudited consolidated financial statements are issued. These unaudited consolidated 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

During the six months ended June 30, 2026, we received net proceeds of $700,491 from the sale of our common stock from ELOC fundings. Furthermore, during the six months ended June 30, 2026, we issued and sold convertible notes having an aggregate principal face value of $4,579,500, and the Company received net proceeds of $3,663,600. 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 the unaudited consolidated financial statements are issued. These unaudited consolidated 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

On April 8, 2026, we issued and sold a convertible promissory note for a purchase price of $350,000, having a principal face value of $437,500 (the “April 2026 Note”) to Lender. Pursuant to the April 2026 Note, the Company may borrow, from time to time thereunder, up to a maximum aggregate amount not to exceed a sum of $1,000,000. The April 2026 Note bears interest at a rate of 10% per annum, matures on April 9, 2027, and is convertible into shares of the Company’s common stock. On April 27, 2026, we issued and sold a convertible promissory note for an purchase price of $400,000, having a principal face value of $500,000 (the “Second April Note”) to Lender. Pursuant to the Second April Note, the Company may borrow, from time to time thereunder, up to a maximum aggregate amount not to exceed a sum of $1,000,000. The Second April Note bears interest at a rate of 10% per annum, matures on April 27, 2027, and is convertible into shares of the Company’s common stock. At any time after the issuance of the April 2026 Note and the Second April Note , the Lender, at its option, is entitled to convert all or any lesser portion of the outstanding principal amount and accrued but unpaid interest into common stock at a conversion price equal to the lesser of (i) $0.05 and (ii) 80% of the average of the 5 (five) lowest intraday trading prices during the 20 (twenty) days prior to the day that the Lender requests conversion, unless otherwise modified by mutual agreement between the parties, subject to certain adjustments and limitations, including a beneficial ownership limitation of 4.99%.

Current wording

On April 8, 2026, we issued and sold a convertible promissory note for a purchase price of $350,000, having a principal face value of $437,500 (the “April 2026 Note”) to Keystone. Pursuant to the April 2026 Note, the Company may borrow, from time to time thereunder, up to a maximum aggregate amount not to exceed a sum of $1,000,000. The April 2026 Note bears interest at a rate of 10% per annum, matures on April 9, 2027, and is convertible into shares of the Company’s common stock. On April 27, 2026, we issued and sold a convertible promissory note for a purchase price of $400,000, having a principal face value of $500,000 (the “Second April Note”) to Keystone. Pursuant to the Second April 2026 Note, the Company may borrow, from time to time thereunder, up to a maximum aggregate amount not to exceed a sum of $1,000,000. The Second April Note bears interest at a rate of 10% per annum, matures on April 27, 2027, and is convertible into shares of the Company’s common stock. At any time after the issuance of the April 2026 Note and the Second April Note, Keystone, at its option, is entitled to convert all or any lesser portion of the outstanding principal amount and accrued but unpaid interest into common stock at a conversion price equal to the lesser of (i) $0.05 and (ii) 80% of the average of the 5 (five) lowest intraday trading prices during the 20 (twenty) days prior to the day that Keystone requests conversion, unless otherwise modified by mutual agreement between the parties, subject to certain adjustments and limitations, including a beneficial ownership limitation of 4.99%.

Previous wording

On April 8, 2026, we issued and sold a convertible promissory note for a purchase price of $350,000, having a principal face value of $437,500 (the “April 2026 Note”) to Lender. Pursuant to the April 2026 Note, the Company may borrow, from time to time thereunder, up to a maximum aggregate amount not to exceed a sum of $1,000,000. The April 2026 Note bears interest at a rate of 10% per annum, matures on April 9, 2027, and is convertible into shares of the Company’s common stock. On April 27, 2026, we issued and sold a convertible promissory note for an purchase price of $400,000, having a principal face value of $500,000 (the “Second April Note”) to Lender. Pursuant to the Second April 2026 Note, the Company may borrow, from time to time thereunder, up to a maximum aggregate amount not to exceed a sum of $1,000,000. The Second April Note bears interest at a rate of 10% per annum, matures on April 27, 2027, and is convertible into shares of the Company’s common stock. At any time after the issuance of the Apri 2026 Note and the Second April Note, the Lender, at its option, is entitled to convert all or any lesser portion of the outstanding principal amount and accrued but unpaid interest into common stock at a conversion price equal to the lesser of (i) $0.05 and (ii) 80% of the average of the 5 (five) lowest intraday trading prices during the 20 (twenty) days prior to the day that the Lender requests conversion, unless otherwise modified by mutual agreement between the parties, subject to certain adjustments and limitations, including a beneficial ownership limitation of 4.99%.

Current wording

On May 28, 2026, the Company issued and sold a convertible promissory note for a purchase price of $750,000, having a principal face value of $937,500 (the “May 2026 Note”) to SRX Global Inc. (f/k/a SRX Health Solutions, Inc.) (“SRX Global”). Pursuant to the May 2026 Note, the Company may borrow, from time to time thereunder, up to a maximum aggregate amount not to exceed a sum of $750,000. The May 2026 Note bears interest at a rate of 10% per annum, matures on May 28, 2027, and is convertible into shares of the Company’s common stock. At any time after the issuance of the May 2026 Note, SRX Global, at its option, is entitled to convert all or any lesser portion of the outstanding principal amount and accrued but unpaid interest into common stock at a conversion price equal to the lesser of (i) $0.05 and (ii) 80% of the average of the 5 (five) lowest intraday trading prices during the 20 (twenty) days prior to the day that SRX Global requests conversion, unless otherwise modified by mutual agreement between the parties, subject to certain adjustments and limitations, including a beneficial ownership limitation of 4.99%.

Previous wording

Other expenses, net consists predominantly of interest income from interest bearing bank accounts, interest expense, and gains or losses on the initial valuation and revaluation of earnout and derivative liabilities, which represents the initial fair value and change in fair value of conversion options related to our convertible notes payable between periods.

Current wording

Other expenses, net consists predominantly of interest income from interest bearing bank accounts, interest expense, and gains or losses on the initial valuation and revaluation of earnout, derivative liabilities and preferred stock liabilities, which represents the initial fair value and change in fair value of conversion options related to our convertible notes payable between periods.

Previous wording

General and administrative expenses were $2.5 million for three months ended March 31, 2026, compared to $2.0 million for the three months ended March 31, 2025, reflecting an increase of $0.5 million. The increase in the three months ended March 31, 2026 over the three months ended March 31, 2025 was partially due to an increase in stock-based stock options expense of approximately $0.9 million, offset by a decrease in professional fees of $0.2 million and a decrease in other general and administrative expenses of approximately $0.2 million.

Current wording

General and administrative expenses were $2,110,000 for the three months ended June 30, 2026, compared to $1,970,000 for the three months ended June 30, 2025, reflecting an increase of $141,000. The increase in the three months ended June 30, 2026 over the three months ended June 30, 2025 was partially due to an increase in stock-based stock options expense of approximately $714,000 and an increase in other compensation and benefits of $54,000, offset by a decrease in professional fees of $432,000 and a decrease in other general and administrative expenses of approximately $195,000.

Previous wording

Other expenses, net was $(1.0) million for the three months ended March 31, 2026, compared to other expenses, net of $0.2 million for the three months ended March 31, 2025, reflecting a negative change of $0.8 million. The negative change during the three months ended March 31, 2026 as compared to the three months ended March 31, 2025 was primarily due to the recording of derivative expense of $0.9 million and interest expense of $0.2 million related to the issuance of convertible notes payable during the 2026 period, offset by a reduction in stock-based inducement expense of $0.2. million.

Current wording

Other income (expenses), net was $2,818,000 for the three months ended June 30, 2026, compared to other expenses, net of $(694,000) for the three months ended June 30, 2025, reflecting a positive change of $3,511,000. The positive change during the three months ended June 30, 2026 as compared to the three months ended June 30, 2025 was primarily due to the recording of a gain on reevaluation of preferred stock liabilities of $6,610,000 and a reduction in stock-based inducement expense of $707,000, offset by the recording of derivative expense of $3,104,000 and interest expense of $690,000 related to the issuance of convertible notes payable during the 2026 period and a decrease in interest income of $13,000.

Previous wording

Research and development expenses were $2.3 million for the three months ended March 31, 2026, compared to $2.9 million for the three months ended March 31, 2025, reflecting a decrease of $0.6 million. The decrease was related to decreased R&D activity in the 2026 period as compared to the 2025 period. During the 2025 period, the Company prepared and filed the IND for CER-1236, prepared for the clinical trials initiation, and began the clinical trial. The decrease in research and development expenses reflected (i) a decrease in clinical expenses of $0.8 million, (ii) a decrease in scientific consulting expenses of $0.2 million, and (iii) a decrease in rent expense of $0.2 million due to the receipt of subtenant rental income and a credit received from the landlord on common area charges paid. These decreases were offset by an increase in drug manufacturing costs of $0.2 million and stock-based stock option expense of approximately $0.4 million.

Current wording

Research and development expenses were $4,074,000 for the six months ended June 30, 2026, compared to $5,662,000 for the six months ended June 30, 2025, reflecting a decrease of $1,588,000. The decrease was related to decreased R&D activity in the 2026 period as compared to the 2025 period. During the 2025 period, the Company prepared and filed the IND for CER-1236, prepared for the clinical trials initiation, and began the clinical trial. The decrease in research and development expenses reflected (i) a decrease in clinical expenses of $1,440,000, (ii) a decrease in scientific consulting expenses of $468,000, (iii) a decrease in rent expense of $295,000 due to the receipt of subtenant rental income and a credit received from the landlord on common area charges paid, and (iv) a decrease in lab and other expenses of $141,000. These decreases were offset by an increase in drug manufacturing costs of $99,000 and stock-based stock option expense of approximately $657,000.

Previous wording

The Company anticipates that its R&D expenses will significantly increase in the future as the Company increases headcount, compensation expense, and contracted services for preclinical and clinical development of its product candidates, as well as for manufacturing of clinical product to be used in clinical development.

Current wording

The Company anticipates that its R&D expenses may increase in the future as the Company increases headcount, compensation expense, and contracted services for preclinical and clinical development of its product candidates, as well as for manufacturing of clinical product to be used in clinical development.

Previous wording

For the three months ended March 31, 2026 and 2025, net loss amounted to $5.9 million and $5.1 million, respectively, an increase of $0.8 million, or 15.3%. During the three months ended March 31, 2025, in connection with our Series A and Series B preferred stock conversions, and the redemption of Series C Preferred Stock, we recorded deemed dividends of $0.3 million, and in connection with the adjustment in the exercise price of Series C Common Warrants, we recorded deemed dividends of $0.1 million. Accordingly, for the three months ended March 31, 2026 and 2025, net loss attributable to common stockholders amounted to $5.9 million, or $0.20 per common share and $5.4 million, or $31.82 per common share, respectively.

Current wording

For the six months ended June 30, 2026 and 2025, net loss amounted to $6,915,000 and $10,523,000, respectively, a decrease of $3,609,000, or 34.3%. During the six months ended June 30, 2026 and 2025, in connection with our Series A, Series B, Series C, Series D and Series E preferred stock conversions, and the redemption of Series C Preferred Stock, we recorded deemed dividends of $28,427,000 and $24,965,000, respectively. Accordingly, for the six months ended June 30, 2026 and 2025, net loss attributable to common stockholders amounted to $35,341,000, or $0.92 per common share and $35,572,000, or $107.60 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 March 31, 2026, the Company had approximately $857,000 in cash, restricted cash, and cash equivalents, a working capital deficit of approximately $9.8 million, and an accumulated deficit of approximately $96.7 million. Additionally, during the three months ended March 31, 2026, the Company used approximately $2.8 of net cash in operating activities. The Company intends to devote most of the available cash to the 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 March 31, 2026 will not fund its operations and capital requirements for 12 months after the filing of these unaudited consolidated financial statements for the three months ended March 31, 2026. During the three months ended March 31, 2026, we received net proceeds of $456,166 from ELOC fundings. Furthermore, on February 9, 2026 and on March 6, 2026, we issued and sold Convertible Notes for an aggregate purchase price of $1,500,000 ($750,000 each), having an aggregate principal face value of $1,875,000 ($937,500 each) to Keystone. 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 the unaudited consolidated financial statements are issued. These unaudited consolidated 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

The Company, therefore, anticipates that substantial additional funding will be needed in connection with its continuing operations. As of June 30, 2026, the Company had approximately $937,500 in cash, restricted cash, and cash equivalents, a working capital deficit of approximately $30.9 million, and an accumulated deficit of approximately $97.8 million. Additionally, during the six months ended June 30, 2026, the Company used approximately $5.1 million of net cash in operating activities. The Company intends to devote most of the available cash to the 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, 2026 will not fund its operations and capital requirements for 12 months after the filing of these unaudited consolidated financial statements for the six months ended June 30, 2026. During the six months ended June 30, 2026, we received net proceeds of $700,491 from ELOC fundings. Furthermore, during the six months ended June 30, 2026, we issued and sold Convertible Notes for an aggregate principal amount of $4,579,500 and we received net proceeds of $3,663,600. 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 the unaudited consolidated financial statements are issued. These unaudited consolidated 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

Net cash used in operating activities for the three months ended March 31, 2026 primarily reflected a net loss of $5,886,000, adjusted for the reconciliation of non-cash items such as depreciation expense of $62,000, stock-based compensation of $1,617,000, amortization of right-of-use asset of $214,000, amortization of debt discount of $137,000, and loss on initial and reevaluation of derivative liabilities of $897,000, and changes in operating asset and liabilities primarily consisting of a decrease in prepaid expenses and other current assets of $355,000, an increase in accounts payable of $106,000, an increase in accrued liabilities of $137,000, a decrease in insurance financing liability of $143,000, and a decrease in operating lease liabilities of $238,000.

Current wording

Net cash used in operating activities for the six months ended June 30, 2026 primarily reflected a net loss of $6,915,000, adjusted for the reconciliation of non-cash items such as depreciation expense of $120,000, stock-based compensation of $2,740,000, amortization of right-of-use asset of $435,000, amortization of debt discount of $747,000, gain on reevaluation of preferred stock liabilities of $6,610,000, and loss on initial and reevaluation of derivative liabilities of $4,000,000, and changes in operating asset and liabilities primarily consisting of a decrease in prepaid expenses and other current assets of $461,000, an increase in accounts payable of $636,000, an increase in accrued liabilities of $121,000, a decrease in insurance financing liability of $323,000, and a decrease in operating lease liabilities of $481,000.

Previous wording

Net cash used in operating activities for the three months ended March 31, 2025 primarily reflected a net loss of $5,106,000, adjusted for the reconciliation of non-cash items such as depreciation expense of $76,000, stock-based compensation of $305,000, inducement expense of $156,000, and amortization of right-of-use asset of $193,000, and changes in operating asset and liabilities primarily consisting of an increase in prepaid expenses and other current assets of $290,000, an increase in accounts payable of $728,000, a decrease in accrued liabilities of $300,000, and a decrease in operating lease liabilities of $209,000.

Current 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.

Previous wording

We did not have any investing activities during the three months ended March 31, 2026 and 2025.

Current wording

We did not have any investing activities during the six months ended June 30, 2026 and 2025.

Previous wording

Net cash provided by financing activities for the three months ended March 31, 2026 amounted to $1,956,000 as compared to $6,322,000 for the three months ended March 31, 2025.

Current wording

Net cash provided by financing activities for the six months ended June 30, 2026 amounted to $4,364,000 as compared to $9,044,000 for the six months ended June 30, 2025.

Previous wording

During the three months ended March 31, 2026, net cash provided by financing activities of $1,956,000 was primarily attributable to the receipt of net proceeds of $456,000 from the sale of Common Stock under the ELOC, and net proceeds of $1,500,000 from the sale of convertible notes payable.

Current wording

During the six months ended June 30, 2026, net cash provided by financing activities of $4,364,000 was primarily attributable to the receipt of net proceeds of $700,000 from the sale of Common Stock under the ELOC, and net proceeds of $3,664,000 from the sale of convertible notes payable.

Previous wording

During the three months ended March 31, 2025, net cash provided by financing activities of $6,322,000 was primarily attributable to the receipt of net proceeds of $500,000 from the exercise of Series A Preferred Warrants, net proceeds of $1,227,000 from the sale of common stock under the ELOC, proceeds of $717,000 from the collection of stock subscriptions receivable from previous sales of common stock under the ELOC, 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 six months ended June 30, 2025, net cash provided by financing activities of $9,044,000 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.

Previous wording

During the three months ended March 31, 2026, there were no material changes to our critical accounting policies from those described in our Annual Report on Form 10-K filed with the SEC on April 15, 2025.

Current wording

During the six months ended June 30, 2026, there were no material changes to our critical accounting policies from those described in our Annual Report on Form 10-K filed with the SEC on April 15, 2026.

Previous wording

See the section titled in Note 2 to the Company’s unaudited consolidated financial statements for the three months ended March 31, 2026, appearing elsewhere herein.

Current wording

See the section titled in Note 2 to the Company’s unaudited consolidated financial statements for the six months ended June 30, 2026, appearing elsewhere herein.