NOTE 6 – NOTES PAYABLE

SRX

On August 27, 2026, the Company completed a secured financing transaction with SRX. In connection with the transaction, the Company issued to SRX the Consolidated Note. Prior to the transaction, SRX was a lender to the Company under certain of the convertible promissory notes described in Note 5. The Consolidated Note consolidates the Previous Notes, including (i) obligations under Previous Notes held by SRX in an aggregate amount of $2,794,000 and (ii) obligations under Previous Notes originally held by Keystone in an aggregate amount of $2,872,109, consisting of $2,812,500 of principal and $59,609 of accrued and unpaid interest. Before the transaction, Keystone sold its Convertible Notes to SRX. Because this was a transfer between creditors, it had no accounting effect for the Company. Accordingly, the principal amount of the Consolidated Note represented by previously outstanding debt was $5,666,109, and such amounts were lent to the Company on an unsecured basis.

The Consolidated Note provides for additional advances by SRX to the Company of up to $6,000,000 in the aggregate, inclusive of the initial advance described below, resulting in a maximum aggregate Consolidated Note amount of $11,666,109. Provided that no Event of Default has occurred and is continuing as determined under the terms of the Consolidated Note, the Consolidated Note provides for additional funding advances to the Company on the first day of each calendar month following the original issue date and before the maturity date in the amounts set forth in the Consolidated Note, reflecting the Company’s budget attached to the Consolidated Note. SRX may, in its sole and absolute discretion, make additional advances reasonably requested by the Company, subject to the $6,000,000 aggregate advance limit.

From August 27, 2026 to September 30, 2026, the Company received advances under the Consolidated Note from SRX in the gross amount of $1,975,600, and received net proceeds of $1,925,600, which is net of $50,000 reimbursement of SRX’s legal expenses, which amount was withheld from the initial advance and treated as a debt discount to be amortized into interest expense over the term. The Company intends to use the proceeds of the advances to pay outstanding trade payables and for working capital purposes of the Company. Interest that is not paid when due may be recorded as an additional advance under the Consolidated Note.

The outstanding principal amount of the Consolidated Note bears interest at 10% per annum, calculated on the basis of a 30-day month and a 360-day year. During the existence of an Event of Default, the outstanding obligations bear interest at the lesser of (i) 24.99% per annum and (ii) the maximum rate permitted by applicable law. If the Event of Default is cured, the interest rate returns to 10% per annum. The unpaid principal amount, accrued and unpaid interest and all other amounts payable under the Consolidated Note were due and payable on October 15, 2026, unless earlier accelerated or otherwise paid in accordance with the Consolidated Note. Provided that no Event of Default has occurred and is continuing, SRX may extend the maturity date for up to four consecutive 30-day periods by providing the Company with at least one business day’s prior written notice. In connection with signing the Stock Purchase Agreement (See Note 15), the maturity date of the Consolidated Note entered into on August 27, 2026 was extended to the date that is five (5) business days following the earlier of the Closing Date or the valid termination of the Stock Purchase Agreement pursuant to its terms (See Note 15).

Except in connection with the consummation of a change of control Transaction, the Company may not prepay any amounts outstanding under the Consolidated Note without SRX’s prior written consent.

As security for the Company’s obligations under the Consolidated Note, the Company entered into a Pledge and Security Agreement with SRX, dated as of August 27, 2026 (the “Pledge Agreement”). Under the Pledge Agreement, the Company pledged and granted SRX a continuing security interest in all of the Company’s right, title and interest in the issued and outstanding capital stock of its subsidiary, CERo Therapeutics, Inc., together with any additional shares or other equity interests in Cero Therapeutics, Inc. subsequently acquired by the Company and all distributions and proceeds relating to those interests. The security interest created by the Pledge Agreement is intended to be a first-priority security interest. Cero Therapeutics, Inc. also entered into an Asset Security Agreement with SRX, dated as of August 27, 2026 (the “Asset Security Agreement”), pursuant to which Cero Therapeutics, Inc., granted SRX a continuing security interest in substantially all of Cero Therapeutics, Inc.’s assets. The collateral includes, among other assets, intellectual property, patents, patent applications, studies, clinical trials, regulatory applications and other assets relating to the Company’s and Cero Therapeutics, Inc.’s CER-T cell therapy business, including CER-1236. In addition, pursuant to a Guaranty of Payment dated as of August 27, 2026 (the “Guaranty”), Cero Therapeutics, Inc. absolutely, unconditionally and irrevocably guaranteed the payment and performance of the Company’s obligations under the Consolidated Note and the other transaction documents, including principal, interest, fees, enforcement costs and other amounts payable thereunder. The Guaranty is a guaranty of payment and performance and not merely a guaranty of collection.

The Consolidated Note contains customary negative covenants that, subject to specified exceptions, restrict the Company and its subsidiaries from, among other things, incurring additional indebtedness or liens, repaying certain other indebtedness, paying cash dividends or distributions on the Company’s equity securities, amending organizational documents in a manner materially adverse to SRX and entering into certain affiliate transactions.

Events of Default under the Consolidated Note include, among other matters, payment defaults; breaches of covenants, representations or warranties; certain cross-defaults under other material agreements; bankruptcy and insolvency events; certain judgments, levies or attachments; the incurrence of unpermitted indebtedness or liens; failure to use proceeds in accordance with the Company’s budget; the occurrence of a Material Adverse Effect; and the invalidity or unenforceability of a transaction document. Following an Event of Default, SRX may declare all outstanding principal and other amounts owing under the Consolidated Note immediately due and payable and may exercise its remedies against the pledged shares and other collateral.

In connection with the issuance of the Consolidated Note, the Previous Notes, including their conversion and other terms, were superseded and replaced in their entirety by the Consolidated Note. The unpaid principal and accrued interest under the Previous Notes were consolidated into the original principal amount of the Consolidated Note rather than repaid at the time of the transaction.

Other

On September 30, 2026, in connection with the Settlement Agreement with Goodwin Procter LLP described in Note 14, the Company’s wholly owned subsidiary, CERo Therapeutics, Inc., issued a promissory note to Goodwin in the principal amount of $500,000 (the “Goodwin Note”). The Goodwin Note was issued as partial consideration for the settlement of unpaid legal fees, and the Company received no cash proceeds. The Goodwin Note is payable in five monthly installments of $100,000 on November 30, 2026, December 30, 2026, January 30, 2027, February 28, 2027, and March 30, 2027, and matures on March 31, 2027. The Goodwin Note bears no interest unless an event of default occurs. Following an event of default, the outstanding principal bears interest at 12% per annum. The Company may prepay the Goodwin Note in whole or in part at any time without penalty. The Goodwin Note is unsecured.

Events of default under the Goodwin Note include, among others: failure to pay principal when due; breach of a material covenant not cured within ten days after notice; a material misrepresentation; assignment for the benefit of creditors or appointment of a receiver or trustee; a money judgment exceeding $500,000 that remains unvacated, unbonded or unstayed for 60 days; bankruptcy or insolvency proceedings not dismissed within 60 days; dissolution or liquidation; and cessation of operations. The Goodwin Note provides that disclosure of substantial doubt about the Company’s ability to continue as a going concern is not an admission that the Company is unable to pay its debts as they become due. If an event of default is not cured within ten business days after the holder delivers a default notice, the outstanding principal, accrued interest, and costs of collection, including legal fees, become immediately due and payable. A default under the Goodwin Note also terminates Goodwin’s forbearance under the Settlement Agreement, as described in Note 14.

Because the Goodwin Note was issued in a troubled debt restructuring accounted for under ASC 470-60, the Company did not impute interest on the Goodwin Note. The Goodwin Note is carried at its principal amount of $500,000 and is classified as a current liability as of September 30, 2026.

On September 30, 2026 and December 31, 2025, notes payable, net consisted of the following:

For the three and nine months ended September 30, 2026, amortization of debt discount related to notes payable amounted to $34,694, which has been included in interest expense on the accompanying unaudited condensed consolidated statements of operations. The weighted average interest rate during the nine months ended September 30, 2026 was approximately 10.0%.