Filed 2026-03-13 · Period ending 2025-12-31 · 87,356 words · SEC EDGAR
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# Cardio Diagnostics Holdings, Inc. (CDIO) — 10-K
**Filed:** 2026-03-13
**Period ending:** 2025-12-31
**Accession:** 0001553350-26-000023
**Source:** [SEC EDGAR](https://www.sec.gov/Archives/edgar/data/1870144/000155335026000023/)
**Origin leaf:** cd9549eef2ea2dcbd58e2d8428e53894c4cb509eaf3a1e806411b5028ad79aad
**Words:** 87,356
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**
UNITED STATES**
**SECURITIES AND EXCHANGE COMMISSION**
**Washington, D.C. 20549**
**FORM 10-K**
**(Mark One)**
**ANNUAL
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT**
**OF 1934**
**For the fiscal year ended December 31, 2025**
**TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934**
**For the transition period from to
**
**Commission File No. 001-41097**
**CARDIO DIAGNOSTICS HOLDINGS, INC.**
(Exact name of registrant as specified in its charter)
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Delaware |
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87-0925574 | |
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(State or Other Jurisdiction of
Incorporation or Organization) |
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(I.R.S. Employer Identification No.) | |
****
**311 West Superior Street,Suite 444**
**Chicago, IL 60654**
(Address of principal executive offices and Zip
Code)
**(855) 226-9991**
(Registrants telephone number, including
area code)
Securities registered pursuant to Section 12(b)
of the Exchange Act
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Title of each class |
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Trading Symbol(s) |
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Name of each exchange on which registered | |
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Common Stock, par value $0.00001 |
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CDIO |
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The Nasdaq Stock Market LLC | |
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Redeemable warrants, each warrant exercisable for
one share of common stock |
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CDIOW |
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The Nasdaq Stock Market LLC | |
Securities registered pursuant to Section 12(g)
of the Securities Exchange Act: NONE
Indicate
by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.YesNo
Indicate
by check mark if the registrant is not required to file reports pursuant to Section 13 or 15 (d) of the Securities Exchange Act.YesNo
Indicate by
check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act
during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject
to such filing requirements for the past 90 days.Yes
No
Indicate by
check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405
of Regulation S-T ( 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was
required to submit such files).Yes No
Indicate by check mark whether the registrant is a large accelerated
filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of
"large accelerated filer, "accelerated filer, "smaller reporting company, and "emerging growth
company in Rule 12b-2 of the Exchange Act.
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Largeacceleratedfiler |
Acceleratedfiler | |
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Non-accelerated filer |
Smallerreportingcompany | |
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Emerging growth company | |
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If
an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying
with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate
by check mark whether the registrant has filed a report on and attestation to its managements assessment of the effectiveness of
its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public
accounting firm that prepared or issued its audit report.
If
securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant
included in the filing reflect the correction of an error to previously issued financial statements.
Indicate
by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation
received by any of the registrants executive officers during the relevant recovery period pursuant to 240.10D-1(b).
Indicate
by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes
No
As of June 30, 2025, the aggregate market value
of shares held by non-affiliates of the registrant (based upon the closing sale prices of such shares on the Nasdaq Capital Market on
June 30, 2025) was approximately $5.8 million. For purposes of calculating the aggregate market value of shares held by non-affiliates,
we have assumed that all outstanding shares are held by non-affiliates, except for shares held by each of our executive officers, directors,
and 5% or greater stockholders. In the case of 5% or greater stockholders, we have not deemed such stockholders to be affiliates unless
there are facts and circumstances which would indicate that such stockholders exercise any control over our company, or unless they hold
10% or more of our outstanding common stock. These assumptions should not be deemed to constitute an admission that all executive officers,
directors, and 5% or greater stockholders are, in fact, affiliates of our company, or that there are not other persons who may be deemed
to be affiliates of our company.
As of March 13, 2026, there were 2,959,469 shares
of common stock, par value $0.00001 issued and outstanding. Documents Incorporated by Reference: None.
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**TABLE OF CONTENTS**
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Page | |
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PART 1 |
4 | |
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Item 1. Business |
4 | |
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Item 1A. Risk Factors |
32 | |
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Item 1B. Unresolved Staff Comments |
56 | |
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Item 1C. Cybersecurity |
56 | |
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Item 2. Properties |
57 | |
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Item 3. Legal Proceedings |
57 | |
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Item 4. Mine Safety Disclosures |
57 | |
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PART II |
58 | |
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Item 5. Market for Registrants Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities |
58 | |
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Item 6. Reserved |
58 | |
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Item 7. Managements Discussion and Analysis of Financial Condition and Results of Operations |
59 | |
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Item 8. Financial Statements and Supplemental Data |
67 | |
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Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure |
68 | |
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Item 9A. Controls and Procedures |
68 | |
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Item 9B. Other Information |
68 | |
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Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections |
68 | |
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PART III |
69 | |
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Item10. Directors, Executive Officers and Corporate Governance |
69 | |
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Item11. Executive Compensation |
77 | |
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Item12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters |
84 | |
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Item13. Certain Relationships and Related Transactions, and Director Independence |
85 | |
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Item14. Principal Accounting Fees and Services |
87 | |
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PART IV |
88 | |
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Item 15. Exhibits, Financial Statement Schedules |
88 | |
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Item 16. Form 10-K Summary |
88 | |
****
**i**
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**INTRODUCTORY NOTE**
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Unless the context dictates otherwise, references
in this Annual Report on Form 10-K to the Company, Cardio, we, us, our,
and similar words are references to Cardio Diagnostics Holdings, Inc., a Delaware corporation, and its consolidated subsidiary. Legacy
Cardio refers to Cardio Diagnostics, Inc. prior to the October 2022 Business Combination, which became our wholly-owned subsidiary
as a result of that transaction.
Trade names and trademarks of Cardio referred to
herein, and their respective logos, are our property. This Annual Report on Form 10-K may contain additional trade names and/or trademarks
of other companies, which are the property of their respective owners. We do not intend our use or display of other companies trade
names and/or trademarks, if any, to imply an endorsement or sponsorship of us by such companies, or any relationship with any of these
companies.
The Company effected a 1-for-30 reverse stock split
effective May 12, 2025 (the "Reverse Stock Split).Unless otherwise indicated, all issued and outstanding
stock and per share amounts referred to in this Annual Report on Form 10-K have been adjusted to reflect the Reverse Stock Split for all
prior periods presented. Proportionate adjustments for the Reverse Stock Split were made to the exercise prices and number of shares issuable
under the Companys equity incentive plans and outstanding warrants, and the number of shares underlying outstanding equity awards
and warrants, as applicable. See Note 1 for information and disclosures relating to adjustments related to the Reverse Stock Split.
**CAUTIONARY NOTE REGARDING FORWARD LOOKING
STATEMENTS**
****
This Annual Report on Form 10-K contains forward-looking
statements within the meaning of Section 27A of the Securities Act of 1933, or the "Securities Act, and Section 21E of the
Securities Exchange Act of 1934, or the Exchange Act. The statements contained in this report that are not purely historical are forward-looking
statements. Our forward-looking statements include, but are not limited to, statements regarding our or our managements expectations,
hopes, beliefs, intentions or strategies regarding the future. In addition, any statements that refer to projections, forecasts or other
characterizations of future events or circumstances, including any underlying assumptions, are forward-looking statements. The words anticipates,
"believe, continue, could, estimate, expect, intends,
may, might, plan, possible, potential, predicts, project,
should, would and similar expressions may identify forward- looking statements, but the absence of these words
does not mean that a statement is not forward-looking. Forward-looking statements in this Form 10-K may include, for example, statements
such as the following:
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the possibility that we may be adversely impacted by economic, business, and/or competitive factors; | |
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our limited operating history makes it difficult to evaluate our business and prospects; | |
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the success, cost and timing of our product development and commercialization activities, including the degree to which Epi+Gen CHD and PrecisionCHD, our currently-available tests, are accepted and adopted by patients, healthcare professionals and other participants in other key channels may not meet our current expectations; | |
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changes in applicable laws or regulations could negatively impact our current business plans, in particular with respect to regulation of laboratory-developed tests; | |
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we may be unable to obtain and maintain regulatory clearance or approval for our tests, and any related restrictions and limitations of any cleared or approved product could negatively impact our financial condition; | |
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the pricing of our products and services and reimbursement for medical tests conducted using our products and services may not be sufficient to achieve our financial goals; | |
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we may be unable to successfully compete with other companies currently marketing or engaged in the development of products and services that could serve the same or similar functions as our products and services; | |
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the size and growth potential of the markets for our products and services, and our ability to serve those markets, either alone or in partnership with others may not meet our current expectations; | |
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we may be unable to maintain our existing or future licenses, or manufacturing, supply and distribution agreements; | |
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we may be unable to identify, in-license or acquire additional technology needed to develop new products or services; | |
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our estimates regarding expenses, future revenue, capital requirements and needs for additional financing may not be accurate; | |
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we may be unable to raise needed financing in the future on acceptable terms, if at all; | |
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we may be unable to maintain our listing on The Nasdaq Stock Market; | |
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the ongoing or future impact from the coronavirus disease or other global health crises could cause significant economic and social disruption, and such impact on our business is uncertain; and | |
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there are other risks and uncertainties indicated in this report, including those under the section entitled Risk Factors that will be included in any prospectus or prospectus supplement, and other filings that have been made or will be made with the SEC by us that could materially alter our current expectations. | |
| 1 | |
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The forward-looking
statements contained in this Annual Report on Form 10-K are based on our current expectations and beliefs concerning future developments
and their potential effects on us. There can be no assurance that future developments affecting us will be those that we have anticipated.
These forward-looking statements involve a number of risks, uncertainties (some of which are beyond our control) or other assumptions
that may cause actual results or performance to be materially different from those expressed or implied by these forward-looking statements.
Should one or more of these risks or uncertainties materialize, or should any of our assumptions prove incorrect, actual results may vary
in material respects from those projected in these forward-looking statements. We undertake no obligation to update or revise any forward-looking
statements, whether as a result of new information, future events or otherwise, except as may be required under applicable securities
laws.
**Recent Developments**
*At the Market Sales Agreement*
On January 26, 2024, the Company entered into the
Sales Agreement with Craig-Hallum Capital Group, LLC (Craig-Hallum). Pursuant to the Sales Agreement, the Company may sell,
at its option, shares of its Common Stock through Craig-Hallum, as sales agent. Sales of the Common Stock were made pursuant to the Sales
Agreement initially up to an aggregate of $17 million under the Companys Registration Statement on Form S-3 filed on January 26,
2024 (File No. 333-276725), and declared effective by the SEC on February 1, 2024 (the Initial Registration Statement).
Additional sales have been, and may continue to be made, pursuant to the Sales Agreement up to an aggregate of $9,476,508 under the Companys
Registration Statement on Form S-3 filed on February 7, 2025 (File No. 333-284775), declared effective by the SEC on February 14, 2025
(the Additional Registration Statement) and its accompanying Prospectus Supplement dated February 14, 2025. Subject to the
terms and conditions of the Sales Agreement, Craig-Hallum may sell the shares, if any, only by methods deemed to be an at the market
offering as defined in Rule 415 promulgated under the Securities Act. The Company has agreed to pay Craig-Hallum a sales commission of
2.5% of the gross proceeds for sales under the Sales Agreement and to provide Craig-Hallum with customary indemnification and contribution
rights, including for liabilities under the Securities Act. In addition, the Company is required to reimburse Craig-Hallum for certain
specified expenses in connection with entering into the Sales Agreement.
In connection with the Sales Agreement, the Company
sold 825,268 common shares (24,758,057 prior to the Reverse Stock Split) at various amounts per share to investors for gross proceeds
totaling $11,546,949, before deducting sales commissions of $288,921 to placement agent, during the year ended December 31, 2024. The
Company also paid the placement agent a fee of $55,000.
During the year ended December 31, 2025, in connection
with the Sales Agreement the Company sold 292,495 shares on the post-reverse stock split basis (which includes 206,713 shares that were
sold prior to the Reverse Stock Split, originally 6,201,377 shares) of Common Stock at various amounts per share to investors for gross
proceeds totaling $3,900,492 before deducting sales commissions of $96,994 to the placement agent. Subsequent
to December 31, 2025, the Company sold 1,133,418 shares of Common Stock for gross proceeds
totaling $3,788,174 under the At-the-MarketIssuance Sales
Agreement as of the date of this report.
**Risk Factor Summary**
*Our business is subject to numerous risks and
uncertainties, including those highlighted in the section titled Risk Factors, which represent challenges that we face in
connection with the successful implementation of our strategy and growth of our business. The occurrence of one or more of the events
or circumstances described in the section titled Risk Factors, alone or in combination with other events or circumstances,
may have an adverse effect on our business, cash flows, financial condition and results of operations. Such risks include, but are not
limited to*:
**Risks Related to Our Business, Industry
and Business Operations**
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We have a limited operating history that makes it impossible to reliably predict future growth and operating results. | |
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We have an unproven business model, have not generated significant revenues and can provide no assurance of generating significant revenues or operating profit. | |
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The healthcare commercialization
process is inherently lengthy and subject to regulatory, reimbursement, evidentiary and behavioral factors, which, combined with clinical
adoption of novel diagnostic technologies that frequently spans multiple years, results in a lengthy period from initial development to
widespread utilization and resulting revenue, which, in some cases, may span a decade or more. | |
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The market for epigenetic tests is fairly new and unproven, and it may decline or experience limited growth, which would adversely affect our ability to fully realize the potential of our business plan. | |
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The estimates of market opportunity and forecasts of market growth included in this Annual Report on Form 10-K may prove to be inaccurate, and even if the market in which we compete achieves the forecasted growth, our business could fail to grow at similar rates, if at all. | |
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If we are not able to enhance or introduce new products that achieve market acceptance and keep pace with technological developments, our business, results of operations and financial condition could be harmed. | |
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The success of our business depends on our ability to expand into new vertical markets and attract new customers in a cost-effective manner. | |
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Our growth strategy may not prove viable and expected growth and value may not be realized. | |
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Our future growth could be harmed if we lose the services of our key personnel. | |
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We may face intense competition, which could limit our ability to maintain or expand market share within our industry, and if we do not maintain or expand our market share, our business and operating results will be harmed. | |
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Our business depends on customers increasing their use of our existing and future products, and we may experience loss of customers or a decline in their use of our solutions, particularly, but not exclusively, if we are unsuccessful in securing Medicare and other payor reimbursement. | |
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We rely on a limited number of suppliers, contract manufacturers, and logistics providers for our tests. | |
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We may be unable to scale our operations successfully. | |
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As we grow the size of our organization, we may experience difficulties in managing this growth. | |
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Our success depends upon our ability to adapt to a changing market and our continued development of additional tests and services. | |
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Our Board of Directors may change our strategies, policies, and procedures without stockholder approval. | |
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We may need to seek alternative business opportunities and change the nature of our business. | |
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We may be subject to general litigation that may materially adversely affect us and our operations. | |
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Our management expects to continue to devote substantial time to maintaining and improving its internal controls over financial reporting and the requirements of being a public company which may, among other things, strain our resources, divert managements attention and affect our ability to accurately report our financial results and prevent fraud. | |
**Risks Related to Our Intellectual Property**
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Certain of our core technology is licensed, and that license may be terminated if we were to breach our obligations under the license. | |
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Our license agreement with University of Iowa Research Foundation (UIRF) includes a non-exclusive license of technical information that potentially could grant unaffiliated third parties access to materials and information considered derivative work made by us, which could be used by such licensees to develop competitive products. | |
**Risks Related to Government Regulation**
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We conduct business in a heavily regulated industry, and if we fail to comply with these laws and government regulations, we could incur penalties or be required to make significant changes to our operations and tests or experience adverse publicity, which could have a material adverse effect on our business, financial condition, and results of operations. | |
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If the U.S. Food and Drug Administration (FDA) were to implement rules regulating our tests, we could incur substantial costs and delays associated with trying to obtain premarket clearance or approval and incur costs associated with complying with post-market controls. | |
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If our products do not receive adequate coverage and reimbursement from third-party payors, our ability to expand access to our tests beyond our initial sales channels will be limited and our overall commercial success will be severely limited. | |
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Our licensed technology was made using government funding and may be subject to federal regulations under the Bayh-Dole Act. Compliance with Bayh-Dole is managed through UIRF and any lapse in reporting could negatively impact Cardio. | |
**Risks Related to Our Common Stock**
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The price of our Common Stock likely will continue to be volatile like the stocks of other early-stage companies. | |
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Because a substantial number of our currently outstanding shares of Common Stock are registered for resale, we may have difficulty raising additional capital when and if needed. | |
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A significant number of shares of our Common Stock are subject to issuance upon exercise of outstanding warrants and options, which upon such exercise may result in dilution to our security holders. | |
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We have never paid dividends on our Common Stock, and we do not anticipate paying any cash dividends on our Common Stock in the foreseeable future. | |
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Sales of a substantial number of shares of our Common Stock in the public market by our existing stockholders could cause our stock price to decline. | |
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**Part I**
****
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Item 1. |
Business | |
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*References in this report to Cardio,
we, us or the Company refer to Cardio Diagnostics Holdings, Inc. References to our management
or our management team refer to the officers and directors of Cardio Diagnostics Holdings, Inc.*
**
**Our Company**
Cardio was formed to further develop and commercialize
a series of products for major types of cardiovascular disease and associated co-morbidities, including coronary heart disease (CHD),
stroke, heart failure and diabetes, by leveraging our Artificial Intelligence (AI)-driven Multi-Omics Engine (formerly
known as our AI-Integrated Genetic-Epigenetic EngineTM). As a
company, we aspire to give every American adult insight into their unique risk for various cardiovascular diseases. Cardio aims to become
one of the leading medical technology companies for enabling improved prevention, early detection and treatment of cardiovascular disease.
Cardio is transforming the approach to cardiovascular disease from reactive to proactive and hope to accelerate the adoption of Precision
Medicine for all. We believe that incorporating Cardios solutions into routine practice in primary care and prevention efforts
can help alter the trajectory that nearly one in two Americans is expected to develop some form of cardiovascular disease by 2035.
Cardio believes that it is the first company to
develop and commercialize epigenetics-based clinical tests for cardiovascular disease that have clear value propositions for multiple
stakeholders including (1) patients, (2) clinicians, (3) hospitals/health systems, (4) employers and (5) payors. According to the CDC,
epigenetics is the study of how a persons behaviors and environment can cause changes that affect the way a persons genes
work. Unlike genetic changes, epigenetic changes are reversible and do not change ones DNA sequence, but they can change how a
persons body reads a DNA sequence.
Cardio launched its first clinical test, Epi+Gen
CHD, a three-year symptomatic CHD risk assessment clinical blood test targeting CHD events, including heart attacks, in 2021 during
the COVID-19 pandemic. As a result, the initial strategy for commercialization involved launching the test via telemedicine and in smaller
provider practices such as concierge medicine practices. The volume of tests through these channels was minimal, and as the circumstances
around COVID-19 pandemic improved, management re-vamped the Companys go-to-market strategy to include other healthcare verticals
and stakeholders beyond patients and small providers, including larger provider organizations, group purchasing organizations, employers,
payors and life insurers. This new approach allowed Cardio to expand the reach of our solutions beyond the initial focus areas. Beyond
the launch of Epi+Gen CHD, in March 2023, we announced the launch of our second product, PrecisionCHD, an integrated epigenetic-genetic
clinical blood test for the detection of coronary heart disease. The PrecisionCHD test is coupled to our Actionable Clinical Intelligence
(ACI), a platform that offers new epigenetic and genetic insights to clinicians prescribing the test to personalize patient
management and help improve chronic care management. In May 2023, we launched CardioInnovate360, a research-use-only (RUO)
solution to support the discovery, development and validation of novel biopharmaceuticals for the assessment and management of cardiovascular
diseases. In February 2024, we announced the launch of HeartRisk, a cardiovascular disease risk intelligence platform. We believe
that our Epi+Gen CHD and PrecisionCHD tests are categorized as laboratory-developed tests, or LDTs. The new
go-to-market strategy is also being implemented for these products. Despite long partnership and sales cycles, in some instances as long
as 24 months, Cardio has been able to increase the number of provider organizations offering its tests and has continued the development
of a more robust sales and partnership pipeline. In the fiscal year ended December 31, 2025, the focus of the Company remained on driving
adoption of our clinical solutions, predominantly among providers, channel partners and employers. In addition, the Company made progress
in its ongoing expansion to additional markets domestically and internationally with the first international expansion to India, partnering
with channel partners such as YMCA of East Tennessee and Southdale YMCA to offer testing to its members and community, The Company also
made progress in setting up our laboratory facility as a high complexity testing laboratory in compliance with the Clinical Laboratory
Improvement Amendments (CLIA).
Cardio expects that sales and
partnership cycles will continue to be long, especially with the current economic uncertainty. Our ongoing strategy for expanding our
business operations and increasing revenue generation include the following:
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Leverage our CPT PLA codes and expand reimbursement efforts with
both government and commercial payors; | |
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Develop additional products, including clinical tests for stroke,
congestive heart failure and diabetes; | |
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Expand clinical and health economics evidence portfolio to continue to demonstrate value of products and increase reach; | |
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Offer laboratory services via our CLIA laboratory; | |
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Expand the adoption of our products across key channels, including health systems and self-insured employers; | |
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Explore additional market opportunities in the US; | |
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Explore partner-led international expansions like that in India; | |
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Explore opportunities to grow presence in India, including with local manufacturing; | |
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Scale our internal operations capabilities with a focus on improving efficiency and reducing our cost of goods sold; and | |
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Pursue potential strategic partnership(s) and/or acquisition(s) of one or more synergistic companies. | |
****
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As of March 13, 2026, we have sold an aggregate
2,251,181 shares of our Common Stock under the Sales Agreement and may sell up to another $5,298,889 of our Common Stock through Craig-Hallum
under the Sales Agreement.
**Recent Regulatory and Judicial Developments
Regarding LDTs**
On May 6, 2024, the FDA published a final rule amending
the definition of an in vitro diagnostic (IVD) device to include tests manufactured by a clinical laboratory. Pursuant to
the rule, LDT, i.e., tests designed, manufactured, and used within a single CLIA-certified high complexity laboratory, would have been
medical devices subject to FDA regulation under the Federal Food, Drug, and Cosmetic Act (FDC Act). The final rule also
announced FDAs intention to apply its medical device requirements to LDTs. Under the final rule, all LDTs, unless subject to a
specific exemption, would have been subject to premarket authorization requirements (510(k), de novo classification, or PMA) for each
LDT performed by the laboratory, and to postmarket registration and listing, medical device reporting, correction, removal, and recall,
complaint handling, labeling, investigational device, and quality system requirements.
On September 19, 2025, the FDA formally rescinded its May 2024 final
rule regulating LDTs as medical devices, following a March 31, 2025 federal court ruling. The U.S. District Court for the Eastern District
of Texas found that the FDA exceeded its authority, reverting LDT oversight to Clinical Laboratory Improvement Amendments (CLIA). There
has been no further pursuit by the current administration.
**Industry Background**
****
According to the American Heart Association (AHA),
even though an estimated 80% of cardiovascular disease (CVD) is preventable, it remains the leading cause of death in the
United States and globally. The AHA also reported that over 650,000 deaths in the United States each year are attributable to heart disease,
which amounts to one in every four deaths. The Centers for Disease Control and Prevention (CDC) estimates that in the United
States, one person dies every 36 seconds from CVD. Unfortunately, the incidence of CVD is expected to continue to rise with the AHA projecting
that by 2035, nearly half of Americans will have some form of CVD.
CVD represents conditions
that affect the heart and blood vessels such as coronary heart disease (CHD), stroke, and congestive heart failure (CHF).
CHD is the most common type of heart disease and according to the CDC, was responsible for nearly 370,000 deaths in 2019. The National
Center for Health Statistics reported that the prevalence of CHD is approximately 6.7%, and according to the AHA, over 20 million adults
aged 20 or older in the United States have CHD. CHD is also the major cause of heart attacks. According to the AHA, every 40 seconds,
someone in the United States has a heart attack, with over 800,000 Americans having a heart attack each year. The CDC reported that in
2020, stroke was responsible for one in six CVD-related deaths. The AHA estimates that every year, nearly 800,000 Americans have a stroke
which is the leading cause of major long-term disability, with a stroke-related death occurring every 3.5 minutes. According to the AHA,
over six million adults have heart failure and nearly 380,000 deaths in 2018 were attributable to heart failure. There are numerous risk
factors that could increase an individuals risk for CVD. Several key risk factors include diabetes, high blood cholesterol, and
high blood pressure. For example, according to the CDC, over 34 million adults have diabetes and according to Johns Hopkins Medicine,
those with diabetes are two to four times more likely to develop CVD. Alongside genetics, age, sex, and ethnicity, lifestyle factors such
as smoking, unhealthy diet, physical inactivity, and being overweight can also increase the risk for CVD.
In addition to the enormous morbidity and mortality
associated with CVD, the economic burden of CVD is also staggering as depicted in the figure below from the Cardiovascular Disease: A
Costly Burden For America, Projections Through 2035 report by the AHA. CVD is the costliest disease in the United States and the economic
burden associated with CVD is expected to continue to soar. According to the CDC Foundation, every year, one in six United States healthcare
dollars is expended on CVD.
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*
The AHA reports that in 2016, the cost of CVD was
$555 billion and is expected to rise to over $1 trillion by 2035. Of the $555 billion, $318 billion was associated with medical costs,
and the remaining $237 billion with indirect costs such as lost productivity. By 2035, the medical costs associated with CVD are expected
to increase 135% to $749 billion, while the indirect costs are expected to rise by 55% to $368 billion. Currently, among the various types
of CVD, the medical costs of CHD are the highest at $89 billion and are expected to rise to $215 billion by 2035 as depicted in the figure
below from the Cardiovascular Disease: A Costly Burden For America, Projections Through 2035 report by the AHA.
To address this expected significant rise in human
health and economic burdens, the United States healthcare market is seeking more efficient and effective methods to better prevent, detect,
manage, and treat CVD. This same trend is playing out across developed nations around the globe as the burden of CVD continues to grow
due to a rise in major risk factors such as obesity, poor diet and Type 2 diabetes.
This is consistent with the cardiovascular diagnostic
testing market trends reported by Research and Markets in their Outlook on the Cardiovascular Diagnostic Testing Global Market to 2027
- Increasing Number of Insurance Providers Presents Opportunities press release published on July 4, 2022. They estimate that the Global
Cardiovascular Diagnostic Testing Market is estimated to grow from $8.47 billion in 2022 to $12.41 billion by 2027, with a CAGR of 7.94%.
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There are several healthcare tailwinds that are
driving this expected growth and are expected to support the large-scale adoption of our solutions:
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The aging population: According to the Population Reference Bureau, by 2060, the number of Americans aged 65 and over is projected to more than double from 46 million to over 98 million. This demographic shift will result in increased demand for healthcare services in general and for CVD specifically because the risk for CVD increases with age. According to the AHA, the risk for CVD at age 24 is about 20% and more than doubles to 50% by age 45, with 90% of those over the age of 80 having some form of CVD. | |
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The rise of chronic diseases: Chronic diseases such as heart disease, cancer, and diabetes are rising in the United States. The rise of these conditions is further driven by less-than-ideal lifestyle choices such as smoking, an unhealthy diet, and sedentary behavior. As a result, better predictive and diagnostic tools are needed to get ahead of these conditions alongside the need for improved treatment and management of these conditions. | |
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The rise of costs associated with chronic diseases: Chronic diseases, including heart disease and cancer continue to drive up healthcare costs, placing a growing financial burden on employers, insurers, and the healthcare system at large. In the United States, the direct and indirect costs associated with CVD is expected to climb as prevalence increases. The financial strain is particularly evident in employer-sponsored health plans, where CVD is a leading driver of high-cost claims, absenteeism, and reduced productivity. As healthcare costs rise, self-insured employers, benefits consultants, payers, and providers are actively seeking cost-effective solutions to mitigate the impact of CVD. This includes early detection strategies, precision diagnostics, and personalized prevention programs that can identify at-risk individuals before costly acute events occur. | |
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The shift to value-based care: The shift to value-based care drives healthcare providers to focus on quality rather than quantity of care. The shift to value-based care is a crucial driver of growth for Cardio because it incentivizes health care providers to focus on providing quality care rather than simply providing more care. Cardio believes providers can tackle the costliest and deadliest disease category with its solutions while reducing costs. | |
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The growth of telemedicine: Driven largely by the COVID-19 pandemic, telemedicine is a growing trend in healthcare, as it allows patients to receive care from providers remotely. Remote, telemedicine-based preventative programs and tests can serve those who are already undergoing routine screening, but more importantly, expand reach to most Americans who currently are not receiving preventative healthcare, including rural and underserved populations. our evidence-based solutions can be deployed remotely, which is expected to further drive adoption by patients and clinicians. | |
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The adoption of Artificial Intelligence (AI): AI is increasingly incorporated into many aspects of healthcare, including administrative tasks, diagnosis and treatment. AI has the potential to improve the quality of care while reducing costs. Machine learning, which is a type of AI, is instrumental to our cutting-edge solutions, powering their clinical performance and differentiating them from other technologies for CVD. | |
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The rise of patient engagement: Thanks to technology, patients are becoming more engaged in their healthcare. They use online tools to research their conditions and treatments and are more likely to participate in their care. This includes demanding cutting-edge clinical tests that can help them better prevent chronic diseases such as CVD while improving the length and quality of life. As a result, healthcare providers and organizations that offer such services including our solutions are likely to have an edge over those who do not. | |
**Our Strategy**
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Building compelling evidence. Our AI-driven Multi-Omics Engine enables rapid design, development, and launch of diagnostic solutions resulting from over a decade of research studies. Our solutions that result from this technology, including our Epi+Gen CHD test for coronary heart disease event risk assessment and PrecisionCHD for the earlier detection of coronary heart disease, were developed through rigorous studies that are peer-reviewed and published and others that are being prepared for peer-reviewed publication in collaboration with leading healthcare and research institutions. In addition to the superior sensitivity of the Epi+Gen CHD and PrecisionCHD tests, the evidence bases for both the PrecisionCHD and Epi+Gen CHD tests also include an economic case to drive a more holistic and compelling argument for adoption. | |
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Expand
product use cases. To continue to differentiate our products and their value propositions, we continue to invest in studies to
expand their use cases. For example, with the PrecisionCHD test, we presented preliminary data at the American Heart
Association and American College of Cardiology conferences on this tests ability to detect non-obstructive form of coronary
heart disease (INOCA) and predict mortality of acute coronary syndrome patients. | |
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Engaging experts and key stakeholders. At Cardio, we understand that engaging experts and key healthcare stakeholders is critical to realizing our solutions full potential and ensuring that these solutions reach as many people as possible. | |
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Prioritizing and executing strategic acquisitions. Our expertise at several intersections across biology, machine learning, lab assay development, and cardiovascular disease, provide an array of strategic acquisition opportunities to better serve the cardiovascular disease market by horizontally and vertically integrating across the cardiac care continuum. | |
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Prioritizing payor coverage. We believe that to continue to grow the market traction of our solutions, we must secure broad payor coverage. We have already secured CPT PLA reimbursement codes for PrecisionCHD (0440U) and Epi+Gen CHD (0439U) and final CMS gapfill payment rates of $854 for both tests. For Medicare, we are currently pursuing coverage for these tests, which we believe is the critical first phase to accomplishing widespread reimbursement for our tests. For commercial payors, we are partnering with a third-party company and expect to have the capability to submit claims out-of-network beginning in Q2 2026. We are also continuing to build necessary evidence, and are pursuing pilots and strategic collaborations with payors. We expect that the process to secure broad coverage could take years, which means that our ability to generate meaningful revenue will continue to be constrained. | |
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Evaluating FDA pathway. Cardio is evaluating an FDA regulatory pathway to enable broader access to our tests. The FDA pathway would enable Cardios tests to be performed broadly at many labs across the country. We are continuing to build our evidence base for this. | |
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Continued education. Changes to established workflows and clinical practice take time. However, we continue to invest in efforts to educate healthcare stakeholders, including physicians and decision makers, on our technology, tests and their value propositions. Such efforts include conference attendance, webinars, and one-on-one educational sessions. | |
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Targeting multiple revenue channels. To ensure that our revenue stream is diversified, Cardio has and will continue to target multiple revenue channels for which our solutions have compelling value propositions. This strategy includes, but is not limited to providers, health systems, and employers. We are also pursuing international expansions to further diversify revenue streams. | |
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Launching synergistic products. To more fully address cardiovascular health, Cardio is leveraging our AI-driven Multi-Omics Engine to develop a series of clinical tests for major types of cardiovascular disease and associated co-morbidities, including stroke, congestive heart failure and diabetes. We have also started to develop additional synergistic products other than new clinical blood tests. Our first such product, HeartRisk, is a cardiovascular disease risk intelligence platform, designed to augment our clinical blood tests. | |
**Our Technology**
At the core of Cardio is our proprietary AI-driven
Multi-Omics Engine, an engine invented and built by three key employees/officers for over a decade. Our technology enables rapid
design, development and launch of new diagnostic solutions through the identification of robust integrated genetic-epigenetic biomarkers
and their translation into clinical tests for cardiovascular disease and associated co-morbidities. This Engine consists of multiple layers.
It begins with genome-wide genetic (single nucleotide polymorphisms or SNPs), genome-wide epigenetic (DNA methylation) and clinical data
points. Using high-performance computing, ML/AI techniques and deep domain expertise in medicine, molecular biology and engineering, a
panel of SNP-DNA methylation biomarkers are mined, modeled and translated into standalone laboratory assays.
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As a result, our products, which are clinical tests,
consist of two components. The first is a laboratory component, which involves epigenetic DNA biomarkers. Genetic biomarkers (SNPs)
represent an individuals inherited risk for the disease, have been reported to drive less than 20% of the risk for cardiovascular
disease (Hou, K et al, Aug 2019, Nature Genetics) and do not change with intervention (i.e.*, static). Epigenetic biomarkers (DNA
methylation) represent an individuals acquired risk for the disease that is influenced by lifestyle and environment which is a
larger driver for cardiovascular risk compared to genetics, is largely confounded by genetics and has been shown to change over time with
intervention or changes in ones lifestyle and environment (*i.e.*, dynamic). The second is an analytical component, which
involves applying a proprietary interpretive predictive machine learning model to predict risk and provide personalized insights to help
clinicians tailor patient management. The combination of biomarkers and predictive machine learning model is unique to each clinical test
we develop.
*
**Our Products and Services**
****
We have and will continue to leverage our AI-driven
Multi-Omics Engine to develop a series of clinical tests for cardiovascular disease. As of March 2026, we have leveraged this Engine
to develop two clinical products: Epi+Gen CHD and PrecisionCHD.
We believe that our first product, Epi+Gen CHD,
is the first epigenetics-based clinical blood test capable of assessing near-term (three-year) risk for a
coronary heart disease (CHD) event, including heart attacks, and our
second product, PrecisionCHD, is the first epigenetics-based clinical blood test for the detection of CHD.
Our PrecisionCHD test is accompanied by our provider-facing
Actionable Clinical Intelligence platform, which maps a patients unique biomarker profile and other information onto modifiable
factors such as diabetes, hypertension, hypercholesterolemia, and smoking, known to be critical drivers of coronary heart disease.
CardioInnovate360 is a research use only
(RUO) solution we launched to support the discovery, development and validation of novel biopharmaceuticals for the assessment and management
of cardiovascular diseases.
In 2024, we launched our first software product,
HeartRisk. HeartRisk is a cardiovascular disease risk intelligence platform that combines insights from HIPAA-compliant
anonymized and aggregated clinical cardiovascular data obtained through our Epi+Gen CHD and PrecisionCHD clinical blood
tests, with industry and geographic data to enable real-time population-level cardiovascular disease (CVD) risk insights.
These insights are customized for the stakeholder implementing our clinical solutions.
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Clinicians Current Approach to Cardiovascular Disease*
**
Currently, a patients risk for CVD is generally
assessed using two common lipid-based clinical tests known as Framingham Risk Score (FRS) and ASCVD Pooled Cohort Equation (PCE).
FRS and PCE are 10-year CVD risk calculators that
aggregate common clinical variables such as cholesterol and diabetes, demographics and subjective, self-reported information such as smoking
status. For the early detection of CHD, tests that are routinely used in a provider setting include stress echocardiograms. These tests
have several limitations and are less effective for several reasons:
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In a peer-reviewed published study by Cardio in collaboration with Intermountain Healthcare (Dogan, Meeshanthini & Knight, Stacey & Dogan, Timur & Knowlton, Kirk & Philibert, Robert. (2021). External validation of integrated genetic-epigenetic biomarkers for predicting incident coronary heart disease. Epigenomics. 13. 10.2217/epi-2021-0123), we found that for predicting the three-year risk for a coronary heart disease event such as a heart attack, the average sensitivity of FRS and PCE was 44% in men and 32% in women. This means that for every 100 men and 100 women deemed "at-risk for a coronary heart disease event, the test only correctly identifies 44 men and 32 women. | |
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In a peer-reviewed published study by Cardio in collaboration with Intermountain Healthcare and University of Iowa Hospitals and Clinics (Philibert, Robert & Dogan, Timur & Knight, Stacey & Ahmad, Ferhaan & Lau, Stanley & Miles, George & Knowlton, Kirk & Dogan, Meeshanthini. (2023). Validation of integrated genetic-epigenetic test for the assessment of coronary heart disease. Journal of American Heart Association. 12:e030934. DOI: 10.1161/JAHA.123.030934), we found that the overall average area under the curve, sensitivity, and specificity in three independent test cohorts for detecting coronary heart disease were 82%, 79%, and 76%, respectively. | |
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In a peer-reviewed published study by Cardio in collaboration with Intermountain Healthcare and University of Iowa Hospitals and Clinics (Philibert, Robert & Dogan, Timur & Knight, Stacey & Ahmed, Ferhaan & Lau, Stanley & Miles, George & Knowlton, Kirk & Dogan, Meeshanthini. (2023). Validation of an integrated genetic-epigenetic test for the assessment of coronary heart disease. Journal of American Heart Association. 10.1161/JAHA.123.030934), we found that for predicting the presence of coronary heart disease, PrecisionCHD had an 80% sensitivity for men and 76% sensitivity for women. | |
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The fasting requirement for current tests could be cumbersome for patients to comply, and the lack of fasting could affect test results. | |
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The patient care plan that results from these tests generally lack personalization. | |
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Lipid-based risk assessment tests depend on self-reported, subjective information such as smoking status from patients, and inaccurate information could affect the accuracy of test results. | |
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Undergoing these tests requires an in-person clinic visit to collect blood samples and other necessary data points such as blood pressure, which may delay or prevent access to primary prevention, e.g., for those who are unable to make time for the visit, have transportation issues or live in rural areas are likely to delay primary prevention altogether. Similarly, to undergo a stress echocardiogram for instance, an in-person visit is required, and such a visit can take weeks to schedule that could delay care for patients especially if they are experiencing symptoms such as chest pain. | |
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Commonly used risk assessment tests were also developed predominantly using data from men and therefore, may be less effective for women. | |
*Epi+Gen CHD is the Only Epigenetics-based
Clinical Test for Coronary Heart Disease Event Risk Assessment*
**
Epi+Gen CHD is a scientifically backed clinical
blood test that is based on an individuals objective genetic and epigenetic DNA biomarkers for assessing the three-year risk for
a coronary heart disease event such as a heart attack. In a peer-reviewed study done in collaboration with Intermountain Healthcare (Dogan,
Meeshanthini & Knight, Stacey & Dogan, Timur & Knowlton, Kirk & Philibert, Robert. (2021). External validation of integrated
genetic-epigenetic biomarkers for predicting incident coronary heart disease. Epigenomics. 13. 10.2217/epi-2021-0123), this test demonstrated
a 76% and 78% sensitivity for men and women, respectively, for three-year CHD risk. This means that for every 100 men and 100 women deemed
"at-risk for a coronary heart disease event, the test correctly identifies 76 men and 78 women. In comparison, the average
sensitivity of the Framingham Risk Score and the ASCVD Pooled Cohort Equation was found to be 44% and 32% for men and women, respectively.
The performance of the test in this study was evaluated across two cohorts that were independent of each other. One cohort was used for
the development of this test, and the other was used to independently validate the performance of the test, showing Epi+Gen CHD
to be approximately 1.7 times and 2.4 times more sensitive than the current lipid-based clinical risk estimators in men and women, respectively.
In another peer-reviewed study focusing on the cost utility of Epi+Gen CHD (Jung, Younsoo & Frisvold, David & Dogan, Timur
& Dogan, Meeshanthini & Philibert, Robert. (2021). Cost-utility analysis of an integrated genetic/epigenetic test for assessing
risk for coronary heart disease. Epigenomics. 13. 10.2217/epi-2021-0021), this test was associated with up to $42,000 in cost savings
per quality adjusted life year and improved survival compared to the ASCVD Pooled Cohort Equation. In another peer-reviewed study, (Philibert,
Willem & Andersen, Allan & Hoffman, Eric & Philibert, Robert & Dogan, Meeshanthini. (2021). The reversion of DNA methylation
at coronary heart disease risk loci in response to prevention therapy. Processes. 9, 699. https://doi.org/10.3390/pr9040699), DNA methylation
of this test was shown to change within 90 days of intervention in the form of smoking cessation, demonstrating that this test could potentially
also be leveraged to evaluate the effectiveness of interventions.
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*
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The blood-based version of this test was introduced
for market testing in 2021. The pricing of the test varies based on factors such as organization type and test volume. The price of the
test and revenue streams could change in the future depending on market forces and payor requirements, as well as on the customer and
the region in which the test is being sold. We are continuing to build additional clinical and health economics evidence to pursue payor
coverage. A key first step in expanding critical payor coverage is to have this test be assigned a CPT PLA code, and the American Medical
Association awarded the Epi+Gen CHD a CPT PLA code, 0439U. This test received a final CMS gapfill payment rate of $854 in 2025.
We believe that the Epi+Gen CHD test can
benefit numerous healthcare stakeholders. For instance, we believe that this test will enable clinicians to identify patients at-risk
in the near-term for CHD-related events, including a heart attack, and utilize actionable insights from this test to provide more personalized
care for their patients to help prevent the event and improve outcomes. These actionable insights are conveyed via our provider-facing
Actionable Clinical Intelligence platform, which maps a patients unique biomarker profile and other information onto pathways
and modifiable drivers of coronary heart disease. In addition to clinicians, we believe that this test can enable healthcare organizations
and payors to reduce the cost of care, and employers to understand and better manage business risks including healthcare costs. Insights
for these stakeholders upon leveraging the Epi+Gen CHD test are provided via our new software product, HeartRisk, which
is a cardiovascular disease risk intelligence platform. The pricing for this platform will be customized based on the organization type
and size, and use case.*
**
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*PrecisionCHD is the Only Epigenetics-based
Clinical Test for the Early Detection of Coronary Heart Disease*
**
PrecisionCHD is a scientifically backed clinical
blood test that is based on an individuals objective genetic and epigenetic DNA biomarkers for the detection of coronary heart
disease. In a peer-reviewed published study by Cardio in collaboration with Intermountain Healthcare and University of Iowa Hospitals
and Clinics (Philibert, Robert & Dogan, Timur & Knight, Stacey & Ahmad, Ferhaan & Lau, Stanley & Miles, George &
Knowlton, Kirk & Dogan, Meeshanthini. (2023). Validation of integrated genetic-epigenetic test for the assessment of coronary heart
disease. Journal of American Heart Association. 12:e030934. DOI: 10.1161/JAHA.123.030934), this test demonstrated an overall average area
under the curve, sensitivity, and specificity in three independent test cohorts for detecting coronary heart disease of 82%, 79%, and
76%, respectively. The average sensitivity for men and women was 80% and 76%, respectively. This means that for every 100 men and 100
women deemed to have coronary heart disease, the test correctly identifies 80 men and 76 women. In comparison, the most
commonly used and least invasive test for detecting coronary heart disease, exercise ECG, has a sensitivity of only 58%. The performance
of the test in this study was evaluated across three cohorts that were independent of each other. One cohort was used for the development
of this test, and the other two were used to independently validate the performance of the test. Based on the known sensitivity of exercise
ECG, PrecisionCHD is approximately 1.4 times and 1.3 times more sensitive than an exercise ECG in men and women, respectively,
for detecting coronary heart disease. In another peer-reviewed study, (Broyles, Damon & Philibert, Robert. (2023). Precision epigenetics
provides a scalable pathway for improving coronary heart disease care globally. Epigenomics. 10.2217/epi-2023-0233), the global scalability
of PrecisionCHD was outlined in comparison to commonly used coronary heart disease tests such as exercise ECG and CCTA. Similar to the
Epi+Gen CHD test, a peer-reviewed study was conducted to evaluate if the DNA methylation biomarkers of PrecisionCHD could be potentially
leveraged to evaluate the effectiveness of interventions. In this peer-reviewed study, (Philibert, Robert & Moody, Joanna & Philibert,
Willem & Dogan, Meeshanthini & Hoffman, Eric. (2023). The reversion of epigenetic signature of coronary heart disease in response
to smoking cessation. Genes. 14, 1233. https://doi.org/10.3390/genes14061233), DNA methylation of this test was shown to change within
90 days of intervention in the form of smoking cessation.
The blood-based version of this test was introduced
for market testing in 2023. The pricing of the test varies based on factors such as organization type and test volume. The American Medical
Association awarded the PrecisionCHD a CPT PLA code, 0440U. This test received a final CMS gapfill payment rate of $854 in 2025.
The price of the test and revenue streams could change in the future depending on market forces and payor requirements, as well as on
the customer and the region in which the test is being sold. We are continuing to build additional clinical and health economics evidence
to pursue payor coverage.
*
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We believe that the PrecisionCHD test can
benefit numerous healthcare stakeholders. For instance, we believe that this test will enable clinicians to identify patients with CHD
with a simple blood test and utilize actionable insights from this test to provide more personalized care for their patients to help improve
outcomes. These actionable insights are conveyed via our provider-facing Actionable Clinical Intelligence platform, which maps
a patients unique biomarker profile and other information onto modifiable factors such as diabetes, inflammation, hypercholesterolemia,
and smoking, known to be critical drivers of coronary heart disease. In addition to clinicians, we believe that this test can enable healthcare
organizations and payors to reduce the cost of care, and employers to understand and better manage
business risks including healthcare cost. Insights for these stakeholders upon leveraging the PrecisionCHD test are provided via
our new software product, HeartRisk, which is a cardiovascular disease risk intelligence platform. The pricing for this platform
will be customized based on the organization type and size, and use case.
Cardio intends to accelerate the adoption of Epi+Gen
CHD and PrecisionCHD by:
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developing strategic clinical partnerships to reach as many patients as possible; | |
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growing the clinical and economic evidence base supporting the use of the tests; | |
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leveraging industry organizations to engage and educate providers; | |
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offering pilot programs to for innovative providers and key strategic partners; and | |
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developing strategic partnerships with other healthcare stakeholders such as payors and employers. | |
Cardio foresees potential opportunities to increase the gross margin
of the Epi+Gen CHD and PrecisionCHD by:
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processing patient samples in the laboratory in larger batches; | |
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shipping sample collection kits in larger batches; and | |
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increasing the level of automation to reduce manual processing. | |
We have completed a pre-submission with the FDA
pertaining to our PrecisionCHD product and have received feedback from the FDA on that submission. We may complete additional pre-submissions
to the FDA as we continue to evaluate FDAs feedback and further develop our regulatory strategy. We have engaged outside expertise
for this process.
Product Pipeline*
**
We have several other tests in our product pipeline at various
stages of development for congestive heart failure, stroke and diabetes. However, as a company in the early stages of its development,
we continuously reevaluate our business, the market in which we operate and potential new opportunities. We may modify our product pipeline,
seek other alternatives within the healthcare field in order to grow the Companys business and increase revenues. Such alternatives
may include, but not be limited to, combinations or strategic partnerships with other laboratory companies or with medical practices such
as hospitalists or behavioral health.
**Our Market Opportunity**
Cardiovascular disease (CVD) is the
leading cause of death in the United States, accounting for one in four deaths. Despite being largely preventable, the American Heart
Association projects that by 2035, nearly 45% of Americans will have some form of CVD. One of the key ways to address the prevalence of
CVD is to shift the approach for CVD from reactive treatment to proactive prevention and earlier detection. As such, technologies that
can more precisely assess the risk for and detect CVD before symptoms emerge or a catastrophic cardiac event occurs becomes even more
critical.
According to Research and Markets in their Outlook
on the Cardiovascular Diagnostic Testing Global Market to 2027 - Increasing Number of Insurance Providers Presents Opportunities press
release published on July 4, 2022, the Global Cardiovascular Diagnostic Testing Market is estimated to grow from $8.47 billion in 2022
to $12.41 billion by 2027, with a CAGR of 7.94%. The increasing prevalence of cardiovascular diseases, technological advancements in cardiovascular
disease diagnostics, and the growing number of initiatives to promote cardiovascular disease testing are the major factors driving the
growth of this market.
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Our principal mission is to enable better detection
of the presence and risk of major cardiovascular diseases through a series of clinical tests developed by leveraging our proprietary AI-driven
Multi-Omics Engine. Our initial product, Epi+Gen CHD, is a highly sensitive and accessible clinical test for three-year
coronary heart disease (CHD) event risk assessment, including risk for a heart attack. Our second product, PrecisionCHD,
is a highly sensitive and accessible clinical test for the detection of CHD.
Using data from the US Census Bureau, test intended
use and disease prevalence, Cardio estimates that 146 million adults could potentially benefit from our Epi+Gen CHD test, and 60
million adults for our PrecisionCHD test. Using the final CMS gapfill pricing of $854/test as a basis, the US addressable market equates
to ~$125 billion for Epi+Gen CHD, and $51 billion for PrecisionCHD. This total addressable market does not account for variations
in test price, including self-pay, pilot pricing, discounts and different payment rates by different payors. It also does not account
for re-testing for patients over time.
*
Go-To-Market Strategy for Epi+Gen CHD
and PrecisionCHD*
Our current go-to-market (GTM) strategy
is predominantly a product-led innovation growth strategy that emphasizes enterprise-wide adoption across key healthcare sub-verticals
with a particular emphasis on deeply centralized key opinion and health trend leaders like innovative providers, health systems, and employers.
*Healthcare Sub-Vertical Priorities for Epi+Gen
CHD and PrecisionCHD*
By assessing the risk for a heart attack early and/or
detecting CHD early to potentially avert a heart attack, we believe that the clinical and economic utility of the Epi+Gen CHD and
PrecisionCHD tests will support their commercial adoption. We believe that Epi+Gen CHD and PrecisionCHD can address
a significant addressable market opportunity even before these tests are covered and reimbursed by payors. While we believe that such
coverage and reimbursement would be necessary to gain widespread adoption, obtaining such coverage and reimbursement from federal and
private payors may take several years, if it is obtained at all. We intend to focus on the following key channels as part of our GTM strategy:
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Innovative Health Systems | |
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As innovative health systems diversify their business
models and care delivery pathways, there is a renewed emphasis on using precision medical technologies to better manage expensive and
chronic conditions, including CHD. By assessing the risk for a CHD event including a heart attack before it occurs, Epi+Gen CHD
has the potential to improve population health. We believe that the improved performance of our test compared to other risk calculators,
coupled with evidence of cost savings and enhanced survival, will drive the adoption of Epi+Gen CHD by health systems to continue
improving the health of their patients. Similarly, with PrecisionCHD, innovative health systems are able to help test their patients
detect CHD earlier with a simple blood test, potentially leading to better patient outcomes.
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Physician-Directed Channels, Including Concierge Practices | |
Early adoption is driven by practices committed
to innovation in medicine for patients who are more focused on preventive health and wellness and have the financial means to pay out-of-
pocket for concierge subscription services. There is a convergence in innovative providers, health-conscious consumers, and best-in-class
tests and technologies in concierge medicine practices or other similar practices to provide on-demand elite personalized and readily
accessible healthcare. With an estimated 2,000 to 5,000 concierge practices in the United States, there is robust growth in high-end healthcare
services with an equal demand for innovative diagnostic tools. Additionally, concierge practices are not price-sensitive, so reimbursement
is not a top priority.
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Employers | |
Early adoption in the employer space is likely to
be driven by self-insured employers and employers looking to provide employee perks relevant to health. Self-insured employers are consistently
seeking solutions to help manage their biggest cost centers such as heart disease. In a post-pandemic world, the health and wellbeing
of employees are also top-of-mind for many employers to ensure that their employees are healthy and productive. Employers view healthcare
investments as another investment in the business. Employers leveraging innovative diagnostic solutions can connect better health for
employees to drive overall business objectives and have a competitive advantage in managing business risks while attracting and retaining
talent.
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Telemedicine and Marketplaces | |
Many Americans are concerned about being proactive
with their health needs. Understanding their personalized risk with tests at the forefront of medicine is crucial for those with financial
resources. According to the U.S. Census Bureau based on the 2020 census, there are nearly 44 million households that earn $100,000 or
more annually. We expect high-earning Americans who are proactive about their health to constitute the initial attainable market.
**
**
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*Sales and Marketing for Epi+Gen CHD and
PrecisionCHD with a Focus on Strategic Channel Partnerships*
While our overall sales and marketing initiatives
will span the gamut across traditional, print, and digital media, our primary sales and marketing strategy consists of the branding, collaboration,
co-marketing, and co-sales opportunities involved in strategic channel partnerships. By prioritizing strategic channel partnerships, we
believe we can accelerate our market penetration into the key healthcare sub-verticals we intend to prioritize for our growth. The key
to our efforts is a well-defined and executed channel partnership integration strategy that will serve to accelerate the sales cycles
for each of our distribution channels. The sales cycles are generally defined as the period in which such distribution channel will turn
over its inventory of our tests, which may vary for each distribution channel. Utilizing and developing such strategic channel partnerships,
we believe, will generate revenue in a myriad of ways including larger contracts for our Epi+Gen CHD and PrecisionCHD clinical
blood tests, and bundling our solutions alongside other synergistic technologies, services, and products.
Strategic channel partnerships are key for the growth
of our solutions. There are several key revenue and strategy benefits to developing a robust channel partnership strategy, including:
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Defensibility and Displacement | |
Strategic channel partners may have exclusivity
agreements for Epi+Gen CHD and PrecisionCHD, which forecloses distribution channels to potential competitors.
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Distribution and Network Effects | |
Channel partners under consideration for Epi+Gen
CHD and PrecisionCHD strategic partnerships have large, related healthcare and life science networks that we expect to leverage
as part of the relationship.
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Bi-Directional Value | |
The cardiovascular disease space is of paramount
concern to stakeholders across the healthcare continuum; the scale of the disease across the population and the associated costs ensures
that addressing cardiovascular disease from a payment, cost, patient outcome, and prevention standpoint for stakeholders across the spectrum
will continue to be a priority.
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Pricing Differentiation | |
The economics of each channel partnership can be
crafted independently to offer each strategic partner a per-unit cost relevant to the size of their network.
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Complementary Goods | |
Bundling Epi+Gen CHD,
PrecisionCHD, HeartRisk and future Cardio solutions alongside complementary clinical, analytics, treatment pathways, and
services-consulting for primary prevention optimization with key partners expands the ROI of the investment in our solutions.
*Hiring and Talent to Accelerate Growth*
Our growth strategy will require investment in internal
and external healthcare enterprise sales, marketing and deep customer insights. By combining best-in-class revenue operations technologies
with seasoned healthcare sales and marketing experts, we believe we can quickly scale the selling approaches we have outlined and validated
to transform the cardiovascular healthcare experience, driving revenue and increased margins. New hires will be targeting the entire continuum
of revenue needs, including opportunity identification, campaign design, and execution.
**Manufacture/Supply Chain**
The content of the sample collections kits for both
Epi+Gen CHD and PrecisionCHD are identical, and we rely on third-party suppliers for kit contents required to collect and
transport a blood sample to the lab for processing. These are commonly used supplies that are and can be sourced from multiple distributors.
Upon sourcing these contents, they are assembled into lancet- based and vacutainer-based sample collection kits internally and fulfilled.
We intend to maintain an inventory of fully assembled kits to meet expected demand for at least six months. However, since there are no
particular or unique assembly protocols and assembly is handled internally, the lead time to assemble additional sample collection kits
would be minimal after the contents are sourced.
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Proprietary genetic and DNA methylation components
are sourced from large manufacturers and manufactured under good manufacturing practices (cGMP). There are alternative manufacturers
for each of these components, and no additional lead time is expected. Laboratory assays that are manufactured under cGMP to specifications
are expected to be available to meet anticipated demand for at least six months.
Both the Epi+Gen CHD and PrecisionCHD
clinical blood tests currently are offered as LDTs through our newly established laboratory with the appropriate Clinical Laboratory Improvement
Amendments of 1988 (CLIA) certification and state licensure. The initial CLIA survey was conducted by a CLIA compliance
manager, which found no deficiencies.
**Our Competitive Strengths**
Innovation is the key to success. In the rapidly
moving cardiac diagnostics space, we believe that we have the team, differentiated technology, and deep technical and business expertise
to deliver a market differentiating suite of products for our customers to address unmet clinical needs in the cardiovascular space and
help us dominate our market.
The pillar of our strategy has been innovation,
from the onset with our technology development and intellectual property that account for future growth, to our commercialization and
partnership efforts that bring together key healthcare stakeholders.
We believe that, among other reasons, the future
belongs to Cardio based on the following competitive strengths:
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Technology and products are strongly backed by science. | |
**
Our technology and products stem from over a decade
of rigorous scientific research by the founding team in collaboration with other clinical and research experts from leading organizations.
Our founding team consist of experts in machine learning approaches in healthcare and in epigenetics with highly-cited peer-reviewed publications.
The technology and products are developed and validated with extensive clinical data. The key findings have been published after undergoing
stringent independent third-party peer review.
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Broad intellectual property portfolio protects our current and future products and their applications. | |
**
As of March 2026, our patent portfolio includes
seven patent families, which encompasses two issued patents in the U.S., as well as issued patents in United Kingdom, France, Germany,
Italy, Switzerland, Ireland, Hong Kong, Australia, China, India, and Japan, five pending U.S. patent applications, one pending PCT International
application, and forty-five patent applications pending worldwide, which are generally directed to methods and compositions for detecting
biomarkers associated with cardiovascular disease and diabetes for diagnosis and other applications. In addition, we have extensive trade
secrets and know-how, including algorithms and assay designs, that are critical for the continued development and improvement of our current
and future products.
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Big data and artificial intelligence (machine learning) expertise drive future product development. | |
**
Our expertise in processing
billions of clinical genotypic, epigenetic and phenotypic data points to generate critical insights allows us to continue to develop innovative
products.
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Proprietary cutting-edge AI-driven Multi-Omics Engine accelerates product development. | |
**
We have built a proprietary AI-driven Multi-Omics Engine that is made up of layers
of big data, our algorithms informed by biology and its expert domain knowledge that was designed and built over more than a decade and
can be leveraged to enable rapid design, development and launch of new diagnostic solutions.
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Multiple potential product offerings with strong value propositions for key healthcare stakeholders. | |
**
We have built a robust product pipeline for various
types of cardiovascular disease and other indications that leverage our AI-driven Multi-Omics Engine to continue to build market
traction. We believe that our current and future products have strong value propositions for various key stakeholders in healthcare. As
a result, we believe that our customers will adopt and champion our products.
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Products that can potentially drive value in multiple ways. | |
**
We believe that our tests are the first epigenetics-based
clinical tests for heart disease. Unlike genetic biomarkers that are static, the DNA methylation (epigenetic) biomarkers included in our
products are generally dynamic. Therefore, DNA methylation biomarkers can change over time and as a result, in addition to initial assessment,
our products could potentially be used to personalize interventions and help monitor the effectiveness of these interventions.
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Commercial processes that are inherently scalable to meet demand. | |
**
**
**
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**
Our commercial pipeline is inherently scalable.
Laboratory testing kits consist of easy to synthesize oligonucleotide products, readily available PCR reagents, and can be kitted months
in advance. Our lancet and vacutainer-based sampling kits incorporate readily available components that can be sourced from several vendors.
Our propriety algorithms can be scaled and automated to process data from thousands of samples. In addition, the laboratory processes
can be automated and scaled by adding existing commercial equipment.
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A leadership team of seasoned healthcare professionals and executives that is led by a visionary founder. | |
**
Cardio is led by a management team with experience
in inventing innovative technologies, developing and commercializing clinical products, and building high growth companies.
**Competition**
Even though we believe that our solutions provide
significant advantages over solutions that are currently available from other sources, we expect continued intense competition. This includes
companies that are entering the cardiovascular diagnostics market or existing companies that are looking to capitalize on the same or
similar opportunities as Cardio is in the clinical and non-clinical spaces. Some of our potential and current competitors have longer
operating histories and have, or will have, substantially greater financial, technical, research, and other resources than we do, along
with larger, more established marketing, sales, distribution, and service organizations. This could enable our competitors to respond
more quickly or efficiently than it can to capture a larger market share, respond to changes in the regulatory landscape or adapt to meet
new trends in the market. Having access to more resources, these competitors may undertake more extensive research and development efforts,
substantially reduce the time to introducing new technologies, accelerate key hires to drive adoption of their technologies, deploy more
far-reaching marketing campaigns and implement a more aggressive pricing policy to build larger customer bases than we have. In some cases,
we are competing for the same resources our customers allocate for purchasing cardiovascular diagnostics products or for establishing
strategic partnerships. We expect new competitors to emerge and the intensity of competition to increase. There is a likelihood that our
competitors may develop solutions that are similar ours and ones that could achieve greater market acceptance than ours. This could attract
customers away from our solutions and reduce our market share. To compete effectively, we must scale our organization and infrastructure
appropriately and demonstrate that our products have superior value propositions, cost savings, and clinical performance.
The clinical cardiovascular
diagnostic space is perhaps the most intensely competitive market space in clinical medicine. Even though we believe our solutions offer
significant advantages to existing methods, we expect alternative biomarker assessment approaches to continue to exist and to be developed.
With respect to coronary heart disease (CHD) risk assessment and early detection, our competitors use a variety of technologies including
genetic, serum lipid-based, imaging, proteomic and people tracking approaches.
Genetic testing, both whole genome and more focused
panel modalities, is the first type of biomarker assessment and is used by many clinicians to assess lifetime risk for CHD. However, whereas
the scientific tenets for this approach are generally accepted, it does not identify when CHD might develop, and we believe that the relative
power of this method for predicting CHD as compared to its Epi+Gen CHD test is limited. In addition, whereas the use of this test
may divert revenues for testing, this approach is in some respects complementary, and it is conceivable that some clinicians may elect
to get both forms of testing to have a more holistic assessment of both short term and lifetime risk.
The best-known biomarker approach is that embodied
by the American Heart Association/American College of Cardiology Atherosclerotic Cardiovascular Risk Calculator (referred to ASCVD risk
calculator or Pooled Cohort Equation). This method integrates laboratory assessment of serum lipids, blood pressure and self-reported
health variables to impute 10-year risk for all forms of atherosclerotic cardiovascular disease (mainly CHD, but also stroke and peripheral
artery disease) using a standard algebraic equation. This is the most commonly used method of assessing CHD risk and enjoys general acceptance
by the medical community. It is perhaps the most direct competitor for our Epi+Gen CHD test. We believe that our test has superior
performance, does not require overnight fasting and will eventually provide greater information to the clinician than this current market
standard. In addition, we note that our test assesses risk over a three-year window rather than a 10-year window which it believes is
a more relevant period of time for patient management.
Imaging modalities are also used to assess risk
for and detect CHD. Perhaps the most commonly used imaging method for predicting risk for CHD is Coronary Artery Calcium (CAC)
screening. In this method, a low intensity computed tomography (CT) scan is taken of the heart. Then using this data, the
amount of calcium laden plaque is determined and the result used to assess 10-year risk for CHD. Strengths of this approach include the
general acceptance of the medical community. Weaknesses include the necessity of exposing patients to x-ray radiation and the inability
of the CAC test to monitor patient response. In many ways, this test competes with our test. At the same time, we note that this test
is not yet recommended as a primary method for screening low risk individuals, uses a longer risk assessment window, and could actually
be used as secondary testing to evaluate patients who are not found to be at low risk using Epi+Gen CHD or who are flagged for
CHD by the PrecisionCHD test.
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Proteomic methods, as exemplified by serologic assessments
of individual proteins such as c-reactive protein or of entire protein panels, such as that for the HART CADhs or CVE tests from Prevencio
are another risk assessment tool. The CADhs test is a good example of a proteomic competitor and predicts the one-year risk for having
70% stenosis in a major coronary artery while another Prevencio test HART CVE, predicts one year risk for individuals at risk for
developing a major adverse cardiovascular event. Important differences between our tests and their offerings include the window of prediction
(three-year vs one-year), the type of technology employed (AI-guided interpretation of genotype and methylation sensitive digital PCR
results compared to algorithm interpretation of results from Luminex bead immunoassays). Because we believe that digital PCR-based methods
are more scalable testing solutions than Luminex bead platforms, we believe that our approach has an advantage.
Finally, researchers have described methods to use
wearable devices, such as the Huami wrist device, to predict risk for cardiovascular disease. Although people doubtlessly use these and
similar methods derived from wearable devices to assess risk, their exact clinical market penetrance is currently low, and whether they
would pose as a direct competitor for our test remains uncertain.
However, the aforementioned is only a snapshot of
the current market space in which we currently compete and which we intend to compete in the future. Our intellectual property claims
include methods to develop tests for coronary heart disease, as well as incident and prevalent heart failure, stroke and diabetes. The
test for prevalent coronary heart disease, whose basis was published in 2018, is well underway, and we expect this test to become a strong
competitor for other methods of establishing current CHD, such as exercise treadmill testing, and for monitoring response to CHD treatment.
In summary, the cardiovascular
diagnostic space is extremely competitive and fast moving. We believe that the serum lipid, proteomic and to a certain extent, imaging-based
modalities are direct competitors for customers and enjoy both large existing market share and substantial financial backing. In addition,
it is clear that these existing alternative assessment strategies have significant degrees of scientific literature supporting their use,
enjoy backing from key medical constituencies for their use in certain circumstances, and have established strategies for obtaining third
party reimbursement. As the population ages, this competition is likely to increase. At the same time, we believe that there are important
differences between the current tests offered and our solutions with respect to clinical performance, window of clinical assessment, scalability,
capacity for assisting with interventions and response monitoring. However, the other technologies are not static, and we expect refinements
and/or combination of existing approaches to vigorously compete for customers in our business space. We will need to scale our efforts,
orient our organization appropriately and demonstrate that our products provide better value for our customers.
**Intellectual Property**
We have made broad pending intellectual property
(IP) claims with respect to the use of epigenetic and gene-methylation interactions for the assessment and monitoring of
cardiovascular disease, specifically coronary heart disease, congestive heart failure and stroke, as well as diabetes. Our portfolio falls
into seven patent families. The members of these patent families have been filed in the United States and a number of foreign jurisdictions
including Europe Union, Japan, India, Australia, United Arab Emirates, Saudi Arabia, Canada and China. U.S., Patent Nos. 11,414,704 and
12,043,869, titled Compositions and Methods for Detecting Predisposition to Cardiovascular Disease, were issued in 2022 and 2024, respectively,
to the University of Iowa Research Foundation (UIRF), the co-inventors of which are Dr. Dogan and Dr. Philibert, our Chief
Executive Officer and Chief Medical Officer, respectively. The original patent family also includes issued patents in Europe, China, Australia,
India, and a number of other pending applications. We have a worldwide exclusive license agreement with UIRF. Under UIRFs Inventions
Policy, inventors are generally entitled to 25% of income from earnings from their inventions. Consequently, Dr. Dogan and Dr. Philibert
will benefit from this policy.
Our issued and pending patents cover general methods
as well as key technological steps that enable these core approaches while facilitating the continued patenting of material included in
the patent applications. In addition to the technology licensed from UIRF, we have other patent applications pending relating to improvements
to our technology, which are potentially valuable and of possible strategic importance to the Company. We expect to continue to file new
patent applications to protect additional products and methodologies as they emerge.
The initial work on our AI-driven Multi-Omics Engine
is derived from work done by our founders while at the University of Iowa. Follow-on work on our core technology also is derived from
work done by our founders while at the University of Iowa but was furthered by our founders and Cardios Chief Technology Officer
independent of the University of Iowa. The follow-on work is described in our second, third, fourth, fifth and sixth families of patent
applications.
The initial work is described in the first family
of patents and patent applications and is generally directed to a number of single nucleotide polymorphism (SNP) biomarkers
and a number of methylation site biomarkers that are associated with the presence or the early onset of a number of cardiovascular diseases.
The first family of patents and patent applications is owned solely by UIRF and is exclusively licensed by Cardio. As of March 2025, this
family includes thirteen granted patents and seven pending patent applications. Any and all patents issuing in this family will be solely
owned by UIRF and, barring any changes to the UIRF exclusive license agreement, will fall under the exclusive license to Cardio.
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The first family is generally directed to biomarkers
associated with cardiovascular disease. This family includes two issued patents in the US as well as issued patents in the United Kingdom,
France, Germany, Italy, Switzerland, Ireland, Hong Kong, Australia, China, Japan, and India, and pending applications in Australia, Canada,
China, Europe, Hong Kong, Japan, and the US. The issued claims in the original US patent and in Australia, China and India are directed
to methods and/or compositions (e.g., kits) for determining the methylation status of at least one CpG dinucleotide and the genotype of
at least one single-nucleotide polymorphism (SNP) that use or include at least one primer for detecting the presence or absence of methylation
in a particular region of the genome (referred to as cg12586707) and at least one primer for detecting the presence or absence of a SNP
in a particular region of the genome (referred to as rs11597065). The issued claims in the EP patent are similarly directed to compositions
(e.g., a kit) for determining the methylation status of at least one CpG dinucleotide and a genotype of at least one SNP that includes
at least one primer that detects the presence or absence of methylation in a particular region of the genome (referred to as cg26910465)
and at least one primer that detects a SNP in a particular region of the genome (referred to as rs10275666) or another SNP in linkage
disequilibrium with the first SNP. The claims that issued in the second U.S. patent are directed to methods for determining the methylation
status of at least one CpG dinucleotide and the genotype of at least one SNP that includes at least one primer that detects the presence
or absence of methylation in a particular region of the genome (referred to as cg11964099) and at least one primer that detects a SNP
in a particular region of the genome (referred to as rs9988960). This family of patents is in-licensed under an exclusive license agreement
with UIRF, and is expected to expire in 2037, absent any applicable patent term adjustments or extensions.
The second family
is generally directed to biomarkers associated with diabetes. This family includes pending applications in the U.S., Australia, United
Arab Emirates, Canada, China, Europe, Hong Kong, India, Japan, and Singapore, with original claims directed to compositions
(e.g., a kit) that include at least one primer for determining the methylation status of at least one CpG dinucleotide from a group of
five different methylation sites, or a different CpG dinucleotide in linkage disequilibrium with one of the listed CpG dinucleotides,
and at least one primer for determining the genotype of at least one SNP from a group of five different SNPs, or a different SNP in linkage
disequilibrium with one of the listed SNPs. The pending applications also included original claims to methods of determining the presence
of biomarkers associated with diabetes, claims to a computer-readable medium for performing such methods, and claims to a system for determining
the methylation status of at least one CpG dinucleotide and the genotype of at least one SNP. This family is co-owned by Cardio Diagnostics
and UIRF, and the UIRF-owned portion is in-licensed under the same exclusive license agreement as the first family. Patents issuing from
this second family are expected to expire in 2041, absent any applicable patent term adjustments or extensions.
The second family of patent applications is co-owned
by UIRF and Cardio, since Cardio expanded on and further refined the original research that was done at the University of Iowa. The ownership
of any and all patents that ultimately issue in this family will depend on the specific subject matter that is claimed in each issued
patent. For example, depending upon the specific biomarkers claimed and when those biomarkers were identified (*e.g*., during the
initial work at the University of Iowa or during the follow-on work at Cardio), ownership could lie solely with UIRF or Cardio, or ownership
could be shared between UIRF and Cardio (*e.g*., if a claimed biomarker was initially identified at the University of Iowa and its
significance with respect to diabetes was further refined by Cardio; or if one of the claimed biomarkers was identified at the University
of Iowa and another one of the claimed biomarkers was identified at Cardio).
The third family is generally directed to biomarkers
associated with predicting a three-year incidence of cardiovascular disease. This family includes applications pending in the U.S., Australia,
United Arab Emirates, Canada, China, Europe, Hong Kong, India, Japan, Saudi Arabia, and Singapore, with original claims directed to compositions
(e.g., a kit) that include at least one primer for determining the methylation status of at least one CpG dinucleotide from a group of
three different methylation sites, or a different CpG dinucleotide in linkage disequilibrium with one of the listed CpG dinucleotides,
and at least one primer for determining the genotype of at least one SNP from a group of five different SNPs, or a different SNP in linkage
disequilibrium with one of the listed SNPs. The pending applications also included original claims to methods of determining the presence
of biomarkers associated with three-year incidence of cardiovascular disease, claims to a computer-readable medium for performing such
methods, and claims to a system for determining the methylation status of at least one CpG dinucleotide and the genotype of a SNP. This
family of patents is owned exclusively by Cardio Diagnostics. Patents issuing from this third family are expected to expire in 2041, absent
any applicable patent term adjustments or extensions.
The fourth family is generally directed to computer
resources (e.g., a dashboard) designed by Cardio Diagnostics for use by their stakeholders (e.g., patients, physicians, researchers, insurance
companies, etc.). The computer resources are designed to provide results as well as information and context related to Cardio Diagnostics
tests and the specific biomarkers that are used. The pending claims are directed to methods of displaying relevant information including
genetic marker test results as well as probability analysis (based on, e.g., the population, age, and/or gender of patients), and hyperlinks
to relevant literature. The pending applications also include claims to computer-readable media containing instructions for performing
such methods and computer systems for executing such instructions. This family currently includes applications pending in Australia, United
Arab Emirates, Canada, China, Europe, India, Japan, Singapore, and the U.S. and is solely owned by Cardio. Patents issuing from this fourth
family are expected to expire in 2044, absent any applicable patent term adjustments or extensions.
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The fifth family is generally directed to biomarkers
associated with detecting cardiovascular disease. The pending claims are directed to compositions (e.g., a kit) that include at least
one primer for determining the methylation status of at least one CpG dinucleotide from a group of six different methylation sites, or
a different CpG dinucleotide in linkage disequilibrium with one of the listed CpG dinucleotides, and at least one primer for determining
the genotype of at least one SNP from a group of ten different SNPs, or a different SNP in linkage disequilibrium with one of the listed
SNPs. The pending application also includes claims to methods of determining the presence of biomarkers associated with detecting cardiovascular
disease, claims to a computer- readable medium for performing such methods, and claims to a system for determining the methylation status
of at least one CpG dinucleotide and the genotype of a SNP. This family currently includes applications, pending in Australia, United
Arab Emirates, Canada, China, Europe, India, Japan, Saudi Arabia, Singapore, and the U.S. and is solely owned by Cardio. Patents issuing
from this fifth family are expected to expire in 2044, absent any applicable patent term adjustments or extensions.
The sixth family is generally directed to an algorithm
that can be used to predict mortality based on the methylation status of at least one CpG dinucleotide and/or information obtained from
cardio-imaging. The pending claims are directed to methods for predicting mortality based on the presence of cardiovascular disease that
include obtaining epigenetic data and/or image data and generating an output that includes a mortality risk assessment for the subject.
This family currently includes an International PCT application, which is owned solely by Cardio. Patents issuing from the sixth family
are expected to expire in 2045, absent any applicable patent term adjustments or extensions.
The seventh family is generally directed to using
methylation sites and levels to predict the level of coronary artery obstruction and ischemia in those with acute coronary syndrome. This
family currently includes a pending U.S. provisional application, which is owned solely by Cardio. Patents issuing from the seventh family
are expected to expire in 2046, absent any applicable patent term adjustments or extensions.
The Exclusive License Agreement entered into with
UIRF and those licenses granted under that license agreement terminate on the expiration of the patent rights licensed under the license
agreement, unless certain proprietary, non-patented technical information is still being used by Cardio, in which case the license agreement
will not terminate until the date of termination of such use. The licenses under the license agreement could terminate prior to the expiration
of the licensed patent rights if we materially breach our obligations under the license agreement, including failing to pay the applicable
license fees and any interest on such fees, and failing to fully remedy such breach within the period specified in the license agreement,
or if we enter liquidation, have a receiver or administrator appointed over any assets related to the license agreement, or if we cease
to carry on business, file for bankruptcy or if an involuntary bankruptcy petition is filed against Cardio.
Additionally, we
have considerable IP in the form of trade secrets, including bioinformatics and high-performance computing techniques and artificial
intelligence and machine learning algorithms used to identify genetic and epigenetic biomarkers for various products and to interpret
genetic and epigenetic data from patient samples to generate clinically actionable information, as well as the methods to develop new
methylation sensitive assays. We protect our proprietary information, which includes, but is not limited to, trade secrets, know-how,
and copyrights. Our future success depends on protecting that knowledge, obtaining trademarks on our products, copyright on key materials,
and avoiding infringing on the IP rights of others. Where appropriate, we will assess the operating space and acquire licenses for critical
technologies that we do not possess or cannot create. We continue to invest in technological innovation and will seek mutualistic and
symbiotic licensing opportunities to promote and maintain our competitive position.
In order to provide our products, we currently use
a variety of third party technologies including, for example, genotyping, digital methylation assessment and data processing technologies.
The terms of these agreements for the non-exclusive use of these technologies are subject to change without notice and could affect our
ability to deliver our solutions. In addition, from time to time, we may face claims from third parties asserting ownership of, or demanding
release of, the open-source software or derivative works that we developed using such software (which could include our proprietary source
code), or otherwise seeking to enforce the terms of the applicable open-source license. These claims could result in litigation that could
be costly to defend, have a negative effect on our operating results and financial condition or require us to devote additional research
and development resources to change our existing or future solutions. Responding to any infringement or noncompliance claim by an open-source
vendor, regardless of its validity, discovering certain open-source software code in our products, or a finding that we have breached
the terms of an open-source software license, could harm our business, results of operations and financial condition. In each case, we
would be required to either seek licenses to software or services from other parties and redesign our products to function with such other
parties software or services or develop these components internally, which would result in increased costs and could result in
delays to product launches. Furthermore, we might be forced to limit the features available in our current or future solutions.
**Government Regulation**
The laboratory testing and healthcare industry and
the practice of medicine are extensively regulated at both the state and federal levels, and additionally, the practice of medicine is
similarly extensively regulated by the various states. Our ability to operate profitably will depend in part upon its ability, and that
of its vendor partners, to maintain all necessary licenses and to operate in compliance with applicable laws and rules. Those laws and
rules continue to evolve, and therefore we devote significant resources to monitoring relevant developments in FDA, CLIA, healthcare and
medical practice regulation. Those laws and rules include, but are not limited to, ones that govern the regulation of clinical laboratories
in general and the regulation of LDTs in particular. As discussed below, legislation has been introduced in Congress that, if enacted,
would substantially alter federal regulation of diagnostic tests, including LDTs. As the applicable laws and rules change, we are likely
to make conforming modifications in our business processes from time to time. In many jurisdictions where we operate, neither our current
nor our anticipated business model has been the subject of judicial or administrative interpretation. We cannot be assured that a review
of our business by courts or regulatory authorities will not result in determinations that could adversely affect our operations or that
the laboratory and healthcare regulatory environment will not change in a way that restricts our operations.
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**State and Federal Regulatory Issues**
*Clinical Laboratory Improvement Amendments of 1988 and
State Regulation*
**
Clinical laboratories are required to hold certain
federal and state licenses, certifications and permits to conduct our business. As to federal certifications, in 1988, Congress passed
the Clinical Laboratory Improvement Amendments of 1988, or (CLIA), establishing more rigorous quality standards for all
commercial laboratories that perform testing on human specimens for the purpose of providing information for the diagnosis, prevention,
or treatment of disease or the assessment of the health of human beings. CLIA requires such laboratories to be certified by the federal
government and mandates compliance with various operational, personnel, facilities administration, validation, quality and proficiency
testing requirements intended to ensure the accuracy, reliability and timeliness of patient test results. CLIA certification is also a
prerequisite to be eligible to bill state and federal healthcare programs, as well as many commercial third- party payers, for laboratory
testing services. The Centers for Medicare & Medicaid Services (CMS) regulates laboratories that perform testing on
individuals in the U.S. through CLIA.
Laboratories must comply with all applicable CLIA
requirements. If a clinical laboratory is found not to comply with CLIA standards, the government may impose sanctions, limit or revoke
the laboratorys CLIA certificate (and prohibit the owner, operator or laboratory director from owning, operating, or directing
a laboratory for two years following license revocation), subject the laboratory to a directed plan of correction, on-site monitoring,
civil monetary penalties, civil actions for injunctive relief, criminal penalties, or suspension or exclusion from the Medicare and Medicaid
programs.
CLIA provides that
a state may adopt laboratory licensure requirements and regulations that are more stringent than those under federal law and requires
compliance with such laws and regulations. New York State in particular, has implemented its own more stringent laboratory regulatory
requirements. State laws may require the laboratory to obtain state licensure and/or laboratory personnel to meet certain qualifications,
specify certain quality control procedures or facility requirements, or prescribe record maintenance requirements. Moreover, several states
impose the same or similar state requirements on out-of-state laboratory testing specimens collected or received from, or test results
reported back to, residents within that state. Therefore, the laboratory is required to meet certain laboratory licensing requirements
for those states in which we offer services or from which we accept specimens and that have adopted regulations beyond CLIA. For more
information on state licensing requirements, see California Laboratory Licensing, New York Laboratory Licensing
and Other State Laboratory Licensing Laws.
*California Laboratory Licensing*
**
In addition to federal certification requirements
for laboratories under CLIA, the laboratory is required under California law to maintain a California state license and comply with California
state laboratory laws and regulations. Similar to the federal CLIA regulations, the California state laboratory laws and regulations establish
standards for the operation of a clinical laboratory and performance of test services, including the education and experience requirements
of the laboratory director and personnel (including requirements for documentation of competency), equipment validations, and quality
Management practices. All testing personnel must maintain a California state license or be supervised by licensed personnel.
Clinical laboratories are subject to both routine
and complaint-initiated on-site inspections by the state. If a clinical laboratory is found to be out of compliance with California laboratory
standards, the California Department of Public Health (CDPH) may suspend, restrict or revoke the California state laboratory
license to operate the clinical laboratory (and exclude persons or entities from owning, operating, or directing a laboratory for two
years following license revocation), assess civil money penalties, and/or impose specific corrective action plans, among other sanctions.
Clinical laboratories must also provide notice to CDPH of any changes in the ownership, directorship, name or location of the laboratory.
Failure to provide such notification may result in revocation of the state license and sanctions under the CLIA program. Any revocation
of a CLIA certificate or exclusion from participation in Medicare or Medicaid programs may result in suspension of the California state
laboratory license.
*New York Laboratory Licensing*
**
We currently do not conduct tests on specimens originating
from New York State. In order to test specimens originating from, and return results to New York State, a clinical laboratory is required
to obtain a New York state laboratory permit and comply with New York state laboratory laws and regulations. The New York state laboratory
laws, regulations and rules are equal to or more stringent than the CLIA regulations and establish standards for the operation of a clinical
laboratory and performance of test services, including education and experience requirements of a laboratory director and personnel, physical
requirements of a laboratory facility, equipment validations, and quality Management practices. The laboratory director(s) must maintain
a Certificate of Qualification issued by the New York State Department of Health (NYS DOH) in the permitted test categories.
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A clinical laboratory conducting tests on specimens
originating in New York is subject to proficiency testing and on-site survey inspections conducted by the Clinical Laboratory Evaluation
Program (CLEP) under the NYS DOH. If a laboratory is found to be out of compliance with New Yorks CLEP standards,
the NYS DOH, may suspend, limit, revoke or annul the New York laboratory permit, censure the holder of the license or assess civil money
penalties. Statutory or regulatory noncompliance may result in a laboratorys operator, owners and/or laboratory director being
found guilty of a misdemeanor under New York law. Clinical laboratories must also provide notice to CLEP of any changes in ownership,
directorship, name or location of the laboratory. Failure to provide such notification may result in revocation of the state license and
sanctions under the CLIA program. Any revocation of a CLIA certificate or exclusion from participation in the Medicare or Medicaid programs
may result in suspension of the New York laboratory permit.
The NYS DOH also must approve each LDT before that
test is offered to patients located in New York.
*Other State Laboratory Licensing Laws*
**
In addition to New York and California, certain
other states require licensing of out-of-state laboratories under certain circumstances. We have obtained or are in the process of obtaining
licenses in the states that we believe require us to do so, including Maryland, Pennsylvania and Rhode Island, and believe we are in compliance
with applicable state laboratory licensing laws.
Potential sanctions
for violation of state statutes and regulations can include significant monetary fines, the rejection of license applications, the suspension
or loss of various licenses, certificates and authorizations, and in some cases criminal penalties, which could harm our business. CLIA
does not preempt state laws that have established laboratory quality standards that are more stringent than federal law.
**Laboratory-Developed Tests**
The FDA generally considers an LDT to be a test
that is designed, manufactured, and used within a single laboratory that is certified under CLIA and meets the regulatory requirements
under CLIA to perform high complexity testing. LDTs are performed using a variety of laboratory instruments and reagents and may also
incorporate FDA-authorized in vitro diagnostics (IVDs) that the laboratory modifies in some way and validates for its new
use. The FDA historically took the position that it had the authority to regulate LDTs as medical devices under the Federal Food, Drug,
and Cosmetic Act (FDC Act) but generally exercised enforcement discretion with regard to LDTs. This meant that even though
the FDA believed it could impose regulatory requirements on LDTs, such as requirements to obtain premarket approval, de novo authorization,
or 510(k) clearance of LDTs, it generally chose not to enforce those requirements.
On May 6, 2024, FDA published a final rule amending
the definition of an in vitro diagnostic (IVD) device to include tests manufactured by a clinical laboratory. Pursuant to
the rule, LDTs would have been subject to regulation as medical devices under the FDC Act, including, unless exempt, premarket authorization
requirements (510(k), de novo classification, or PMA) for each LDT performed by the laboratory, and to postmarket registration and listing,
medical device reporting, correction, removal, and recall, complaint handling, labeling, investigational device, and quality system requirements.
On March 31, 2025, a federal district court
vacated the FDA final rule, thereby cancelling the rulemakings associated requirements. The court held that LDTs do not meet the
definition of a medical device under the FDC Act and the FDA therefore lacks jurisdiction to regulate them. The court directed FDA to
rescind the final rule, which occurred on September 19, 2025. The FDA has not indicated how it will interpret the court ruling or whether
it will seek a different regulatory approach with respect to LDTs or components thereof.
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Over the years, various legislative proposals addressing
the FDAs oversight of LDTs have been introduced in Congress. In June 2021, Congress introduced the Verifying Accurate, Leading-edge
IVCT Development Act (VALID Act) to establish a new risk-based regulatory framework for in vitro clinical tests (IVCTs),
including IVDs, LDTs, collection devices and instruments used with such tests. This legislation was re-introduced in 2023 but was not
enacted. The VALID Act was again re-introduced in 2025, indicating that there remains debate about whether and how LDTs should be regulated
in the U.S.
Over the years, various legislative proposals addressing
the FDAs oversight of LDTs have been introduced in Congress. In June 2021, Congress introduced the Verifying Accurate, Leading-edge
IVCT Development Act (VALID Act), which would have established a new risk-based regulatory framework for in vitro clinical
tests (IVCTs), a category which would have included IVDs, LDTs, collection devices and instruments used with such tests.
This legislation was re-introduced in 2023 but was not enacted. The VALID Act was again re-introduced in 2025, indicating that there remains
debate about whether and how LDTs should be regulated in the U.S.
As mentioned above,
separately, CMS oversees clinical laboratory operations through the CLIA program
**Regulation of Medical Devices by the U.S.
Food and Drug Administration**
To be commercially distributed in the United States,
medical devices, including some collection devices used to collect samples for testing, and certain types of software, must receive from
the FDA prior to marketing, unless subject to an exemption, clearance of a premarket notification (510(k) clearance), premarket
approval (PMA), or a de novo authorization.
IVDs are a type of medical device that are intended
to be used in the diagnosis or detection of diseases or conditions, including a determination of the state of health, through collection,
preparation and examination of specimens taken from the human body. IVDs may be used to detect the presence of certain chemicals, genetic
information or other biomarkers related to diagnosis or detection of diseases or conditions. IVDs may include tests for disease prediction,
prognosis, diagnosis, and screening.
The FDC Act classifies medical devices into one
of three categories based on the risks associated with the device and the level of control necessary to provide reasonable assurance of
safety and effectiveness. Class I devices are deemed to be low risk and are subject to the fewest regulatory controls. Many Class I devices
are exempt from FDA premarket review requirements. Class II devices, including some software products to the extent that they qualify
as a device, are deemed to be moderate risk, and generally require clearance through the premarket notification, or 510(k) clearance,
process. Class III devices are generally the highest risk devices and are subject to the highest level of regulatory control to provide
reasonable assurance of the device's safety and effectiveness. Class III devices typically require a PMA by the FDA before they are marketed.
A clinical trial is almost always required to support a PMA application or de novo authorization and is sometimes required for 510(k)
clearance. All clinical studies of investigational devices must be conducted in compliance with any applicable FDA and Institutional Review
Board requirements. Devices that are exempt from FDA premarket review requirements must nonetheless comply with post-market general controls
as described below, unless the FDA has indicated otherwise.
*510(k) clearance pathway.*To obtain 510(k)
clearance, a manufacturer must submit a premarket notification demonstrating to the FDAs satisfaction that the new device is substantially
equivalent to a predicate device. A predicate device is a legally marketed device to which a new device may be compared
to for a determination regarding substantial equivalence. A legally marketed device is a device that was previously 510(k)-cleared, a
device that received de novo authorization, or a device that was in commercial distribution before May 28, 1976 for which the FDA has
not called for submission of a PMA application. The FDAs 510(k) clearance pathway usually takes from three to 12 months from submission,
but it can take longer, particularly for a novel type of product.
*PMA pathway.* The PMA pathway requires proof
of the safety and effectiveness of the device to the FDAs satisfaction. The PMA pathway is costly, lengthy, and uncertain. A PMA
application must provide extensive preclinical and clinical trial data as well as information about the device and its components regarding,
among other things, device design, manufacturing, and labeling. As part of its PMA review process, the FDA will typically inspect the
manufacturers facilities for compliance with the Quality Management System Regulation (QMSR) requirements, which
impose extensive testing, control, documentation, and other quality assurance procedures. The PMA review process typically takes one to
three years from submission but can take longer.
De novo pathway. If no predicate device can be identified,
a device is automatically classified as Class III, requiring a PMA application. However, the FDA can reclassify, either on its own initiative
or in response to a request for de novo classification, for a device for which there was no predicate device if the device is low- or
moderate-risk. If the device is reclassified as Class II, the FDA will identify special controls that the manufacturer must implement,
which may include labeling, testing, performance standards, or other requirements. Subsequent applicants can rely upon the de novo device
as a predicate for a 510(k) clearance, unless the FDA exempts subsequent devices from the need for a 510(k). The de novo route is intended
to be less burdensome than the PMA process.
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*Post-market general controls.* After a device,
including a device exempt from FDA premarket review, is placed on the market, numerous regulatory requirements apply. These include: the
QMSR, labeling regulations, registration and listing, the Medical Device Reporting regulation (which requires that manufacturers report
to the FDA if their device may have caused or contributed to a death or serious injury or malfunctioned in a way that would likely cause
or contribute to a death or serious injury if it were to recur), and the Reports of Corrections and Removals regulation (which requires
manufacturers to report to the FDA corrective actions made to, or removal of, products in the field, if such actions were initiated to
reduce a risk to health posed by the device or to remedy a violation of the FDC Act which may present a health risk). Depending on the
severity of the legal violation that led to correction or removal, the FDA may classify the manufacturers action as a recall.
The FDA enforces compliance
with its requirements through inspection and market surveillance. If the FDA finds a violation, it can institute a wide variety of actions,
ranging from an untitled or warning letter sent to manufacturers to enforcement actions such as fines, injunctions, and civil penalties;
recall or seizure of products; operating restrictions, partial suspension or total shutdown of production; refusing requests for 510(k)
clearance or PMA approval of new products; withdrawal of PMAs already granted; and criminal prosecution.
Software
Software that is intended for use in diagnosis,
treatment, cure mitigation or prevention of disease meets the definition of a medical device and is subject to FDA regulation. Software
that is included in a hardware device (Software as a Medical Device or SiMD) is regulated as part of the hardware device.
Freestanding software (Software as a Medical Device or SaMD) may be subject to regulation by FDA but may be exempt from
regulation if it meets certain criteria.
The FDA has become increasingly active in addressing the regulation of software used to support
clinical decision making. In 2016, the 21st Century Cures Act, (the Cures Act), among other things, amended the medical
device definition in the FDC Act to exclude certain software from FDA regulation, including clinical decision support (CDS software)
that meets certain criteria. CDS software is exempt from the medical device definition if it: (a) displays, analyzes or prints medical
information about a patient or other medical information; (b) is intended for the purpose of supporting or providing recommendations
about a patients care to a health care professional, (HCP), user; and (c) provides sufficient information about
the basis for the recommendations to the HCP user, so that the HCP user does not rely primarily on any of the recommendations to make
a clinical decision about an individual patient; unless (d) the software function acquires, processes, or analyzes a medical image, a
signal from an in vitro diagnostic device, or a pattern or signal from a signal acquisition system.
FDA issued a final guidance document addressing
CDS software on September 28, 2022, and issued a revised guidance document on January 29, 2026. Among other views expressed, the final
guidance stated that software functions that assess or interpret the clinical implications or clinical relevance of a signal or pattern,
such as those that process or analyze an electrochemical or photometric response generated by an assay and instrument to generate a clinical
test result, are not exempt from medical device regulation.
**Corporate Practice of Medicine; Fee-Splitting**
We contract with various healthcare companies to
deliver services to patients. This contractual relationship is subject to various state laws, including those of New York, Texas and California,
that prohibit fee-splitting or the practice of medicine by lay entities or persons and are intended to prevent unlicensed persons from
interfering with or influencing the physicians professional judgment. In addition, various state laws also generally prohibit the
sharing of professional services income with nonprofessional or business interests. Activities other than those directly related to the
delivery of healthcare may be considered an element of the practice of medicine in many states. Under the corporate practice of medicine
restrictions of certain states, decisions and activities such as scheduling, contracting, setting rates and the hiring and management
of non-clinical personnel may implicate the restrictions on the corporate practice of medicine.
State corporate practice of medicine and fee-splitting
laws vary from state to state and are not always consistent among states. In addition, these requirements are subject to broad powers
of interpretation and enforcement by state regulators. Some of these requirements may apply to any telemedicine company or provider organization
we contract with. Failure to comply with regulations could lead to adverse judicial or administrative action against us and/or the providers
we work with, civil or criminal penalties, receipt of cease-and-desist orders from state regulators, loss of provider licenses, the need
to make changes to the terms of engagement with any telemedicine company or provider organization we contract with that interfere with
our business and other materially adverse consequences.
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**Federal and State Fraud and Abuse Laws**
*Healthcare Laws Generally*
**
The federal Health Insurance Portability and Accountability
Act of 1996, as amended by the Health Information Technology for Economic and Clinical Health Act, or HITECH, and their implementing regulations,
which is collectively referred to as HIPAA, established several separate criminal penalties for making false or fraudulent claims to insurance
companies and other non- governmental payors of healthcare services. Under HIPAA, these two additional federal crimes are: "Healthcare
Fraud and "False Statements Relating to Healthcare Matters. The Healthcare Fraud statute prohibits knowingly and recklessly
executing a scheme or artifice to defraud any healthcare benefit program, including private payors. A violation of this statute is a felony
and may result in fines, imprisonment or exclusion from government-sponsored programs. The False Statements Relating to Healthcare Matters
statute prohibits knowingly and willfully falsifying, concealing or covering up a material fact by any trick, scheme or device or making
any materially false, fictitious or fraudulent statement in connection with the delivery of or payment for healthcare benefits, items
or services. A violation of this statute is a felony and may result in fines or imprisonment. This statute could be used by the government
to assert criminal liability if a healthcare provider knowingly fails to refund an overpayment. These provisions are intended to punish
some of the same conduct in the submission of claims to private payors as the federal False Claims Act covers in connection with governmental
health programs.
In addition, the Civil
Monetary Penalties Law imposes civil administrative sanctions for, among other violations, inappropriate billing of services to federally
funded healthcare programs and employing or contracting with individuals or entities who are excluded from participation in federally
funded healthcare programs. Moreover, a person who offers or transfers to a Medicare or Medicaid beneficiary any remuneration, including
waivers of co-payments and deductible amounts (or any part thereof), that the person knows or should know is likely to influence the beneficiarys
selection of a particular provider, practitioner or supplier of Medicare or Medicaid payable items or services may be liable for civil
monetary penalties of up to $10,000 for each wrongful act. Moreover, in certain cases, providers who routinely waive copayments and deductibles
for Medicare and Medicaid beneficiaries can also be held liable under the Anti-Kickback Statute and civil False Claims Act, which can
impose additional penalties associated with the wrongful act. One of the statutory exceptions to the prohibition is non-routine, unadvertised
waivers of copayments or deductible amounts based on individualized determinations of financial need or exhaustion of reasonable collection
efforts. The OIG emphasizes, however, that this exception should only be used occasionally to address special financial needs of a particular
patient. Although this prohibition applies only to federal healthcare program beneficiaries, the routine waivers of copayments and deductibles
offered to patients covered by commercial payers may implicate applicable state laws related to, among other things, unlawful schemes
to defraud, excessive fees for services, tortious interference with patient contracts and statutory or common law fraud.
*Federal Stark Law*
We are subject to the federal self-referral prohibitions,
commonly known as the Stark Law. Where applicable, this law prohibits a physician from referring Medicare patients to an entity providing
"designated health services if the physician or a member of such physicians immediate family has a "financial
relationship with the entity, unless an exception applies. The penalties for violating the Stark Law include the denial of payment
for services ordered in violation of the statute, mandatory refunds of any sums paid for such services, civil penalties of up to $15,000
for each violation and twice the dollar value of each such service and possible exclusion from future participation in the federally-funded
healthcare programs. A person who engages in a scheme to circumvent the Stark Laws prohibitions may be fined up to $100,000 for
each applicable arrangement or scheme. The Stark Law is a strict liability statute, which means proof of specific intent to violate the
law is not required. In addition, the government and some courts have taken the position that claims presented in violation of the various
statutes, including the Stark Law can be considered a violation of the federal False Claims Act (described below) based on the contention
that a provider impliedly certifies compliance with all applicable laws, regulations and other rules when submitting claims for reimbursement.
A determination of liability under the Stark Law could have a material adverse effect on our business, financial condition and results
of operations.
**
**
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*Federal Anti-Kickback Statute*
**
We are also subject to the federal Anti-Kickback
Statute. The Anti-Kickback Statute is broadly worded and prohibits the knowing and willful offer, payment, solicitation or receipt of
any form of remuneration in return for, or to induce, (i) the referral of a person covered by Medicare, Medicaid or other governmental
programs, (ii) the furnishing or arranging for the furnishing of items or services reimbursable under Medicare, Medicaid or other governmental
programs or (iii) the purchasing, leasing or ordering or arranging or recommending purchasing, leasing or ordering of any item or service
reimbursable under Medicare, Medicaid or other governmental programs. Certain federal courts have held that the Anti-Kickback Statute
can be violated if "one purpose of a payment is to induce referrals. In addition, a person or entity does not need to have
actual knowledge of this statute or specific intent to violate it to have committed a violation, making it easier for the government to
prove that a defendant had the requisite state of mind or "scienter required for a violation. Moreover, the government may
assert that a claim including items or services resulting from a violation of the Anti-Kickback Statute constitutes a false or fraudulent
claim for purposes of the False Claims Act, as discussed below. Violations of the Anti- Kickback Statute can result in exclusion from
Medicare, Medicaid or other governmental programs as well as civil and criminal penalties, including fines of $50,000 per violation and
three times the amount of the unlawful remuneration. Imposition of any of these remedies could have a material adverse effect on our business,
financial condition and results of operations. In addition to a few statutory exceptions, the U.S. Department of Health and Human Services
Office of Inspector General, or OIG, has published safe-harbor regulations that outline categories of activities that are deemed protected
from prosecution under the Anti-Kickback Statute provided all applicable criteria are met. The failure of a financial relationship to
meet all of the applicable safe harbor criteria does not necessarily mean that the particular arrangement violates the Anti-Kickback Statute.
However, conduct and business arrangements that do not fully satisfy each applicable safe harbor may result in increased scrutiny by government
enforcement authorities, such as the OIG.
*False Claims Act*
**
Both federal and state government agencies have
continued civil and criminal enforcement efforts as part of numerous ongoing investigations of healthcare companies and their executives
and managers. Although there are a number of civil and criminal statutes that can be applied to healthcare providers, a significant number
of these investigations involve the federal False Claims Act. These investigations can be initiated not only by the government but also
by a private party asserting direct knowledge of fraud. These "qui tam whistleblower lawsuits may be initiated against any
person or entity alleging such person or entity has knowingly or recklessly presented, or caused to be presented, a false or fraudulent
request for payment from the federal government or has made a false statement or used a false record to get a claim approved. In addition,
the improper retention of an overpayment for 60 days or more is also a basis for a False Claim Act action, even if the claim was originally
submitted appropriately. Penalties for False Claims Act violations include fines ranging from $5,500 to $11,000 for each false claim,
plus up to three times the amount of damages sustained by the federal government. A False Claims Act violation may provide the basis for
exclusion from the federally-funded healthcare programs. In addition, some states have adopted similar fraud, whistleblower and false
claims provisions.
*State Fraud and Abuse Laws*
**
Several states in
which we operate have also adopted similar fraud and abuse laws as described above. The scope of these laws and the interpretations of
them vary from state to state and are enforced by state courts and regulatory authorities, each with broad discretion. Some state fraud
and abuse laws apply to items or services reimbursed by any third-party payor, including commercial insurers, not just those reimbursed
by a federally-funded healthcare program. A determination of liability under such state fraud and abuse laws could result in fines and
penalties and restrictions on our ability to operate in these jurisdictions.
**State and Federal Health Information Privacy
and Security Laws**
There are numerous U.S. federal and state laws and
regulations related to the privacy and security of personally identifiable information, or PII, including health information. In particular,
HIPAA establishes privacy and security standards that limit the use and disclosure of protected health information, or PHI, and require
the implementation of administrative, physical, and technical safeguards to ensure the confidentiality, integrity and availability of
individually identifiable health information in electronic form. Since the effective date of the HIPAA Omnibus Final Rule on September
23, 2013, HIPAAs requirements are also directly applicable to the independent contractors, agents and other "business associates
of covered entities that create, receive, maintain or transmit PHI in connection with providing services to covered entities. Although
Cardio is a covered entity under HIPAA, Cardio is also a business associate of other covered entities when Cardio is working on behalf
of our affiliated medical groups.
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Violations of HIPAA may result in civil and criminal
penalties. The civil penalties range from $100 to $50,000 per violation, with a cap of $1.5 million per year for violations of the same
standard during the same calendar year. However, a single breach incident can result in violations of multiple standards. Cardio must
also comply with HIPAAs breach notification rule. Under the breach notification rule, covered entities must notify affected individuals
without unreasonable delay in the case of a breach of unsecured PHI, which may compromise the privacy, security or integrity of the PHI.
In addition, notification must be provided to the HHS and the local media in cases where a breach affects more than 500 individuals. Breaches
affecting fewer than 500 individuals must be reported to HHS on an annual basis. The regulations also require business associates of covered
entities to notify the covered entity of breaches by the business associate.
State attorneys general also have the right to prosecute
HIPAA violations committed against residents of their states. While HIPAA does not create a private right of action that would allow individuals
to sue in civil court for a HIPAA violation, its standards have been used as the basis for the duty of care in state civil suits, such
as those for negligence or recklessness in misusing personal information. In addition, HIPAA mandates that HHS conduct periodic compliance
audits of HIPAA covered entities and their business associates for compliance. It also tasks HHS with establishing a methodology whereby
harmed individuals who were the victims of breaches of unsecured PHI may receive a percentage of the Civil Monetary Penalty fine paid
by the violator. In light of the HIPAA Omnibus Final Rule, recent enforcement activity, and statements from HHS, we expect increased federal
and state HIPAA privacy and security enforcement efforts.
HIPAA also required HHS to adopt national standards
establishing electronic transaction standards that all healthcare providers must use when submitting or receiving certain healthcare transactions
electronically. On January 16, 2009, HHS released the final rule mandating that everyone covered by HIPAA must implement ICD-10 for medical
coding on October 1, 2013, which was subsequently extended to October 1, 2015 and is now in effect.
Many states in which we operate and in which patients
reside also have laws that protect the privacy and security of sensitive and personal information, including health information. These
laws may be similar to or even more protective than HIPAA and other federal privacy laws. For example, the laws of the State of California,
in which we operate, are more restrictive than HIPAA. Where state laws are more protective than HIPAA, we must comply with the state laws
we are subject to, in addition to HIPAA. In certain cases, it may be necessary to modify our planned operations and procedures to comply
with these more stringent state laws. Not only may some of these state laws impose fines and penalties upon violators, but also some,
unlike HIPAA, may afford private rights of action to individuals who believe their personal information has been misused. In addition,
state laws are changing rapidly, and there is discussion of a new federal privacy law or federal breach notification law, to which we
may be subject.
In addition to HIPAA, state health information privacy
and state health information privacy laws, we may be subject to other state and federal privacy laws, including laws that prohibit unfair
privacy and security practices and deceptive statements about privacy and security and laws that place specific requirements on certain
types of activities, such as data security and texting.
In recent years,
there have been a number of well-publicized data breaches involving the improper use and disclosure of PII and PHI. Many states have
responded to these incidents by enacting laws requiring holders of personal information to maintain safeguards and to take certain actions
in response to a data breach, such as providing prompt notification of the breach to affected individuals and state officials. In addition,
under HIPAA and pursuant to the related contracts that we enter into with our business associates, we must report breaches of unsecured
PHI to our contractual partners following discovery of the breach. Notification must also be made in certain circumstances to affected
individuals, federal authorities and others.
*State Privacy Laws*
Various states have enacted laws governing the privacy
of personal information collected and used by businesses online. For example, California adopted the California Consumer Privacy Act of
2018 ("CCPA), which went into effect on January 1, 2020 and was recently amended by the California Privacy Rights Act of 2020
which significantly modified the CCPA in ways that affect businesses. This law, in part, requires that companies make certain disclosures
to consumers via their privacy policies, or otherwise at the time the personal data is collected. We will have to determine what personal
data it is collecting from individuals and for what purposes, and to update its privacy policy every 12 months to make the required disclosures,
among other things.
****
****
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**Employees and Human Capital Resources**
As of March 13, 2026, we had 15 full-time employees
and two part-time employees. Three of our employees hold Ph.D. or M.D. degrees. We also engage contractors and consultants from time
to time. None of our employees are represented by a labor union or covered under a collective bargaining agreement.
Our human capital resources objectives include,
identifying, recruiting, retaining, incentivizing and integrating our existing and additional employees into our collaborative culture.
Our compensation program is designed to retain, motivate and attract highly qualified executives and talented employees and consultants.
We are committed to fostering a culture that supports diversity and an environment of mutual respect, equity and collaboration that helps
drive our business and our mission to become one of the leading medical technology companies for enabling improved prevention, detection,
treatment and management of cardiovascular disease.
**Corporation Information**
Our corporate headquarters is located at 311 W.
Superior St. Suite 444, Chicago IL. Our telephone number is (855) 226-9991 and our website address is cdio.ai. The information contained
on, or that can be accessed through, our website is not incorporated by reference in this Annual Report on Form 10-K and does not form
a part of this Annual Report on Form 10-K. The reference to our website address does not constitute incorporation by reference of the
information contained at or available through our website, and you should not consider it to be a part of this registration statement.
**Emerging Growth Company, Smaller Reporting
Company and Non-Accelerated Filer Status**
We are an emerging growth company (EGC),
as defined in Section 2(a) of the Securities Act, as modified by the Jumpstart Our Business Startups Act of 2012 (the JOBS Act),
and we may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that
are not EGCs, including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of
the Sarbanes-Oxley Act of 2002, as amended (the Sarbanes-Oxley Act), reduced disclosure obligations regarding executive
compensation in our periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote
on executive compensation and stockholder approval of any golden parachute payments not previously approved.
Further, Section 102(b)(1) of the JOBS Act exempts
EGCs from being required to comply with new or revised financial accounting standards until private companies (that is, those that have
not had a registration statement under the Securities Act declared effective or do not have a class of securities registered under the
Securities Exchange Act of 1934, as amended the Exchange Act), are required to comply with the new or revised financial
accounting standards. The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the
requirements that apply to non-emerging growth companies but any such an election to opt out is irrevocable. We have elected not to opt
out of such extended transition period which means that when a standard is issued or revised and it has different application dates for
public or private companies, we, as an EGC, can adopt the new or revised standard at the time private companies adopt the new or revised
standard. This may make comparison of our financial statements with another public company which is neither an emerging growth company
nor an emerging growth company which has opted out of using the extended transition period difficult or impossible because of the potential
differences in accounting standards used.
Additionally, we are a smaller reporting company as defined in Item 10(f)(1) of
Regulation S-K. Smaller reporting companies may take advantage of certain reduced disclosure obligations, including, among other things,
providing only two years of audited financial statements, as well as continued reduced executive compensation disclosure. We will remain
a smaller reporting company until the last day of the fiscal year in which (1) the market value of our Common Stock held by non-affiliates
equaled or exceeded $250 million as of the end of the prior June 30th, or (2) our annual revenues equaled or exceeded $100 million during
such completed fiscal year and the market value of our Common Stock held by non-affiliates equaled or exceeded $700 million as of the
prior June 30th.
We will remain an emerging growth company until
December 31, 2026, after which we will be subject to certain requirements from which we have previously been exempt. However, we will
continue to be a smaller reporting company, as well as a non-accelerated filer. As a result of losing EGC status, beginning in 2027, we
will no longer be able to take advantage of the extended transition period for new or revised accounting standards, and instead, will
need to adopt any new standards according to the timelines applicable to non- EGCs. We also will be required to hold nonbinding stockholder
advisory votes on executive compensation and seek stockholder approval of any golden parachute payments not previously approved. However,
as a smaller reporting company, we will be allowed to continue including only two years of audited financial statements in our securities
filings and can elect to continue providing scaled down executive compensation disclosure. Most significantly in terms of expenditure
of resources, because we will continue to be both a smaller reporting company and a non-accelerated filer, we will continue to be exempt
from the requirement to obtain an auditors attestation on managements assessment of the effectiveness of our internal control
over financial reporting. We expect that we will continue to take advantage of the smaller reporting company and non-accelerated filer
benefits for the foreseeable future.
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**Available Information**
We are required to file Annual Reports on Form 10-K
and Quarterly Reports on Form 10-Q with the SEC on a regular basis, and are required to disclose certain material events in a Current
Report on Form 8-K. The SEC maintains an Internet website that contains reports, proxy and information statements and other information
regarding issuers that file electronically with the SEC. The SECs Internet website is located at www.sec.gov. In addition, the
Company will provide copies of these documents without charge upon request from us in writing at 311 West Superior Street, Suite 444,
Chicago IL 60654.
**Item
1A. Risk Factors**
****
**RISK FACTORS**
****
*Investing in our securities involves risks. You
should carefully consider the risks and uncertainties described below and the other information in this Annual Report on Form 10-K before
making an investment in our Common Stock. Our business, financial condition, results of operations, or prospects could be materially and
adversely affected if any of these risks occurs, and as a result, the market price of our Common Stock could decline and you could lose
all or part of your investment. This Annual Report on Form 10-K also contains forward-looking statements that involve risks and uncertainties.
See Cautionary Statement Regarding Forward-Looking Statements. Our actual results could differ materially and adversely
from those anticipated in these forward-looking statements as a result of certain factors, including those set forth below. These disclosures
reflect the Companys beliefs and opinions as to factors that could materially and adversely affect the Company and its securities
in the future. References to past events are provided by way of example only and are not intended to be a complete listing or a representation
as to whether or not such factors have occurred in the past or their likelihood of occurring in the future.*
**
**Risks Related to Our Limited Operating History
and Early Stage of Growth**
*We are a medical diagnostic testing company with
a limited operating history and have not yet generated significant revenue from product sales. We have incurred operating losses since
our inception and may never achieve or maintain profitability.*
**
We have generated
only nominal revenue in 2024 and 2025, including $34,890 in revenue generated in 2024 and $14,825 in revenue generated in 2025. Our net
losses totaled $8,383,453 and $6,498,167 for the years ended December 31, 2024 and 2025, respectively, and we have an accumulated deficit
of $29,250,000 at December 31, 2025. We expect losses to continue as a result of our ongoing activities to increase the adoption of our
products, to gain market recognition and acceptance of our products, to expand our marketing channels and otherwise position ourselves
to grow our revenue opportunities, all of which will require hiring additional employees as well as other significant expenses. We are
unable to predict when we will become profitable, and it is possible that we may never become profitable. We may encounter unforeseen
expenses, difficulties, complications, delays, and other unknown factors that may adversely affect our business. The size of our future
net losses will depend, in part, on the rate of future growth of our expenses, which we expect to increase substantially as a public company,
and on our ability to generate revenue. Even if we achieve profitability in the future, we may not be able to sustain profitability in
subsequent periods. If additional capital is not available when required, if at all, or is not available on acceptable terms, we could
be forced to modify or abandon our current business plan.
*The healthcare
commercialization process is inherently lengthy and subject to regulatory, reimbursement, evidentiary and behavioral factors, which, combined
with clinical adoption of novel diagnostic technologies that frequently spans multiple years, results in a lengthy period from initial
development to widespread utilization and ultimately to revenue generation, which, in some cases, may span a decade or more.*
**
The commercialization lifecycle for diagnostic tests
is lengthy and generally involves multiple stages, including scientific validation, regulatory compliance, the securing of third-party
reimbursement, including coverage determination from government programs including the Centers for Medicare & Medicaid Services (CMS)
and subsequently, from commercial payors, physician adoption and incorporation into clinical guidelines and behavioral and workflow integration
as health care providers gain familiarity and comfort with new technologies. These various stages can each take many years, and the entire
process from scientific discovery to broad clinical adoption frequently can extend over a decade.
Despite having two clinically promising diagnostic tests currently available and more tests in the pipeline, we expect that our revenue
growth will continue to be negligible until we have obtained third party reimbursement for our tests, the tests are incorporated into
the broader health care clinical guidelines and are integrated into medical care workflow by health care providers. There is no assurance
that we will be successful in achieving those milestones and begin growing meaningful revenue. We also cannot provide assurance that we
will ever achieve profitability even as we grow revenue.
**
*We believe our long-term value as a company will
be greater if we focus on growth, which has in the past, and may continue to negatively impact our results of operations in the near term.*
**
We believe our long-term value as a company will
be greater if we focus on longer-term growth over short-term results. As a result, our results of operations may be negatively impacted
in the near term relative to a strategy focused on maximizing short-term profitability. Significant expenditures on marketing efforts,
potential acquisitions and other expansion efforts may not ultimately grow our business or lead to expected long-term results.
*Our business and the markets in which we operate
are new and rapidly evolving, which make it difficult to evaluate our future prospects and the risks and challenges we may encounter.*
**
Our business and the markets in which we operate
are new and rapidly evolving, which make it difficult to evaluate and assess the success of our business to date, our future prospects
and the risks and challenges that we may encounter. These risks and challenges include our ability to:
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attract new customers for our tests through patient awareness, sales and marketing campaigns, as well as through key channel partners; | |
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gain market acceptance of our current and future tests and services with key constituencies and maintain and expand such relationships; | |
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comply with existing and new laws and regulations applicable to our business and in our industry; | |
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anticipate and respond to changes in payor reimbursement rates and the markets in which we operate; | |
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react to challenges from existing and new competitors; | |
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maintain and enhance our reputation and brand; | |
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effectively manage our growth and business operations, including new geographies; | |
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accurately forecast our revenue and budget for, and manage, our expenses, including capital expenditures; and | |
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hire and retain talented individuals at all levels of our organization; | |
If we fail to understand fully or adequately address
the challenges that we are currently encountering or that we may encounter in the future, including those challenges described here and
elsewhere in this Risk Factors section, our business, financial condition and results of operations could be adversely affected.
If the risks and uncertainties that we plan for when operating our business are incorrect or change, or if we fail to manage these risks
successfully, our results of operations could differ materially from our expectations and our business, financial condition and results
of operations could be adversely affected.
*Our limited operating history makes it difficult
to evaluate our future prospects and the risks and challenges we may encounter.*
**
We were established in 2017, and we are continuing
to grow our marketing and management capabilities. Consequently, predictions about our future success or viability may not be as accurate
as they could be if we had a longer operating history. The evolving nature of the medical diagnostics industry increases these uncertainties.
If our growth strategy is not successful, we may not be able to continue to grow our revenue or operations. Our limited operating history,
evolving business and growth make it difficult to evaluate our future prospects and the risks and challenges we may encounter.
In addition, as a business with a limited operating
history, we may encounter unforeseen expenses, difficulties, complications, delays and other known and unknown challenges. We may not
be successful at commercialization, sales and marketing and, as a result, our business may be adversely affected.
*Our quarterly results may fluctuate significantly
and may not fully reflect the underlying performance of our business.*
**
Our results of operations and key metrics discussed
elsewhere in this Annual Report on Form 10-K may vary significantly in the future and period-to-period comparisons of our operating results
and key metrics may not provide a full picture of our performance. Accordingly, the results of any one quarter or year should not be relied
upon as an indication of future performance. Our quarterly financial results and metrics may fluctuate as a result of a variety of factors,
many of which are outside of our control, and as a result they may not fully reflect the underlying performance of our business. These
quarterly fluctuations may negatively affect the value of our securities. Factors that may cause these fluctuations include, without limitation:
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the level of demand for our tests and services, which may vary significantly from period to period; | |
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our ability to attract new customers, whether patients or strategic channel partners or other customers; | |
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the timing of recognition of revenues; | |
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the amount and timing of operating expenses; | |
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general economic, industry and market conditions, both domestically and internationally, including any economic downturns and adverse impacts resulting from the COVID- 19 pandemic and/or the military conflicts between Russia and Ukraine or in Iran; | |
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the timing of our billing and collections; | |
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adoption rates by participants in our key channels; | |
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increases or decreases in the number of patients, providers and organizations that use our tests or pricing changes upon any signing and renewals of agreements with healthcare sub-vertical channel partners; | |
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changes in our pricing policies or those of our competitors; | |
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the timing and success of new offerings by us or our competitors or any other change in the competitive dynamics of our industry, including consolidation among competitors, practitioners, clinics or outsourcing facilities; extraordinary expenses such as litigation or other dispute-related expenses or settlement payments; | |
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extraordinary expenses such as litigation or other dispute-related expenses or settlement payments; | |
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sales tax and other tax determinations by authorities in the jurisdictions in which we conduct business; | |
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the impact of new accounting pronouncements and the adoption thereof; | |
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fluctuations in stock-based compensation expenses; | |
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expenses in connection with mergers, acquisitions or other strategic transactions; | |
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changes in regulatory and licensing requirements; | |
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the amount and timing of expenses related to our expansion to markets outside the United States; and | |
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the timing of expenses related to the development or acquisition of technologies or businesses and potential future charges for impairment of goodwill or intangibles from acquired companies. | |
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Further, although our revenues currently are only
nominal, once we achieve traction, in any future period, our revenue growth could slow or our revenues could decline for a number of reasons,
including slowing demand for our tests and services, increasing competition, a decrease in the growth of our overall market, or our failure,
for any reason, to continue to capitalize on growth opportunities. In addition, our growth rate may slow in the future as our market penetration
rates increase. As a result, our revenues, operating results and cash flows may fluctuate significantly on a quarterly basis and revenue
growth rates may not be sustainable and may decline in the future, and we may not be able to achieve or sustain profitability in future
periods, which could harm our business and cause the market price of our Common Stock to decline.
*We expect to need to raise additional capital
to fund our existing operations or develop and commercialize new services or expand our operations.*
**
We expect to spend significant amounts to expand
our existing operations, including expansion into new geographies, to make additional key hires, to expand our sales channels and constituencies
and to develop new tests and services. Since 2024, our primary source of capital has been sales of our Common Stock under our at-the-market
agreement with Craig-Hallum Capital Group, LLC (the ATM Agreement). If we are unable to raise additional capital under the
ATM Agreement or otherwise, we may need to delay the timing of, or scale back, certain aspects of our business plan and operations. The
estimate and our expectation regarding the sufficiency of funds to continue our business plan and operations are based on assumptions
that may prove to be wrong, and we could use our available capital resources sooner than we currently expect. Until such time, if ever,
as we can generate sufficient revenues, we expect to finance our cash needs through a combination of equity offerings and debt financings
or other sources. In addition, we may seek additional capital in the event of favorable market conditions or strategic considerations,
even if we believe that we have sufficient funds for our current or future operating plans.
Our present and future funding requirements will
depend on many factors, including:
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our ability to achieve revenue growth; | |
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our ability to effectively manage our expenses and burn; | |
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the cost of expanding our operations, including our geographic scope, and our offerings, including our marketing efforts; | |
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our rate of progress in launching, commercializing and establishing adoption of our tests and services; and | |
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the effect of competing technological and market developments. | |
To the extent that we raise additional capital through
the sale of equity or convertible debt securities, your ownership interest will be diluted, and the terms of these securities may include
liquidation or other preferences that adversely affect your rights as a securityholder. In addition, debt financing and preferred equity
financing, if available, may involve agreements that include covenants limiting or restricting our ability to take specific actions, such
as incurring additional debt, making capital expenditures or declaring dividends. If we raise additional funds through collaborations,
strategic alliances or marketing, distribution or licensing arrangements with third parties, we may be required to relinquish valuable
rights to our technologies, intellectual property, or future revenue streams or grant licenses on terms that may not be favorable to us.
Furthermore, any capital raising efforts may divert our management from their day-to-day activities, which may adversely affect our ability
to advance development activities. If we need additional capital and cannot raise it on acceptable terms, or at all, we may not be able
to, among other things:
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invest in our business and continue to grow our brand and expand our customer and patient bases; | |
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hire and retain employees, including scientists and medical professionals, operations personnel, financial and accounting staff, and sales and marketing staff; | |
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respond to competitive pressures or unanticipated working capital requirements; or | |
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pursue opportunities for acquisitions of, investments in, or strategic alliances and joint ventures with complementary businesses. | |
*We may invest in or acquire other businesses,
and our business may suffer if we are unable to successfully integrate an acquired business into our company or otherwise manage the growth
associated with multiple acquisitions.*
**
From time to time, we may acquire, make investments
in, or enter into strategic alliances and joint ventures with, complementary businesses. These transactions may involve significant risks
and uncertainties, including:
In the case of an acquisition:
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The potential for the acquired business to underperform relative to our expectations and the acquisition price; | |
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The potential for the acquired business to cause our financial results to differ from expectations in any given period, or over the longer-term; | |
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Unexpected tax consequences from the acquisition, or the tax treatment of the acquired businesss operations going forward, giving rise to incremental tax liabilities that are difficult to predict; | |
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Difficulty in integrating the acquired business, its operations, and its employees in an efficient and effective manner; | |
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Any unknown liabilities or internal control deficiencies assumed as part of the acquisition; and | |
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The potential loss of key employees of the acquired businesses. | |
In the case of an investment, alliance, joint venture,
or other partnership:
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Our ability to cooperate with our co-venturer; | |
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Our co-venturer having economic, business, or legal interests or goals that are inconsistent with ours; and | |
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The potential that our co-venturer may be unable to meet is economic or other obligations, which may require us to fulfill those obligations alone or find a suitable replacement. | |
Any such transaction may involve the risk that our
senior managements attention will be excessively diverted from our other operations, the risk that our industry does not evolve
as anticipate, and that any intellectual property or personnel skills acquired do not prove to be those needed for our future success,
and the risk that our strategic objectives, cost savings or other anticipate benefits are otherwise not achieved.
*We may experience difficulties in managing our
growth and expanding our operations.*
**
We expect to experience
significant growth in the scope of our operations. Our ability to manage our operations and future growth will require us to continue
to improve our operational, financial and management controls, compliance programs and reporting systems. We may not be able to implement
improvements in an efficient or timely manner and may discover deficiencies in existing controls, programs, systems and procedures, which
could have an adverse effect on our business, reputation and financial results. Additionally, rapid growth in our business may place
a strain on our human and capital resources.
**Risks Related to our Business and Industry**
*We have an unproven business model with no assurance
of significant revenues or operating profit.*
**
Our current business model is unproven and the profit
potential, if any, is unknown at this time. We are subject to all of the risks inherent in the creation of a new business. Our ability
to achieve profitability is dependent, among other things, on our initial marketing and accompanying product acceptance to generate sufficient
operating cash flow to fund current operations and future expansion. There can be no assurance that our results of operations or business
strategy will achieve significant revenue or profitability.
*The market for epigenetic tests is fairly new
and unproven, and it may decline or experience limited growth, which would adversely affect our ability to fully realize the potential
of our platform.*
**
Epigenetics is at the heart of our technology, products
and services. According to the CDC, epigenetics is the study of how a persons behaviors and environment can cause changes that
affect the way a persons genes work. Unlike genetic changes, epigenetic changes are reversible and do not change ones DNA
sequence, but they can change how a persons body reads a DNA sequence. The market for epigenetic tests is relatively new and evaluating
the size and scope of the market is subject to a number of risks and uncertainties. We believe that our future success will depend in
large part on the growth of this market. The utilization of our solution is still relatively new, and customers may not recognize the
need for, or benefits of, our tests and services, which may prompt them to cease use of our tests and services or decide to adopt alternative
products and services to satisfy their healthcare requirements. In order to expand our business and extend our market position, we intend
to focus our marketing and sales efforts on educating customers about the benefits and technological capabilities of our tests and services
and the application of our tests and services to specific needs of customers in different market verticals. Our ability to access and
expand the market that our tests and services are designed to address depends upon a number of factors, including the cost, performance
and perceived value of the tests and services. Market opportunity estimates are subject to significant uncertainty and are based on assumptions
and estimates. Assessing the market for our solutions in each of the vertical markets we are competing in, or planning to compete in,
is particularly difficult due to a number of factors, including limited available information and rapid evolution of the market. The market
for our tests and services may fail to grow significantly or be unable to meet the level of growth we expect. As a result, we may experience
lower-than-expected demand for our products and services due to lack of customer acceptance, technological challenges, competing products
and services, decreases in expenditures by current and prospective customers, weakening economic conditions and other causes. If our market
share does not experience significant growth, or if demand for our solution does not increase, then our business, results of operations
and financial condition will be adversely affected.
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*The estimates of market opportunity and forecasts
of market growth included in this Annual Report on Form 10-K may prove to be inaccurate, and even if the market in which we compete achieves
the forecasted growth, our business could fail to grow at similar rates, if at all.*
**
Market opportunity estimates and growth forecasts
are subject to significant uncertainty and are based on assumptions and estimates that may not prove to be accurate. The estimates and
forecasts in this Annual Report on Form 10-K relating to the size and expected growth of the cardiovascular diagnostics market may prove
to be inaccurate. Even if the market in which we compete meets our size estimates and forecasted growth, our business could fail to grow
at similar rates, if at all.
*If we are not able to enhance or introduce new
products that achieve market acceptance and keep pace with technological developments, our business, results of operations and financial
condition could be harmed.*
**
Our ability to attract
new customers and increase revenue from existing customers depends in part on our ability to enhance and improve our solutions, increase
adoption and usage of our products and introduce new products and features. The success of any enhancements or new products depends on
several factors, including timely completion, adequate quality testing, actual performance quality, market-accepted pricing levels and
overall market acceptance and demand. Enhancements and new products that we develop may not be introduced in a timely or cost-effective
manner, may contain defects, may have interoperability difficulties with our solutions, or may not achieve the market acceptance necessary
to generate significant or any revenue. If we are unable to successfully enhance our existing solutions and capabilities to meet evolving
customer requirements, increase adoption and usage of our solutions, develop new products, or if our efforts to increase the usage of
our products are more expensive than we expect, then our business, results of operations and financial condition could be harmed.
*The success of our business depends on our ability
to expand into new vertical markets and attract new customers in a cost-effective manner.*
**
In order to grow our business, we plan to drive
greater awareness and adoption of our tests and services from customers across new vertical markets. We intend to increase our investment
in sales and marketing, as well as in technological development, to meet evolving customer needs in these and other markets. There is
no guarantee, however, that we will be successful in gaining new customers from existing and new markets. We have limited experience in
marketing and selling our products and services generally, and in particular in new markets, which may present unique and unexpected challenges
and difficulties. Furthermore, we may incur additional costs to modify our current solutions to conform to the customers requirements,
and we may not be able to generate sufficient revenue to offset these costs. We may also be required to comply with certain regulations
required by government customers, which will require us to incur costs, devote management time and modify our current solutions and operations.
If we are unable to comply with those regulations effectively and in a cost-effective manner, our financial results could be adversely
affected.
If the costs of the new marketing channels we use
or plan to pursue increase dramatically, then we may choose to use alternative and less expensive channels, which may not be as effective
as the channels we currently use or have plans to use. As we add to or change the mix of our marketing strategies, we may need to expand
into more expensive channels than those we are currently in, which could adversely affect our business, results of operations and financial
condition. In addition, we have limited experience marketing our products and services and we may not be successful in selecting the marketing
channels that will provide us with exposure to customers in a cost-effective manner. As part of our strategy to penetrate the new vertical
markets, we expect to incur marketing expenses before we are able to recognize any revenue in such markets, and these expenses may not
result in increased revenue or brand awareness. We expect to make significant expenditures and investments in new marketing activities,
and these investments may not lead to the cost-effective acquisition of additional customers. If we are unable to maintain effective sales
and marketing programs, then our ability to attract new customers or enter into new vertical markets could be adversely affected.
*Consolidation in the health care industry could
have a material adverse effect on our business, financial condition and results of operations.*
**
Many health care industry participants and payers
are consolidating to create larger and more integrated health care delivery systems with greater market power. We expect regulatory and
economic conditions to result in additional consolidation in the health care industry in the future. As consolidation accelerates, the
economies of scale of our customers organizations may grow. If a customer experiences sizable growth following consolidation, that
customer may determine that it no longer needs to rely on us and may reduce its demand for our products and services. In addition, as
health care providers consolidate to create larger and more integrated health care delivery systems with greater market power, these providers
may try to use their market power to negotiate price reductions for our products and services. Finally, consolidation may also result
in the acquisition or future development by our customers of products and services that compete with our products and services. Any of
these potential results of consolidation could have a material adverse effect on our business, financial condition and results of operations.
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*If we are not able to compete effectively, our
business and operating results will be harmed.*
**
The market for our tests and services is increasingly
competitive, rapidly evolving and fragmented, and is subject to changing technology and shifting customer needs. Although we believe that
the solutions that we offer are unique, many companies develop and market products and services that compete to varying extents with our
offerings, and we expect competition in our market to continue to intensify. Moreover, industry consolidation may increase competition.
While the clinical
epigenetics market is still fairly new, we face competition from various sources, including large, well-capitalized technology companies
such as Cleerly and Prevencio. These competitors may have better brand name recognition, greater financial and engineering resources and
larger sales teams than we have. As a result, our competitors may be able to develop and introduce competing solutions and technologies
that may have greater capabilities than our solutions or that are able to achieve greater customer acceptance, and they may be able to
respond more quickly and effectively than we can to new or changing opportunities, technologies, standards or customer requirements. In
addition, we may also compete with smaller companies, who may develop their own platforms that perform similar services as our platform.
We expect that competition will increase and intensify as we continue to expand our serviceable markets and improve our tests and services.
If we are unable to provide our tests and services on terms attractive to the customer, the prospective customer may be unwilling to utilize
our solutions. If our competitors products, services or technologies become more accepted than our solutions, if they are successful
in bringing their products or services to market earlier than we do, or if their products or services are more technologically capable
than ours, then our revenue could be adversely affected. In addition, increased competition may result in pricing pressures and require
us to incur additional sales and marketing expenses, which could negatively impact our sales, profitability and market share.
*Our business depends on customers increasing
their use of our solutions, and we may experience loss of customers or decline in their use of our solutions.*
**
Our ability to grow and generate revenue depends,
in part, on our ability to maintain and grow our relationships with existing customers and convince them to increase their usage of our
tests and services. If our customers do not increase their use of our tests and services, then our revenue may not grow, and our results
of operations may be harmed. It is difficult to accurately predict customers usage levels and the loss of customers or reductions
in their usage levels may have a negative impact on our business, results of operations and financial condition. If a significant number
of customers cease using, or reduce their usage of our tests and services, then we may be required to expend significantly more on sales
and marketing than we currently plan to expend in order to maintain or increase revenue from customers. These additional expenditures
could adversely affect our business, results of operations and financial condition.
*Our technologies and products leverage and incorporate*
AI *and machine learning, and their development, maintenance, and operational success are subject to various risks and uncertainties,
some of which are beyond our control and may adversely affect our business, results of operations and financial condition, and may also
result in reputational harm and liability.*
**
One of the key components of our technology and
solutions is the use of machine learning/artificial intelligence (ML/AI). While we have made, and expect to continue to
make, investments in the continued development of AI capabilities, adoption of fast changing AI technology presents risks, challenges
and potential unintended consequences. Also, the markets for our solutions and services are rapidly evolving and are highly competitive,
and many of our competitors are also seeking to incorporate AI into their products. Competing firms may be able to develop and embed AI
in their products more quickly than we can. If our competitors are better able to incorporate AI in their products and we are unable to
compete effectively with them, our business, results of operations and financial condition could be adversely affected.
Our ML/AI powering our technology and products,
there are known risks with the use of ML/AI including accuracy, bias, toxicity, privacy, security and data provenance. Developing,
testing and deploying ML/AI systems may also increase the cost of our offerings. Our failure to adequately address potential risks relating
to the use of ML/AI in our technology and solutions could result in litigation regarding, among other things, intellectual property, privacy
and other claims that could result in liability for our company. It may also result in new or increased governmental or regulatory scrutiny,
which could result in regulatory action, legal liabilities, regulatory penalties, and damage to our reputation, potentially harming our
business and financial condition. The use of our AI capabilities could raise ethical or social concerns and our failure to adequately
address these concerns or the failure of our competitors, clients or other end users to do so could negatively impact our brand and reputation.
Our success in ML/AI technologies depends significantly
on the continued service of our key technical personnel especially our Chief Technology Officer and our Chief Executive Officer, and our
ability to attract and retain skilled professionals in a competitive market. The loss of key personnel or the inability to hire and retain
the necessary talent could adversely affect our technological competitiveness and operational capabilities.
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*Interruptions or performance problems associated
with our technology and infrastructure may adversely affect our business and operating results.*
**
Our continued growth
depends in part on the ability of customers to access its tests and services at any time and within an acceptable amount of time. We
may in the future experience disruptions, outages and other performance problems due to a variety of factors, including challenges with
suppliers, infrastructure changes, introductions of new applications and functionality, software errors and defects, capacity constraints
due to an increasing number of customers or security related incidents. In addition, from time-to-time, we or our vendors may experience
limited periods of equipment downtime, server downtime due to server failure or other technical difficulties (as well as maintenance
requirements). It may become increasingly difficult to maintain and improve our performance, especially during high volume times and
as our solution becomes more complex and our customer demand and traffic increases. If our solution is unavailable or if our customers
are unable to access our solutions within a reasonable amount of time or at all, our business would be adversely affected, and its brand
could be harmed. In the event of any of the factors described above, or certain other failures of our infrastructure, customer or patient
data may be permanently lost. To the extent that we do not effectively address capacity constraints, upgrade our systems, as needed,
and continually develop our technology and network architecture to accommodate actual and anticipated changes in technology, customers
may cease to use our solutions and our business and operating results may be adversely affected.
*The security of our solutions, networks or computer
systems may be breached, and any unauthorized access to our customer data will have an adverse effect on our business and reputation.*
The use of our solutions involves the storage, transmission
and processing of our customers private data, and this data may contain confidential and proprietary information of our customers
or their customers, patients, employees, business partners or other persons (customer personnel) or other personal or identifying
information regarding our customers and customer personnel. Individuals or entities may attempt to penetrate our network or platform security,
or that of our third-party hosting and storage providers, and could gain access to our customer and customer personnel private data, which
could result in the destruction, disclosure or misappropriation of proprietary or confidential information of our customers and customer
personnel. If any of our customers or customer personnels private data is leaked, obtained by others or destroyed without
authorization, it could harm our reputation, we could be exposed to civil and criminal liability, and we may lose our ability to access
private data, which will adversely affect the quality and performance of our solutions.
In addition, our platform and services may be subject
to computer malware, viruses and computer hacking, fraudulent use attempts and phishing attacks, all of which have become more prevalent
in our industry. Though it is difficult to determine what, if any, harm may directly result from any specific interruption or attack,
they may include the theft or destruction of data owned by us or our customers or customer personnel, and/or damage to our platform. Any
failure to maintain the performance, reliability, security and availability of our products and technical infrastructure to the satisfaction
of our customers may harm our reputation and our ability to retain existing customers and attract new customers.
While we have implemented and are continuing to
implement procedures and safeguards that are designed to prevent security breaches and cyberattacks, they may not be able to protect against
all attempts to breach our systems, and we may not become aware in a timely manner of any such security breach. Unauthorized access to
or security breaches of our platform, network or computer systems, or those of our technology service providers, could result in the loss
of business, reputational damage, regulatory investigations and orders, litigation, indemnity obligations, damages for contract breach,
civil and criminal penalties for violation of applicable laws, regulations or contractual obligations and significant costs, fees and
other monetary payments for remediation. If customers believe that our platform does not provide adequate security for the storage of
sensitive information or its transmission over the Internet, our business will be harmed. Customers concerns about security or
privacy may deter them from using our solutions for activities that involve personal or other sensitive information.
We maintain cybersecurity coverage; however, this
coverage may not continue to be available on acceptable terms, may not be available in sufficient amounts to cover one or more large claims
against us, and may include larger self-insured retentions or certain exclusions. In addition, the insurer might disclaim coverage as
to any future claim. A successful claim not fully covered by our insurance could have a material adverse impact on our liquidity, financial
condition, and results of operations.
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*Any failure to offer high-quality customer support
may adversely affect our relationships with our customers.*
Our ability to retain
existing customers and attract new customers depends in part on our ability to maintain a consistently high level of customer service
and technical support. Our current and future customers depend on our customer support team to assist them in utilizing our tests and
services effectively and to help them to resolve issues quickly and to provide ongoing support. If we are unable to hire and train sufficient
support resources or are otherwise unsuccessful in assisting our customers effectively, it could adversely affect our ability to retain
existing customers and could prevent prospective customers from adopting our solutions. We may be unable to respond quickly enough to
accommodate short-term increases in demand for customer support. We also may be unable to modify the nature, scope and delivery of our
customer support to compete with changes in the support services provided by our competitors. Increased demand for customer support,
without corresponding revenue, could increase our costs and adversely affect our business, results of operations and financial condition.
Our sales are and will be highly dependent on our business reputation and on positive recommendations from customers. Any failure to
maintain high-quality customer support, or a market perception that we do not maintain high-quality customer support, could adversely
affect our reputation, business, results of operations and financial condition.
*The information that we provide to our customers
could be inaccurate or incomplete, which could harm our business reputation, financial condition, and results of operations.*
We aggregate, process, and analyze customers/patients
healthcare-related data and information for use by our customers. Because data in the healthcare industry is fragmented in origin, inconsistent
in format, and often incomplete, the overall quality of data received or accessed in the healthcare industry is often poor, the degree
or amount of data which is knowingly or unknowingly absent or omitted can be material. If the test results that we provide to our customers
are based on incorrect or incomplete data or if we make mistakes in the capture, input, or analysis of these data, our reputation may
suffer, and our ability to attract and retain customers may be materially harmed.
In addition, in the future, we may assist our customers
with the management and submission of data to governmental entities, including CMS. These processes and submissions are governed by complex
data processing and validation policies and regulations. If we fail to abide by such policies or submits incorrect or incomplete data,
we may be exposed to liability to a client, court, or government agency that concludes that its storage, handling, submission, delivery,
or display of health information or other data was wrongful or erroneous.
*Our proprietary applications may not operate
properly, which could damage our reputation, give rise to a variety of claims against us, or divert our resources from other purposes,
any of which could harm our business and operating results.*
Proprietary software, product and application development
is time-consuming, expensive, and complex, and may involve unforeseen difficulties. We may encounter technical obstacles, and it is possible
that we discover additional problems that prevent our proprietary solutions from operating properly. If our solutions and services do
not function reliably or fail to achieve customer expectations in terms of performance, customers could assert liability claims against
us and attempt to cancel their contracts with us. Moreover, material performance problems, defects, or errors in our existing or new solutions
may arise in the future and may result from, among other things, the lack of interoperability of our applications with systems and data
that we did not develop and the function of which is outside of our control or undetected in our testing. Defects or errors in our solutions
might discourage existing or potential customers from purchasing products and services from us. Correction of defects or errors could
prove to be time consuming, costly, impossible, or impracticable. The existence of errors or defects in our solutions and the correction
of such errors could divert our resources from other matters relating to its business, damage our reputation, increase our costs, and
have a material adverse effect on our business, financial condition, and results of operations.
*If we do not keep pace with technological changes,
our solutions may become less competitive, and our business may suffer.*
The clinical epigenetic testing, artificial intelligence/machine
learning-based solutions and the cardiovascular diagnostics markets are undergoing rapid technological change, frequent product and service
innovation and evolving industry standards. If we are unable to provide enhancements and new features for our existing tests and services
or additional tests and services that achieve market acceptance or that keep pace with these technological developments, our business
could be adversely affected. The success of enhancements, new tests and services depends on several factors, including the timely completion,
introduction and market acceptance of the innovations. Failure in this regard may significantly impair our revenue growth. In addition,
because our solutions are designed to operate on existing cloud software and technologies, we will need to continuously modify and enhance
our solutions to keep pace with changes in internet-related hardware, software, communication, browser and database technologies, alongside
changes in laboratory technologies. We may not be successful in either developing these modifications and enhancements or in bringing
them to market in a timely fashion. Furthermore, uncertainties about the timing and nature of new diagnostic tests, network platforms
or technologies, including laboratory technologies, or modifications to existing tests, platforms or technologies, could increase our
research and development expenses. Any failure of our solutions to keep pace with technological changes or operate effectively with future
network platforms and technologies, including laboratory technologies, could reduce the demand for our solutions, result in customer dissatisfaction
and adversely affect our business.
**
**
**
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*Our growth strategy may not prove viable and
expected growth and value may not be realized.*
While our overall
sales and marketing initiatives will span the gamut across traditional, print and digital mediums, our primary sales and marketing strategy
consists of the branding, collaboration, co-marketing, and co-sales opportunities involved in strategic channel partnerships. By prioritizing
strategic channel partnerships, we believe we can accelerate our market penetration into the key healthcare sub-verticals we intend to
prioritize for our growth. The key to our efforts is a well-defined and executed channel partnership integration strategy that we believe
will serve to accelerate the sales cycle. Although there is no assurance, we believe such strategic channel partnerships will generate
revenue in a myriad of ways, including larger contracts for our Epi+Gen CHD and PrecisionCHD tests, our HeartRisk platform,
and bundling our solutions alongside other synergistic technologies, services, and products. There can be no assurance that we will be
successful in acquiring customers through these and other strategies.
*Market and economic conditions may negatively
impact our business, financial condition and stock price.*
**
Concerns over inflation, energy costs, geopolitical
issues, including the ongoing conflict between Russian and Ukraine and the recent commencement of hostilities in Iran, unstable global
credit markets and financial conditions, and volatile oil prices could lead to periods of significant economic instability, diminished
liquidity and credit availability, declines in consumer confidence and discretionary spending, diminished expectations for the global
economy and expectations of slower global economic growth going forward. Our general business strategy may be adversely affected by any
such inflationary fluctuations, economic downturns, volatile business environments and continued unstable or unpredictable economic and
market conditions.
Additionally, rising costs of goods and services
purchased by us, including raw materials used in manufacturing our tests, may have an adverse effect on our gross margins and profitability
in future periods. If economic and market conditions continue to deteriorate or do not improve, it may make any necessary debt or equity
financing more difficult to complete, more costly and more dilutive to our stockholders. Failure to secure any necessary financing in
a timely manner or on favorable terms could have a material adverse effect on our financial performance and stock price or could require
us to delay or abandon development other business plans. In addition, there is a risk that one or more of our current and future service
providers, manufacturers, suppliers, other partners could be negatively affected by such difficult economic factors, which could adversely
affect our ability to attain our operating goals on schedule and on budget or meet our business and financial objectives.
*Our success depends upon our ability to adapt
to a changing market and our continued development of additional tests and services.*
Although we believe that we will provide a competitive
range of tests and services, there can be no assurance of acceptance by the marketplace. The procurement of new contracts by us may be
dependent upon the continuing results achieved with current and future customers, upon pricing and operational considerations, as well
as the potential need for continuing improvement to existing products and services. Moreover, the markets for such services may not develop
as expected nor can there be any assurance that we will be successful in our marketing of any such products and services.
*Compliance with changing regulation of corporate
governance and public disclosure result in significant additional expenses.*
Changing laws, regulations,
and standards relating to corporate governance and public disclosure for public companies, including the Sarbanes-Oxley Act of 2002 and
various rules and regulations adopted by the SEC, are creating uncertainty for public companies. Our management needs to invest significant
time and financial resources to comply with both existing and evolving requirements for public companies, which leads, among other things,
to significantly increased general and administrative expenses and diversion of management time and attention from revenue generating
activities to compliance activities.
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**Risks Related to our Business Operations**
*We could experience losses or liability not covered
by insurance.*
Our business exposes us to risks that are inherent
in the provision of testing services that assist clinical decision-making. If customers or customer personnel assert liability claims
against us, any ensuing litigation, regardless of outcome, could result in a substantial cost to the Company, divert managements
attention from operations, and decrease market acceptance of our solutions. The limitations of liability set forth in any contracts we
may enter into now or in the future may not be enforceable or may not otherwise protect us from liability for damages. Additionally, we
may be subject to claims that are not explicitly covered by a contract. We also maintain general liability coverage; however, this coverage
may not continue to be available on acceptable terms, may not be available in sufficient amounts to cover one or more large claims against
us, and may include larger self-insured retentions or exclusions for certain products. In addition, the insurer might disclaim coverage
as to any future claim. A successful claim not fully covered by our insurance could have a material adverse impact on our liquidity, financial
condition, and results of operations.
**
*Our future growth could be harmed if we lose
the services of our key personnel.*
We are highly dependent upon the talents and services
of a number of key employees, specifically Meeshanthini Dogan, PhD, Robert Philibert, MD PhD and Timur Dogan, PhD, and other senior technical
and management personnel, including our other executive officers, all of whom would be difficult to replace. In 2022, we entered into
multi-year employment agreements with each of our executive officers and a consulting agreement with our non-executive chairman. The loss
of the services of one or more of these key employees would disrupt our business and harm its results of operations. As competition is
intense for the type of highly skilled scientific and medical professionals our business requires, we may not be able to successfully
attract and retain senior leadership necessary to grow our business.
**
*If we are unable to hire, retain and motivate
qualified personnel, our business will suffer.*
Our future success depends, in part, on our ability
to continue to attract and retain highly skilled personnel. We believe that there is, and will continue to be, intense competition for
highly skilled management, medical, engineering, data science, sales and other personnel with experience in our industry. We must provide
competitive compensation packages and a high-quality work environment to hire, retain and motivate employees. If we are unable to retain
and motivate our existing employees and attract qualified personnel to fill key positions, we may be unable to manage our business effectively,
including the development, marketing and sale of our products, which could adversely affect our business, results of operations and financial
condition. To the extent we hire personnel from competitors, we also may be subject to allegations that they have been improperly solicited
or that they have divulged proprietary or other confidential information. If we are unable to retain our employees, our business, results
of operations and financial condition could be adversely affected.
*If we cannot maintain our corporate culture as
it grows, we could lose the innovation, teamwork, passion and focus on execution that it believes contribute to its success, and its business
may be harmed.*
We believe that our corporate culture is a critical
component to our success. We have and will continue to invest substantial time and resources in building our team. As we grow and develop
the infrastructure of a public company, we may find it difficult to maintain our corporate culture. Any failure to preserve our culture
could negatively affect our future success, including our ability to retain and recruit personnel and effectively focus on and pursue
our corporate objectives.
*We may be unable to manage our growth.*
Currently, we have less than 15 full and two part-time
employees. Our ability to manage our growth effectively will require us to continue to improve our operational, financial and management
controls and information systems to accurately forecast sales demand, to manage our operating costs, manage our marketing programs in
conjunction with an emerging market, and attract, train, motivate and manage our employees effectively. Our growth strategy will place
significant demands on our management team and our financial, administrative and other resources. Operating results will depend substantially
on the ability of our officers and key employees to manage changing business conditions and to implement and improve its financial, administrative
and other resources. If management fails to manage the expected growth, our results of operations, financial condition, business and prospects
could be adversely affected. In addition, our growth strategy may depend on effectively integrating future entities, which requires cooperative
efforts from the managers and employees of the respective business entities. If we are unable to respond to and manage changing business
conditions, or the scale of our operations, then the quality of our products and services, our ability to retain key personnel, and our
business could be harmed, which in turn, could adversely affect our results of operations, financial condition, business and prospects.
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*Our Board of Directors may change its strategies,
policies, and procedures without stockholder approval, and we may become highly leveraged, which may increase our risk of default under
our existing or future obligations.*
Our investment, financing, leverage, and dividend
policies, and our policies with respect to all other activities, including growth, capitalization, and operations, are determined exclusively
by our board of directors, and may be amended or revised at any time by our board of directors without notice to or a vote of our stockholders.
This could result in the Company conducting operational matters, making investments, or pursuing different business or growth strategies
than those contemplated in this Annual Report on Form 10-K. Further, our charter and bylaws do not limit the amount or percentage of indebtedness,
funded or otherwise, that we may incur. High leverage also increases the risk of default on our obligations. In addition, a change in
our investment policies, including the manner in which we allocate our resources across our portfolio or the types of assets in which
we seek to invest, may increase our exposure to interest rate risk and liquidity risk. Changes to our policies with regards to the foregoing
could materially adversely affect our financial condition, results of operations, and cash flow.
*Our business is subject to the risks of earthquakes,
fire, floods, pandemics and other natural catastrophic events, and to interruption by man-made problems, such as power disruptions, computer
viruses, data security breaches or terrorism.*
A significant natural disaster, such as a tornado,
hurricane or a flood, occurring at our headquarters or where a business partner is located could adversely affect our business, results
of operations and financial condition. Further, if a natural disaster or man-made problem were to affect our network service providers
or Internet service providers, this could adversely affect the ability of our customers to use our products and platform. In addition,
health epidemics or pandemics, natural disasters and acts of terrorism could cause disruptions in our business, or the businesses of our
customers or service providers. We also rely, and will continue to rely, on our network and third-party infrastructure and enterprise
applications and internal technology systems for our engineering, sales and marketing and operations activities. In the event of a major
disruption caused by a health epidemic or pandemic, natural disaster or man-made problem, we may be unable to continue our operations
and may endure system interruptions, reputational harm, delays in our development activities, lengthy interruptions in service, breaches
of data security and loss of critical data, any of which could adversely affect our business, results of operations and financial condition.
**
*We may need to seek alternative business opportunities
and change the nature of our business.*
As a company in the early stages of its development,
we continuously reevaluate our business, the market in which we operate and potential new opportunities. We may seek other alternatives
within the healthcare field in order to grow our business and increase revenues. Such alternatives may include, but not be limited to,
combinations or strategic partnerships with laboratory companies or with medical practices such as hospitalists or behavioral health.
Pursuing alternative business opportunities could increase our expenses, may require us to obtain additional financing, which may not
be available on favorable terms or at all, and result in potentially dilutive issuances of our equity securities or the incurrence of
debt that may be burdensome to service, any of which could have a material adverse effect on our business and operations. In addition,
pursuing alternative business opportunities may never be successful and may divert significant management time and attention. Moreover,
accomplishing and integrating any business opportunity that is pursued by us may disrupt the existing business and may be a complex, risky
and costly endeavor and could have a material adverse effect on our business, results of operations, financial condition and prospects.
**
*Any legal proceedings or claims against us could
be costly and time-consuming to defend and could harm our reputation regardless of the outcome.*
We may in the future
become subject to legal proceedings and claims that arise in the ordinary course of business, including intellectual property, collaboration,
licensing agreement, product liability, employment, class action, whistleblower and other litigation claims, and governmental and other
regulatory investigations and proceedings. Such matters can be time-consuming, divert managements attention and resources, cause
us to incur significant expenses or liability, or require us to change our business practices. In addition, the expense of litigation
and the timing of this expense from period to period are difficult to estimate, subject to change, and could adversely affect our financial
condition and results of operations. Because of the potential risks, expenses, and uncertainties of litigation, we may, from time to time,
settle disputes, even where we have meritorious claims or defenses, by agreeing to settlement agreements. Any of the foregoing could adversely
affect our business, financial condition, and results of operations.
**Risks Related to our Intellectual Property**
*Our license agreement with the University of
Iowa Research Foundation includes a non-exclusive license of technical information that potentially could grant unaffiliated
third parties access to materials and information considered derivative work made by us, which could be used by such licensees to develop
competitive products.*
The University of Iowa Research Foundation, or UIRF,
license agreement grants to us a worldwide, exclusive, non-transferable license under the Patent Rights, as defined in the agreement,
to make, have made, use, sell, offer for sale and import the Licensed Products(s) and/or Licensed Processes, as defined in the agreement,
in the field of research tools and clinical diagnostics for cardiovascular disease, stroke, congestive heart failure and diabetes in humans.
However, the agreement also confers a non-exclusive license as to Technical Information. Technical Information is defined as certain research
and development information, materials, confidential information, technical data, unpatented inventions, know-how and supportive information
owned and controlled by the licensor that was not in the public domain as of May 2, 2017 and that describes the Invention, as defined
in the agreement, its manufacture and/or use and selected by the licensor to provide to us for use in or with the development, manufacture
or use of the Licensed Products and/or Licensed Processes. Technical Information further includes materials, all progeny and derivatives
of the materials made by us or our sublicensees, as well as software or other copyrightable work, all derivatives of such software and
other copyrightable work made by us and our sublicensees. The ability of UIRF to grant non-exclusive licenses to third parties in and
to this broad definition of Technical Information raises the possibility that unaffiliated third parties could use such Technical Information,
including Technical Information used by the Company, to make, use, sell, offer to sell and import products and/or processes that compete
with the Companys exclusively-licensed products and/or processes or are positioned in markets that the Company may enter in the
future. Increased competition could result in reduced demand for the Companys products and/or processes, slow its growth and materially
adversely affect its business, operating results and financial condition.
*We could incur substantial costs in protecting
or defending our intellectual property rights, and any failure to protect or defend our intellectual property could adversely affect our
business, results of operations and financial condition.*
Our success depends, in part, on our ability to
protect our brand and the proprietary methods and technologies that we develop under patent and other intellectual property laws of the
United States and foreign jurisdictions so that we can prevent others from using our inventions and proprietary information. Any patents
that have been issued or that may be issued in the future may not provide significant protection for our intellectual property. If we
fail to protect our intellectual property rights adequately, our competitors might gain access to our technology and our business, results
of operations and financial condition may be adversely affected.
The particular forms of intellectual property protection
that we seek, or our business decisions about when to file patent applications and trademark applications, may not be adequate to protect
our business. We could be required to expend significant resources to monitor and protect our intellectual property rights. Litigation
may be necessary in the future to enforce our intellectual property rights, determine the validity and scope of our proprietary rights
or those of others, or defend against claims of infringement or invalidity. Such litigation could be costly, time-consuming and distracting
to management, result in a diversion of significant resources, lead to the narrowing or invalidation of portions of our intellectual property
and have an adverse effect on our business, results of operations and financial condition. Our efforts to enforce our intellectual property
rights may be met with defenses, counterclaims and countersuits attacking the validity and enforceability of our intellectual property
rights or alleging that we infringe the counterclaimants own intellectual property. Any of our patents, copyrights, trademarks
or other intellectual property rights could be challenged by others or invalidated through administrative process or litigation.
We also rely, in part, on confidentiality agreements
with our business partners, employees, consultants, advisors, customers and others in our efforts to protect our proprietary technology,
processes and methods. These agreements may not effectively prevent disclosure of our confidential information, and it may be possible
for unauthorized parties to copy our software or other proprietary technology or information, or to develop similar technology independently
without our having an adequate remedy for unauthorized use or disclosure of our confidential information. In addition, others may independently
discover our trade secrets and proprietary information, and in these cases, we would not be able to assert any trade secret rights against
those parties. Costly and time-consuming litigation could be necessary to enforce and determine the scope of our proprietary rights, and
the failure to obtain or maintain trade secret protection could adversely affect our competitive business position.
In addition, the laws
of some countries do not protect intellectual property and other proprietary rights to the same extent as the laws of the United States.
To the extent we expand into international activities, our exposure to unauthorized copying, transfer and use of our proprietary technology
or information may increase.
Our means of protecting our intellectual property
and proprietary rights may not be adequate or our competitors could independently develop similar technology. If we fail to meaningfully
protect our intellectual property and proprietary rights, our business, results of operations and financial condition could be adversely
affected.
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*Assertions by third parties of infringement or
other violations by us of its intellectual property rights could result in significant costs and harm our business and operating results.*
Our success depends upon our ability to refrain
from infringing upon the intellectual property rights of others. Some companies, including some of our competitors, own large numbers
of patents, copyrights and trademarks, which they may use to assert claims against us. As we grow and enter new markets, we will face
a growing number of competitors. As the number of competitors in our industry grows and the functionality of products in different industry
segments overlaps, we expect that software and other solutions in our industry may be subject to such claims by third parties. Third parties
may in the future assert claims of infringement, misappropriation or other violations of intellectual property rights against us. We cannot
assure investors that infringement claims will not be asserted against us in the future, or that, if asserted, any infringement claim
will be successfully defended. A successful claim against us could require that we pay substantial damages or ongoing royalty payments,
prevent us from offering our products and services, or require that we comply with other unfavorable terms. We may also be obligated to
indemnify our customers or business partners or pay substantial settlement costs, including royalty payments, in connection with any such
claim or litigation and to obtain licenses, modify applications or refund fees, which could be costly. Even if we were to prevail in such
a dispute, any litigation regarding our intellectual property could be costly and time-consuming and divert the attention of our management
and key personnel from our business operations.
**
*Certain of our core technology is licensed, and
that license may be terminated if we were to breach our obligations under the license.*
The initial work on our core technology is derived
from work done by our founders while at the University of Iowa, around which there is currently a family of patent applications, the rights
of which are owned by the University of Iowa Research Foundation (UIRF) and exclusively licensed to us. In addition, certain follow-on
work on our core technology also is derived from work done by our founders while at the University of Iowa but was furthered by our founders.
Therefore, certain follow-on work is co-owned by UIRF and us, and exclusively licensed to us under the license agreement with UIRF. That
license agreement and those licenses granted under the license agreement terminate on the expiration of the patent rights licensed under
the license agreement, unless certain proprietary, non-patented technical information is still being used by us, in which case the license
agreement will not terminate until the date of termination of such use. The licenses under the license agreement could terminate prior
to the expiration of the licensed patent rights if we materially breach our obligations under the license agreement, including failing
to pay the applicable license fees and any interest on such fees, and if we fail to fully remedy such breach within the period specified
in the license agreement, or if we enter liquidation, have a receiver or administrator appointed over any assets related to the license
agreement, or cease to carry on business, or file for bankruptcy or if an involuntary bankruptcy petition is filed against us. The license
agreement can also be terminated by either party as a result of any material breach of the license which is not remedied within 30 days
after receiving written notice thereof or by UIRF as a result of any breach of the license which has not been cured within 90 days after
UIRF provides written notice of such breach.
*Some of our technologies incorporate open-source
software or other similar licensed technologies, which could become unavailable or subject us to increased costs, delays in production
or assessment or litigation.*
In order to provide our products, we currently use
a variety of technologies including, for example, genotyping, digital methylation assessment and data processing technologies owned by
third parties. The terms of these agreements, and any other open source software agreements we may rely upon in the future,
are subject to change without notice and may increase our costs. Moreover, our failure to comply with the terms of one or more of these
agreements could expose us to business disruption because the license may be terminated automatically due to non-compliance.
The use and distribution
of open-source software may also entail greater risks than the use of third-party commercial software, as open-source licensors generally
do not provide warranties or other contractual protections regarding infringement claims or the quality of the code. Many of the risks
associated with use of open-source software cannot be eliminated and could negatively affect our business.
In addition, the wide availability of open-source
code used in our current and future products could expose us to security vulnerabilities. From time to time, we may face claims from third
parties asserting ownership of, or demanding release of, the open-source software or derivative works that we developed using such software
(which could include our proprietary source code), or otherwise seeking to enforce the terms of the applicable open-source license. These
claims could result in litigation that could be costly to defend, have a negative effect on our operating results and financial condition
or require us to devote additional research and development resources to change our existing or future proprietary source code. Responding
to any infringement or noncompliance claim by an open-source vendor, regardless of its validity, discovering certain open-source software
code in our products, or a finding that we have breached the terms of an open- source software license, could harm our business, results
of operations and financial condition. In each case, we would be required to either seek licenses to software or services from other parties
and redesign our products to function with such other parties software or services or develop these components internally, which
would result in increased costs and could result in delays to product launches. Furthermore, we might be forced to limit the features
available in our current or future solutions. If these delays and feature limitations occur, our business, results of operations and financial
condition could be adversely affected.
**
**
**
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*Intellectual property that is in-licensed may
have been made using government funding and, thus, may be subject to federal regulations under the Bayh-Dole Act.*
The intellectual property Cardio has licensed from
UIRF is indicated as having been discovered through government funded programs and thus, may be subject to federal regulations under the
Bayh-Dole Act. In general, the Bayh-Dole Act provides the U.S. government certain rights in inventions developed using government funding,
such as a right to a non-exclusive, non-transferable, irrevocable worldwide license to use inventions for any governmental purpose. In
addition, intellectual property generated with government funding is also subject to certain reporting requirements, and the Bayh-Dole
Act requires that any products subject to the Bayh-Dole Act be manufactured substantially in the United States, although this manufacturing
requirement can be waived if the owner of the patents and applications can show that reasonable efforts to manufacture the product substantially
in the United States were unsuccessful, or that under the circumstances, domestic manufacture is not commercially feasible.
Under the Bayh-Dole Act, the U.S. government has
the right to take title to inventions developed using a U.S. government funded program, referred to as march-in rights,
for a number of reasons including, for example, failure to disclose the invention to the government or failure to file an application
within specified time limits. In addition, under the Bayh-Dole Act, the U.S. government has the right to require any invention developed
using U.S. government funding to be granted exclusive, partially exclusive, or non-exclusive licenses to any of these inventions to a
third party if it determines that (i) adequate steps have not been taken to commercialize the invention (ii) government action is necessary
to meet public health or safety needs or (iii) government action is necessary to meet requirements for public use under federal regulations.
Compliance with such regulations may limit Cardios
exclusive rights, subject Cardio to expenditure of resources with respect to reporting requirements and limit Cardios ability to
contract with non-U.S. manufacturers. In addition, any exercise by the government of any of the foregoing rights under the Bayh-Dole Act
may affect Cardios competitive position, business, financial condition, results of operations, and prospects.
****
**Risks Related to Government Regulation**
*We conduct business in a heavily regulated industry,
and if we fail to comply with these laws and government regulations, we could incur penalties or be required to make significant changes
to our operations or experience adverse publicity, which could have a material adverse effect on our business, financial condition, and
results of operations.*
The healthcare industry is heavily regulated and
closely scrutinized by federal, state and local governments. Comprehensive statutes and regulations govern the manner in which we provide
and bill for our products services and collect reimbursement from governmental programs and private payors, our contractual relationships
with providers, vendors and customers, our marketing activities and other aspects of our operations. Of particular importance are:
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the federal physician self-referral law, commonly referred to as the Stark Law; | |
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the federal Anti-Kickback Act; | |
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the criminal healthcare fraud provisions of HIPAA; | |
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the federal False Claims Act; | |
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reassignment of payment rules that prohibit certain types of billing and collection; | |
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similar state law provisions pertaining to anti-kickback, self-referral and false claims issues; | |
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state laws that prohibit general business corporations, such as us, from practicing medicine; and | |
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laws that regulate debt collection practices as applied to our debt collection practices. | |
Because of the breadth of these laws and the narrowness
of the statutory exceptions and safe harbors available, it is possible that some of our business activities could be subject to challenge
under one or more of such laws. Achieving and sustaining compliance with these laws may prove costly. Failure to comply with these laws
and other laws can result in civil and criminal penalties such as fines, damages, overpayment recoupment loss of enrollment status and
exclusion from the Medicare and Medicaid programs. The risk of us being found in violation of these laws and regulations is increased
by the fact that many of them have not been fully interpreted by the regulatory authorities or the courts, and their provisions are sometimes
open to a variety of interpretations. Our failure to accurately anticipate the application of these laws and regulations to our business
or any other failure to comply with regulatory requirements could create liability for us and negatively affect our business. Any action
against us for violation of these laws or regulations, even if we successfully defend against it, could cause us to incur significant
legal expenses, divert managements attention from the operation of our business and result in loss of customers and adverse publicity.
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To enforce compliance with the federal laws, the
U.S. Department of Justice and the Office of the Inspector General (OIG) have recently increased their scrutiny of healthcare providers,
which has led to a number of investigations, prosecutions, convictions and settlements in the healthcare industry. Dealing with investigations
can be time- and resource-consuming and can divert managements attention from the business. Any such investigation or settlement
could increase our costs or otherwise have an adverse effect on our business. In addition, because of the potential for large monetary
exposure under the federal False Claims Act, which provides for treble damages and mandatory minimum penalties of $5,500 to $11,000 per
amounts to avoid the uncertainty of treble damages that may be awarded in litigation proceedings. Such settlements often contain additional
compliance and reporting requirements as part of a consent decree, settlement agreement or corporate integrity agreement. Given the significant
size of actual and potential settlements, it is expected that the government will continue to devote substantial resources to investigating
healthcare providers compliance with the healthcare reimbursement rules and fraud and abuse laws.
The laws, regulations and standards governing the
provision of healthcare services may change significantly in the future. We cannot assure investors that any new or changed healthcare
laws, regulations or standards will not materially adversely affect our business. We cannot assure investors that a review of our business
by judicial, law enforcement, regulatory or accreditation authorities will not result in a determination that could adversely affect
our operations.
*If the FDA were to begin actively regulating our tests or software, we could incur substantial costs and delays associated
with trying to obtain premarket 510(k) clearance, de novo classification, or premarket approval and incur costs associated with complying
with post-market controls.*
We believe our Epi+Gen CHD and PrecisionCHD
tests are LDTs. The FDA generally considers an LDT to be a test that is designed, manufactured, and used within a single laboratory that
is certified under CLIA and meets the regulatory requirements under CLIA to perform high complexity testing. Our laboratories are currently
regulated under CLIA and must comply with CAP requirements, and we are subject to extensive federal and state laws and regulations. The
FDA issued a final rule in May 2024 that would have subjected many LDTs to regulatory requirements including, in some cases, premarket
authorization. A federal district court vacated the FDA final rule in May 2025, holding that LDTs are not subject to FDA regulation. The
FDA rescinded the final rule in September 2025. The FDA has not indicated how it will interpret the court ruling or whether it will seek
a different regulatory approach with respect to LDTs or components thereof. In June 2025, Congress re-introduced the Verifying Accurate,
Leading-edge IVCT Development Act (VALID Act) to establish a new risk-based regulatory framework for in vitro clinical tests
(IVCTs), including IVDs, LDTs, collection devices and instruments used with such tests. This legislation was previously
introduced in 2021 and 2023.
If the FDA were to develop an alternate approach
to regulating LDTs, or if Congress were to enact legislation giving FDA authority to regulate our current or future LDTs, or any components,
materials, or software we use in our tests we could be forced to stop selling our tests or be required to modify claims for or make other
changes to our tests while we or our suppliers work to comply with FDA requirements including, potentially, premarket authorization. Our
business could be adversely affected while such review was ongoing and if we or our supplier were ultimately unable to obtain such authorization.
Completing such submissions would require the expenditure of time, attention and financial and other resources, and may not yield the
desired results, which could delay, limit or prevent regulatory authorization.
We also believe that our Actionable Clinical Intelligence
and HeartRisk platform are not subject to regulation by the FDA.In particular, the Actionable Clinical Intelligence platform is offered
as a component of the PrecisionCHD LDT which, as noted above, FDA does not have authority to regulate. HeartRisk is intended for
use by business leaders as a population health analytics platform and as such does not meet the device definition. If
the FDA were to disagree with our position, this could have an adverse impact on our ability to offer our tests and related services.
If the FDA required us to obtain marketing authorization for one or more of our platforms, our business could be adversely affected while
such review was in process or if we are unable to obtain marketing authorization.
**
*If our products do not receive adequate coverage
and reimbursement from third-party payors, our ability to expand access to our tests beyond the initial sales channels will be limited
and our overall commercial success will be limited.*
We currently do not have broad-based coverage and
reimbursement for the Epi+Gen CHD and PrecisionCHD tests. However, our strategy is to expand access to our tests by pursuing
coverage and reimbursement by third-party payors, including government payors. Coverage and reimbursement by third-party payors, including
managed care organizations, private health insurers, and government healthcare programs, such as Medicare and Medicaid in the United States
and similar programs in other countries, for the types of risk assessment and detection tests we perform can be limited and uncertain.
Healthcare providers may not order our products unless third-party payors cover and provide adequate reimbursement for a substantial portion
of the price of the products. If we are not able to obtain adequate coverage and an acceptable level of reimbursement for our products
from third-party payors, there could be a greater co-insurance or co-payment obligation for any individual for whom a test is ordered.
The individual may be forced to pay the entire cost of a test out-of-pocket, which could dissuade physicians from ordering our products
and, if ordered, could result in delay in or decreased likelihood of collection of payment.
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Medicare is the single largest U.S. payor and a
particularly important payor for many cardiac-related laboratory services, given the demographics of the Medicare population. Generally,
traditional Medicare fee-for-service will not cover screening tests that are performed in the absence of signs, symptoms, complaints,
personal history of disease, or injury except when there is a statutory provision that explicitly covers the test. Epi+Gen CHD
could be considered a screening test under Medicare and, accordingly, may not be eligible for traditional Medicare fee-for- service coverage
and reimbursement unless we pursue substantial additional measures, which would require significant investments, and may ultimately be
unsuccessful or may take several years to achieve.
If eligible for reimbursement,
laboratory tests such as ours generally are classified for reimbursement purposes under CMSs Healthcare Common Procedure Coding
System (HCPCS) and the American Medical Associations (AMA) Current Procedural Terminology (CPT)
coding systems. We and payors must use those coding systems to bill and pay for our diagnostic tests, respectively. These HCPCS and CPT
codes are associated with the particular product or service that is provided to the individual. Accordingly, without a HCPCS or CPT code
applicable to our products, the submission of claims could be a significant challenge. Once CMS creates an HCPCS code or the AMA establishes
a CPT code, CMS establishes payment rates and coverage rules under traditional Medicare, and private payors establish rates and coverage
rules independently. Under Medicare, payment for laboratory tests is generally made under the Clinical Laboratory Fee Schedule (CLFS)
with payment amounts assigned to specific HCPCS and CPT codes. In addition, laboratory-reported private payor rates are used to establish
Medicare payment rates for tests reimbursed via the CLFS. This methodology implements Section 216 of the Protecting Access to Medicare
Act of 2014 (PAMA) and requires laboratories that meet certain requirements related to volume and type of Medicare revenues
to report to CMS their private payor payment rates for each test they perform, the volume of tests paid at each rate, and the HCPCS code
associated with the test. CMS uses the reported information to set the Medicare payment rate for each test at the weighted median private
payor rate. The full impact of the PAMA rate-setting methodology and its applicability to our products remains uncertain at this time.
Coverage and reimbursement by a third-party payor
may depend on a number of factors, including a payors determination that a product is appropriate, medically necessary, and cost-
effective. Each payor will make its own decision as to whether to establish a policy or enter into a contract to cover our products and
the amount it will reimburse for such products. Obtaining approvals from third-party payors to cover our products and establishing adequate
coding recognition and reimbursement levels is an unpredictable, challenging, time-consuming, and costly process, and we may never be
successful. If third-party payors do not provide adequate coverage and reimbursement for our products, our ability to succeed commercially
will be limited.
Even if we establish relationships with payors to
provide our products at negotiated rates, such agreements would not obligate any healthcare providers to order our products or guarantee
that we would receive reimbursement for our products from these or any other payors at adequate levels. Thus, these payor relationships,
or any similar relationships, may not result in acceptable levels of coverage and reimbursement for our products or meaningful increases
in the number of billable tests we sell to healthcare providers. We believe it may take at least several years to achieve coverage and
adequate reimbursement with a majority of third-party payors, including with those payors offering negotiated rates. In addition, we cannot
predict whether, under what circumstances, or at what payment levels payors will cover and reimburse for our products. We do not expect
Epi+Gen CHD or PrecisionCHD to have Medicare or other third-party coverage or reimbursement in the near term. However, if
we fail to establish and maintain broad-based coverage and reimbursement for our products, our ability to expand access to our products,
generate increased revenue, and grow our test volume and customer base will be limited, and our overall commercial success will be limited.
*Our products may fail to achieve the degree of
market acceptance necessary for commercial success.*
**
The failure of our products, once introduced, to
be listed in physician guidelines or of our studies to produce favorable results or to be published in peer-reviewed journals could limit
the adoption of our products. In addition, healthcare providers and third-party payors, including Medicare, may rely on physician guidelines
issued by industry groups, medical societies, and other key organizations, before utilizing or reimbursing the cost of any diagnostic
or screening test. Although we have published a study showing the Epi+Gen CHD and PrecisionCHD tests are associated with
cost saving, it is not yet, and may never be, listed in any such guidelines.
Further, if our products or the technology underlying
them do not receive sufficient favorable exposure in peer-reviewed publications, the rate of physician and market acceptance of our products
and positive reimbursement coverage decisions for our products could be negatively affected. The publication of clinical data in peer-reviewed
journals is an important step in commercializing and obtaining reimbursement for products, such as Epi+Gen CHD and PrecisionCHD,
and our inability to control when, if ever, results are published may delay or limit our ability to derive sufficient revenues from any
product that is developed using data from a clinical study.
Failure to achieve broad market acceptance of our
products, including Epi+Gen CHD and PrecisionCHD, would materially harm our business, financial condition, and results of
operations.
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**Risks Related to Customer Privacy, Cybersecurity
and Data**
*Our use and disclosure of personally identifiable
information, including health information, is subject to federal and state privacy and security regulations, and our failure to comply
with those regulations or to adequately secure the information we hold could result in significant liability or reputational harm and,
in turn, a material adverse effect on our customer base and revenue.*
Numerous state and
federal laws and regulations govern the collection, dissemination, use, privacy, confidentiality, security, availability and integrity
of Personally Identifiable Information (PII), including protected health information. These laws and regulations include
the Health Insurance Portability and Accountability Act of 1996 (HIPAA). HIPAA establishes a set of basic national privacy
and security standards for the protection of protected health information, (PHI), by health plans, healthcare clearinghouses
and certain healthcare providers, referred to as covered entities, and the business associates with whom such covered entities contract
for services, which includes Cardio.
HIPAA requires healthcare providers like Cardio
to develop and maintain policies and procedures with respect to PHI that is used or disclosed, including the adoption of administrative,
physical and technical safeguards to protect such information. HIPAA also implemented the use of standard transaction code sets and standard
identifiers that covered entities must use when submitting or receiving certain electronic healthcare transactions, including activities
associated with the billing and collection of healthcare claims.
HIPAA imposes mandatory penalties for certain violations.
Penalties for violations of HIPAA and its implementing regulations start at $100 per violation and are not to exceed $50,000 per violation,
subject to a cap of $1.5 million for violations of the same standard in a single calendar year. However, a single breach incident can
result in violations of multiple standards. HIPAA also authorizes state attorneys general to file suit on behalf of their residents. Courts
will be able to award damages, costs and attorneys fees related to violations of HIPAA in such cases. While HIPAA does not create
a private right of action allowing individuals to sue us in civil court for violations of HIPAA, its standards have been used as the basis
for duty of care in state civil suits such as those for negligence or recklessness in the misuse or breach of PHI.
In addition, HIPAA mandates that the Secretary of
Health and Human Services, or HHS, conduct periodic compliance audits of HIPAA-covered entities or business associates for compliance
with the HIPAA Privacy and Security Standards. It also tasks HHS with establishing a methodology whereby harmed individuals who were the
victims of breaches of unsecured PHI may receive a percentage of the Civil Monetary Penalty fine paid by the violator.
HIPAA further requires that patients be notified
of any unauthorized acquisition, access, use or disclosure of their unsecured PHI that compromises the privacy or security of such information,
with certain exceptions related to unintentional or inadvertent use or disclosure by employees or authorized individuals. HIPAA specifies
that such notifications must be made without unreasonable delay and in no case later than 60 calendar days after discovery of the
breach. If a breach affects 500 patients or more, it must be reported to HHS without unreasonable delay, and HHS will post the
name of the breaching entity on its public web site. Breaches affecting 500 patients or more in the same state or jurisdiction must also
be reported to the local media. If a breach involves fewer than 500 people, the covered entity must record it in a log and notify HHS
at least annually.
Numerous other federal and state laws protect the
confidentiality, privacy, availability, integrity and security of personally identifiable information, or PII, including PHI. These laws
in many cases are more restrictive than, and may not be preempted by, the HIPAA rules and may be subject to varying interpretations by
courts and government agencies, creating complex compliance issues for us, and our customers and potentially exposing us to additional
expense, adverse publicity and liability.
New health information standards, whether implemented
pursuant to HIPAA, congressional action or otherwise, could have a significant effect on the manner in which we must handle healthcare
related data, and the cost of complying with standards could be significant. If we do not comply with existing or new laws and regulations
related to PHI, it could be subject to criminal or civil sanctions.
Because of the extreme sensitivity of the PII that
we store and transmit, the security features of our technology platform are very important. If our security measures, some of which are
managed by third parties, are breached or fail, unauthorized persons may be able to obtain access to sensitive customer and patient data,
including HIPAA-regulated PHI. As a result, our reputation could be severely damaged, adversely affecting customer and patient confidence.
Customers may curtail their use of or stop using our services or our customer base could decrease, which would cause our business to suffer.
In addition, we could face litigation, damages for contract breach, penalties and regulatory actions for violation of HIPAA and other
applicable laws or regulations and significant costs for remediation, notification to individuals and for measures to prevent future occurrences.
Any potential security breach could also result in increased costs associated with liability for stolen assets or information, repairing
system damage that may have been caused by such breaches, incentives offered to customers or other business partners in an effort to maintain
our business relationships after a breach and implementing measures to prevent future occurrences, including organizational changes, deploying
additional personnel and protection technologies, training employees and engaging third-party experts and consultants. While we maintain
insurance covering certain security and privacy damages and claims expenses, we may not carry insurance or maintain coverage sufficient
to compensate for all liability and in any event, insurance coverage would not address the reputational damage that could result from
a security incident.
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We outsource important
aspects of the storage and transmission of customer and customer personnel information, and thus rely on third parties to manage functions
that have material cyber- security risks. We attempt to address these risks by requiring outsourcing subcontractors who handle customer
and customer personnel information to sign business associate agreements contractually requiring those subcontractors to adequately safeguard
personal health data to the same extent that applies to us and in some cases by requiring such outsourcing subcontractors to undergo third-party
security examinations. In addition, we periodically hire third-party security experts to assess and test our security posture. However,
we cannot assure investors that these contractual measures and other safeguards will adequately protect us from the risks associated with
the storage and transmission of client and patients proprietary and protected health information.
In addition, U.S. states are adopting new laws or
amending existing laws and regulations, requiring attention to frequently changing regulatory requirements applicable to data related
to individuals. For example, California has enacted the California Consumer Privacy Act (CCPA). The CCPA gives California
residents expanded rights to access and delete their personal information, opt out of certain personal information sharing and receive
detailed information about how their personal information is used by requiring covered companies to provide new disclosures to California
consumers (as that term is broadly defined and which can include any of our current or future employees who may be California residents
or any other California residents whose data we collect or process) and provide such residents new ways to opt out of certain sales of
personal information. The CCPA provides for civil penalties for violations, as well as a private right of action for data breaches that
is expected to increase data breach litigation. As we expand our operations and customer base, the CCPA may increase our compliance costs
and potential liability. Additionally, the California Privacy Rights Act (CPRA), which was approved by California voters
in the election in November 2020, created obligations relating to consumer data with implementing regulations that, although delayed,
did take effect during 2024. The CPRA modifies the CCPA significantly, potentially resulting in further uncertainty and requiring us to
incur additional costs and expenses in an effort to comply. Additionally, about 20 U.S. states have adopted, privacy-focused legislation
such as Colorado, Virginia, Utah and Connecticut. Aspects of these state laws remain unclear, resulting in further uncertainty and potentially
requiring us to modify our data practices and policies and to incur substantial additional costs and expenses in an effort to comply.
**
*Privacy and data security laws and regulations
could require us to make changes to our business, impose additional costs on us and reduce the demand for our tests and services.*
Our business model contemplates that we will store,
process and transmit both public data and our customers and customer personnels private data. Our customers may store and/or
transmit a significant amount of personal or identifying information through our platform. Privacy and data security have become significant
issues in the United States and in other jurisdictions where we may offer our solutions. The regulatory framework relating to privacy
and data security issues worldwide is evolving rapidly and is likely to remain uncertain for the foreseeable future. Federal, state and
foreign government bodies and agencies have in the past adopted, or may in the future adopt, laws and regulations regarding the collection,
use, processing, storage and disclosure of personal or identifying information obtained from customers and other individuals. In addition
to government regulation, privacy advocates and industry groups may propose various self- regulatory standards that may legally or contractually
apply to our business. Because the interpretation and application of many privacy and data security laws, regulations and applicable industry
standards are uncertain, it is possible that these laws, regulations and standards may be interpreted and applied in a manner inconsistent
with our existing privacy and data management practices. As we expand into new jurisdictions or verticals, we will need to understand
and comply with various new requirements applicable in those jurisdictions or verticals.
To the extent applicable to our business or the
businesses of our customers, these laws, regulations and industry standards could have negative effects on our business, including by
increasing our costs and operating expenses, and delaying or impeding our deployment of new core functionality and products. Compliance
with these laws, regulations and industry standards requires significant management time and attention, and failure to comply could result
in negative publicity, subject us to fines or penalties or result in demands that we modify or cease existing business practices. In addition,
the costs of compliance with, and other burdens imposed by, such laws, regulations and industry standards may adversely affect our customers
ability or desire to collect, use, process and store personal information using our solutions, which could reduce overall demand for them.
Even the perception of privacy and data security concerns, whether or not valid, may inhibit market acceptance of our solutions in certain
verticals. Furthermore, privacy and data security concerns may cause our customers customers, vendors, employees and other industry
participants to resist providing the personal information necessary to allow our customers to use our applications effectively. Any of
these outcomes could adversely affect our business and operating results.
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**General Risks Affecting Our Company**
*A pandemic, epidemic or outbreak of an infectious
disease in the United States or worldwide, including the re-emergence of the novel strain of coronavirus disease, COVID-19, could adversely
affect our business.*
If a pandemic, epidemic
or outbreak of an infectious disease occurs in the United States or worldwide, our business may be adversely affected. If the COVID-19
virus and its potentially more contagious variants cause an additional resurgence of infection of COVID-19, or if new variants continue
to develop resistance to government approved COVID-19 vaccinations, or if an influenza or other pandemic were to occur, our business,
results of operations, financial condition and liquidity could be negatively impacted.
As a result of public health emergencies, we experienced,
and in the future could experience, supply chain disruptions, including shortages, delays and work stoppages among some vendors and suppliers,
travel restrictions and cancellation of events, among other effects, thereby significantly and negatively impacting our operations. In
addition, our results and financial condition may be adversely affected by future federal or state laws, regulations, orders, or other
governmental or regulatory actions addressing public health emergencies such as a COVID-19 or the U.S. health care system, which, if adopted,
could result in direct or indirect restrictions to its business, financial condition, results of operations and cash flow.
**
*Changes in accounting standards and subjective
assumptions, estimates and judgments by management related to complex accounting matters could significantly affect our financial results
or financial condition.*
Generally accepted accounting principles and related
accounting pronouncements, implementation guidelines and interpretations with regard to a wide range of matters that are relevant to our
business, including but not limited to revenue recognition, allowance for doubtful accounts, content asset amortization policy, valuation
of our Common Stock, stock-based compensation expense and income taxes, are highly complex and involve many subjective assumptions, estimates
and judgments. Changes in these rules or their interpretation or changes in underlying assumptions, estimates or judgments could significantly
change or increase volatility of our reported or expected financial performance or financial condition. Refer to Note 2, Summary
of Significant Accounting Policies to the Audited Financial Statements included elsewhere in this Annual Report on Form 10-K for
a description of recent accounting pronouncements.
**Risks Related to Our Securities**
*We are an emerging growth company
and smaller reporting company within the meaning of the Securities Act, and if we take advantage of certain exemptions from
disclosure requirements available to emerging growth companies, it could make our securities less attractive to investors and may make
it more difficult to compare our performance to the performance of other public companies.*
We are an emerging growth company
as defined in Section 2(a)(19) of the Securities Act, as modified by the Jumpstart our Business Startups Act (the JOBS Act).
As such, we are eligible for and take advantage of certain exemptions from various reporting requirements applicable to other public companies
that are not emerging growth companies for as long as we continue to be an emerging growth company, including, but not limited to, (a)
not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act of 2002 (Sarbanes-Oxley),
(b) reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements and (c) exemptions from
the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments
not previously approved. As a result, our stockholders may not have access to certain information they may deem important. We will remain
an emerging growth company until December 31, 2026, which is the last day of the fiscal year following the fifth anniversary of the date
of the first sale of Common Stock in Manas initial public offering. We cannot predict whether investors have found or will continue
to find our securities less attractive because it will rely on these exemptions. If some investors find our securities less attractive
as a result of our reliance on these exemptions, the trading prices of our securities may be lower than they otherwise would be, there
may be a less active trading market for our securities and the trading prices of our securities may be more volatile.
Further, Section 102(b)(1) of the JOBS Act exempts
emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that
is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered
under the Exchange Act) are required to comply with the new or revised financial accounting standards. The JOBS Act provides that a company
can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies but
any such election to opt out is irrevocable. We have elected not to opt out of such extended transition period, which means that when
a standard is issued or revised and it has different application dates for public or private companies, we, as an emerging growth company,
can adopt the new or revised standard at the time private companies adopt the new or revised standard. This may make comparison of our
financial statements with another public company that is neither an emerging growth company nor an emerging growth company that has opted
out of using the extended transition period difficult or impossible because of the potential differences in accounting standards used.
However, once we lose emerging growth company status on December 31, 2026, we will lose this exemption and will be required to adopt revised
or new accounting standards on the time schedule applicable to non-emerging growth companies.
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Additionally, we are
a smaller reporting company as defined in Item 10(f)(1) of Regulation S-K and a non-accelerated filer. Smaller reporting
companies may take advantage of certain reduced disclosure obligations, including, among other things, providing only two years of audited
financial statements and reduced executive compensation disclosure. In addition, as a non-accelerated filer and smaller reporting company,
we will continue to be exempt from complying with the auditor attestation requirements of Section 404 of Sarbanes-Oxley. We expect that
we will remain a smaller reporting company until the last day of any fiscal year for so long as either (a) the market value of our Common
Stock held by non-affiliates does not equal or exceed $250 million as of the prior June 30th, or (b) our annual revenues did not equal
or exceed $100 million during such completed fiscal year and the market value of our Common Stock held by non-affiliates did not equal
or exceed $700 million as of the prior June 30th. To the extent we take advantage of such reduced disclosure obligations, it may also
make comparison of our financial statements with other public companies difficult or impossible.
*Our stock price may be volatile and may decline
regardless of our operating performance.*
The market price of our Common Stock may fluctuate
significantly in response to numerous factors and may continue to fluctuate for these and other reasons, many of which are beyond our
control, including:
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actual or anticipated fluctuations in our revenue and results of operations; | |
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failure of securities analysts to maintain coverage of the Company, changes in financial estimates or ratings by any securities analysts who follow us or our failure to meet these estimates or the expectations of investors; | |
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announcements by us or our competitors of significant technical innovations, acquisitions, strategic partnerships, joint ventures, results of operations or capital commitments; | |
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changes in operating performance and stock market valuations of other healthcare-related companies generally, or those in the medical diagnostics industry in particular; | |
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price and volume fluctuations in the overall stock market, including as a result of trends in the economy as a whole; | |
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trading volume of our Common Stock; | |
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the inclusion, exclusion or removal of our Common Stock from any indices; | |
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changes in the Board or management; | |
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transactions in our Common Stock by directors, officers, affiliates and other major investors; | |
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lawsuits threatened or filed against us; | |
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changes in laws or regulations applicable to our business; | |
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changes in our capital structure, such as future issuances of debt or equity securities; | |
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short sales, hedging and other derivative transactions involving our capital stock; | |
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general economic conditions in the United States; | |
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pandemics or other public health crises, including, but not limited to, the COVID-19 pandemic (including additional variants such as the Omicron variant); | |
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other events or factors, including those resulting from war, incidents of terrorism or responses to these events; and | |
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the other factors described in this Risk Factors section. | |
The stock market generally, as well as our Common
Stock in particular, have recently experienced extreme price and volume fluctuations. The market prices of securities of companies have
experienced fluctuations that often have been unrelated or disproportionate to their operating results. In the past, stockholders have
sometimes instituted securities class action litigation against companies following periods of volatility in the market price of their
securities. Any similar litigation against us could result in substantial costs, divert managements attention and resources, and
harm its business, financial condition, and results of operations.
**
*An active trading market for our Common Stock
may not be created or sustained.*
We have listed our Common Stock and Warrants on
Nasdaq under the symbols CDIO and CDIOW, respectively. We cannot assure you that an active trading market
for our Common Stock can be sustained. Accordingly, we cannot assure you of the liquidity of any trading market, your ability to sell
your shares of our Common Stock when desired or the prices that you may obtain for your shares.
**
**
**
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*Future sales of Common Stock in the public market
could cause our share price to decline significantly, even if our business is doing well.*
We have filed, and
the SEC has declared effective, registration statements covering (i) the resale of Common Stock underlying Public Warrants issued in the
Companys initial public offering and a substantial number of shares of Common Stock and shares underlying warrants issued in private
placements we completed prior to our Business Combination; (ii) up to $17 million in securities on a shelf registration statement that
was used for an at-the-market offering of up to $17 million; (iii) up to $9,476,508 in securities on a shelf registration statement that
we are currently using for an at-the-market offering of up to $9,476,508; (iii) a registration statement on Form S-8 covering our 2022
Equity Incentive Plan. Public sales of securities can continue to be made under these registration statements, and (iv) a registration
statement covering the resale of Common Stock and shares underlying warrants that were sold in a private placement effected in February
2024. In addition, all of the shares we issued in the Business Combination to holders of Legacy Cardio securities are available for resale
under Rule 144 without restriction, subject to certain limitations that apply to our affiliates.
The total number of shares available for resale
under these registration statements and/or under Rule 144 represents a significant percentage of our outstanding shares. The resale, or
expected or potential resale, of a substantial number of our shares of Common Stock in the public market could adversely affect the market
price for our shares of Common Stock and make it more difficult for investors to sell their shares of Common Stock at times and prices
that they feel are appropriate. In particular, we expect that, because there are a substantial number of shares registered pursuant to
various registration statements, the applicable selling securityholders can continue to offer such covered securities for a significant
period of time, the precise duration of which cannot be predicted. Accordingly, the adverse market and price pressures resulting from
an offering pursuant to a registration statement or Rule 144 may continue for an extended period of time.
Sales of Common Stock pursuant to these registration
statements or pursuant to Rule 144 may make it more difficult for us to sell equity securities in the future at a time and at a price
that we deem appropriate. These sales also could cause the trading price of our Common Stock to fall and make it more difficult for investors
to sell shares of our Common Stock at a time and price that they deem appropriate.
**
*If securities or industry analysts either do
not publish research about us or publish inaccurate or unfavorable research about us, our business, or our market, or if they change their
recommendations regarding our Common Stock adversely, the trading price or trading volume of our Common Stock could decline.*
The trading market for our Common Stock is influenced
in part by the research and reports that securities or industry analysts may publish about us, our business, our market, or our competitors.
If one or more of the analysts initiate research with an unfavorable rating or downgrade our Common Stock, provide a more favorable recommendation
about our competitors, or publish inaccurate or unfavorable research about our business, the trading price of our Common Stock would likely
decline. In addition, we currently expect that securities research analysts will establish and publish their own periodic projections
for our business. These projections may vary widely and may not accurately predict the results we actually achieve. Our stock price may
decline if our actual results do not match the projections of these securities research analysts. Furthermore, if no analysts commence
coverage of our Company, the trading price and volume for our Common Stock could be adversely affected. If any analyst who may cover us
were to cease coverage of the Company or fail to regularly publish reports on us, we could lose visibility in the financial markets, which
in turn could cause the trading price or trading volume of our Common Stock to decline.
*Delaware law and provisions in our Charter and
Bylaws could make a merger, tender offer, or proxy contest difficult, thereby depressing the trading price of our Common Stock.*
**
Our Charter and Bylaws contain provisions that could
depress the trading price of our Common Stock by acting to discourage, delay, or prevent a change of control of the Company or changes
in our management that our stockholders may deem advantageous. These provisions include the following:
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the right of the board of directors to establish the number of directors and fill any vacancies and newly created directorships; | |
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director removal solely for cause; | |
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blank check preferred stock that the Board could use to implement a stockholder rights plan; | |
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the right of the Board to issue our authorized but unissued Common Stock and preferred stock without stockholder approval; | |
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no ability of our stockholders to call special meetings of stockholders; | |
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no right of our stockholders to act by written consent, which requires all stockholder actions to be taken at a meeting of our stockholders; | |
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limitations on the liability of, and the provision of indemnification to, our director and officers; | |
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the right of the board of directors to make, alter, or repeal the Bylaws; and | |
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advance notice requirements for nominations for election to the Board or for proposing matters that can be acted upon by stockholders at annual stockholder meetings. | |
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Any provision of the
Charter or Bylaws that has the effect of delaying or deterring a change in control could limit the opportunity for our stockholders to
receive a premium for their shares of our Common Stock, and could also affect the price that some investors are willing to pay for our
Common Stock.
*Our Bylaws provide that the Court of Chancery
of the State of Delaware will be the exclusive forum for substantially all disputes between the Company and our stockholders, which could
limit our stockholders ability to obtain a favorable judicial forum for disputes with the Company or our directors, officers or
employees.*
The Bylaws provide that the Court of Chancery of
the State of Delaware is the exclusive forum for any derivative action or proceeding brought on our behalf, any action asserting a breach
of fiduciary duty, any action asserting a claim against us arising pursuant to the DGCL, the Charter or Bylaws or any action asserting
a claim against us that is governed by the internal affairs doctrine. These choice of forum provisions may limit a stockholders
ability to bring a claim in a judicial forum that it finds favorable for disputes with us or our directors, officers or other employees
and may discourage these types of lawsuits. This provision would not apply to claims brought to enforce a duty or liability created by
the Exchange Act or any other claim for which the federal courts have exclusive jurisdiction. The Bylaws provide further that, to the
fullest extent permitted by law, the federal district courts of the United States will be the exclusive forum for resolving any complaint
asserting a cause of action arising under the Securities Act. However, Section 22 of the Securities Act provides that federal and state
courts have concurrent jurisdiction over lawsuits brought under the Securities Act or the rules and regulations thereunder. To the extent
the exclusive forum provision restricts the courts in which claims arising under the Securities Act may be brought, there is uncertainty
as to whether a court would enforce such a provision. We note that investors cannot waive compliance with the federal securities laws
and the rules and regulations thereunder. Furthermore, the enforceability of similar choice of forum provisions in other companies
certificates of incorporation has been challenged in legal proceedings, and it is possible that a court could find these types of provisions
to be inapplicable or unenforceable. While the Delaware courts have determined that such choice of forum provisions are facially valid,
a stockholder may nevertheless seek to bring a claim in a venue other than those designated in the exclusive forum provisions, and there
can be no assurance that such provisions will be enforced by a court in those other jurisdictions. If a court were to find the exclusive-forum
provision contained in the Bylaws to be inapplicable or unenforceable in an action, we may incur additional costs associated with resolving
such action in other jurisdictions, which could harm our business.
*We do not intend to pay dividends for the foreseeable
future.*
We currently intend to retain any future earnings
to finance the operation and expansion of our business and we do not expect to declare or pay any dividends in the foreseeable future.
Moreover, the terms of any revolving credit facility
into which we or any of our subsidiaries enters may restrict our ability to pay dividends, and any additional debt we or any of our subsidiaries
may incur in the future may include similar restrictions. As a result, stockholders must rely on sales of their Common Stock after price
appreciation as the only way to realize any future gains on their investment.
*We may issue additional shares of our Common
Stock or other equity securities without your approval, which would dilute your ownership interests and may depress the market price of
our Common Stock.*
On January 26, 2024, the Company entered into an
At-the-Market Issuance Sales Agreement (the Sales Agreement) with Craig-Hallum Capital Group LLC (Craig-Hallum).
Sales of our Common Stock pursuant to the Sales Agreement were made under the Companys Registration Statement on Form S-3 filed
on January 26, 2024 (File No. 333-276725) declared effective by the SEC on February 1, 2024 and have been, and may continue to be made,
under the Companys Registration Statement on Form S-3 filed on February 7, 2025 (File No. 333-284775) declared effective by the
SEC on February 14, 2025. As of March 13, 2026, we have sold 2,251,181 shares of our Common Stock under the Sales Agreement and may sell
up to another $5,298,889 of our Common Stock through Craig-Hallum under the Sales Agreement.
As of March 13, 2026, we have Warrants
outstanding to purchase 284,292 shares of our Common Stock. We will also have the ability to initially issue an aggregate of 239,920
shares of our Common Stock under the Cardio Equity Incentive Plan, of which 144,320 options have been granted and are currently
exercisable and 14,972 RSUs have been granted. To the extent Warrants and options are exercised, and RSUs vest, additional shares of
Common Stock could be issued, which will result in dilution to our then existing stockholders and increase the number of shares
eligible for resale in the public market. Sales of substantial numbers of such shares in the public market could depress the market
price of our Common Stock.
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We may issue additional shares of our Common Stock
or other equity securities of equal or senior rank in the future in connection with, among other things, future acquisitions or repayment
of outstanding indebtedness, without stockholder approval, in a number of circumstances.
The issuance of additional shares of Common Stock
or other equity securities of equal or senior rank would have the following effects:
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our existing stockholders proportionate ownership interest in the Company will decrease; | |
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the amount of cash available per share, including for payment of dividends (if any) in the future, may decrease; | |
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the relative voting strength of each previously outstanding share of Common Stock may be diminished; and | |
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the market price of our shares of Common Stock may decline. | |
*We may redeem the Public Warrants and the Sponsor
Warrants prior to their exercise at a time that is disadvantageous to you, as a warrant holder, thereby making your Public Warrants or
Sponsor Warrants worthless.*
**
We have the ability to redeem outstanding Public
Warrants and Sponsor Warrants at any time after they become exercisable and prior to their expiration, at a price of $0.01 per warrant,
provided that the last reported sales price of our Common Stock equals or exceeds $540.00 per share (as adjusted for stock splits, stock
dividends, reorganizations, recapitalizations and the like) for any 20 trading days within a 30 trading-day period ending on the third
trading day prior to the date on which we give proper notice of such redemption and provided certain other conditions are met. Trading
prices of our Common Stock have not historically exceeded the $540.00 per share redemption threshold. If and when the Public Warrants
and Sponsor Warrants become redeemable, we may not exercise our redemption right unless there is a current registration statement in effect
with respect to the shares of Common Stock underlying the Warrants. While we have registered the Common Stock issuable upon the exercise
of the Public Warrants and Sponsor Warrants on a separate registration statement, most recently updated by Post-Effective Amendment No.
3, which the SEC declared effective on September 9, 2025, it must remain current and effective by future filings. There can be no assurance
that the registration statement will still be effective at the time that we would like to exercise our redemption rights.
In the event we have determined to redeem the Public
Warrants and the Sponsor Warrants, holders would be notified of such redemption as described in the Warrant Agreement. Specifically, we
would be required to fix a date for the redemption (the Redemption Date). Notice of redemption would be mailed by first
class mail, postage prepaid, by the Company not less than 30 days prior to the Redemption Date to the registered holders of the Public
Warrants and the Sponsor Warrants to be redeemed at their last addresses as they appear on the registration books. In addition, beneficial
owners of the redeemable Public Warrants and the Sponsor Warrants will be notified of such redemption via the Companys posting
of the redemption notice to DTC. Redemption of the Public Warrants and the Sponsor Warrants could force you (i) to exercise your Public
Warrants and the Sponsor Warrants and pay the exercise price therefor at a time when it may be disadvantageous for you to do so, (ii)
to sell your Public Warrants and the Sponsor Warrants at the then-current market price when you might otherwise wish to hold your Public
Warrants and the Sponsor Warrants or (iii) to accept the nominal redemption price which, at the time the outstanding Public Warrants and
the Sponsor Warrants are called for redemption, is likely to be substantially less than the market value of your Public Warrants and the
Sponsor Warrants. None of the Private Placement Warrants will be redeemable.
*Exercise of our Warrants is dependent upon the
trading price of our Common Stock. Because of the disparity between the current stock price and the respective Warrant exercise prices,
the Warrants may never be in the money and may expire worthless.*
**
The exercise prices of our currently outstanding
Warrants range from a high of $345 to a low of $53.4 per share. We believe the likelihood that warrant holders will exercise the Warrants,
and therefore, the amount of cash proceeds that we would receive, is dependent upon the trading price of our Common Stock, the last reported
sales price for which was $4.76 per share on March 11, 2026. If the trading price for our Common Stock is less than the applicable exercise
price of our Warrants, we believe holders of those Warrants will be unlikely to exercise their Warrants.
There is no guarantee that the Warrants will be
in the money prior to their expiration, and, as such, the Warrants may expire worthless, and we may receive no proceeds from the exercise
of the Warrants.
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*The Warrant Agreement designates the courts of
the State of New York or the United States District Court for the Southern District of New York as the sole and exclusive forum for certain
types of actions and proceedings that may be initiated by holders of the Warrants, which could limit the ability of warrant holders to
obtain a favorable judicial forum for disputes with our Company.*
**
The Warrant Agreement
provides that, subject to applicable law, (i) any action, proceeding or claim against us arising out of or relating in any way to the
Warrant Agreement, including under the Securities Act, will be brought and enforced in the courts of the State of New York or the United
States District Court for the Southern District of New York, and (ii) that we irrevocably submit to such jurisdiction, which jurisdiction
shall be the exclusive forum for any such action, proceeding or claim. We will waive any objection to such exclusive jurisdiction and
that such courts represent an inconvenient forum. Notwithstanding the foregoing, these provisions of the Warrant Agreement will not apply
to suits brought to enforce any liability or duty created by the Exchange Act or any other claim for which the federal district courts
of the United States of America are the sole and exclusive forum.
Any person or entity purchasing or otherwise acquiring
any interest in Warrants shall be deemed to have notice of and to have consented to the forum provisions in the Warrant Agreement. If
any action, the subject matter of which is within the scope the forum provisions of the Warrant Agreement, is filed in a court other than
a court of the State of New York or the United States District Court for the Southern District of New York (a foreign action)
in the name of any holder of Warrants, such holder shall be deemed to have consented to: (x) the personal jurisdiction of the state and
federal courts located in the State of New York in connection with any action brought in any such court to enforce the forum provisions
(an enforcement action), and (y) having service of process made upon such warrant holder in any such enforcement action
by service upon such warrant holders counsel in the foreign action as agent for such warrant holder.
This choice-of-forum provision may limit a warrant
holders ability to bring a claim in a judicial forum that it finds favorable for disputes with us, which may discourage such lawsuits.
Alternatively, if a court were to find this provision
of the Warrant Agreement inapplicable or unenforceable with respect to one or more of the specified types of actions or proceedings, we
may incur additional costs associated with resolving such matters in other jurisdictions, which could materially and adversely affect
our business, financial condition and results of operations and result in a diversion of the time and resources of our management and
board of directors.
*Financial reporting obligations of being a public
company in the United States are expensive and time-consuming, and our management will be required to devote substantial time to compliance
matters.*
**
As a publicly traded company, we will incur significant
additional legal, accounting and other expenses that we did not incur as a privately company. The obligations of being a public company
in the United States require significant expenditures and will place significant demands on our management and other personnel, including
costs resulting from public company reporting obligations under the Exchange Act and the rules and regulations regarding corporate governance
practices, including those under Sarbanes-Oxley, the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd Frank),
and the Nasdaq listing requirements. These rules require the establishment and maintenance of effective disclosure and financial controls
and procedures, internal control over financial reporting and changes in corporate governance practices, among many other complex rules
that are often difficult to implement, monitor and maintain compliance with. Moreover, despite reforms made possible by the JOBS Act,
the reporting requirements, rules, and regulations will make some activities more time-consuming and costly, particularly after we are
no longer an emerging growth company. In addition, we expect these rules and regulations to make it more difficult and more
expensive for us to obtain director and officer liability insurance. Our management and other personnel will need to devote a substantial
amount of time to ensure that we comply with all of these requirements and to keep pace with new regulations, otherwise we may fall out
of compliance and risk becoming subject to litigation or being delisted, among other potential problems.
*If we fail to comply with the rules under Sarbanes-Oxley
related to accounting controls and procedures in the future, or, if we discover material weaknesses and other deficiencies in our internal
control and accounting procedures, our stock price could decline significantly and raising capital could be more difficult.*
**
Section 404 of Sarbanes-Oxley requires annual management
assessments of the effectiveness of our internal control over financial reporting. If we fail to comply with the rules under Sarbanes-Oxley
related to disclosure controls and procedures in the future, or, if we discover material weaknesses and other deficiencies in our internal
control and accounting procedures, our stock price could decline significantly and raising capital could be more difficult. If material
weaknesses or significant deficiencies are discovered or if we otherwise fail to achieve and maintain the adequacy of our internal control,
we may not be able to ensure that we can conclude on an ongoing basis that we have effective internal controls over financial reporting
in accordance with Section 404 of Sarbanes-Oxley. Moreover, effective internal controls are necessary for us to produce reliable financial
reports and are important to helping prevent financial fraud. If we cannot provide reliable financial reports or prevent fraud, our business
and operating results could be harmed, investors could lose confidence in our reported financial information, and the trading price of
our Common Stock could drop significantly.
We have incurred and
will continue to incur additional costs to remediate material weaknesses in our internal control over financial reporting, as described
in Item 9A. Controls and Procedures. The additional reporting and other obligations imposed by these rules and regulations
will increase legal and financial compliance costs and the costs of related legal, accounting and administrative activities. These increased
costs will require us to divert a significant amount of money that could otherwise be used to expand the business and achieve strategic
objectives.
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*We will need to grow the size of our organization
and may experience difficulties in managing this growth.*
As our expansion plans and strategies develop, and
as we continue to operate as a public company, we expects needing additional managerial, operational, sales, marketing, financial and
other personnel. Future growth would impose significant added responsibilities on members of management, including:
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identifying, recruiting, compensating, integrating, maintaining and motivating additional employees; | |
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coping with demands on Management related to the increased size of its business; | |
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assimilating different corporate cultures and business practices; | |
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converting other entities books and records and conforming their practices to ours; | |
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integrating operating, accounting and information technology systems of other entities with ours and in maintaining uniform procedures, policies and standards, such as internal accounting controls; and | |
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improving our operational, financial and management controls, reporting systems and procedures. | |
Our future financial performance and our ability
to expand our business will depend, in part, on our ability to effectively manage any future growth, and our management may also have
to divert a disproportionate amount of its attention away from day-to-day activities in order to devote a substantial amount of time to
managing these growth activities.
If we are not able to effectively expand our organization
by hiring new employees and expanding our groups of consultants and contractors, we may not be able to successfully implement the tasks
necessary to further develop and commercialize our product candidates and, accordingly, may not achieve our research, development and
commercialization goals.
*There can be no assurance that we will be able
to comply with the continued listing standards of Nasdaq, and delisting of our securities could become more likely if a proposed Nasdaq
rule currently being considered is adopted, as expected . *
**
Our Common Stock is listed on The Nasdaq Capital
Market ("Nasdaq). In recent years, Nasdaq has adopted, and currently is proposing, revised standards that could make it more
difficult for a small company to maintain its listing. In order to maintain our listing, we must satisfy minimum financial and other
requirements including, without limitation, a requirement that the closing bid price of our Common Stock be at least $1.00 per share..
Under Nasdaqs listing rules, if a companys security fails to meet the continued listing requirement for minimum bid price
of no less than $1.00 for 30 consecutive business days, and the Company has effected a reverse stock split over the prior one-year period;
or has effected one or more reverse stock splits over the prior two-year period with a cumulative ratio of 250 shares or more to one,
then that company loses eligibility for any additional compliance cure period and risks immediate delisting with respect to that security.
The Company effected a reverse stock split on May 12, 2025 in order to cure the $1.00 minimum bid deficiency, making these time periods
relevant. In addition, Nasdaq has recently proposed a rule change that if a companys listed securities fail to have a market value
of listed securities (MVLS) of at least $5 million for 30 consecutive business days, then Nasdaq will immediately suspend
that companys securities, with delisting to follow without Nasdaqs historically-customary cure period. The only basis of
appeal will be to correct calculation errors, and any suspension will remain in effect during that appeal process. The proposal is subject
to SEC approval, which is currently expected in March 2026, and would become effective 60 days thereafter. If the proposal is implemented
and becomes effective, our securities will be more vulnerable to being delisted if we are unable to maintain a MVLS of at least $5.0
million. On March 11, 2026, our Common Stock closed at $4.76, so we currently have a MVLS above $5.0 million, but our stock is volatile
and could be subject to delisting in the future.
If Nasdaq delists our shares of Common Stock and
Public Warrants for failure to meet the listing standards, we and oursecurityholderscould face significant material adverse
consequences including:
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a limited availability of market quotations for our securities; | |
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reduced liquidity for our securities; | |
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a determination that our Common Stock is a penny stock, which will require brokers trading in our common stock to adhere to more stringent rules, possibly resulting in a reduced level of trading activity in the secondary trading market for shares of our Common Stock; | |
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a more limited amount of analyst coverage; and | |
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a decreased ability to issue additional securities or obtain additional financing in the future, including that we would no longer be able to rely on our ATM Offering, which has been its primary source of financing for the last two years. | |
*We may acquire other companies or technologies,
which could divert our managements attention, result in dilution to our stockholders and otherwise disrupt our operations and adversely
affect our operating results.*
We may in the future seek to acquire or invest in
businesses, applications and services or technologies that we believe could complement or expand our services, enhance our technical capabilities
or otherwise offer growth opportunities. The pursuit of potential acquisitions may divert the attention of management and cause us to
incur various expenses in identifying, investigating and pursuing suitable acquisitions, whether or not they are consummated.
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In addition, we do not have any experience in acquiring
other businesses. If we acquire additional businesses, we may not be able to integrate the acquired personnel, operations and technologies
successfully, or effectively manage the combined business following the acquisition. We also may not achieve the anticipated benefits
from the acquired business due to a number of factors, including:
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inability to integrate or benefit from acquired technologies or services in a profitable manner; | |
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unanticipated costs or liabilities associated with the acquisition; | |
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difficulty integrating the accounting systems, operations, and personnel of the acquired | |
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difficulties and additional expenses associated with supporting legacy products and hosting infrastructure of the acquired business; | |
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difficulty converting the customers of the acquired business onto the Platform and contract terms, including disparities in the revenue, licensing, support, or professional services model of the acquired company; | |
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diversion of managements attention from other business concerns; | |
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adverse effects to our existing business relationships with business partners and customers as a result of the acquisition; | |
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the potential loss of key employees; | |
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use of resources that are needed in other parts of our business; and | |
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use of substantial portions of our available cash to consummate the acquisition. | |
In addition, a significant portion of the purchase
price of companies we acquire may be allocated to acquired goodwill and other intangible assets, which must be assessed for impairment
at least annually. In the future, if our acquisitions do not yield expected returns, we may be required to take charges to our operating
results based on this impairment assessment process, which could adversely affect our results of operations.
Acquisitions could
also result in dilutive issuances of equity securities or the incurrence of debt, which could adversely affect our operating results.
In addition, if an acquired business fails to meet our expectations, our operating results, business and financial position may suffer.
**Item
1B. Unresolved Staff Comments**
****
Not applicable.
**Item
1C. Cybersecurity**
****
**Risk Management and Strategy**
We have established policies and processes for assessing,
identifying, and managing material risk from cybersecurity threats, and we have integrated these processes into our overall risk management
program. We assess material risks from cybersecurity threats, including any potential unauthorized occurrence on or conducted through
our information systems that may result in adverse effects on the confidentiality, integrity, or availability of our information systems
or any information residing therein.
We have adopted as the governance framework for
our cybersecurity program the Service Organization Control Type 2 (SOC2) and the Health Insurance Portability and Accountability
Act (HIPAA). We use this framework as a guide to help us identify, assess, respond to, and manage cybersecurity risks relevant
to our business. Our cybersecurity risk management program includes:
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periodic risk assessments designed to help identify material cybersecurity risks to our critical systems, information, and our broader enterprise information technology environment; | |
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skilled information security and data privacy personnel, who support our cybersecurity risk assessment processes, our security controls, and our response to cybersecurity incidents; | |
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external service providers, where appropriate, to monitor, assess, test, or otherwise assist with aspects of our security controls, and to support risk mitigation efforts; | |
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training for our employees on cybersecurity awareness and the importance of protecting information assets. | |
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periodic reviews of key cybersecurity policies, and updating as needed; | |
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a cybersecurity incident response plan that includes procedures for responding to cybersecurity incidents. | |
We have not identified any risks from known cybersecurity
threats, including as a result of any prior cybersecurity incidents, that have materially affected or are reasonably likely to materially
affect us, including our business strategy, results of operations, or financial condition.
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**Governance**
Our Board considers
cybersecurity risk as part of its risk oversight function and management expects to keep the Board informed of any material cybersecurity
threats and expects to provide a report to the Board on a periodic basis and the Board will consider and oversee.
Our management team
is responsible for assessing and managing our material risks from cybersecurity threats. Our Chief Technology Officer leads a team of
information security professionals who have primary responsibility for our overall cybersecurity risk management program and supervises
both our internal personnel and our external cybersecurity consultants.
Our management team oversees efforts to prevent,
detect, mitigate, and remediate cybersecurity risks and incidents through various means, which may include threat briefings from internal
personnel and external service providers, as well as alerts and reports produced by security tools deployed in the information technology
environment.
**Item
2. Properties**
****
We do not own any real estate or other physical
properties materially important to our operations. We currently maintain our principal executive offices at 311 W. Superior Street, Suite
444, Chicago, IL 60654 pursuant to a three-year lease agreement with an unaffiliated third party that commenced on December 1, 2023. The
cost for this space is approximately $13,000 per month. We also maintain a laboratory at 2565 N. Dodge, Suite D, Iowa City, IA 52245 pursuant
to a five-year lease agreement with an unaffiliated third party that commenced on December 1, 2023. The cost for this space is approximately
$8,505 per month. We consider our current office space, combined with the other office space otherwise available to our executive officers,
adequate for our current operations.
**Item
3. Legal Proceedings**
****
We are not currently a party to any material litigation
or other legal proceedings brought against us.
**Item
4. Mine Safety Disclosures**
****
Not applicable.
****
****
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**PART****II**
****
**Item
5. Market for Registrants Common Equity, Related Shareholder Matters and Issuer Purchases
of Equity Securities**
****
*Market Information*
**
Our publicly traded Common Stock and warrants are
currently listed on the Nasdaq Capital Market under the symbols CDIO and CDIOW, respectively.
*Holders*
**
As of March 13, 2026, there were 39 holders of
record of our common stock and six holders of record of our Public Warrants and Sponsor Warrants. In addition, we have approximately
74 holders of private placement warrants, the majority of which have been registered for resale on a registration statement on Form S-1
that the SEC declared effective on January 24, 2023.
The number of record holders of our Common Stock
and Public Warrants was determined from the records of our transfer agent and does not include beneficial owners of any of our securities
whose securities are held in the names of various security brokers, dealers, and registered clearing agencies.
The transfer agent for our common stock and warrant
agent for our warrants is Continental Stock Transfer & Trust Company.
*Dividends*
**
We have not declared or paid any cash dividends
on our Common Stock. To date we have utilized all available cash to finance our operations. Payment of cash dividends in the future will
be at the discretion of our Board of Directors and will depend upon our earnings levels, capital requirements, any restrictive loan covenants
and other factors the Board considers relevant.
*Warrants*
**
As of March 13, 2026, there were 284,292 (8,528,766
prior to the Reverse Stock Split) warrants outstanding for the purchase of Company Common Stock. Refer to Note 9 to the consolidated financial
statements included in this Annual Report on Form 10-K for additional information relating to outstanding warrants.
*Securities Authorized for Issuance Under Equity
Compensation Plans*
**
See Part III, Item 11, Executive Compensation,
for information about securities authorized for issuance under the Companys equity compensation plan.
*Sales of Unregistered Securities*
**
We did not sell any equity securities that were
not registered under the Securities Act during the fiscal year ended December 31, 2025 that were not otherwise disclosed in our Quarterly
Reports on Form 10-Q or our Current Reports on Form 8-K.
*Issuer Purchases of Equity Securities*
**
We do not currently have any plans under which the
Company is able to repurchase shares of our equity securities from our stockholders.
**Item
6. [Reserved]**
****
****
****
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****
**Item
7. Managements Discussion and Analysis of Financial Condition and Results of Operations**
****
*As a result of the closing of the Business Combination,
which was accounted for as a reverse recapitalization in accordance with U.S. GAAP, the consolidated financial statements of Cardio Diagnostics, Inc., a Delaware corporation and our wholly owned
subsidiary, are now the financial statements of the Company. You should read the following discussion and analysis of our financial condition
and results of operations together with our audited consolidated financial statements as of December 31, 2025 and 2024 and for each of
the two years in the period ended December 31, 2025 and the related notes included in Part II, Item 8 of this Annual Report.*
**
*Some of the information contained in this discussion
and analysis or set forth elsewhere in this Annual Report, including information with respect to our plans, estimates and strategy for
our business, includes forward-looking statements based upon current expectations that involve risks and uncertainties. You should read
the sections titled Risk Factors and Cautionary Note Regarding Forward Looking Statements for a discussion
of important factors that could cause actual results to differ materially from the results described in or implied by the forward-looking
statements contained in the following discussion and analysis. Our historical results are not necessarily indicative of the results that
may be expected for any period in the future.*
**
*Unless the context
requires otherwise, references to Cardio, the Company, we, us and our**refer to Cardio Diagnostics Holdings, Inc., a Delaware corporation, together with its consolidated subsidiary.*
**
**Overview**
Cardio was formed to further develop and commercialize
a series of products for major types of cardiovascular disease and associated co-morbidities, including coronary heart disease (CHD),
stroke, heart failure and diabetes, by leveraging our Artificial Intelligence (AI)-driven Multi-Omics Engine. As
a company, we aspire to give every American adult insight into their unique risk for various cardiovascular diseases. Cardio aims to become
one of the leading medical technology companies for enabling improved prevention, early detection and treatment of cardiovascular disease.
Cardio is transforming the approach to cardiovascular disease from reactive to proactive and hope to accelerate the adoption of Precision
Medicine for all. We believe that incorporating Cardios solutions into routine practice in primary care and prevention efforts
can help alter the trajectory that nearly one in two Americans is expected to develop some form of cardiovascular disease by 2035.
Cardio believes that it is the first company to
develop and commercialize epigenetics-based clinical tests for cardiovascular disease that have clear value propositions for multiple
stakeholders including (1) patients, (2) clinicians, (3) hospitals/health systems, (4) employers and (5) payors. According to the CDC,
epigenetics is the study of how a persons behaviors and environment can cause changes that affect the way a persons genes
work. Unlike genetic changes, epigenetic changes are reversible and do not change ones DNA sequence, but they can change how a
persons body reads a DNA sequence.
Cardio launched its first clinical test, Epi+Gen
CHD, a three-year symptomatic CHD risk assessment clinical blood test targeting CHD events, including heart attacks, in 2021 during
the COVID-19 pandemic. As a result, the initial strategy for commercialization involved launching the test via telemedicine and in smaller
provider practices such as concierge medicine practices. The volume of tests through these channels were minimal, and as the circumstances
around COVID-19 pandemic improved, management re-vamped the Companys go-to-market strategy to include other healthcare verticals
and stakeholders beyond patients and small providers, including larger provider organizations, group purchasing organizations, employers,
payors and life insurers. This new approach allowed Cardio to expand the reach of our solutions beyond the initial focus areas. Beyond
the launch of Epi+Gen CHD, in March 2023, we announced the launch of our second product, PrecisionCHD, an integrated epigenetic-genetic
clinical blood test for the detection of coronary heart disease. The PrecisionCHD tests is coupled to Actionable Clinical Intelligence
(ACI), a platform that offers new epigenetic and genetic insights to clinicians prescribing the to personalize patient management
and help improve chronic care management. In May 2023, we launched CardioInnovate360, a research-use-only (RUO) solution
to support the discovery, development and validation of novel biopharmaceuticals for the assessment and management of cardiovascular diseases.
In February 2024, we announced the launch of HeartRisk, a cardiovascular disease risk intelligence platform. We believe that our
Epi+Gen CHD and PrecisionCHD tests are categorized as laboratory-developed tests, or LDTs. The new go-to-market
strategy is also being implemented for these products. Despite long partnership and sales cycles, in some instance as long as 24 months,
Cardio has been able to increase the number of provider organizations offering its tests and has continued the development of a more robust
sales and partnership pipeline. In the fiscal year ended December 31, 2025, the focus of the Company remained in driving adoption of our
clinical solutions, predominantly among providers, channel partners and employers. In addition, the Company made progress in its ongoing
expansion to additional markets domestically and internationally with the first international expansion to India, partnering with channel
partners such as YMCA of East Tennessee and Southdale YMCA to offer testing to its members and community, and in setting up our CLIA laboratory
facility.
| 59 | |
| | |
Cardio expects that sales and partnership cycles
will continue to be long, especially with the current economic uncertainty. Our ongoing strategy for expanding our business operations
and increasing revenue generation include the following:
|
|
|
Develop additional products, including clinical tests for stroke, congestive heart failure and diabetes; | |
|
|
|
Offer laboratory services via our laboratory; | |
|
|
|
Expand clinical and health economics evidence portfolio to continue to demonstrate value of products and increase reach; | |
|
|
|
Leverage our CPT PLA codes and expand reimbursement efforts with both government and commercial payors; | |
|
|
|
Expand the adoption of our products across key channels, including health systems and self-insured employers; | |
|
|
|
Explore additional market opportunities in the US; | |
|
|
|
Explore partner-led international expansions like that in India; | |
|
|
|
Explore opportunities to grow presence in India, including with local manufacturing; | |
|
|
|
Scale our internal operations capabilities with a focus on improving efficiency and reducing our cost of goods sold; and | |
|
|
|
Pursue potential strategic partnership(s) and/or acquisition(s) of one or more synergistic companies. | |
**Recent Developments**
*At the Market Sales Agreement*
On January 26, 2024, the Company entered into the
Sales Agreement with Craig-Hallum. Pursuant to the Sales Agreement, the Company may sell, at its option, shares of its Common Stock through
Craig-Hallum, as sales agent. Sales of the Common Stock were made pursuant to the Sales Agreement initially up to an aggregate of $17
million under the Companys Registration Statement on Form S-3 filed on January 26, 2024 (File No. 333-276725) and declared effective
by the SEC on February 1, 2024 (the Initial Registration Statement). Additional sales have been, and may continue to be
made, pursuant to the Sales Agreement up to an aggregate of $9,476,508 under the Companys Registration Statement on Form S-3 filed
on February 7, 2025 (File No. 333-284775), declared effective by the SEC on February 14, 2025 (the Additional Registration Statement)
and its accompanying Prospectus Supplement dated February 14, 2025. Subject to the terms and conditions of the Sales Agreement, Craig-Hallum
may sell the shares, if any, only by methods deemed to be an at the market offering as defined in Rule 415 promulgated under
the Securities Act. The Company has agreed to pay Craig-Hallum a sales commission of 2.5% of the gross proceeds for sales under the Sales
Agreement and to provide Craig-Hallum with customary indemnification and contribution rights, including for liabilities under the Securities
Act. In addition, the Company is required to reimburse Craig-Hallum for certain specified expenses in connection with entering into the
Sales Agreement.
In connection with the Sales Agreement, the Company
sold 825,268 common shares (24,758,057 prior to the Reverse Stock Split) at various amounts per share to investors for gross proceeds
totaling $11,546,949, before deducting sales commissions of $288,921 to placement agent, during the year ended December 31, 2024. The
Company also paid the placement agent a fee of $55,000.
During the year ended December 31, 2025, in connection
with the Sales Agreement the Company sold 292,495 shares on the post-reverse stock split basis (which includes 206,713 shares that were
sold prior to the Reverse Stock Split, originally 6,201,377 shares) of Common Stock at various amounts per share to investors for gross
proceeds totaling $3,900,492 before deducting sales commissions of $96,994 to the placement agent. Subsequent
to December 31, 2025, the Company sold 1,133,418 shares of Common Stock for gross proceeds
totaling $3,788,174 under the At-the-MarketIssuance Sales
Agreement as of the date of this report.
As of March 13, 2026, we have sold an aggregate
2,251,181 shares of our Common Stock under the Sales Agreement and may sell up to another $5,298,889 of our Common Stock through Craig-Hallum
under the Sales Agreement.
**Recent Regulatory and Judicial Developments
Regarding LDTs**
On May 6, 2024, FDA published a final rule amending
the definition of an in vitro diagnostic (IVD) device to include tests manufactured by a clinical laboratory. Pursuant to
the rule, laboratory developed tests (LDTs), i.e., tests designed, manufactured, and used within a single CLIA-certified
high complexity laboratory, are medical devices subject to FDA regulation under the Federal Food, Drug, and Cosmetic Act. The final rule
also announced FDAs intention to apply its medical device requirements to LDTs. Under the final rule, all LDTs, unless subject
to a specific exemption, would be subject to premarket authorization requirements (510(k), de novo classification, or PMA) for each LDT
performed by the laboratory, and to postmarket registration and listing, medical device reporting, correction, removal, and recall, complaint
handling, labeling, investigational device, and quality system requirements. FDA intends to phase in these requirements beginning May
6, 2025. The final rule stated that certain categories of LDTs would be subject to enforcement discretion with respect to some or all
of these requirements. For example, FDA would apply enforcement discretion to currently marketed LDTs that were first offered prior to
May 6, 2024, with respect to most quality system requirements and the requirement for premarket authorization if they are not modified
or modified in only limited ways. Laboratories performing these tests are subject to other requirements, including the requirement to
submit the labeling for the LDT to FDA for review. FDA would similarly exercise enforcement discretion with respect to premarket authorization
for LDTs approved by the New York State Clinical Laboratory Evaluation Program (NYS-CLEP).
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| | |
On September 19, 2025, the FDA formally rescinded
its May 2024 final rule regulating Laboratory Developed Tests (LDTs) as medical devices, following a March 31, 2025, federal court ruling.
TheU.S. District Court for the Eastern District of Texasfound the FDA exceeded its authority, reverting LDT oversight to Clinical
Laboratory Improvement Amendments (CLIA). There has been no further pursuit by the current administration.
**Results of Operations**
The results of operations presented below should
be reviewed in conjunction with the consolidated financial statements and notes included elsewhere in this Annual Report on Form 10-K.
The following table sets forth Cardios results of operations data for the periods presented:
**Comparisons for the years ended December
31, 2025 and 2024:**
|
| |
Years
Ended December 31, | | |
|
|
2025 | | |
2024 | | |
|
Revenue | |
$ | 14,825 | | |
$ | 34,890 | | |
|
| |
| | | |
| | | |
|
Operating Expenses | |
| | | |
| | | |
|
Sales and marketing | |
| 766,888 | | |
| 1,231.969 | | |
|
Research and development | |
| 641,212 | | |
| 227,966 | | |
|
General and administrative | |
| 5,025,570 | | |
| 6,921,094 | | |
|
Amortization | |
| 65,233 | | |
| 19,738 | | |
|
Total operating expenses | |
| (6,498,903 | ) | |
| (8,400,767 | ) | |
|
Other (expense) income | |
| (14,089 | ) | |
| (17,576 | ) | |
|
Net (loss) | |
$ | (6,498,167 | ) | |
$ | (8,383,453 | ) | |
****
Cardios net loss for the year ended December
31, 2025 was $6,498,167 as compared to $8,383,453 for the year ended December 31, 2024, a decrease of $1,885,286 primarily as a result
of a decrease in General and Administrative expenses associated with stock compensation issued in
2024.
*Revenue*
**
Revenue for the year ended December 31, 2025 was
$14,825 compared to $34,890 for the year ended December 31, 2024. The decrease in revenue is a result
of the conclusion of the Family Medicine Specialists Heart Attack Prevention testing initiative.
Additional
providers and other organizations are continuing to be onboarded. However, there is a one to three quarter period from onboarding to ramping
up usage of tests. The new provider organizations are also smaller and have fewer patients in general than Family Medicine Specialists.
*Revenue
Growth and Commercial Adoption Considerations*
**
A recurring
question from investors is why revenue growth does not immediately follow the development and validation of a clinically promising diagnostic
test. While product development may appear straightforward develop the test, demonstrate its effectiveness, and launch
the path from scientific discovery to broad clinical adoption is complex, highly regulated and typically extended in duration.
The commercialization
lifecycle for diagnostic tests generally involves multiple stages:
****
|
| Scientific Validation | |
The Company
must conduct rigorous analytical and clinical validation studies to demonstrate the safety, accuracy and clinical utility of its tests.
Publication of supporting data and peer-reviewed evidence is often an important component of this process.
****
|
| Regulatory Requirements | |
Depending
on the regulatory pathway, the Company must comply with applicable federal and state regulatory standards. Regulatory processes may involve
submissions, inspections, or other oversight requirements that can extend development timelines.
****
|
| Reimbursement and Coverage | |
| 61 | |
| | |
Revenue generation
depends significantly on securing third-party reimbursement. Following launch, the Company must obtain coverage determinations from government
programs, including the Centers for Medicare & Medicaid Services (CMS), and subsequently from commercial payors. Coverage
decisions often require demonstration of clinical utility, cost-effectiveness, and economic value relative to the current standard of
care. The timing and scope of reimbursement approvals can materially impact adoption rates and revenue growth.
****
|
| Physician Adoption and Clinical
Guidelines | |
Broad utilization
frequently depends on physician awareness, education and confidence in the test. Adoption may accelerate when professional medical societies
incorporate a diagnostic test into clinical guidelines; however, guideline inclusion typically follows the accumulation of substantial
clinical evidence over time.
****
|
| Behavioral and Workflow Integration | |
Even when
a test is validated, reimbursed and supported by clinical data, integration into established clinical workflows and physician practice
patterns can be gradual. Changes in medical practice often occur incrementally as providers gain familiarity and comfort with new technologies.
In summary,
the healthcare commercialization process is inherently lengthy and subject to regulatory, reimbursement, evidentiary, and behavioral factors.
Broad clinical adoption of novel diagnostic technologies frequently spans multiple years and, in some cases, may require a decade or more
from initial development to widespread utilization.
*Sales and Marketing*
**
Expenses related to sales and marketing for the
year ended December 31, 2025 were $766,888 as compared to $1,231,969 for the year ended December 31, 2024, a decrease of $465,081. The
overall decrease was primarily due to a restructuring in sales and marketing personnel in 2025.
*Research and Development*
**
Research and development expense for the year ended
December 31, 2025 was $641,212 as compared to $227,966 for the year ended December 31, 2024, an increase of $413,246. The overall increase
was due to an increase in research and development personnel in 2025.
*General and Administrative Expenses*
General and Administrative Expenses for the year
ended December 31, 2025 were $5,025,570 as compared to $6,921,094 for the year ended December 31, 2024, a decrease of $1,895,524. The
overall decrease is primarily due to a decrease in stock compensation expenses (mainly as a result of new stock options issued in the
first quarter of 2024), coupled by the decrease in director and officer insurance expense.
General and Administrative Expenses for the year
ended December 31, 2025 included payroll and related costs of $1,366,808, rent and other facility costs of $306,591, legal and professional
fees of $868,826, consulting and contractor fees of $715,764, insurance expense of $618,998, filing fees of $99,115, transfer agent fees
of $62,228, software and web computing expenses of $316,339, board compensation of $198,235, investor relations expenses of $10,133 and
general corporate overhead expenses of $462,533.
General and Administrative Expenses for the year
ended December 31, 2024 included payroll and related costs of $3,213,917, rent and other facility costs of $224,123, legal and professional
fees of $731,209, consulting and contractor fees of $740,516, insurance expense of $714,481, filing fees of $102,514, transfer agent fees
of $67,536, software and web computing expenses of $274,515, board compensation of $199,658, investor relations expense of $82,345 and
general corporate overhead expenses of $570,280.
We expect our general corporate overhead to remain
relatively flat. Additionally, as a public company, we must comply with changing legal and exchange requirements, including as to regulations
of the SEC and the continued listing requirements of the Nasdaq Capital Market. We incur annual expenses related to these matters and,
among other things, directors and officers liability insurance, directors fees, reporting requirements of the SEC,
transfer agent fees, Nasdaq listing fees, auditing and legal fees and similar expenses.
| 62 | |
| | |
*Amortization*
**
The total amortization expense for the year ended
December 31, 2025 was $65,233, consisting of amortization of intangible assets of $5,333 and patent costs of $59,900. The total amortization
expense for the year ended December 31, 2024 is $19,738, consisting of intangible assets of $16,000 and patent costs of $3,738.
**
*Other income (expenses)*
Total other expense for the year ended December
31, 2025 was $(14,089) as compared to $(17,576) for the year ended December 31, 2024. The total other expense for the year ended December
31, 2025 consists of interest expense of $14,801, net of interest income of $712. The total other expense for the year ended December
31, 2024 consists of interest expense of $18,640, net of interest income of $1,064.
*Liquidity and Capital Resources*
**
Liquidity describes the ability of a company to
generate sufficient cash flows in the short- and long-term to meet the cash requirements of its business operations, including working
capital needs, debt service, acquisitions and investments and other commitments and contractual obligations. We consider liquidity in
terms of cash flows from operations and other sources, and their sufficiency to fund our operations. Historically, our principal sources
of liquidity have been proceeds from the issuance of equity.
On January 26, 2024, we entered into the Sales Agreement
with Craig-Hallum (the ATM Offering). Pursuant to the Sales Agreement and ATM Offering, we may sell, at our option, shares
of our Common Stock through Craig-Hallum, as sales agent. Sales of our Common Stock were made pursuant to the Sales Agreement initially
up to an aggregate of $17 million under a shelf registration statement declared effective in February 2024 (File No. 333-276725) and have
been, and may continue to be made pursuant to the Sales Agreement up to an aggregate of an additional $9,476,508 under a second shelf
registration statement declared effective in February 2025 (File No. 333-284775).
As of March 13, 2026, we sold an aggregate 2,251,181
shares of our Common Stock on a Reverse Stock Split-adjusted basis under the Sales Agreement resulting in proceeds to the Company of
$18,754,735, net of offering costs. The Company has paid Craig-Hallum $480,890 in sales commissions.
On February 2, 2024
(pre-dating the 1-for-30 reverse stock split effected in May 2025), in accordance with executed subscription agreements with seven accredited
investors (the Subscription Agreements), we closed on the sale of 561,793 units (the Units), with each Unit
consisting of (i) one share of the Companys common stock, $0.00001 par value (the Common Stock) and (ii) one six
year Common Stock purchase warrant (the Warrants), which warrants are exercisable until February 2, 2030 at an exercise
price of $1.78 ($53.40 on a post-reverse stock split basis) per share, subject to adjustment for stock splits, reverse stock splits and
other similar events of recapitalization, including the 1-for-30 reverse stock split we effected on May 12, 2025. The Units were sold
to the investors in a private placement at a sale price of $1.78 ($53.40 on a post-reverse stock split basis) per Unit (the Private
Placement), resulting in gross proceeds to the Company of $1,000,000, before deducting placement agent fees (10% or $100,000) and
other offering expenses. We used the net proceeds from the Private Placement for working capital and general corporate purposes. On a
post-reverse stock split basis, the Company issued 18,727 shares and warrants that are exercisable for 18,727 shares, all at an exercise
price of $53.40 per share. We have subsequently registered the Private Placement Common Stock and the Common Stock issuable upon the exercise
of the Private Placement Warrants on a registration statement on Form S-1 that was declared effective by the SEC on December 3, 2024 and
subsequently on September 19, 2025.
We have had, and expect that we will continue to
have, an ongoing need to raise additional cash from outside sources to fund our operations and grow our business, given the nominal amount
of revenue we have generated since inception, coupled with substantial expenses both for ongoing business operations and to fund expenses
incurred as a public company. We expect that our primary cash needs for the remainder of 2026 and for the foreseeable future will be for
funding day-to-day operations and working capital requirements, funding our growth strategy, paying the setup expenses of our internal
laboratory and paying expenses incurred in connection with our ongoing FDA submission activities.We explore our financing options
on an ongoing basis. However, given recent stock prices and the extreme volatility of our stock, it continues to be challenging to balance
cash that could be raised and the dilution that might be required to close a particular transaction. We expect that for the remainder
of 2026, we will rely primarily on the ongoing ATM Offering, provided that market conditions are favorable.
Our long-term future
capital requirements will depend on many factors, including revenue growth rate, the timing and the amount of cash received from customers,
the expansion of sales and marketing activities, the timing and extent of spending to support investments, including research and development
efforts, and the continuing market adoption of our products. In each fiscal year since our inception, we have incurred losses from operations
and generated negative cash flows from operating activities. We expect this trend to continue in future periods for the foreseeable future.
| 63 | |
| | |
Unless we are able to generate significant cash
flows from operations, which we do not foresee happening in the near term, we will need to finance our operations through the issuance
of additional equity and/or convertible debt securities. Looking forward, we expect we will need to raise additional capital and generate
revenues to meet long-term operating requirements. If we raise additional funds through the issuance of equity or convertible debt securities,
the percentage ownership of our equity holders could be significantly diluted, particularly at current stock price levels, and these newly-issued
securities may have rights, preferences or privileges senior to those of existing equity holders. If we raise additional funds by obtaining
loans from third parties, the terms of those financing arrangements may include negative covenants or other restrictions on our business
that could impair our operating flexibility and also require us to incur interest expense.
Working capital requirements are expected to
increase in line with the growth of the business. We have no lines of credit or other bank financing arrangements. We anticipate
that our principal sources of liquidity, including existing funds and the ATM offering will be sufficient to fund our activities
over the next 12 months. In order to have sufficient cash to fund our operations beyond the next 12 months and grow our business, we
will need to raise additional funds through the issuance of equity and/or debt. We cannot provide any assurance that we will be
successful in doing so.
If we are unable
to raise additional capital when desired, our business, financial condition and results of operations would be harmed. Successful transition
to attaining profitable operations depends upon achieving a level of revenue adequate to support our business plan, balanced against
ongoing expenses. There is no assurance that we will be successful in reaching and sustaining profitability.
The exercise prices of our currently outstanding
warrants range from a high of $345 to a low of $53.40 (a high of $11.50 to a low of $1.78 before the Reverse Stock Split) (subject to
adjustment) per share of Common Stock. The likelihood that warrant holders will exercise their warrants, and therefore the amount of
cash proceeds that we might receive, is dependent upon the trading price of our Common Stock, the last reported sales price for which
was $4.76 on March 11, 2026. If the trading price of our Common Stock is less than the respective exercise prices of our outstanding
warrants, which has been the case for a substantial period of time, we believe holders of any of our warrants will be unlikely to exercise
their warrants. There is no guarantee that the warrants will be in the money prior to their respective expiration dates, and as such,
the warrants may expire worthless, and we may receive no proceeds from the exercise of warrants. Given the current differential between
the trading price of our Common Stock and the Warrant exercise prices and the volatility of our stock price, we are not making strategic
business decisions based on an expectation that we will receive any cash from the exercise of warrants. However, we will use any cash
proceeds received from the exercise of warrants for general corporate and working capital purposes, which would increase our liquidity.
We will continue to evaluate the probability of warrant exercises and the merit of including potential cash proceeds from the exercise
of the warrants in our future liquidity projections.
Cash at December 31, 2025 totaled $5,110,630 as compared to $7,827,487 at December 31, 2024, a decrease
of $2,716,857. The following table shows our cash flows from operating activities, investing activities and financing activities for
the stated periods:
|
| |
2025 | | |
2024 | | |
|
Net cash used in operating activities | |
$ | 5,726,833 | | |
$ | 4,993,104 | | |
|
Net cash used in investing activities | |
| 419,310 | | |
| 404,190 | | |
|
Net cash provided by financing activities | |
| 3,429,286 | | |
| 11,941,258 | | |
*Cash Used in Operating Activities*
**
Cash used in operating activities for the year ended
December 31, 2025 was $5,726,833, as compared to $4,993,104 for the year ended December 31, 2024. The cash used in operations during the
year ended December 31, 2025 is a function of net loss of $6,498,167, adjusted for the following non-cash operating items: depreciation
of $160,063, amortization of $238,065 and stock-based compensation of $110,235. Operating assets and liabilities fluctuated as follows:
a decrease in accounts receivable of $10,486, a decrease of $479,974 in prepaid expenses and other current assets, an increase of $9,781
in accounts payable and accrued expenses and a decrease in lease liability of $237,270.
The cash used in operations during the year ended
December 31, 2024 is a function of net loss of $8,383,453, adjusted for the following non-cash operating items: depreciation of $113,777,
amortization of $162,568, and stock-based compensation of $2,591,168. Operating assets and liabilities fluctuated as follows: an increase
in accounts receivable of $13,652, a decrease of $915,969 in prepaid expenses and other current assets, a decrease of $155,552 in accounts
payable and accrued expenses and a decrease in lease liability of $223,929.
**
**
| 64 | |
| | |
*Cash Used in Investing Activities*
**
Cash used in investing activities for the year ended
December 31, 2025 was $419,310 compared to $404,190 for the year ended December 31, 2024. The cash used in investing activities for the
year ended December 31, 2025 was due to $187,317 for purchase of property and equipment and $231,993 in patent costs incurred. The cash
used in investing activities for the year ended December 31, 2024 was due to $214,765 for purchase of property and equipment and $189,425
in patent costs incurred.
*Cash Provided by Financing Activities*
**
Cash provided by financing activities for the year
ended December 31, 2025 was $3,429,286 as compared to $11,941,258 for the year ended December 31, 2024. This change was due to
$3,803,498 in proceeds from the sale of Common Stock, net of issuance costs, offset by $374,212 in payments pursuant to a
finance agreement during the year ended December 31, 2025. Cash provided by financing activities for the year ended December 31, 2024
was due to $12,391,949 in proceeds from the sale of Common Stock and warrants, net of issuance costs, offset by $450,691 in payments pursuant
to the Sales Agreement for the ATM Offering.
**Off-Balance Sheet Financing Arrangements**
****
We did not have any
off-balance sheet arrangements as of December 31, 2025.
**Contractual Obligations**
As of December 31, 2025, we do not have any ongoing
contractual obligations that would have a negative impact on liquidity and cash flows. However, if one or more of the following potential
claims that arise from contracts we have entered into were pursued against us, there is the potential that we could see a negative impact
on liquidity and cash flows, depending on the outcome.
*Prior Relationships of Cardio with Boustead Securities,
LLC*
**
At the commencement of efforts to pursue what ultimately
ended in the terminated business acquisition, Legacy Cardio entered into a Placement Agent and Advisory Services Agreement (the Placement
Agent Agreement), dated April 12, 2021, with Boustead Securities, LLC (Boustead Securities). This agreement was terminated
in April 2022, when Legacy Cardio terminated the underlying agreement and plan of merger and the accompanying escrow agreement relating
to that proposed business acquisition after efforts to complete the transaction failed, despite several extensions of the closing deadline.
Under the terminated Placement Agent Agreement,
Legacy Cardio agreed to certain future rights in favor of Boustead Securities, including (i) a two-year tail period during which Boustead
Securities would be entitled to compensation if Cardio were to close on a transaction (as defined in the Placement Agent Agreement) with
any party that was introduced to Legacy Cardio by Boustead Securities; and (ii) a right of first refusal to act as the Companys
exclusive placement agent for 24-months from the end of the term of the Placement Agent Agreement (the right of first refusal).
Cardio has taken the position that due to Boustead Securities failure to perform as contemplated by the Placement Agent Agreement,
these provisions purporting to provide future rights are null and void.
Boustead Securities responded to the termination
of the Placement Agent Agreement by disputing Legacy Cardios contention that it had not performed under the Placement Agent Agreement
because, among other things, Boustead Securities had never sought out prospective investors. In its response, Boustead Securities included
a list of funds that they had supposedly contacted on Legacy Cardios behalf. While Boustead Securities contention appears
to contradict earlier communications from Boustead Securities in which they indicated that they had not made any such contacts or introductions,
Boustead Securities contended that they are due success fees for two years following the termination of the Placement Agent Agreement
on any transaction with any person on the list of supposed contacts or introductions. Legacy Cardio strongly disputes this position. Notwithstanding
the foregoing, the Company has not consummated any transaction, as defined, with any potential party that purportedly was a contact of
Boustead Securities in connection with the Placement Agent Agreement and has no plans to do so at any time during the tail period. No
legal proceedings have been instigated by either party.
*The Benchmark Company, LLC Right of First Refusal*
**
The Company completed a business combination with
Mana on October 25, 2022. In connection with the proposed business combination, by agreement dated May 13, 2022, Mana engaged The Benchmark
Company, LLC (Benchmark) as its M&A advisor. Upon closing of the business combination, Legacy Cardio assumed the contractual
engagement entered into by Mana. On November 14, 2022, Cardio and Benchmark entered into Amendment No. 1 Engagement Letter (the Amendment
Engagement). Pursuant to the Amendment Engagement, Benchmark has been granted a right of first refusal to act as lead or joint-lead
investment banker, lead or joint-lead book-runner and/or lead or joint-lead placement agent for all future public and private equity and
debt offerings through October 25, 2023. Based on the right of first refusal, Benchmark alleges that it is owed damages because the Company
entered into the Yorkville Convertible Debenture Transaction without first offering Benchmark the right to serve as the lead or joint-lead
placement agent for the transaction. No legal proceedings have been instigated.
**
**
| 65 | |
| | |
*Demand Letter and Potential Mootness Fee Claim*
**
On June 25, 2022,
a plaintiffs securities law firm sent a demand letter to the Company alleging that the Companys Registration Statement
on Form S-4 filed (the S-4 Registration Statement) with the Securities and Exchange Commission (SEC) on May
31, 2022 omitted material information with respect to the Business Combination and demanding that the Company and its Board of Directors
immediately provide corrective disclosures in an amendment or supplement to the Registration Statement. Subsequent thereto, the Company
filed amendments to the S-4 Registration Statement on July 27, 2022, August 23, 2022, September 15, 2022, October 4, 2022 and October
5, 2022 in which it responded to various comments of the SEC staff and otherwise updated its disclosure. In October 2022, the SEC completed
its review and declared the S-4 registration statement effective on October 6, 2022. On February 23, 2023 and February 27, 2023, plaintiffs
securities law firm contacted the Companys counsel asking who will be negotiating a mootness fee relating to the purported claims
set forth in the June 25, 2022 demand letter. The Company vigorously denies that the S-4 Registration Statement, as amended and declared
effective, is deficient in any respect and believes that no additional supplemental disclosures are material or required. The Company
believes that the claims asserted in the Demand Letter are without merit and that no further disclosure is required to supplement the
S-4 Registration Statement under applicable laws. As of the date of filing of this Annual Report on Form 10-K, no lawsuit has been filed
against the Company by that firm.
*Northland Securities, Inc.*
In January 2024, following the Companys termination
of its agreement with Yorkville and in connection with the Companys at the market offering and/or its February 2024 private
placement, a managing director of Northland Securities, Inc. (Northland) contacted the Company claiming the right to be
paid a fee of approximately $150,000 pursuant to the agreement of March 1, 2023 between the Company and Northland regarding the Yorkville
financing. Subsequently, the Company has been advised by another representative of Northland that Northland would not proceed with any
such claim and no legal proceedings have been instigated.
The Company cannot preclude the possibility that
claims or lawsuits brought relating to any alleged securities law violations or breaches of fiduciary duty could potentially require significant
time and resources to defend and/or settle and distract its management and board of directors from focusing on its business.
*Directors and Officers Insurance*
In connection with the Companys various contractual
obligations arising in the ordinary course of business, the Company is required to maintain insurance coverage for claims against its
directors and officers.
*TheUniversity of Iowa Research Foundation
Exclusive License Agreement*
**
The Company has a worldwide
exclusive license agreement with the University of Iowa Research Foundation (UIRF) relating to its patent and patent-pending technology
(the Exclusive License Agreement). Under the terms of the Exclusive License Agreement, the Company will have to pay each
of: (1) 1% of either the: (i) aggregate consideration (and trailing consideration, if any) for a liquidation event; or (ii) pre-money
valuation for an initial public offering, (the Equity Rights) (2) 2% of annual net sales, and (3) 15% of non-royalty fees
paid to licensee if it enters into one or more sublicensing agreements. Upon the Closing of the Business Combination, the Company issued
3,639 (109,170 prior to the Reverse Stock Split) Shares of Common Stock to UIRF in accordance with the Equity Rights under the Exclusive
License Agreement. The Company has had minimal sales of $68,631 to date and has paid 2% or approximately $1,300 in total royalty fees
to UIRF under the exclusive license.
**Nasdaq Continued Listing Compliance**
On June 3, 2024, we received notice from The Nasdaq
Stock Market LLC (Nasdaq) that we were not in compliance with Nasdaq Listing Rule 5550(a)(2) because the closing bid price
of our common stock had been below $1.00 per share for 30 consecutive business days. We were provided an initial compliance period and,
on December 4, 2024, were granted an additional compliance period through June 2, 2025.
In May 2025, we effected a reverse stock split,
after which we regained compliance with the minimum bid price requirement. Nasdaq subsequently notified us that we had regained compliance
with Listing Rule 5550(a)(2).
Although we are currently in compliance, the market
price of our common stock has historically experienced volatility and may continue to fluctuate due to factors both within and outside
of our control, including our operating performance, capital market conditions, investor sentiment toward small-cap healthcare companies,
and broader macroeconomic trends. Reverse stock splits do not guarantee sustained increases in market price, and there can be no assurance
that we will be able to maintain compliance with the minimum bid price requirement or other Nasdaq continued listing standards in the
future.
If the bid price of our common stock were to decline
below $1.00 per share for a sustained period, we could again become non-compliant with Nasdaqs continued listing requirements.
In addition, continued listing on Nasdaq requires compliance with other quantitative and qualitative standards, including stockholders
equity thresholds, market value of publicly held shares, corporate governance requirements, and timely filing obligations.
Any future failure to maintain compliance could
result in deficiency notices and, if not cured, could ultimately lead to delisting, which could adversely affect the liquidity and market
value of our common stock and our ability to access the capital markets.
| 66 | |
| | |
**Critical Accounting Policies and Estimates**
Our consolidated financial statements are prepared
in accordance with GAAP in the United States. The preparation of our consolidated financial statements and related disclosures requires
us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenue, costs and expenses and the disclosure
of contingent assets and liabilities in our financial statements. We base our estimates on historical experience, known trends and events
and various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments
about the carrying values of assets and liabilities that are not readily apparent from other sources. Management evaluates our estimates
and assumptions on an ongoing basis. Our actual results may differ from these estimates under different assumptions or conditions.
While our significant accounting policies are described
in more detail in Note 2 to the consolidated financial statements, we believe that the following accounting policies are those most critical
to the judgments and estimates used in the preparation of the consolidated financial statements. Critical accounting policies are those
that are most important to the portrayal of our financial condition, results of operations and cash flows and require managements
most difficult, subjective and complex judgments, often as a result of the need to make estimates about the effect of matters that are
inherently uncertain. If actual results were to differ significantly from estimates made, the reported results could be materially affected.
*Stock-Based Compensation*
**
We account for stock-based
awards granted under our employee compensation plan in accordance with ASC Topic No. 718-20, *Awards Classified as Equity,*which
requires the measurement of compensation expense for all share-based compensation granted to employees and non-employee directors at fair
value on the date of grant and recognition of compensation expense over the related service period for awards expected to vest. We use
the Black-Scholes option pricing model to estimate the fair value of our stock options and warrants. The Black-Scholes option pricing
model requires the input of highly subjective assumptions including the expected stock price volatility of our Common Stock, the risk-free
interest rate at the date of grant, the expected vesting term of the grant, expected dividends and an assumption related to forfeitures
of such grants. Changes in these subjective input assumptions can materially affect the fair value estimate of our stock options and warrants.****
****
As of December 31, 2025, we were not subject to any market
or interest rate risk.
**Item
8. Financial Statements and Supplemental Data**
****
**INDEX TO FINANCIAL STATEMENTS**
****
|
|
Page | |
|
Report of Independent Registered Public Accounting Firm (PCAOB ID 273) |
F-1 | |
|
Consolidated Balance Sheets as of December 31, 2025 and 2024 |
F-2 | |
|
Consolidated Statements of Operations for the Years Ended December 31, 2025 and 2024 |
F-3 | |
|
Consolidated Statements of Changes in Stockholders Equity for the Years Ended December 31, 2025 and 2024 |
F-4 | |
|
Consolidated Statements of Cash Flows for the Years Ended December 31, 2025 and 2024 |
F-5 | |
|
Notes to Consolidated Financial Statements |
F-6 | |
****
****
| 67 | |
| | |
**REPORT OF INDEPENDENT REGISTERED PUBLIC
ACCOUNTING FIRM**
****
To the Stockholders and the Board of Directors
of
Cardio Diagnostics Holdings, Inc.
**Opinion on the Consolidated Financial Statements**
We have audited the accompanying consolidated
balance sheets of Cardio Diagnostics Holdings, Inc. (the Company) as of December 31, 2025 and 2024, and the related consolidated
statements of operations, changes in stockholders equity, and cash flows for the years ended December 31, 2025 and 2024, and the
related notes (collectively referred to as the consolidated financial statements). In our opinion, the consolidated financial statements
present fairly, in all material respects, the consolidated financial position of the Company as of December 31, 2025 and 2024, and the
results of its operations and its cash flows for the years ended December 31, 2025 and 2024, in conformity with accounting principles
generally accepted in the United States of America.
**Basis for Opinion**
These consolidated financial statements are the
responsibility of the Companys management. Our responsibility is to express an opinion on the Companys consolidated financial
statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United
States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and
the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the
standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated
financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we
engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding
of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Companys
internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess
the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures
that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the
consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by
management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide
a reasonable basis for our opinion.
*/s/Prager Metis CPAs,
LLC*
We have
served as the Companys auditor since 2021
Hackensack,
New Jersey
March 13,
2026
| F-1 | |
| | |
**CARDIO DIAGNOSTICS HOLDINGS, INC.**
**CONSOLIDATED BALANCE SHEETS**
**DECEMBER 31,**
|
| |
| | |
| | |
|
| |
2025 | | |
2024 | | |
|
| |
| | |
| | |
|
ASSETS |
| |
|
| |
| | |
| | |
|
Current assets | |
| | | |
| | | |
|
Cash | |
$ | 5,110,630 | | |
$ | 7,827,487 | | |
|
Accounts receivable | |
| 8,126 | | |
| 18,612 | | |
|
Prepaid expenses and other current assets | |
| 801,947 | | |
| 944,683 | | |
|
| |
| | | |
| | | |
|
Total current assets | |
| 5,920,703 | | |
| 8,790,782 | | |
|
| |
| | | |
| | | |
|
Long-term assets | |
| | | |
| | | |
|
Property and equipment, net | |
| 700,115 | | |
| 672,861 | | |
|
Right of use assets, net | |
| 259,565 | | |
| 432,397 | | |
|
Intangible assets, net | |
| | | |
| 5,333 | | |
|
Deposits | |
| 12,850 | | |
| 12,850 | | |
|
Patent costs, net | |
| 873,182 | | |
| 701,089 | | |
|
| |
| | | |
| | | |
|
Total assets | |
$ | 7,766,415 | | |
$ | 10,615,312 | | |
|
| |
| | | |
| | | |
|
LIABILITIES AND STOCKHOLDERS' EQUITY | |
| | | |
| | | |
|
| |
| | | |
| | | |
|
Current liabilities | |
| | | |
| | | |
|
Accounts payable and accrued expenses | |
$ | 97,442 | | |
$ | 87,661 | | |
|
Lease liability - current | |
| 237,607 | | |
| 237,270 | | |
|
Finance agreement payable | |
| 269,790 | | |
| 306,764 | | |
|
| |
| | | |
| | | |
|
Total current liabilities | |
| 604,839 | | |
| 631,695 | | |
|
| |
| | | |
| | | |
|
Long-term liabilities | |
| | | |
| | | |
|
Lease liability - long term | |
| 188,222 | | |
| 425,829 | | |
|
| |
| | | |
| | | |
|
Total liabilities | |
| 793,061 | | |
| 1,057,524 | | |
|
| |
| | | |
| | | |
|
Stockholders' equity | |
| | | |
| | | |
|
Preferred
stock, $.00001 par value; authorized - 100,000,000 shares; 0 shares issued and outstanding
as of December 31, 2025 and 2024, respectively | |
| | | |
| | | |
|
Common
stock, $.00001 par
value; authorized - 300,000,000 shares;
1,826,051
and 1,531,468
shares issued and outstanding as of December 31,
2025 and 2024, respectively* | |
| 18 | | |
| 15 | | |
|
Additional paid-in capital | |
| 36,223,336 | | |
| 32,309,606 | | |
|
Accumulated deficit | |
| (29,250,000 | ) | |
| (22,751,833 | ) | |
|
| |
| | | |
| | | |
|
Total stockholders' equity | |
| 6,973,354 | | |
| 9,557,788 | | |
|
| |
| | | |
| | | |
|
Total liabilities and stockholders' equity | |
$ | 7,766,415 | | |
$ | 10,615,312 | | |
|
* | Retroactively restated for thirty-for-one share consolidation on May 12, 2025. |
|
See accompanying notes to the
consolidated financial statements.
| F-2 | |
| | |
**CARDIO DIAGNOSTICS HOLDINGS, INC.**
**CONSOLIDATED STATEMENTS OF OPERATIONS**
**YEARS ENDED DECEMBER 31,**
|
| |
| | |
| | |
|
| |
2025 | | |
2024 | | |
|
| |
| | |
| | |
|
Revenue | |
$ | 14,825 | | |
$ | 34,890 | | |
|
| |
| | | |
| | | |
|
Operating expenses | |
| | | |
| | | |
|
Sales and marketing | |
| 766,888 | | |
| 1,231,969 | | |
|
Research and development | |
| 641,212 | | |
| 227,966 | | |
|
General and administrative | |
| 5,025,570 | | |
| 6,921,094 | | |
|
Amortization | |
| 65,233 | | |
| 19,738 | | |
|
| |
| | | |
| | | |
|
Total operating expenses | |
| 6,498,903 | | |
| 8,400,767 | | |
|
| |
| | | |
| | | |
|
Loss from operations | |
| (6,484,078 | ) | |
| (8,365,877 | ) | |
|
| |
| | | |
| | | |
|
Other income (expenses) | |
| | | |
| | | |
|
Interest income | |
| 712 | | |
| 1,064 | | |
|
Interest expense | |
| (14,801 | ) | |
| (18,640 | ) | |
|
| |
| | | |
| | | |
|
Total other income (expenses) | |
| (14,089 | ) | |
| (17,576 | ) | |
|
| |
| | | |
| | | |
|
Loss before provision for income taxes | |
| (6,498,167 | ) | |
| (8,383,453 | ) | |
|
| |
| | | |
| | | |
|
Provision for income taxes | |
| | | |
| | | |
|
| |
| | | |
| | | |
|
Net loss | |
$ | (6,498,167 | ) | |
$ | (8,383,453 | ) | |
|
| |
| | | |
| | | |
|
Basic and fully diluted income (loss) per common share: | |
| | | |
| | | |
|
Net loss per common share* | |
$ | (3.71 | ) | |
$ | (9.35 | ) | |
|
| |
| | | |
| | | |
|
| |
| | | |
| | | |
|
Weighted average common shares outstanding - basic and fully diluted* | |
| 1,751,417 | | |
| 896,424 | | |
|
| |
| | | |
| | | |
|
* | Retroactively restated for thirty-for-one share consolidation on May 12, 2025. |
|
See accompanying notes to the consolidated financial
statements.
| F-3 | |
| | |
**CARDIO DIAGNOSTICS HOLDINGS,
INC.**
**CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS
EQUITY**
**YEARS ENDED DECEMBER 31, 2025 AND 2024**
|
| |
| | |
| | |
| | |
| | |
| | |
|
| |
Common
stock | | |
Additional
Paid-in | | |
Accumulated | | |
| | |
|
| |
Shares* | | |
Amount* | | |
Capital | | |
Deficit | | |
Totals | | |
|
| |
| | |
| | |
| | |
| | |
| | |
|
Balances, December
31, 2023 | |
| 684,680 | | |
$ | 7 | | |
$ | 17,326,497 | | |
$ | (14,368,380 | ) | |
$ | 2,958,124 | | |
|
| |
| | | |
| | | |
| | | |
| | | |
| | | |
|
Common
stock and warrants issued for cash, net of issuance costs | |
| 843,995 | | |
| 8 | | |
| 12,391,941 | | |
| | | |
| 12,391,949 | | |
|
| |
| | | |
| | | |
| | | |
| | | |
| | | |
|
Restricted
stock awards vested | |
| 2,793 | | |
| | | |
| 76,000 | | |
| | | |
| 76,000 | | |
|
| |
| | | |
| | | |
| | | |
| | | |
| | | |
|
Compensation
for vested stock options | |
| | | |
| | | |
| 2,515,168 | | |
| | | |
| 2,515,168 | | |
|
| |
| | | |
| | | |
| | | |
| | | |
| | | |
|
Net
loss | |
| | | |
| | | |
| | | |
| (8,383,453 | ) | |
| (8,383,453 | ) | |
|
| |
| | | |
| | | |
| | | |
| | | |
| | | |
|
Balances, December 31, 2024 | |
| 1,531,468 | | |
| 15 | | |
| 32,309,606 | | |
| (22,751,833 | ) | |
| 9,557,788 | | |
|
| |
| | | |
| | | |
| | | |
| | | |
| | | |
|
Common
stock issued for cash, net of issuance costs | |
| 292,495 | | |
| 3 | | |
| 3,803,495 | | |
| | | |
| 3,803,498 | | |
|
| |
| | | |
| | | |
| | | |
| | | |
| | | |
|
Fractional
shares adjustment | |
| 27 | | |
| | | |
| | | |
| | | |
| | | |
|
| |
| | | |
| | | |
| | | |
| | | |
| | | |
|
Restricted
stock awards vested | |
| 2,061 | | |
| | | |
| 12,000 | | |
| | | |
| 12,000 | | |
|
| |
| | | |
| | | |
| | | |
| | | |
| | | |
|
Compensation
for vested stock options | |
| | | |
| | | |
| 98,235 | | |
| | | |
| 98,235 | | |
|
| |
| | | |
| | | |
| | | |
| | | |
| | | |
|
Net
loss | |
| | | |
| | | |
| | | |
| (6,498,167 | ) | |
| (6,498,167 | ) | |
|
| |
| | | |
| | | |
| | | |
| | | |
| | | |
|
Balances,
December 31, 2025 | |
| 1,826,051 | | |
$ | 18 | | |
$ | 36,223,336 | | |
$ | (29,250,000 | ) | |
$ | 6,973,354 | | |
|
| |
| | | |
| | | |
| | | |
| | | |
| | | |
|
* | Retroactively restated for thirty-for-one share consolidation on May 12, 2025. |
|
****
****
See accompanying notes to the
consolidated financial statements.
| F-4 | |
| | |
**CARDIO DIAGNOSTICS HOLDINGS, INC.**
**CONSOLIDATED STATEMENTS OF CASH FLOWS**
**YEARS ENDED DECEMBER 31,**
|
| |
| | |
| | |
|
| |
2025 | | |
2024 | | |
|
| |
| | |
| | |
|
CASH FLOWS FROM OPERATING ACTIVITIES: | |
| | | |
| | | |
|
Net loss | |
$ | (6,498,167 | ) | |
$ | (8,383,453 | ) | |
|
Adjustments to
reconcile net loss to net cash used in operating activities | |
| | | |
| | | |
|
Depreciation | |
| 160,063 | | |
| 113,777 | | |
|
Amortization | |
| 238,065 | | |
| 162,568 | | |
|
Stock-based compensation expense | |
| 110,235 | | |
| 2,591,168 | | |
|
Changes in operating assets and liabilities: | |
| | | |
| | | |
|
Accounts receivable | |
| 10,486 | | |
| (13,652 | ) | |
|
Prepaid expenses and other current assets | |
| 479,974 | | |
| 915,969 | | |
|
Accounts payable and accrued expenses | |
| 9,781 | | |
| (155,552 | ) | |
|
Lease liability | |
| (237,270 | ) | |
| (223,929 | ) | |
|
| |
| | | |
| | | |
|
NET CASH USED IN OPERATING ACTIVITIES | |
| (5,726,833 | ) | |
| (4,993,104 | ) | |
|
| |
| | | |
| | | |
|
CASH FLOWS FROM INVESTING ACTIVITIES: | |
| | | |
| | | |
|
Purchases of property and equipment | |
| (187,317 | ) | |
| (214,765 | ) | |
|
Patent costs incurred | |
| (231,993 | ) | |
| (189,425 | ) | |
|
| |
| | | |
| | | |
|
NET CASH USED IN INVESTING ACTIVITIES | |
| (419,310 | ) | |
| (404,190 | ) | |
|
| |
| | | |
| | | |
|
CASH FLOWS FROM FINANCING ACTIVITIES: | |
| | | |
| | | |
|
Proceeds from sale of common stock and warrants, net of issuance costs | |
| 3,803,498 | | |
| 12,391,949 | | |
|
Payments of finance agreement | |
| (374,212 | ) | |
| (450,691 | ) | |
|
| |
| | | |
| | | |
|
NET CASH PROVIDED BY FINANCING ACTIVITIES | |
| 3,429,286 | | |
| 11,941,258 | | |
|
| |
| | | |
| | | |
|
NET (DECREASE) INCREASE IN CASH | |
| (2,716,857 | ) | |
| 6,543,964 | | |
|
| |
| | | |
| | | |
|
CASH - BEGINNING OF YEAR | |
| 7,827,487 | | |
| 1,283,523 | | |
|
| |
| | | |
| | | |
|
CASH - END OF YEAR | |
$ | 5,110,630 | | |
$ | 7,827,487 | | |
|
| |
| | | |
| | | |
|
| |
| | | |
| | | |
|
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION: | |
| | | |
| | | |
|
Cash paid during the year for: | |
| | | |
| | | |
|
Interest | |
$ | 14,801 | | |
$ | 18,640 | | |
|
Income taxes | |
$ | | | |
$ | | | |
|
| |
| | | |
| | | |
|
Non-cash investing and financing activities: | |
| | | |
| | | |
|
Financing agreement entered into for prepaid insurance | |
$ | 337,238 | | |
$ | 383,455 | | |
See accompanying notes to the
consolidated financial statements.
| F-5 | |
| | |
**CARDIO DIAGNOSTICS HOLDINGS, INC.**
**Notes to Consolidated Financial Statements**
**Years Ended December 31, 2025 and 2024**
**Note 1 - Organization and Basis
of Presentation**
****
The consolidated financial statements presented
are those of Cardio Diagnostics Holdings, Inc., (the Company) and its wholly-owned subsidiary, Cardio Diagnostics, Inc.
(Legacy Cardio). The Company was incorporated as Mana Capital Acquisition Corp. (Mana) under the laws of the
state of Delaware on May 19, 2021, and Legacy Cardio was formed on January 16, 2017 as an Iowa limited liability company (Cardio Diagnostics,
LLC) and was subsequently incorporated as a Delaware C-Corp on September 6, 2019. The Company was formed to develop and commercialize
a patent-pending Artificial Intelligence (AI)-driven DNA biomarker testing technology (Core Technology) for
cardiovascular disease invented at the University of Iowa by the Founders, with the goal of becoming one of the leading medical technology
companies for enabling precision prevention, early detection and treatment of cardiovascular disease. The Company is transforming the
approach to cardiovascular disease from reactive to proactive. The Core Technology is being incorporated into a series of products for
major types of cardiovascular disease and associated co-morbidities including coronary heart disease (CHD), stroke, heart failure and
diabetes.
**Reverse Stock Split**
On May 12, 2025, the Company filed a Certificate
of Amendment to the Third Amended and Restated Certificate of Incorporation
of the Company with the Delaware Secretary of State to effect a reverse stock split at a1-for-30 ratio (the Effective Time). At the Effective Time, every 30 shares of issued
and outstanding Common Stock automatically combined into one issued share of common stock, with no change in par value. No fractional
shares were issued as a result of the Reverse Stock Split. Instead of issuing fractional shares, the Company rounded shares up or down
to the nearest whole number as determined by DTC at the participant level. The Reverse Stock Split did not modify any voting rights or
other terms of the Common Stock. The Companys Common Stock began trading on a reverse stock split-adjusted basis on The Nasdaq
Capital Market at the open of the markets on May 13, 2025. As a result, the number of shares of Common Stock outstanding was reduced from52,160,487shares
to1,738,683shares, exclusive of 27 whole shares issued for rounding up fractional shares (which were issued in May 2025),
and the number of authorized shares of Common Stock remains300million shares.
Unless otherwise indicated, all issued and outstanding
stock and per share amounts contained in the accompanying consolidated financial statements have been adjusted to reflect the1-for-30
Reverse Stock Split for all prior periods presented.Proportionate adjustments were made to the exercise prices and number of shares
issuable under the Companys equity incentive plans, and the number of shares underlying outstanding equity awards, as applicable.
The impacts of the Reverse Stock Split were applied
retroactively for all periods presented in accordance with applicable guidance, less the number of rounded whole shares issued for fractional
shares on May 12, 2025. Therefore, prior period amounts are different than those previously reported. Certain amounts within the following
tables may not foot due to rounding.
The following table illustrates changes in equity,
as previously reported prior to, and as adjusted subsequent to, the impact of the Reverse Stock Split retroactively adjusted for the
periods presented:
|
Schedule of subsequent events | |
| | |
| | |
| | |
|
| |
December
31, 2024 | | |
|
| |
As Previously
Reported | | |
Impact of Reverse
Stock Split | | |
As Revised | | |
|
Common stock - shares | |
| 45,944,039 | | |
| (44,412,571 | ) | |
| 1,531,468 | | |
|
Common stock - amount | |
$ | 459 | | |
$ | (444 | ) | |
$ | 15 | | |
|
Additional paid-in capital | |
$ | 32,309,162 | | |
$ | 444 | | |
$ | 32,309,606 | | |
|
| |
| | | |
| | | |
| | | |
|
| |
| | |
| | |
| | |
|
| |
December 31, 2023 | | |
|
| |
As Previously Reported | | |
Impact of Reverse Stock Split | | |
As Revised | | |
|
Common stock - shares | |
| 20,540,409 | | |
| (19,855,729 | ) | |
| 684,680 | | |
|
Common stock - amount | |
$ | 205 | | |
$ | (198 | ) | |
$ | 7 | | |
|
Additional paid-in capital | |
$ | 17,326,299 | | |
$ | 198 | | |
$ | 17,326,497 | | |
|
| |
| | | |
| | | |
| | | |
| F-6 | |
| CARDIO DIAGNOSTICS HOLDINGS, INC.Notes to Consolidated Financial StatementsYears Ended December 31, 2025 and 2024 | |
The following table illustrates changes in loss
per share and weighted average shares outstanding, as previously reported prior to, and as adjusted subsequent to, the impact of the
Reverse Stock Split retroactively adjusted for the periods presented:
|
Schedule of loss per share and weighted average shares outstanding | |
| | |
| | |
| | |
|
| |
Year
ended December 31, 2024 | | |
|
| |
As Previously
Reported | | |
Impact of Reverse
Stock Split | | |
As Revised | | |
|
Loss attributable to common shareholders | |
$ | (8,383,453 | ) | |
| | | |
$ | (8,383,453 | ) | |
|
Weighted average shares used to compute basic and diluted EPS | |
| 26,892,705 | | |
| (25,996,281 | ) | |
| 896,424 | | |
|
Loss per share - basic and diluted | |
$ | (0.31 | ) | |
$ | (9.04 | ) | |
$ | (9.35 | ) | |
The following shares of common stock exercisable
or issuable from outstanding stock options and warrants were not included in the computation of diluted shares outstanding because the
effect would be anti-dilutive:
|
Schedule of warrants exercisable | |
| | |
| | |
| | |
|
| |
Year
ended December 31, 2024 | | |
|
| |
As
Previously
Reported | | |
Impact
of Reverse Stock Split | | |
As
Revised | | |
|
Common stock options | |
| 3,594,202 | | |
| (3,474,395 | ) | |
| 119,807 | | |
|
Common stock warrants | |
| 8,528,766 | | |
| (8,244,474 | ) | |
| 284,292 | | |
Stock options were adjusted retroactively to give
effect to the Reverse Stock Split for the year ended December 31,2024:
|
Schedule of Warrants adjustment | |
| | |
| | |
| | |
| | |
| | |
| | |
|
| |
As
Previously Reported | | |
Impact
of Reverse Stock Split | | |
As
Revised | | |
|
| |
Options | | |
Weighted Average
Exercise | | |
Options | | |
Weighted Average
Exercise | | |
Options | | |
Weighted Average
Exercise | | |
|
| |
Outstanding | | |
Price | | |
Outstanding | | |
Price | | |
Outstanding | | |
Price | | |
|
Options outstanding at December 31, 2023 | |
| 2,584,599 | | |
$ | 3.06 | | |
| (2,498,446 | ) | |
$ | 88.66 | | |
| 86,153 | | |
$ | 91.72 | | |
|
Options granted | |
| 1,322,231 | | |
$ | 1.93 | | |
| (1,278,157 | ) | |
$ | 56.07 | | |
| 44,074 | | |
$ | 58.00 | | |
|
Options expired or forfeited or cancelled | |
| (312,628 | ) | |
$ | 1.93 | | |
| 302,208 | | |
$ | 55.99 | | |
| (10,420 | ) | |
$ | 57.92 | | |
|
Options outstanding at December 31, 2024 | |
| 3,594,202 | | |
$ | 2.74 | | |
| (3,474,395 | ) | |
$ | 79.51 | | |
| 119,807 | | |
$ | 82.25 | | |
|
Options vested and exercisable at December 31, 2024 | |
| 3,594,202 | | |
$ | 2.74 | | |
| (3,474,395 | ) | |
$ | 79.51 | | |
| 119,807 | | |
$ | 82.25 | | |
| F-7 | |
| CARDIO DIAGNOSTICS HOLDINGS, INC.Notes to Consolidated Financial StatementsYears Ended December 31, 2025 and 2024 | |
Warrant shares issuable upon exercise of a warrant
and the related exercise price per whole share of Common Stock were adjusted retroactively to give effect to the Reverse Stock Split for
the year ended December 31,2024:
|
Schedule of Warrants adjustment | |
| | |
| | |
| | |
| | |
| | |
| | |
|
| |
As
Previously Reported | | |
Impact
of Reverse Stock Split | | |
As
Revised | | |
|
| |
Warrant
shares | | |
Weighted Average
Exercise | | |
Warrant shares | | |
Weighted Average
Exercise | | |
Warrant shares | | |
Weighted Average
Exercise | | |
|
| |
Outstanding | | |
Price | | |
Outstanding | | |
Price | | |
Outstanding | | |
Price | | |
|
Warrants outstanding at December 31, 2023 | |
| 7,854,620 | | |
$ | 9.70 | | |
| (7,592,799 | ) | |
$ | 281.35 | | |
| 261,821 | | |
$ | 291.05 | | |
|
Warrants granted | |
| 674,146 | | |
$ | 1.78 | | |
| (651,675 | ) | |
$ | 51.62 | | |
| 22,471 | | |
$ | 53.40 | | |
|
Warrants outstanding at December 31, 2024 | |
| 8,528,766 | | |
$ | 9.08 | | |
| (8,244,474 | ) | |
$ | 263.18 | | |
| 284,292 | | |
$ | 272.26 | | |
****
**Note 2 Summary of Significant Accounting
Policies**
**Principles of Consolidation**
The consolidated financial statements include
the accounts of the Company and its wholly-owned subsidiary, Legacy Cardio.All intercompany accounts and transactions have been
eliminated.
****
**Use of Estimates in the Preparation of Financial
Statements**
The preparation of financial statements
in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements
and the reported amounts of revenues and expenses during the period. Actual results could differ from those estimates.
**Segments**
****
The Company uses the management approach
in determining reportable operating segments. The management approach considers the internal organization and reporting used by the Companys
chief operating decision maker (CODM), who is our chief executive officer, for making operating decisions and assessing
performance as the source for determining the Companys reportable segments. Management, including the CODM, reviews operating results
solely by monthly revenue and operating results of the Company and, as such, the Company has determined that the Company has one operating
segment (product testing) as defined by ASC Topic 280 Segment Reporting.
One hundred percent of the Companys revenues
are generated from product tests for major types of cardiovascular disease, and therefore the Company has one operating segment for financial
reporting purposes. The Companys principal products are its Epi+Gen CHD and PrecisionCHD tests. Epi+Gen CHD assesses the risk for
a coronary heart disease event, including a heart attack, in the next three years. PrecisionCHD aids in diagnosing and managing coronary
heart disease. The tests can be paid for by provider organizations, patients, and/or employers. Customers are generally charged for tests
utilized for the minimum committed test volume and the pricing can vary based on organization type, size and volume.
| F-8 | |
| CARDIO DIAGNOSTICS HOLDINGS, INC.Notes to Consolidated Financial StatementsYears Ended December 31, 2025 and 2024 | |
Reportable segment information is presented below:
|
Schedule of segment information | |
| | |
| | |
|
| |
December 31, 2025 | | |
December31, 2024 | | |
|
Current Segment assets | |
| | | |
| | | |
|
Cash | |
$ | 5,110,630 | | |
$ | 7,827,487 | | |
|
Accounts receivable | |
| 8,126 | | |
| 18,612 | | |
|
Prepaid expenses and other current assets | |
| 801,947 | | |
| 944,683 | | |
|
| |
| | | |
| | | |
|
Total current segment assets | |
| 5,920,703 | | |
| 8,790,782 | | |
|
| |
| | | |
| | | |
|
Long-term segment assets | |
| | | |
| | | |
|
Property and equipment, net | |
| 700,115 | | |
| 672,861 | | |
|
Right of use assets, net | |
| 259,565 | | |
| 432,397 | | |
|
Intangible assets, net | |
| | | |
| 5,333 | | |
|
Deposits | |
| 12,850 | | |
| 12,850 | | |
|
Patent costs, net | |
| 873,182 | | |
| 701,089 | | |
|
| |
| | | |
| | | |
|
Total segment assets | |
$ | 7,766,415 | | |
$ | 10,615,312 | | |
|
| |
| | | |
| | | |
The accounting policies of the product testing
segment are the same as those described in the summary of significant accounting policies. The measure of segment assets is reported
on the balance sheet as total consolidated assets.
Reportable segment operating results are presented
below:
|
| |
| | |
| | |
|
| |
Years
Ended December 31, | | |
|
| |
2025 | | |
2024 | | |
|
Revenue | |
| | | |
| | | |
|
Product Test sales | |
$ | 14,825 | | |
$ | 34,890 | | |
|
Total Segment Revenue | |
$ | 14,825 | | |
$ | 34,890 | | |
|
| |
| | | |
| | | |
|
Segment Operating Expenses | |
| | | |
| | | |
|
Payroll and related costs | |
$ | 1,366,808 | | |
$ | 3,213,917 | | |
|
Rent and facility expense | |
| 306,591 | | |
| 224,123 | | |
|
Legal and professional expense | |
| 868,826 | | |
| 731,209 | | |
|
Consulting and contractor expense | |
| 715,764 | | |
| 740,516 | | |
|
Insurance expense | |
| 618,998 | | |
| 714,481 | | |
|
Filing fees expense | |
| 99,115 | | |
| 102,514 | | |
|
Transfer agent expense | |
| 62,228 | | |
| 67,536 | | |
|
Software and web computing expense | |
| 316,339 | | |
| 274,515 | | |
|
Board compensation expense | |
| 198,235 | | |
| 199,658 | | |
|
Investor relations expense | |
| 10,133 | | |
| 82,345 | | |
|
Other segment items (a) | |
| 462,533 | | |
| 570,280 | | |
|
Research and development expense | |
| 641,212 | | |
| 227,966 | | |
|
Sales and marketing expense | |
| 766,888 | | |
| 1,231,969 | | |
|
Amortization expense | |
| 65,233 | | |
| 19,738 | | |
|
Interest expense, net | |
| 14,089 | | |
| 17,576 | | |
|
Total Segment Operating Expenses | |
| 6,512,992 | | |
| 8,418,343 | | |
|
Total Segment Net Income (Loss) | |
$ | (6,498,167 | ) | |
$ | (8,383,453 | ) | |
|
(a) | Other segment items included in segment net income (loss) include shipping
expense, taxes expense, subscription fees expense, bank fees expense and other overhead expense. | |
****
| F-9 | |
| CARDIO DIAGNOSTICS HOLDINGS, INC.Notes to Consolidated Financial StatementsYears Ended December 31, 2025 and 2024 | |
****
**Fair Value Measurements**
The Company adopted the provisions of ASC Topic
820, *Fair Value Measurements and Disclosures,*which defines fair value as used in numerous accounting pronouncements, establishes
a framework for measuring fair value and expands disclosure of fair value measurements.
The estimated fair value of certain
financial instruments, including cash and cash equivalents, accounts receivable, accounts payable and accrued expenses are carried
at historical cost basis, which approximates their fair values because of the short-term nature of these instruments. The carrying
amounts of our short- and long-term credit obligations approximate fair value because the effective yields on these obligations,
which include contractual interest rates taken together with other features such as concurrent issuances of warrants and/or embedded
conversion options, are comparable to rates of returns for instruments of similar credit risk.
ASC 820 defines fair value as the exchange price
that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the
asset or liability in an orderly transaction between market participants on the measurement date. ASC 820 also establishes a fair value
hierarchy, which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring
fair value. ASC 820 describes three levels of inputs that may be used to measure fair value:
Level 1 quoted prices
in active markets for identical assets or liabilities
Level 2 quoted prices
for similar assets and liabilities in active markets or inputs that are observable
Level 3 inputs that
are unobservable (for example cash flow modeling inputs based on assumptions)
Determining which category an asset or liability
falls within the hierarchy requires significant judgment. The Company evaluates its hierarchy disclosures each quarter. There are no financial
instruments measured at fair value on a recurring basis.
****
**Revenue Recognition**
The Company offers its products, Epi+Gen CHD and
PrecisionCHD, via telemedicine providers, provider organizations such as concierge practices, and longevity clinics, and employer organizations.
The Company is continuing to expand its markets and payment optionality, and therefore, other organization types not listed below may
be added, and from time-to-time, there may be additional payment options.
|
|
|
Telemedicine | |
For telemedicine, the telemedicine provider collects
payments from patients upon completion of eligibility screening and test order. Patients then send their samples to the lab for biomarker
assessments. The Company performs all quality control, analytical assessments and report generation and shares test reports with the ordering
healthcare provider. Revenue is recognized upon completing the testing of patient samples. Telemedicine providers are invoiced at the
end of each month for all tests completed or orders received since prior invoicing.
| F-10 | |
| CARDIO DIAGNOSTICS HOLDINGS, INC.Notes to Consolidated Financial StatementsYears Ended December 31, 2025 and 2024 | |
|
|
|
Provider organizations | |
For provider organizations, the cost of each
test is negotiated prior to testing commencing. Pricing is determined based largely on the provider organization type and testing
volume commitment. Upon ordering a test, a patients sample is sent to the lab for biomarker assessments. The Company performs
all quality control, analytical assessments and report generation and shares test reports with the ordering healthcare provider.
Revenue is recognized upon completing the testing of patient samples. The provider organization is invoiced the agreed upon pricing
at the end of each month for all samples accepted or tests completed since prior invoicing. Patients are also able to pay directly
for the test electronically.
|
|
|
Employer organizations | |
For employer organizations, the cost of each
test is negotiated prior to testing commencing. Pricing is determined based largely on testing volume commitment. Patient samples
are sent to the lab for biomarker assessments. The Company performs all quality control, analytical assessments and report
generation and shares test reports with the ordering healthcare provider. Revenue is recognized upon completing testing of patient
samples. The employer organization is invoiced the agreed upon pricing once a heart disease fair is completed or sample is received
and accepted or all testing is completed.
The Company accounts for revenue under Accounting
Standards Update (ASU) 2014-09, Revenue from Contracts with Customers (Topic 606). The Company determines
the measurement of revenue and the timing of revenue recognition utilizing the following core principles:
1. Identifying the contract with a customer;
2. Identifying the performance obligations in
the contract;
3. Determining the transaction price;
4. Allocating the transaction price to the performance
obligations in the contract; and
5. Recognizing revenue when (or as) the Company
satisfies its performance obligations.
**Research and Development**
Research and development costs are expensed as
incurred. Research and development costs charged to operations for the years ended December 31, 2025 and 2024 were $641,212 and $227,966,
respectively.
****
**Advertising Costs**
The Company expenses advertising costs as incurred.
Advertising costs of $105,121 and $182,446 were charged to operations for the years ended December 31, 2025 and 2024, respectively.
**Cash and Cash Equivalents**
Cash and cash equivalents are comprised of cash
and highly liquid investments with original maturities of 90 days or less at the date of purchase. The Company does not have any cash
equivalents as of December 31, 2025 and 2024. Cash is maintained at a major financial institution. Accounts held at U.S. financial institutions
are insured by the FDIC up to $250,000. The Company is exposed to credit risk in the event of default by the financial institutions or
the issuers of these investments to the extent the amounts on deposit or invested are in excess of amounts that are insured. The Companys
accounts at this major financial institution may, at times, exceed the federally insured limits. The amount in excess of the FDIC insurance
as of December 31, 2025 and 2024, was approximately $4.8 million and $7.5 million, respectively. The Company has not experienced any losses
on these accounts and management believes, based upon the quality of this major financial institution, that the credit risk with regard
to these deposits is not significant.
**Accounts Receivable**
Accounts receivable is stated at invoiced
amount, net of an allowance for doubtful accounts and bear no interest. An allowance for credit losses is established through a
provision for losses charged to expenses. Receivables are charged against the allowance for losses when management believes
collectability is unlikely. The allowance (if any) is an amount that management believes will be adequate to absorb estimated losses
on existing receivables, based on evaluation of the collectability of the accounts and prior loss experience.
| F-11 | |
| CARDIO DIAGNOSTICS HOLDINGS, INC.Notes to Consolidated Financial StatementsYears Ended December 31, 2025 and 2024 | |
**Property and Equipment and Depreciation**
Property and equipment are stated at cost. Maintenance
and repairs are charged to expense when incurred. When property and equipment are retired or otherwise disposed of, the related cost
and accumulated depreciation are removed from the respective accounts and any gain or loss is credited or charged to income. Depreciation
is computed using the straight line method over the estimated
lives of the respective assets as follows:
|
Schedule of estimated lives |
|
| |
|
|
Office and computer equipment |
5 years | |
|
|
Furniture and fixtures |
7 years | |
|
|
Lab equipment |
7 years | |
|
|
Leasehold improvements |
7 years | |
**Intangible Assets**
Intangible assets are acquired individually or
as part of a group of assets, and are initially recorded at cost. The cost of a group of assets acquired in a transaction is allocated
to the individual assets based on their relative fair values. Intangible assets are carried at cost less accumulated amortization and
any recorded impairment. Intangible assets with finite useful lives are amortized using a straight-line method over the period of estimated
useful life. The estimated useful life of the Companys intangible assets (Know-how license) is 5 years. The Company
evaluates intangible assets for impairment whenever events or changes in circumstances indicate that the assets might be impaired.
**Patent Costs**
The Company accounts for patents in accordance
with ASC 350-30, *General Intangibles Other than Goodwill*. The Company capitalizes patent costs representing legal fees associated
with filing patent applications and amortize them on a straight-line basis. The Company evaluates its patents estimated useful
life and begins amortizing the patents when they are brought to the market or otherwise commercialized.
**Impairment of Long-Lived Assets**
In accordance with ASC 360-10-35, the Company
assesses the valuation of components of its long-lived assets whenever events or circumstances dictate that the carrying value might not
be recoverable. The Company bases its evaluation on indicators such as the nature of the assets, the future economic benefit of the assets,
any historical or future profitability measurements and other external market conditions or factors that may be present. If such factors
indicate that the carrying amount of an asset or asset group may not be recoverable, the Company determines whether an impairment has
occurred by analyzing an estimate of undiscounted future cash flows at the lowest level for which identifiable cash flows exist. If the
estimate of undiscounted cash flows during the estimated useful life of the asset is less than the carrying value of the asset, the Company
recognizes a loss for the difference between the carrying value of the asset and its estimated fair value, generally measured by the present
value of the estimated cash flows.
**Leases**
The Company accounts for leases under ASC*842,
Leases.*The Company determines if an arrangement is a lease or contains a lease at inception of the arrangement.
Operating lease liabilities are recognized based on the present value of the remaining lease payments, discounted using the discount rate
for the lease at the commencement date. As the rate implicit in the lease is not readily determinable for the operating lease, the Company
generally uses an incremental borrowing rate based on information available at the commencement date to determine the present value of
future lease payments. Operating lease right-of-use assets (ROU assets) represent the Companys right to control the
use of an identified asset for the lease term and lease liabilities represent the Companys obligation to make lease payments arising
from the lease. ROU assets are generally recognized based on the amount of the initial measurement of the lease liability. Lease expense
is recognized on a straight-line basis over the lease term. The Company elected to keep leases with an initial term of 12 months or less
off the balance sheet.
ROU assets are reviewed for impairment when indicators
of impairment are present. ROU assets from operating and finance leases are subject to the impairment guidance in ASC 360, Property, Plant,
and Equipment, as ROU assets are long-lived nonfinancial assets. ROU assets are tested for impairment individually or as part of an asset
group if the cash flows related to the ROU assets are not independent from the cash flows of other assets and liabilities. An asset group
is the unit of accounting for long-lived assets to be held and used, which represents the lowest level for which identifiable cash flows
are largely independent of the cash flows of other groups of assets and liabilities.
| F-12 | |
| CARDIO DIAGNOSTICS HOLDINGS, INC.Notes to Consolidated Financial StatementsYears Ended December 31, 2025 and 2024 | |
**Stock-Based Compensation**
****
The Company accounts for its stock-based awards
granted under its employee compensation plan in accordance with ASC Topic No. 718-20, *Awards Classified as Equity,* which requires
the measurement of compensation expense for all share-based compensation granted to employees and non-employee directors at fair value
on the date of grant and recognition of compensation expense over the related service period for awards expected to vest.The Company
uses the Black-Scholes option pricing model to estimate the fair value of its stock options and warrants. The Black-Scholes option pricing
model requires the input of highly subjective assumptions including the expected stock price volatility of the Companys common
stock, the risk free interest rate at the date of grant, the expected vesting term of the grant, expected dividends, and an assumption
related to forfeitures of such grants.Changes in these subjective input assumptions can materially affect the fair value estimate
of the Companys stock options and warrants.
****
**Income Taxes**
The Company accounts for income taxes using the
asset and liability method in accordance with ASC Topic No. 740, *Income Taxes*. Under this method, deferred tax assets and liabilities
are determined based on differences between financial reporting and tax bases of assets and liabilities and are measured using the enacted
tax rates and laws that are expected to be in effect when the differences are expected to reverse.
The Company applies the provisions of ASC Topic
No. 740 for the financial statement recognition, measurement and disclosure of uncertain tax positions recognized in the Companys
financial statements*.* In accordance with this provision, tax positions must meet a more-likely-than-not recognition threshold and
measurement attribute for the financial statement recognition and measurement of a tax position.
**Reclassification**
Certain prior period amounts have been reclassified
to conform with the current period presentation. On the consolidated statements of changes in stockholders equity and cash flows,
payment of placement agent fee has been combined with common stock and warrants issued for cash rather than being separated out, to present
net proceeds. On the consolidated statements of operations, prior period amounts of sales and marketing, research and development,
and general and administrative under operating expenses have been reclassified to conform with 2025 fiscal year presentation for better
reflecting the function of these expenses.
**Recent Accounting Pronouncements**
*Recently adopted accounting pronouncements*
Income Taxes
In December 2023, the FASB issued ASU No. 2023-09,
Improvements to Income Tax Disclosures (ASU 2023-09). ASU 2023-09 is intended to improve income tax disclosures primarily
through enhanced disclosure of income tax rate reconciliation items, and disaggregation of income (loss) from continuing operations, income
tax expense (benefit) and income taxes paid, net disclosures by federal, state and foreign jurisdictions, among others. ASU 2023-09 was
effective for annual reporting periods beginning after December 15, 2024. We adopted this ASU on a prospective basis effective January 1,
2025. Refer to Note 10,*Income Taxes*for the inclusion of new disclosures required.
*Recently issued accounting pronouncements
not yet adopted*
**
Disaggregation of Income Statement Expenses
In November 2024, the FASB issued ASU No. 2024-03,
Income StatementReporting Comprehensive IncomeExpense Disaggregation Disclosures (Subtopic 220-40): Disaggregation
of Income Statement Expenses, which requires disaggregated disclosure of income statement expenses for public business entities.
ASU 2024-03 requires new financial statement disclosures in tabular format, disaggregating information about prescribed categories underlying
any relevant income statement expense caption. The prescribed categories include, among other things, purchases of inventory, employee
compensation, depreciation, and intangible asset amortization. Additionally, entities must disclose the total amount of selling expenses
and, in annual reporting periods, an entitys definition of selling expenses. ASU 2024-03 is effective for annual reporting periods
beginning after December 15, 2026, and for interim reporting periods within fiscal years beginning after December 15, 2027. The guidance
can be applied prospectively with an option for retrospective application. Early adoption is also permitted. We are currently evaluating
the provisions of this ASU.
Financial Instruments Measurement of
Credit Losses for Accounts Receivable and Contract Assets
In July 2025, the FASB issued ASU No. 2025-05,
Financial InstrumentsCredit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets. The amendments
in this update provide a practical expedient permitting an entity to assume that conditions at the balance sheet date remain unchanged
over the life of the asset when estimating expected credit losses for current classified accounts receivable and contract assets. This
update is effective for annual periods beginning after December 15, 2025, including interim periods within those fiscal years. Adoption
of this ASU can be applied prospectively for reporting periods after its effective date. Early adoption is permitted. The Company is currently
evaluating the impact that ASU 2025-05 will have on the consolidated financial statements.
We have reviewed other recent accounting pronouncements
and concluded they are either not applicable to the business, or no material effect is expected on the consolidated financial statements
as a result of future adoption.
****
****
****
| F-13 | |
| CARDIO DIAGNOSTICS HOLDINGS, INC.Notes to Consolidated Financial StatementsYears Ended December 31, 2025 and 2024 | |
****
**Note 3 Property and Equipment**
Property and equipment are carried at cost and
consist of the following at December 31, 2025 and 2024:
|
Schedule of property and equipment | |
| | |
| | |
|
| |
2025 | | |
2024 | | |
|
| |
| | |
| | |
|
Office and computer equipment | |
$ | 29,264 | | |
$ | 21,032 | | |
|
Furniture and fixtures | |
| 115,839 | | |
| 96,818 | | |
|
Lab equipment | |
| 330,487 | | |
| 170,423 | | |
|
Leasehold improvements | |
| 502,155 | | |
| 502,155 | | |
|
Less: Accumulated depreciation | |
| (277,630 | ) | |
| (117,567 | ) | |
|
Total | |
$ | 700,115 | | |
$ | 672,861 | | |
Leasehold improvements of $502,155 represent costs
of the buildout of the leased laboratory in Iowa City, Iowa that was completed in January 2024.
Depreciation expense of $160,063 and $113,777
was charged to operations for the years ended December 31, 2025 and 2024, respectively.
****
**Note 4 Intangible Assets**
The following table provides details associated
with the Companys acquired identifiable intangible assets at December 31, 2025 and 2024:
|
Schedule of intangible assets | |
| | |
| | |
|
| |
2025 | | |
2024 | | |
|
| |
| | |
| | |
|
Know-how license | |
$ | 80,000 | | |
$ | 80,000 | | |
|
Less: Accumulated amortization | |
| (80,000 | ) | |
| (74,667 | ) | |
|
Total | |
$ | | | |
$ | 5,333 | | |
Amortization expense charged to operations was
$5,333 and $16,000 for the years ended December 31, 2025 and 2024, respectively.
**Note 5 Patent Costs**
As of December 31, 2025, our patent
portfolio includes seven patent families. In the first family of patents and patent applications owned solely by UIRF and
exclusively licensed by Cardio, there are granted patents in the US (two), EU (subsequently validated in the United Kingdom, France,
Germany, Italy, Switzerland, Ireland and Hong Kong), China, Australia, India, and Japan and other pending patent applications. The
Company also has pending patent applications in patent families two, three, four, five, six and seven. Legal fees associated with the
patents totaled $873,182 and $701,089,
net of accumulated amortization of $66,820
and $6,920
as of December 31, 2025 and 2024, respectively and are presented in the consolidated balance sheets as patent costs. Patents are
amortized over their estimated useful lives of approximately 14
and 15
years, respectively. Amortization expense charged to operations was $59,900
and $3,738
for the years ended December 31, 2025 and 2024, respectively.
**Note 6 Operating Leases**
****
The Company determines if a contract is, or contains,
a lease at contract inception. Operating leases are included in operating lease right-of-use (ROU) assets, current portion
of operating lease liabilities and operating lease liabilities, net of current portion in the Companys consolidated balance sheets.
Finance leases are included in property and equipment, current portion of finance lease obligations and finance lease obligations, net
of current portion in the Companys consolidated balance sheets.
ROU assets represent the right to use an underlying
asset for the lease term and lease liabilities represent the obligation to make lease payments arising from the lease. ROU assets and
lease liabilities are recognized at the commencement date based on the present value of lease payments over the lease term. In addition,
ROU assets include initial direct costs incurred by the lessee as well as any lease payments made at or before the commencement date and
exclude lease incentives. The Company used the implicit rate in the lease in determining the present value of lease payments. Lease terms
include options to extend or terminatethe lease when it is reasonably certain that the Company will exercise that option. Leases
with a term of one year or less are generally not included in ROU assets and corresponding operating lease liabilities.
| F-14 | |
| CARDIO DIAGNOSTICS HOLDINGS, INC.Notes to Consolidated Financial StatementsYears Ended December 31, 2025 and 2024 | |
In 2023, the Company entered into a lease agreement
for office space in Chicago, Illinois, commencing on August 1, 2023 for a term of three years and four months and expiring on November
30, 2026. The monthly rent for August to November 2023 was abated and the Company started to make monthly rental installments from December
2023 of $12,847. The monthly rental payment increases by approximately 2% every August starting from 2024.
On July 20, 2023, the Company entered into another
lease agreement for laboratory in Iowa City, Iowa, commencing on August 1, 2023 for a term of five years and four months and expiring
on November 30, 2028. The monthly rent for August to November 2023 was abated and the Company agreed to pay a monthly rent of $8,505 ($102,060
annually) commencing December 1, 2023. In addition, the landlord agreed to provide the Company with a one-time Tenant Improvement Allowance
(TIA) in the amount of up to, but not exceeding $50 per rentable square foot of the premises for a maximum allowance of
$253,000.
Pursuant to ASC Topic 842 Leases, the Company
accounted for both leases as operating leases and accounted for the TIA as a lease incentive. The Company received the TIA from the landlord
in the maximum amount of $253,000 on January 16, 2024.
During the year ended December 31, 2023, the Company
recorded ROU assets of $663,875 and operating lease liabilities of $642,523 at the lease commencement date. The discount rate used to
determine the present value is the incremental borrowing rate, estimated to be 4.57% for Chicago lease and 4.24% for Iowa City lease,
respectively, as the interest rate implicit in our lease is not readily determinable.
As of December 31, 2025 and 2024, operating lease
ROU assets and operating lease liabilities are recorded on the consolidated balance sheets as follows:
|
Schedule of operating lease ROU assets and operating lease liabilities | |
| | |
| | |
|
| |
December 31,
2025 | | |
December 31,
2024 | | |
|
| |
| | |
| | |
|
Operating Leases: | |
| | | |
| | | |
|
Operating lease right-of-use assets, net | |
$ | 259,565 | | |
$ | 432,397 | | |
|
Current portion of operating lease liabilities | |
$ | 237,607 | | |
$ | 237,270 | | |
|
Operating lease liabilities, net of current portion | |
$ | 188,222 | | |
$ | 425,829 | | |
As of December 31, 2025, the weighted-average
remaining lease terms of the two operating leases were 0.9
years and 2.9
years, respectively. As of December 31, 2024, the weighted-average remaining lease terms of the two operating leases were1.9years
and3.9years, respectively.
The following table summarizes maturities of operating
lease liabilities based on lease terms as of December 31:
|
Schedule
of future minimum payments due | | |
| | |
|
| 2026 | | |
$ | 250,152 | | |
|
| 2027 | | |
| 102,060 | | |
|
| 2028 | | |
| 93,555 | | |
|
| Total lease payments | | |
| 445,767 | | |
|
| Less: Imputed interest | | |
| 19,938 | | |
|
| Present value of lease liabilities | | |
$ | 425,829 | | |
At December 31, 2025, the Company had the following
future minimum payments due under the non-cancelable lease:
|
| | |
| | |
|
| 2026 | | |
$ | 250,152 | | |
|
| 2027 | | |
| 102,060 | | |
|
| 2028 | | |
| 93,555 | | |
|
| Total minimum lease payments | | |
$ | 445,767 | | |
Consolidated rental expense for all operating
leases was $237,015 and $204,717 for the years ended December 31, 2025 and 2024, respectively.
| F-15 | |
| CARDIO DIAGNOSTICS HOLDINGS, INC.Notes to Consolidated Financial StatementsYears Ended December 31, 2025 and 2024 | |
The following table summarizes the cash paid and
related right-of-use operating lease recognized for the years ended December 31, 2025 and 2024.
|
Schedule of cash paid and related right-of-use operating lease | |
| | |
| | |
|
| |
Years
Ended December 31, | | |
|
| |
2025 | | |
2024 | | |
|
Cash paid for amounts included in the measurement of lease liabilities: | |
| | |
| | |
|
Operating cash flows from operating leases | |
$ | 260,612 | | |
$ | 257,508 | | |
|
Reduction of lease liabilities: | |
| | | |
| | | |
|
Operating leases | |
$ | 237,270 | | |
$ | 223,929 | | |
**Note 7 Finance Agreement Payable**
On October 25, 2023, the Company entered into
an agreement with a premium financing company to finance its Directors and Officers insurance premiums for 12-month policies effectiveOctober
25, 2023. The amount financed of$467,500was payable in 10 monthly installments plus interest at a rate of8.95%throughAugust
25, 2024. Accordingly, Directors and Officers insurance premiums of $550,000have been recorded in prepaid expenses and were amortized
over the life of the policy until October 25, 2024. As of October 31, 2024, this finance agreement was paid in full and insurance premiums
were fully amortized.
On October 25, 2024, the Company entered into
an agreement with a premium financing company to finance its Directors and Officers insurance premiums for 12-month policies effective
October 25, 2024. The amount financed of $383,455 was payable in 10 monthly installments plus interest at a rate of 8.80% through August
25, 2025. Accordingly, Directors and Officers insurance premiums of $451,124 have been recorded in prepaid expenses and were amortized
over the life of the policy until October 25, 2025. As of October 31, 2025, this finance agreement was paid in full
and insurance premiums were fully amortized.
On October 25, 2025, the Company entered into
an agreement with a premium financing company to finance its Directors and Officers insurance premiums for 12-month policies effective
October 25, 2025. The amount financed of $337,238 is payable in 10 monthly installments plus interest at a rate of 7.35% through August
25, 2026. Accordingly, Directors and Officers insurance premiums of $396,750 have been recorded in prepaid expenses and is being amortized
over the life of the policy until October 25, 2026.
Finance agreements payable
was $269,790 and $306,764 at December 31, 2025 and 2024, respectively. Unamortized balance of Directors and Officers insurance premiums
was $323,922 and $368,315 as of December 31, 2025 and 2024, respectively.
**Note 8 - Earnings (Loss) Per Common Share**
****
The Company calculates net income (loss) per common
share in accordance with ASC 260 *Earnings Per Share* (ASC 260). Basic and diluted net earnings (loss)
per common share was determined by dividing net earnings (loss) applicable to common stockholders by the weighted average number of Common
Shares outstanding during the period. The Companys potentially dilutive shares, which include shares of Common Stock presented
below on a post-reverse stock split basis that are exercisable or issuable from outstanding common stock options and common stock warrants
have not been included in the computation of diluted net loss per share for the years ended December 31, 2025 and 2024 as the result would
be anti-dilutive.
|
Schedule
of anti dilutive earning per share | |
| | |
| | |
|
| |
Years Ended
December 31, | | |
|
| |
2025 | | |
2024 | | |
|
| |
| | |
| | |
|
Stock warrants | |
| 284,292 | | |
| 284,292 | | |
|
Stock options | |
| 144,320 | | |
| 119,807 | | |
|
Total shares excluded from calculation | |
| 428,612 | | |
| 404,099 | | |
**Note 9 Stockholders Equity**
**2022 Equity Incentive Plan**
On October 25, 2022, the Companys stockholders approved the Cardio Diagnostics Holdings, Inc. 2022 Equity Incentive Plan
(the 2022 Plan). The purpose of the 2022 Plan is to promote the interests of the Company and its stockholders by providing
eligible employees, officers, directors and consultants with additional incentives to remain with the Company and its subsidiaries, to
increase their efforts to make the Company more successful, to reward such persons by providing an opportunity to acquire shares of Common
Stock on favorable terms and to attract and retain the best available personnel to participate in the ongoing business operations of the
Company. The 2022 Plan permits the grant of Incentive Stock Options, Nonstatutory Stock Options, Restricted Stock, Restricted Stock Units,
Stock Appreciation Rights, Performance Units and Performance Shares.
****
| F-16 | |
| CARDIO DIAGNOSTICS HOLDINGS, INC.Notes to Consolidated Financial StatementsYears Ended December 31, 2025 and 2024 | |
The 2022 Plan, as approved, permits the issuance
of up to 108,850 shares (3,265,516 prior to the Reverse Stock Split) of Common Stock (the Share Reserve) upon exercise or
conversion of grants and awards made from time to time to officers, directors, employees and consultants, provided, however that the Share
Reserve will increase on January 1st of each calendar year and ending on and including January 1, 2027 (each, an Evergreen Date),
in an amount equal to the lesser of (i) 7% of the total number of shares of Common Stock outstanding on the December 31st immediately
preceding the applicable Evergreen Date and (ii) such lesser number of shares of Common Stock as determined to be appropriate by the Compensation
Committee, which administers the 2022 Plan, in its sole discretion. In January 2024, the Compensation Committee approved an annual increase
in the Share Reserve of 35,349 shares (1,060,458 prior to the Reverse Stock Split). On March 31, 2025, the Compensation Committee approved
an increase in the Share Reserve of 95,721 shares (2,871,638 prior to the Reverse Stock Split).
As a result, the Company has the ability to initially issue an
aggregate of 239,920 shares (on a post-reverse stock split basis) of Common Stock under the 2022 Equity Incentive Plan, of which 144,320
options have been granted and are currently exercisable. In addition, after deduction of 14,972 shares (on a post-reverse stock split
basis) in settlement of RSUs issued to our independent directors and advisors in 2023 to 2025, a total of 80,628 shares were available
for issuance under the 2022 Equity Plan at December 31, 2025.
****
**Common Stock Issued**
*Private Placement*
On February 2, 2024 (pre-dating the 1-for-30
reverse stock split effected in May 2025), in accordance with executed subscription agreements with seven accredited investors (the
Subscription Agreements), the Company closed on the sale of 561,793
units (the Units), with each Unit consisting of (i) one share of the Companys common stock, $0.00001
par value (the Common Stock) and (ii) one six year Common Stock purchase warrant (the Warrants), which
warrants are exercisable until February 2, 2030 at an exercise price of $1.78 ($53.40 on a post-reverse stock split basis)
per share, subject to adjustment for stock splits, reverse stock splits and other similar events of recapitalization, including the
1-for-30 reverse stock split the Company effected on May 12, 2025. The Units were sold to the investors in a private placement at a
sale price of $1.78 ($53.40 on a post-reverse stock split basis) per Unit (the Private Placement), resulting in gross
proceeds to the Company of $1,000,000,
before deducting placement agent fees (10% or $100,000)
and other offering expenses. The Company used the net proceeds from the Private Placement for working capital and general corporate
purposes. On a post-reverse stock split basis, the Company issued 18,727
shares and warrants that are exercisable for 18,727
shares, all at an exercise price of $53.40
per share, during the year ended December 31, 2024.
In connection with the Private Placement, the
Company entered into a Placement Agent Agreement with Altitude Capital Group, LLC, as placement agent (Altitude Capital
or the Placement Agent). The Companys Non-Executive Chairman of the Board owns 10% of Altitude Capital. Pursuant
to the Placement Agent Agreement, at closing, Altitude Capital was paid a cash commission equal to 10% of the gross proceeds received
by the Company, plus 20% warrant coverage, providing Altitude Capital with the right to purchase 3,745 shares (112,353 prior to the Reverse
Stock Split) of Common Stock at $53.40 per share ($1.78 prior to the Reverse Stock Split) through February 2, 2030 (the Placement
Agent Warrants).
*At-the-Market Issuance*
In connection with an At-the-Market Issuance Sales
Agreement (the Sales Agreement) that the Company entered into with a placement agent on January 26, 2024, the Company sold
292,495 shares on the post-reverse stock split basis (which includes 206,713 shares that were sold prior to the Reverse Stock Split, originally
6,201,377 shares) of Common Stock at various amounts per share to investors for gross proceeds totaling $3,900,492 before deducting sales
commissions of $96,994 to the placement agent, during the year ended December 31, 2025.
In connection
with the Sales Agreement, the Company sold 825,268 common shares (24,758,057 prior to the Reverse Stock Split) at
various amounts per share to investors for gross proceeds totaling $11,546,949, before deducting sales commissions of $288,921 to placement
agent, during the year ended December 31, 2024. The Company also paid the placement agent a fee of $55,000.
*Other Common Stock Issuance*
During the year ended December 31, 2025, the Company
issued 2,061 shares (on a Reverse Stock Split-adjusted basis) of Common Stock to a consultant for services pursuant to vesting of Restricted
Stock Units granted, valued at $12,000.
During the year ended December 31, 2024, the
Company issued 1,619
shares (48,568
prior to the Reverse Stock Split) of Common Stock to 2 consultants for services pursuant to vesting of Restricted Stock Units
granted, valued at $26,000.
On March 31, 2024, the Company issued 1,174 shares
(35,212 prior to the Reverse Stock Split) of Common Stock to the board of directors for services pursuant to vesting of Restricted Stock
Units granted, valued at $50,000.
****
| F-17 | |
| CARDIO DIAGNOSTICS HOLDINGS, INC.Notes to Consolidated Financial StatementsYears Ended December 31, 2025 and 2024 | |
**Warrants**
During the years ended December 31, 2025 and 2024,
in connection with the Private Placement as described above, the Company issued warrants that are exercisable for an aggregate of 0 and
22,471 shares of Common Stock (674,146 prior to the Reverse Stock Split), respectively.
Warrant activity during the years ended December
31, 2025 and 2024 was as follows:
|
Schedule of Warrant activity | |
| | |
| | |
| | |
|
| |
Warrant shares Outstanding | | |
Weighted
Average ExercisePrice | | |
Weighted
Average Remaining Contractual Life (Years) | | |
|
Warrants outstanding at December 31, 2023 | |
| 261,821 | | |
$ | 291.05 | | |
| 3.72 | | |
|
Warrants granted | |
| 22,471 | | |
| 53.40 | | |
| | | |
|
Warrants outstanding at December 31, 2024 | |
| 284,292 | | |
| 272.26 | | |
| 2.91 | | |
|
No warrant activity | |
| | | |
| | | |
| | | |
|
Warrants outstanding at December 31, 2025 | |
| 284,292 | | |
$ | 272.26 | | |
| 1.91 | | |
****
**Options**
On January 23, 2024, the Company authorized an
additional 35,349 shares (1,060,458 prior to the Reverse Stock Split) to the Equity Incentive Plan Reserve (the 2022 Plan).
On March 31, 2025, the Company authorized an additional 95,721
shares (2,871,638 prior to the Reverse Stock Split) to the 2022 Plan.
On March 31, 2025, the Company granted 2,524
stock options (75,756 prior to the Reverse Stock Split) to the board of directors, which vested immediately on grant date. Each
option has an exercise price of $9.90
per share ($0.33 prior to the Reverse Stock Split) with an expiration date of March
31, 2035. These immediately vested stock options were valued at $24,612
at grant date based on the Black-Scholes Option Pricing model. The following assumptions were utilized in the Black-Scholes
valuation of these immediately vested stock options during the year ended December 31, 2025, risk free interest rate of 4.3908%,
volatility of 148%
and an exercise price of $9.90
($0.33 prior to the Reverse Stock Split).
On June 30, 2025, the Company granted 6,944 stock
options to the board of directors, which vested immediately on grant date. Each option has an exercise price of $3.60 per share with an
expiration date of June 30, 2035. These immediately vested stock options were valued at $24,778 at grant date based on the Black-Scholes
Option Pricing model. The following assumptions were utilized in the Black-Scholes valuation of these immediately vested stock options
during the year ended December 31, 2025, risk free interest rate of 4.39%, volatility of 161% and an exercise price of $3.60.
On September 30, 2025, the Company granted 6,236
stock options to the board of directors, which vested immediately on grant date. Each option has an exercise price of $4.01 per share
with an expiration date of September 30, 2035. These immediately vested stock options were valued at $24,762 at grant date based on the
Black-Scholes Option Pricing model. The following assumptions were utilized in the Black-Scholes valuation of these immediately vested
stock options during the year ended December 31, 2025, risk free interest rate of 4.42%, volatility of 159% and an exercise price of $4.01.
| F-18 | |
| CARDIO DIAGNOSTICS HOLDINGS, INC.Notes to Consolidated Financial StatementsYears Ended December 31, 2025 and 2024 | |
On December 31, 2025, the Company granted 9,224
stock options to the board of directors, which vested immediately on grant date. Each option has an exercise price of $2.71 per share
with an expiration date of December 31, 2035. These immediately vested stock options were valued at $24,083 at grant date based on the
Black-Scholes Option Pricing model. The following assumptions were utilized in the Black-Scholes valuation of these immediately vested
stock options during the year ended December 31, 2025, risk free interest rate of 4.41%, volatility of 126% and an exercise price of $2.71.
On January 23, 2024, the Company granted 39,594
options (1,187,826 prior to the Reverse Stock Split) to management and employees, 38,894
(1,166,826 prior to the Reverse Stock Split) of which vested immediately with the remaining 700 options (21,000 prior to the Reverse
Stock Split) subject to 50% vesting on June 30, 2024 and 100% vesting on December 31, 2024. Each option has an exercise price of
$63.30 per share ($2.11 prior to the Reverse Stock Split) with an expiration date of January
23, 2034. The immediately vested 38,894
stock options (1,166,826 prior to the Reverse Stock Split) were valued at $2,461,404
at grant date based on the Black-Scholes Option Pricing model. The following assumptions were utilized in the Black-Scholes
valuation of these immediately vested stock options during the fiscal year ended December 31, 2025, risk free interest rate of 5.22%,
volatility of 228%
and an exercise price of $63.30
($2.11 prior to the Reverse Stock Split). For the remaining 700 options (21,000 prior to the Reverse Stock Split), 250 options
(7,500 prior to the Reverse Stock Split) were vested on June 30, 2024, 167 options (5,000 prior to the Reverse Stock Split) were
vested on December 31, 2024 and 283 options (8,500 prior to the Reverse Stock Split) were forfeited before vesting with the leaving
of the employees before December 31, 2024. The vested stock options were valued at $4,106 at
vesting date based on the Black-Scholes Option Pricing model. The following assumptions were utilized in the Black-Scholes valuation
of these vested stock options during the year ended December 31, 2024, risk free interest rate of 4.40%,
volatility of 188%
and an exercise price of $63.30
($2.11 prior to the Reverse Stock Split).
On June 30, 2024, the Company granted1,012stock
options (30,300 prior to the Reverse Stock Split) to the board of directors, which vestedimmediately on grant date.Each option
has an exercise price of$16.50per share ($0.55 prior to the Reverse Stock Split) with an expiration date ofJune 30,
2034. These immediately vested stock options were valued at $16,625at grant date based on the Black-Scholes Option Pricing model.
The following assumptions were utilized in the Black-Scholes valuation of these immediately vested stock options during the year ended
December 31, 2024, risk free interest rate of4.40%, volatility of188%and an exercise price of $16.50 ($0.55 prior to
the Reverse Stock Split).
On September 30, 2024, the Company granted2,492stock
options (74,744 prior to the Reverse Stock Split) to the board of directors, which vestedimmediately on grant date.Each option
has an exercise price of$6.60per share ($0.22 prior to the Reverse Stock Split) with an expiration date ofSeptember
30, 2034. These immediately vested stock options were valued at $16,618at grant date based on the Black-Scholes Option Pricing model.
The following assumptions were utilized in the Black-Scholes valuation of these immediately vested stock options during the year ended
December 31, 2024, risk free interest rate of3.79%, volatility of184%and an exercise price of $6.60 ($0.22 prior to
the Reverse Stock Split).
On November 14, 2024, the Company granted 524
stock options (15,728 prior to the Reverse Stock Split) to two independent directors of the board, which vested immediately on grant date.
Each option has an exercise price of $8.10 per share ($0.27 prior to the Reverse Stock Split) with an expiration date of November 14,
2034. These immediately vested stock options were valued at $4,125 at grant date based on the Black-Scholes Option Pricing model. The
following assumptions were utilized in the Black-Scholes valuation of these immediately vested stock options during the year ended December
31, 2024, risk free interest rate of 4.44%, volatility of 156% and an exercise price of $8.10 ($0.27 prior to the Reverse Stock Split).
The two independent directors did not stand for re-election at the 2024 Annual Meeting but did receive the options upon vesting.
On December 31, 2024, the Company granted 454
stock options (13,632 prior to the Reverse Stock Split) to the board of directors, which vested immediately on grant date. Each option
has an exercise price of $27.60 per share ($0.92 prior to the Reverse Stock Split) with an expiration date of December 31, 2034. These
immediately vested stock options were valued at $12,289 at grant date based on the Black-Scholes Option Pricing model. The following assumptions
were utilized in the Black-Scholes valuation of these immediately vested stock options during the year ended December 31, 2024, risk free
interest rate of 4.58%, volatility of 146% and an exercise price of $27.60 ($0.92 prior to the Reverse Stock Split).
Option activity during the years ended December
31, 2025 and 2024 was as follows:
|
Schedule of option activity | |
| | |
| | |
| | |
|
| |
Options Outstanding | | |
Weighted
Average ExercisePrice | | |
Weighted
Average Remaining Contractual Life (Years) | | |
|
Options outstanding at December 31, 2023 | |
| 86,153 | | |
$ | 91.72 | | |
| 8.71 | | |
|
Options granted | |
| 44,074 | | |
| 58.00 | | |
| | | |
|
Options expired or cancelled or forfeited | |
| (10,420 | ) | |
| 57.92 | | |
| | | |
|
Options outstanding at December 31, 2024 | |
| 119,807 | | |
| 82.25 | | |
| 8.12 | | |
|
Options granted | |
| 24,928 | | |
| 4.01 | | |
| | | |
|
Options expired or cancelled or forfeited | |
| (415 | ) | |
| 63.30 | | |
| | | |
|
Options outstanding at December 31, 2025 | |
| 144,320 | | |
$ | 68.79 | | |
| 7.58 | | |
|
Options vested and exercisable at December 31, 2025 | |
| 144,320 | | |
$ | 68.79 | | |
| | | |
****
**Note 10 - Income Taxes**
Upon adoption of ASU 2023-09, Improvements to
Income Tax Disclosures, as described in Note 2,*Summary of Significant Accounting Policies*, our loss before provision for
income taxes for the year ended December31, 2025 was as follows:
|
Schedule of provision for
income tax | |
| | |
|
| |
Year
Ended December 31,
2025 | | |
|
Domestic | |
$ | (6,498,167 | ) | |
|
Foreign | |
| | | |
|
Loss before provision for income taxes | |
$ | (6,498,167 | ) | |
Loss before provision for income taxes for the
year ended December 31, 2024 was $8,383,453.
Upon adoption of ASU 2023-09, Improvements to
Income Tax Disclosures, as described in Note 2,*Summary of Significant Accounting Policies*, the reconciliation of taxes at
the federal statutory rate to our provision for income taxes for the year ended December31, 2025 was as follows:
|
Schedule of effective income tax rate reconciliation |
|
|
| |
| | |
|
|
|
|
Amount | |
Percent | | |
|
|
|
|
|
| |
| | |
|
|
Statutory
U.S. federal income tax rate |
|
$ |
(1,364,615 | ) |
| (21.0 | )% | |
|
|
State
income taxes, net of federal income tax benefit |
|
|
| |
| 0.0 | |
|
|
Tax
effect of expenses that are not deductible for income tax purposes: |
|
|
| |
| | | |
|
|
Stock
based compensation |
|
|
20,629 | |
| 0.3 | |
|
|
Change
in Valuation Allowance |
|
|
1,343,986 | |
| 20.7 | |
|
|
Provision for income taxes |
|
$ |
| |
| 0.0 | % | |
|
The reconciliation of taxes at the federal statutory rate to our
provision for income taxes for the year ended December31, 2024 in accordance with the guidance prior to the adoption of ASU 2023-09
was as follows:
|
| |
Year Ended
December 31, | | |
|
| |
2024 | | |
|
| |
|
| | |
|
Statutory
U.S. federal income tax rate | |
|
| (21.0 | )% | |
|
State
income taxes, net of federal income tax benefit | |
|
| (0.0 | )% | |
|
Tax
effect of expenses that are not deductible for income tax purposes: | |
|
| | | |
|
Stock
based compensation | |
|
| 6.3 | % | |
|
Change
in Valuation Allowance | |
|
| 14.7 | % | |
|
Effective
tax rate | |
|
| 0.0 | % | |
At December31, the significant components
of the deferred tax assets (liabilities) are summarized below:
|
Schedule of deferred income tax assets | |
| | |
| | |
|
| |
2025 | | |
2024 | | |
|
Deferred Tax Assets: | |
| | | |
| | | |
|
Net operating losses | |
$ | 6,681,394 | | |
$ | 5,580,034 | | |
|
Other | |
| 2,328 | | |
| 2,328 | | |
|
Property and equipment | |
| 81,991 | | |
| 25,169 | | |
|
Total deferred tax assets | |
| 6,765,713 | | |
| 5,607,531 | | |
|
| |
| | | |
| | | |
|
Deferred Tax Liabilities | |
| | | |
| | | |
|
| |
| | | |
| | | |
|
Valuation Allowance | |
| (6,765,713 | ) | |
| (5,607,531 | ) | |
|
| |
| | | |
| | | |
|
Net deferred tax assets | |
$ | | | |
$ | | | |
| F-19 | |
| CARDIO DIAGNOSTICS HOLDINGS, INC.Notes to Consolidated Financial StatementsYears Ended December 31, 2025 and 2024 | |
As of December 31, 2025, the Company had federal
net operating loss carryforwards of approximately $23.5 million which may be carried forward indefinitely, and state net operating loss
carryforwards of approximately $624,000 (Iowa) and $22.8 million (Illinois), respectively which expire at various dates from 2040
through 2045. These net operating loss carryforwards may be used to offset future taxable income and thereby reduce the Companys
U.S. federal income taxes. The net operating losses may be subject to limitation under Internal Revenue Code Section 382 should there
be a greater than 50% change in ownership as determined under the regulations.
In assessing the realization of deferred tax assets,
management considers whether it is more likely than not that some portion or all of the deferred tax assets will be realized. The ultimate
realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary
differences become deductible. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income
and tax planning strategies in making this assessment. Based on the assessment, management has established a full valuation allowance
against all of the deferred tax assets for every period because it is more likely than not that all of the deferred tax assets will not
be realized.
In accordance with ASC 740, a valuation allowance
must be established if it is more likely than not that the deferred tax assets will not be realized. This assessment is based upon consideration
of available positive and negative evidence, which includes, among other things, the Companys most recent results of operations
and expected future profitability. Based on the Companys cumulative losses in recent years, a full valuation allowance against
the Companys deferred tax assets as of December 31, 2025 and 2024 respectively has been established as Management believes that
the Company will not more likely than not realize the benefit of those deferred tax assets. Therefore, no tax provision has been recorded
for the years ended December 31, 2025 and 2024, respectively.
The Company complies with the provisions of ASC
740-10 in accounting for its uncertain tax positions. ASC 740-10 addresses the determination of whether tax benefits claimed or expected
to be claimed on a tax return should be recorded in the financial statements. Under ASC 740-10, the Company may recognize the tax benefit
from an uncertain tax position only if it is more likely that not that the tax position will be sustained on examination by the taxing
authorities, based on the technical merits of the position. Management has determined that the Company has no significant uncertain tax
positions requiring recognition under ASC 740-10.
The Company is subject to income tax in the U.S.,
and certain state jurisdictions. The Company has not been audited by the U.S. Internal Revenue Service, or any states in connection with
income taxes. The federal and state tax authorities
can generally reduce a net operating loss (but not create taxable income) for a period outside the statute of limitations in order to
determine the correct amount of net operating loss which may be allowed as a deduction against income for a period within the statute
of limitations.
The Company recognizes interest and penalties
related to unrecognized tax benefits, if incurred, as a component of income tax expense. No interest or penalties have been recorded for
the years ended December 31, 2025 and 2024, respectively.
**Note 11 Commitments and Contingencies**
**Prior Relationship of Cardio with Boustead
Securities, LLC**
At the commencement of efforts to pursue what
ultimately ended in a terminated business acquisition, Legacy Cardio entered into a Placement Agent and Advisory Services Agreement (the
Placement Agent Agreement), dated April 12, 2021, with Boustead Securities, LLC ("Boustead Securities). This
agreement was terminated in April 2022, when Legacy Cardio terminated the underlying agreement and plan of merger and the accompanying
escrow agreement relating to that proposed business acquisition after efforts to complete the transaction failed, despite several extensions
of the closing deadline.
| F-20 | |
| CARDIO DIAGNOSTICS HOLDINGS, INC.Notes to Consolidated Financial StatementsYears Ended December 31, 2025 and 2024 | |
Under the terminated Placement Agent Agreement,
Legacy Cardio agreed to certain future rights in favor of Boustead Securities, including (i) a two-year tail period during which Boustead
Securities would be entitled to compensation if Cardio were to close on a transaction (as defined in the Placement Agent Agreement) with
any party that was introduced to Legacy Cardio by Boustead Securities; and (ii) a right of first refusal to act as the Companys
exclusive placement agent for 24-months from the end of the term of the Placement Agent Agreement (the right of first refusal).
Cardio has taken the position that due to Boustead Securities failure to perform as contemplated by the Placement Agent Agreement,
these provisions purporting to provide future rights are null and void.
Boustead Securities responded to the termination
of the Placement Agent Agreement by disputing Legacy Cardios contention that it had not performed under the Placement Agent Agreement
because, among other things, Boustead Securities had never sought out prospective investors. In its response, Boustead Securities included
a list of funds that they had supposedly contacted on Legacy Cardios behalf. While Boustead Securities contention appears
to contradict earlier communications from Boustead Securities in which they indicated that they had not made any such contacts or introductions,
Boustead Securities contended that they were due success fees for two years following the termination of the Placement Agent Agreement
on any transaction with any person on the list of supposed contacts or introductions. Legacy Cardio strongly disputed this position. Notwithstanding
the foregoing, the Company has not consummated any transaction, as defined, with any potential party that purportedly was a contact of
Boustead Securities in connection with the Placement Agent Agreement and had no plans to do so at any time during the tail period. No
legal proceedings have been instigated by either party.
**The Benchmark Company, LLC Right of First
Refusal**
The Company completed the business combination
on October 25, 2022. In connection with the proposed business combination, by agreement dated May 13, 2022, Mana engaged The Benchmark
Company, LLC (Benchmark) as its M&A advisor. Upon closing of the business combination, Legacy Cardio assumed the contractual
engagement entered into by Mana. On November 14, 2022, the Company and Benchmark entered into Amendment No. 1 Engagement Letter (the Amendment
Engagement). Pursuant to the Amendment Engagement, the parties agreed that the Company would pay Benchmark $230,000 at the closing
of the business combination and an additional $435,000 on October 25, 2023. Both of those payments have been made in full. In addition,
the Amendment Engagement provided that Benchmark has been granted a right of first refusal to act as lead or joint-lead investment banker,
lead or joint-lead book- runner and/or lead or joint-lead placement agent for all future public and private equity and debt offerings
through October 25, 2023. Based on the right of first refusal, Benchmark alleges that it is owed damages because the Company entered into
the Yorkville Convertible Debenture Transaction without first offering Benchmark the right to serve as the lead or joint-lead placement
agent for the transaction. No legal proceedings have been instigated.
**Demand Letter and Potential Mootness Fee
Claim**
On June 25, 2022, a plaintiffs
securities law firm sent a demand letter to the Company alleging that the Companys Registration Statement on Form S-4 filed
(the S-4 Registration Statement) with the Securities and Exchange Commission (SEC) on May 31, 2022
omitted material information with respect to the Business Combination and demanding that the Company and its Board of Directors
immediately provide corrective disclosures in an amendment or supplement to the Registration Statement. Subsequent thereto, the
Company filed amendments to the S-4 Registration Statement on July 27, 2022, August 23, 2022, September 15, 2022, October 4, 2022
and October 5, 2022 in which it responded to various comments of the SEC staff and otherwise updated its disclosure. In October
2022, the SEC completed its review and declared the S-4 registration statement on effective October 6, 2022. On February 23, 2023
and February 27, 2023, plaintiffs securities law firm contacted the Companys counsel asking who will be negotiating a
mootness fee relating to the purported claims set forth in the June 25, 2022 demand letter. The Company vigorously denies that the
S-4 Registration Statement, as amended and declared effective, is deficient in any respect and that no additional supplemental
disclosures are material or required. The Company believes that the claims asserted in the Demand Letter are without merit and that
no further disclosure is required to supplement the S-4 Registration Statement under applicable laws. As of the date of filing of
this Annual Report on Form 10-K, no lawsuit has been filed against the Company by that firm.
**Northland Securities, Inc.**
In January 2024, following the Companys
termination of its agreement with Yorkville and in connection with the Companys at the market offering and/or its February
2024 private placement, a managing director of Northland Securities, Inc. (Northland) contacted the Company claiming the
right to be paid a fee of approximately $150,000 pursuant to the agreement of March 1, 2023 between the Company and Northland regarding
the Yorkville financing. Subsequently, the Company has been advised by another representative of Northland that Northland would not proceed
with any such claim and no legal proceedings have been instituted.
The Company cannot preclude the possibility that
claims or lawsuits brought relating to any alleged securities law violations or breaches of fiduciary duty could potentially require significant
time and resources to defend and/or settle and distract its management and board of directors from focusing on its business.
| F-21 | |
| CARDIO DIAGNOSTICS HOLDINGS, INC.Notes to Consolidated Financial StatementsYears Ended December 31, 2025 and 2024 | |
**Directors and Officers Insurance**
In connection with the Companys various
contractual obligations arising in the ordinary course of business, the Company is required to maintain insurance coverage for claims
against its directors and officers.
**The University of Iowa Research Foundation Exclusive License
Agreement**
The Company
has a worldwide exclusive license agreement with the University of Iowa Research Foundation (UIRF) relating to its patent and patent-pending
technology (the Exclusive License Agreement). Under the terms of the Exclusive License Agreement, the Company will have
to pay each of: (1) 1% of either the: (i) aggregate consideration (and trailing consideration, if any) for a liquidation event; or (ii)
pre-money valuation for an initial public offering, (the Equity Rights) (2) 2% of annual net sales, and (3) 15% of non-royalty
fees paid to licensee if it enters into one or more sublicensing agreements. Upon the Closing of the Business Combination, the Company
issued 3,639 (109,170 prior to the Reverse Stock Split) Shares of Common Stock to UIRF in accordance with the Equity Rights under the
Exclusive License Agreement. The Company has had minimal sales of $68,631 to date and has paid 2% or approximately $1,300 in total royalty
fees to UIRF under the exclusive license.
**Note 12 Subsequent Events**
The Company evaluated its December 31, 2025 consolidated
financial statements for subsequent events through the date the consolidated financial statements were issued.
**Common Stock Issued**
Subsequent
to December 31, 2025 and through March 13, 2026, the Company sold 1,133,418
shares of Common Stock for gross proceeds totaling $3,788,174
under the At-the-Market Issuance Sales Agreement as of the date of this report.
F-22
| | |
| | |
**Item
9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure**
****
None.
**Item
9A. Controls and Procedures**
**Evaluation of Disclosure Controls and Procedures**
Under the supervision and with the participation
of our management, including our principal executive officer and principal financial and accounting officer, we conducted an evaluation
of the effectiveness of the design and operation ofour disclosure controls and procedures as of December 31, 2025, as such term
is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act. Based on this evaluation, our principal executive officer and principal
financial and accounting officer have concluded that during the period covered by this report, our disclosure controls and procedures
were not effective. As a result, we performed additional analysis as deemed necessary to ensure that our financial statements were prepared
in accordance with U.S. generally accepted accounting principles. Accordingly, management believes that the financial statements included
in this Form 10-K present fairly in all material respects our financial position, results of operations and cash flows for the period
presented.
Disclosure controls and procedures are designed
to ensure that information required to be disclosed by us in our Exchange Act reports is recorded, processed, summarized, and reported
within the time periods specified in the SECs rules and forms, and that such information is accumulated and communicated to our
management, including our principal executive officer and principal financial officer or persons performing similar functions, as appropriate
to allow timely decisions regarding required disclosure.
We do not expect that our disclosure controls and
procedures will prevent all errors and all instances of fraud. Disclosure controls and procedures, no matter how well conceived and operated,
can provide only reasonable, not absolute, assurance that the objectives of the disclosure controls and procedures are met. Further, the
design of disclosure controls and procedures must reflect the fact that there are resource constraints, and the benefits must be considered
relative to their costs. Because of the inherent limitations in all disclosure controls and procedures, no evaluation of disclosure controls
and procedures can provide absolute assurance that we have detected all our control deficiencies and instances of fraud, if any. The design
of disclosure controls and procedures also is based partly on certain assumptions about the likelihood of future events, and there can
be no assurance that any design will succeed in achieving its stated goals under all potential future conditions.
**Managements Report on Internal Controls
Over Financial Reporting**
Management identified the following material weakness
in our internal control over financial reporting: inadequate segregation of duties within the financial reporting process due to our limited
staff resources, which increases the risk of errors or unauthorized transactions. This weakness was identified in our assessment during
the fiscal year ended December 31, 2025.
*Inadequate Segregation of Duties.*This
material weakness did not result in a material misstatement of the Companys consolidated financial statements for the periods presented.
*Remediation Plans.* To address the
material weakness related to inadequate segregation of duties, we explored the following remediation measures during the year ended December 31, 2025:
|
|
|
Implementation of Approval Matrices: We are developing a formalized approval matrix requiring dual authorization for significant transactions, such as payments above a specified threshold or changes to the general ledger, to enhance oversight despite staffing constraints. | |
|
|
|
Automation of Key Processes: We are exploring and deploying accounting software with built-in controls to automate certain financial processes, reducing reliance on manual interventions and minimizing error risks. | |
These remediation efforts are in progress and have
not yet been fully implemented or tested for effectiveness as of December 31, 2025.
While we believe that these efforts will continue
to improve our internal control over financial reporting, our remediation efforts are ongoing and will require validation. The actions
that we are taking are subject to ongoing senior management review. We will not be able to conclude whether the steps we are taking will
fully remediate the remaining material weakness in our internal control over financial reporting until we have completed our remediation
efforts and subsequent evaluation of their effectiveness. We may also conclude that additional measures may be required to remediate the
material weakness in our internal control over financial reporting.
**Changes in Internal Control over Financial
Reporting**
There have been no changes in our internal control
over financial reporting during the period ended December 31, 2025 that have materially affected, or are reasonably likely to materially
affect, our internal control over financial reporting.
**Item
9B. Other Information**
During the Companys fourth quarter, no director
or officer adopted or terminated a Rule 10b5-1 trading arrangement or a non-Rule 10b5-1 trading arrangement.
**Item
9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections**
****
Not applicable.
| 68 | |
| | |
**PART III**
****
**Item
10. Directors, Executive Officers and Corporate Governance.**
****
The following table sets forth certain information,
including ages as of March 13, 2026, of our executive officers and members of the Board of Directors.
|
Name |
|
Age |
|
Position | |
|
Executive Officers |
|
|
|
| |
|
Meeshanthini (Meesha) V. Dogan, PhD |
|
37 |
|
Chief Executive Officer and Director | |
|
Robert (Rob) Philibert, MD PhD |
|
64 |
|
Chief Medical Officer and Director | |
|
Elisa Luqman, JD MBA |
|
61 |
|
Chief Financial Officer | |
|
Timur Dogan, PhD |
|
38 |
|
Chief Technology Officer | |
|
|
|
|
|
| |
|
Non-Employee Directors |
|
|
|
| |
|
Warren Hosseinion, MD |
|
54 |
|
Non-Executive Chairman | |
|
James Intrater |
|
62 |
|
Director | |
|
Peter K. Fung, MD |
|
69 |
|
Director | |
|
Wendy J. Betts |
|
53 |
|
Director | |
|
Paul Burton |
|
58 |
|
Director | |
****
**Biographical Information**
****
**Executive Officers**
The following is a brief biography of each of our
executive officers:
*Meeshanthini V. Dogan*has served as our Chief
Executive Officer and a director since inception. Together with Dr. Philibert, she is the Co-Founder of Legacy Cardio, with over 15 years
experience in bridging medicine, engineering and artificial intelligence towards building solutions to fulfill unmet clinical needs such
as in cardiovascular disease prevention and management. Coming from a family with a two-generation history of heart disease and having
worked for an extensive time interacting with those affected by heart disease, she understands the pain points and founded Legacy Cardio
to help prevent others from experiencing its devastating impacts. Dr. Dogan is a pioneer in artificial intelligence/machine learning-driven
integrated genetic-epigenetic approaches, which includes highly cited publications, and platform presentations at the American Heart Association
and American Society of Human Genetics. She co-invented the proprietary AI-driven Multi-Omics Engine of Cardio Diagnostics (six
granted patents and numerous pending patents). In 2017, Dr. Dogan founded Legacy Cardio to commercialize this technology through a series
of patent-pending clinical tests towards making heart disease prevention and early detection more accessible, personalized and precise.
Under her leadership, Legacy Cardio was awarded the prestigious One To Watch award in 2020 by Nature and Merck, the 2021 Clinical Diagnostics
Solution of the Year from Biotech Breakthrough and Fast Company's Next Big Things in Tech 2022, has worked its way to become a technology
leader in cardiovascular diagnostics, launched products, secured both dilutive and non-dilutive funding and key relationships with world
renowned healthcare organizations and key opinion leaders. Dr. Dogan holds a PhD degree in Biomedical Engineering and BSE/MS degrees in
Chemical Engineering from University of Iowa. She was named FLIK Woman Entrepreneur to Watch in 2021. We believe that, as a co-founder
of our Company and co-inventor of our Companys key technologies and products, as well as her leadership skills, Dr. Dogan is uniquely
positioned to bring unmatched experience and insights into the boardroom and to the daily operations of our Company.
*Robert Philibert*has served as our Chief
Medical Officer and as a director since inception. Together with Dr. Dogan, he is a co-founder of Legacy Cardio. Dr. Philibert graduated
from the University of Iowa Medical Scientist Training Program and completed a residency in Psychiatry at the University of Iowa. Between
1993 and 1998, he completed a Pharmacology Research Training Program (PRAT) Fellowship and a Staff Fellowship at the National
Institutes of Health while also serving in the United States Uniformed Public Health Service. In late 1998, he returned to the University
of Iowa where he now is a Professor of Psychiatry, with joint appointments in Neuroscience, Molecular Medicine and Biomedical Engineering.
He has published over 170 peer reviewed manuscripts and is the recipient of numerous NIH grant awards and both national and international
patents for his pioneering work in epigenetics. In particular, he is credited with discovering the epigenetic signatures for cigarette
and alcohol consumption. In 2009, he founded Behavioral Diagnostics, LLC, a leading provider of epigenetic testing services which has
introduced two epigenetic tests, Smoke Signature and Alcohol Signature to the commercial market. Simultaneously, he has licensed
related non-core technologies to manufacturing partners while developing an ecosystem of key complementary service providers in the clinical
diagnostics space. With his decades of medical scientific study and practice and extensive academic background, having co-founded our
Company and having pioneered critical aspects of our technology, Dr. Philibert brings to our board of directors invaluable background
and expertise.
| 69 | |
| | |
*Elisa Luqman*has served as our Chief Financial
Officer on a part time basis since March 2021. In March 2021, Legacy Cardio and Ms. Luqman entered into a consulting agreement under which
she was retained to provide services in connection with a potential merger transaction. Since April 2022, Ms. Luqman has also been serving
as Chief Legal Officer (SEC) for Nutex Health, Inc. (Nutex), a physician-led, technology-enabled healthcare services company.
She attained that position upon the closing of a merger transaction in which her employer, Clinigence Holdings, Inc. (Clinigence"),
was the surviving entity. She served as the Chief Financial Officer, Executive Vice President Finance and General Counsel of Clinigence
from October 2019 until the merger. She also served as a director of Clinigence from October 2019 to February 2021. At Clinigence, Ms.
Luqman was responsible for maintaining the corporations accounting records and statements, preparing its SEC filings and overseeing
compliance requirements. She was an integral member of the Clinigence team responsible for obtaining the companys NASDAQ listing
and completing the reverse merger with Nutex. At Nutex Ms. Luqman continues to be responsible for preparing its SEC filings and overseeing
compliance requirements. Ms. Luqman co-founded bigVault Storage Technologies, a cloud- based file hosting company acquired by Digi-Data
Corporation in February 2006. From March 2006 through February 2009, Ms. Luqman was employed as Chief Operating Officer of the Vault Services
Division of Digi-Data Corporation, and subsequently during her tenure with Digi-Data Corporation she became General Counsel for the entire
corporation. In that capacity she was responsible for acquisitions, mergers, patents, customer, supplier, and employee contracts, and
worked very closely with Digi-Datas outside counsel firms. In March 2009, Ms. Luqman joined iGambit Inc. (IGMB) as
Chief Financial Officer and General Counsel. Ms. Luqman oversaw and was responsible for IGMBs SEC filings, FINRA filings and public
company compliance requirements from its initial Form 10 filing with the SEC in 2010 through its reverse merger with Clinigence Holdings,
Inc. in October 2019. Ms. Luqman received a BA degree, a JD in Law, and an MBA Degree in Finance from Hofstra University. Ms. Luqman is
a member of the bar in New York and New Jersey and Florida in House Counsel Bar.
*Timur Dogan*has served as our Chief Technology
Officer since May 2022. He has been employed by Legacy Cardio since August 2019, after obtaining his Ph.D., and was serving as its Senior
Data Scientist until he was promoted to CTO. Dr. Dogan was instrumental in developing and advancing the proprietary AI-driven Multi-Omics
Engine that is at the core of Cardios cardiovascular solutions. Along with the founding team, he is the co-inventor of several
patent-pending technologies in cardiovascular disease and diabetes. He holds a joint B.S.E./M.S. and Ph.D. degrees in Mechanical Engineering
from the University of Iowa where he researched complex fluid flows. He developed machine learning models on high-performance computing
systems using a mixture of low and high-fidelity numerical simulations and experiments to draw insights from non-linear physics.
**Non-Employee Members of the Board of Directors**
****
The following is a brief biography of each of our
non-employee directors:
*Warren Hosseinion, MD* has served as the Companys
Non-Executive Chairman of the Board since the consummation of the Business Combination in October 2022. He was Legacy Cardios Non-Executive
Chairman of the Board from May 2022 and was on Legacy Cardios Board of Directors beginning in November 2020. In March 2021, Legacy
Cardio and Dr. Hosseinion entered into a consulting agreement under which he was retained to provide services in connection with a potential
merger transaction. He continues to provide consulting services to the Company under that contract. He is also currently the President
and a director of Nutex Health, Inc. (Nasdaq: NUTX), positions he has held since April 2022. Dr. Hosseinion also serves as Chairman of
the Board of Directors of Voyager Acquisition Corp (Nasdaq:VACH). He has served as the Chairman of Altitude Acquisition Corporation (NASDAQ:
ALTU) from September2022 to March2024. VACH and ALTU are each a Special Purpose Acquisition Corporation (SPAC). In 2001, Dr.
Hosseinion co-founded Astrana Health, Inc. (Nasdaq: ASTH) (formerly, Apollo Medical Holdings, Inc. (Nasdaq: AMEH)) and served as a member
of Astranas Board of Directors from July 2008 to March 2019. He served as Astranas Chief Executive Officer from July 2008
to December 2017 and its Co-Chief Executive Officer from December 2017 to March 2019. Dr. Hosseinion received his B.S. in Biology from
the University of San Francisco, his M.S. in Physiology and Biophysics from the Georgetown University Graduate School of Arts and Sciences,
his Medical Degree from the Georgetown University School of Medicine and completed his residency in internal medicine from the Los Angeles
County-University of Southern California Medical Center. Dr. Hosseinions experience as a physician, along with his background at
Astrana and Nutex, brings to our Board and our Company a depth of understanding of physician culture and the healthcare market, as well
as a strong knowledge of the public markets.**
**
*James Intrater*is the director who was designated
by Mana, and he began his term upon Closing of the Business Combination in October 2022*.*Mr. Intrater is a senior materials and
process engineer with over 35 years of professional experience. He has worked in both commercial product development and on Federal R&D
projects, including work for NASA, the U.S. Department of Defense, and the U.S. Department of Energy. Since June 2014, Mr. Intrater has
served as the president of IntraMont Technologies, a consumer health products development company. In addition, since May 2020, he has
also provided engineering consultancy services for Falcon AI, a private investment firm to evaluate potential portfolio investments. Mr.
Intrater has published numerous technical works and reports for various agencies of the federal government and in technical journals and
is listed as holder or co-holder of five patents, with another patent pending. Mr. Intrater received his Master of Science in Metallurgical
Engineering from the University of Tennessee and a Bachelor of Sciences in Ceramic Engineering from Rutgers University - College of Engineering.
Mr. Intrater was selected to serve as a member of our board of directors due to his significant experience developing healthcare-related
products as well as products in other industries.
| 70 | |
| | |
*Wendy J. Betts*has
served as a member of the Companys Board of Directors since November 15, 2024. Since June 2024, Ms. Betts has been serving
as the Information Security Officer at Rotary International, where she is managing the cybersecurity department, which includes cyber
defense, cyber operations and deployment of strategic technology. Prior to that, she was the Director of Cybersecurity Strategy at United
Airlines from October 2022 to September 2023, where she managed the strategic initiatives for the cybersecurity program. From July
2019 to October 2022, Ms. Betts served as Senior Risk Manager at Bank of America, where she oversaw the second line work for
cybersecurity defense including SOC, Malware, DDoS and Cloud. From March 2010 to July 2019, Ms. Betts was employed by Northern Trust,
most recently serving as Vulnerability Manager, where she developed the Secure SDLC program and rolled out DevSecOps methodology
throughout the application development environment. Ms. Betts is continually active in the technology industry, where she is currently
a member of Information Systems Security Association (ISSA), Women in Cybersecurity (WiCyS), and Chief, the
private network for senior women executives. Ms. Betts earned her BA in Operations Management Information Systems from Northern Illinois
University and an MBA with an emphasis in finance from the Keller Graduate School of Management. She is a Certified Information Systems
Security Professional (CISSP) and Certified Cloud Security Professional (CCSP). She also serves as a Director
for the Luminarts Culture Foundation, an organization dedicated to supporting young artists through its competitive programs that
offer financial awards, artistic opportunities and mentoring that bridge the gap between education and career. Ms. Betts was selected
to serve due to her background and experience in cybersecurity, finance, and corporate leadership, all of which are areas
of expertise we believe bring valuable insights to our boardroom including with respect to cybersecurity oversight requirements.
*Peter K. Fung, M.D.*has
served as a member of the Companys Board of Directors since November 15, 2024. Since 2004, Dr. Fung has served as the Director
of Cardiovascular Division of Beverly Hospital in Montebello, California. He is also the Director of Research and Education at Central
California Heart Institute in Fresno, California since 1992 and Director of Nuclear Cardiology at Central Cardiology
Medical Clinic in Bakersfield, California since 1991. Earlier in his professional career from 1990 to 1997, Dr. Fung served
as Clinical Faculty at University of California Los Angeles (UCLA). He received his B.Sc. in Psychobiology in 1979 from
University of Southern California, his MD in 1983 from Stanford University School of Medicine, and was an Internal Medicine resident between
1983 and 1986 and Cardiology Fellow between 1986 and 1989 at Cedars-Sinai Medical Center/UCLA. His board certifications include Diplomat
of the American Board of Internal Medicine, Diplomat Subspecialty Board of Cardiovascular Disease, Fellow of American College of Cardiology,
Fellow of American College of Angiology and Diplomat of Subspecialty Board of Interventional Cardiology. His extensive clinical expertise
includes more than 5,000 cases of coronary angiography, more than 2,000 cases of percutaneous transluminal coronary angioplasty,
more than 400 cases of Peripheral Angiography, more than 200 cases of Peripheral Angioplasty including balloon and TEC devices, more than
100 cases of Carotid Angiography, more than 100 cases of Peripheral Stent placement, more than 100 cases of Renal Artery Stent Placement,
Rotational Artherectomy, Coronary TEC, Pacemaker Implantation, Laser Artherectomy, Stent Placement, Brachytherapy, and Abdominal Aortic
Aneurysm Percutaneous Repair/& Grafting. Dr. Fung was selected to serve on our board of directors due to his extensive clinical experience
in cardiology.
*Paul F. Burton*has served as a member of
the Companys Board of Directors since December 2023. Since May 2021, Mr. Burton has served as the Managing Partner, of 2Flo Ventures,
a start-up studio and early-stage healthcare investor. Through 2Flo Ventures, he provides strategic and financial advice to healthcare
companies. In 2010, he founded and continues to serve as Managing Principal of Burton Advisory, Inc., which provides strategic and financial
advice to healthcare companies, drawing from over 20 years of experience in corporate finance and strategic advisory services. In connection
therewith, since December 2018, Mr. Burton has been the Chief Executive Officer of Akan Biosciences, a biotech start-up company developing
regenerative medicinal therapeutics. From 2019 he also has been serving as the Chief Financial Officer of Temprian Therapeutics. From
2019 through 2022 he served as the fractional CFO for both Cancer IQ and 4D Healthware. From 2019 through 2022, Mr. Burton was also an
Entrepreneur in Residence at Northwestern University, supporting students and faculty with healthcare-oriented commercialization projects.
Previously, he was the Chief Executive Officer of ResQ Pharma, Inc. In 2013 he co-founded Vivacelle Bio, Inc., where he served as Chief
Financial Officer and a member of its board of directors. Mr. Burton currently serves as a member of the Chicago Biomedical Consortiums
VC Advisory Committee, as a member of MATTER, a Chicago-based healthcare incubator, and the Bunker Labs, an incubator started in Chicago
for U.S. military veterans. He also is a member of the Board of Directors of Millennium Beacon, a healthcare incubator based on the southside
of Chicago, seeking to serve overlooked populations. Prior thereto, Mr. Burton worked as an investment banking associate at Salomon Brothers
(now Citigroup Corporate & Investment Bank). He also served as a United States Regular Army Commissioned Officer (Infantry). Mr. Burton
earned his JD and MBA from the University of Illinois at Urbana-Champaign and earned two Bachelors Degrees from the University
of Illinois at Chicago. He currently serves on the Board of Trustees of the Ravinia Festival, an internationally-renowned, not-for-profit
music festival. Mr. Burton was selected to serve due to his extensive experience in the working of numerous capacities with early-stage
healthcare companies as well as his corporate finance background, both of which are areas of expertise we believe bring invaluable insights
to our Board.
| 71 | |
| | |
**Family Relationships**
Other than Meeshanthini Dogan and Timur Dogan, who
are wife and husband, there are no family relationships among our executive officers and directors.
**Corporate Governance**
Cardio has structured its corporate governance in
a manner that we believe closely aligns its interests with those of its stockholders. Notable features of this corporate governance include:
|
|
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Cardio has independent director representation on its audit, compensation and nominating and corporate governance committees, and its independent directors will meet regularly in executive sessions without the presence of its corporate officers or non-independent directors; | |
|
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at least one of its directors has qualified as an audit committee financial expert as defined by the SEC; and | |
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it has and will implement a range of other corporate governance best practices, including a robust director education program. | |
**Leadership Structure of the Board**
The roles of our Non-Executive Chairman and our
Chief Executive Officer have been separated. We believe that this is appropriate under current circumstances because it allows management
to make the operating decisions necessary to manage the business, while separating out oversight function of the Board and operating decisions.
We feel that this has provided an appropriate balance of operational focus, flexibility and oversight. We do not separately have a lead
independent director. Currently, Dr. Hosseinion serves as Non-executive Chairman of the Board, participates in setting the agenda of Board
and committee meetings, facilitating communications among members of the Board and management, and maintaining the focus and punctuality
of Board and committee meetings. Dr Hosseinion also currently leads the efforts in evaluating our Chief Executive Officer and in succession
planning, considering Board committee membership and leadership. He will be presiding at this Annual Meeting.
**Background and Experience of Directors**
Our nominating and corporate governance committee
is responsible for, among other things, identifying individuals qualified to become members of our board of directors, consistent with
criteria approved by our board of directors, overseeing succession planning for our Chief Executive Officer and other executive officers,
periodically reviewing our board of directors leadership structure and recommending any proposed changes to our board of directors,
overseeing an annual evaluation of the effectiveness of our board of directors and its committees, and developing and recommending to
our Board of Directors a set of corporate governance guidelines.
**Composition of the Board of Directors and Company
Officers**
Cardios business and affairs are managed
under the direction of our board of directors.
Our board consists of seven directors. The board
of directors are elected each year at the annual meeting of stockholders.
Our officers are appointed by the board of directors
and serve at the discretion of the board of directors, rather than for specific terms of office, subject to the terms of employment agreements,
where applicable. The board of directors is authorized to appoint persons to the offices set forth in our bylaws as it deems appropriate.
The Companys bylaws provide that our officers may consist of a Chairman of the Board, Chief Executive Officer, Chief Financial
Officer, President, one or more Vice Presidents, Secretary, Treasurer, one or more Assistant Secretaries and such other offices as may
be determined by the board of directors.
**Director Independence**
The Nasdaq listing
standards require that a majority of our Board of Directors be independent. An independent director is defined generally
as a person who has no material relationship with the listed company (either directly or as a partner, stockholder or officer of an organization
that has a relationship with the company). Our independent directors hold regularly scheduled meetings at which only independent directors
are present. Any affiliated transactions must be on terms no less favorable to the Company than could be obtained from independent parties.
Our Board of Directors reviews and approves all affiliated transactions with any interested director abstaining from such review and
approval.
| 72 | |
| | |
Based on information provided by each director concerning his or her background, employment and affiliations, the Board has
determined that Paul Burton, James Intrater, Wendy Betts, and Peter Fung, MD, representing four of the Companys seven directors,
do not have a relationship that would interfere with the exercise of independent judgment in carrying out the responsibilities of a director
and that each of these directors is an independent director as defined under the listing standards of Nasdaq and applicable
SEC rules. In making these determinations, the Board considered the current and prior relationships that each non-employee director has
with the Company and all other facts and circumstances that the Board deemed relevant in determining their independence, including the
beneficial ownership of the Company capital stock by each non- employee director, and the transactions involving them. See Certain
Cardio Relationships and Related Persons Transactions.
**Board Committees**
The standing committees of the Cardio Board consist
of an audit committee, a compensation committee and a nominating and corporate governance committee. The board of directors may from time
to time establish other committees.
Cardios chief executive officer and other
executive officers regularly report to the non-executive directors and the audit, the compensation and the nominating and corporate governance
committees to ensure effective and efficient oversight of our activities and to assist in proper risk management and the ongoing evaluation
of management controls.
*Audit Committee*
**
Cardio has an audit committee consisting of Paul
Burton, James Intrater and Wendy Betts, with Mr. Burton serving as the chair of the committee. The Cardio Board has determined that each
member of the audit committee qualifies as an independent director under the independence requirements of the Sarbanes-Oxley Act, Rule
10A-3 under the Exchange Act and Nasdaq listing requirements. The Cardio Board has determined that Mr. Burton
qualifies as an audit committee financial expert, as defined in Item 407(d)(5) of Regulation S-K, and that he possesses
financial sophistication, as defined under the rules of Nasdaq. Mr. Burton was selected to serve on our Board and as the chair of our
audit committee due to his extensive experience working in numerous capacities with early-stage healthcare companies as well as his corporate
finance background, both of which are areas of expertise that bring invaluable insights to the Cardio boardroom.
The audit committees responsibilities include,
among other things:
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reviewing and discussing with management and the independent auditor the annual audited financial statements, and recommending to the Board whether the audited financial statements should be included in our Form 10-K; | |
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discussing with management and the independent auditor significant financial reporting issues and judgments made in connection with the preparation of our financial statements; | |
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discussing with management major risk assessment and risk management policies; | |
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monitoring the independence of the independent auditor; | |
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verifying the rotation of the lead (or coordinating) audit partner having primary responsibility for the audit and the audit partner responsible for reviewing the audit as required by law; | |
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reviewing and approving all related-party transactions; | |
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inquiring and discussing with management our compliance with applicable laws and regulations; | |
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pre-approving all audit services and permitted non-audit services to be performed by our independent auditor, including the fees and terms of the services to be performed; | |
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appointing or replacing the independent auditor; | |
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determining the compensation and oversight of the work of the independent auditor (including resolution of disagreements between management and the independent auditor regarding financial reporting) for the purpose of preparing or issuing an audit report or related work; | |
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reviewing and approving any annual or long-term incentive cash bonus or equity or other incentive plans in which our executive officers may participate; | |
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establishing procedures for the receipt, retention and treatment of complaints received by us regarding accounting, internal accounting controls or reports which raise material issues regarding our financial statements or accounting policies; and | |
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approving reimbursement of expenses incurred by our management team in identifying potential target businesses. | |
The board of directors
has adopted a written charter for the audit committee that is available on our website.
| 73 | |
| | |
*Compensation Committee*
Cardio has a compensation committee consisting of
James Intrater, Paul Burton and Peter Fung, MD with Mr. Intrater serving as chair of the committee. The Cardio Board has determined that
each member of the compensation committee qualifies as an independent director under the independence requirements of the Sarbanes-Oxley
Act, Rule 10A-3 under the Exchange Act and Nasdaq listing requirements.
The compensation committees responsibilities
include, among other things:
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establishing, reviewing, and approving our overall executive compensation philosophy and policies; | |
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reviewing and approving on an annual basis the corporate goals and objectives relevant to our Chief Executive Officers compensation, evaluating our Chief Executive Officers performance in light of such goals and objectives and determining and approving the remuneration (if any) of our Chief Executive Officer based on such evaluation; | |
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reviewing and approving the compensation of all of our other executive officers; | |
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approving reimbursement of expenses incurred by our management team in identifying potential target businesses. | |
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reviewing our executive compensation policies and plans; | |
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receiving and evaluating performance target goals for the senior officers and employees (other than executive officers) and reviewing periodic reports from the CEO as to the performance and compensation of such senior officers and employees; | |
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implementing and administering our incentive compensation equity-based remuneration plans; | |
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reviewing and approving any annual or long-term incentive cash bonus or equity or other incentive plans in which our executive officers may participate; | |
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reviewing and approving for our chief executive officer and other executive officers any employment agreements, severance arrangements, and change in control agreements or provisions; | |
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reviewing and discussing with Management the Compensation Discussion and Analysis set forth in Securities and Exchange Commission Regulation S-K, Item 402, if required, and, based on such review and discussion, determine whether to recommend to the Board that the Compensation Discussion and Analysis be included in our annual report or proxy statement the annual meeting of stockholders; | |
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assisting management in complying with our proxy statement and annual report disclosure requirements; | |
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approving all special perquisites, special cash payments and other special compensation and benefit arrangements for our executive officers and employees; | |
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if required, producing a report on executive compensation to be included in our annual proxy statement; | |
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reviewing and recommending to the Board for approval the frequency with which we will conduct Say-on-Pay Votes, taking into account the results of the most recent stockholder advisory vote on frequency of Say-on-Pay Votes required by Section 14A of the Exchange Act, and review and recommend to the Board for approval the proposals regarding the Say- on-Pay Vote and the frequency of the Say-on-Pay Vote to be included in our proxy statements filed with the SEC; | |
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conducting an annual performance evaluation of the committee; and | |
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reviewing, evaluating and recommending changes, if appropriate, to the remuneration for directors. | |
The board of directors
has adopted a written charter for the compensation committee that is available on our website.
*Compensation Committee Interlocks and Insider
Participation*
None of our executive officers serves as a member
of the compensation committee of the board of directors (or other committee performing equivalent functions) of any entity that has one
or more executive officers serving on our board of directors.
*Nominating and Corporate Governance Committee*
**
Cardio has a nominating and corporate governance
committee consisting of Wendy Burton, James Intrater, and Peter Fung, MD with Ms. Betts serving as chair of the committee. The Cardio
Board has determined that each member of the nominating and corporate governance committee qualifies as an independent director under
the independence requirements of the Sarbanes-Oxley Act, Rule 10A-3 under the Exchange Act and Nasdaq listing requirements.
| 74 | |
| | |
The nominating and corporate governance committees
responsibilities include, among other things, to:
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review and assess and make recommendations to the board of directors regarding desired qualifications, expertise and characteristics sought of board members; | |
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identify, evaluate, select or make recommendations to the board of directors regarding nominees for election to the board of directors; | |
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develop policies and procedures for considering stockholder nominees for election to the board of directors; | |
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review the Companys succession planning process for Companys chief executive officer, and assist in evaluating potential successors to the chief executive officer; | |
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review and make recommendations to the board of directors regarding the composition, organization and governance of the board and its committees; | |
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review and make recommendations to the board of directors regarding corporate governance guidelines and corporate governance framework; | |
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oversee director orientation for new directors and continuing education for directors; | |
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oversee the evaluation of the performance of the board of directors and its committees; | |
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review and monitor compliance with the Companys code of business conduct and ethics; and | |
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administer policies and procedures for communications with the non-management members of the Companys Board of Directors. | |
The board of directors has adopted a written charter
for the nominating and corporate governance committee that is available on our website.
*Guidelines for Selecting Director Nominees*
**
The guidelines for selecting nominees generally
provide that persons to be nominated:
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should have demonstrated notable or significant achievements in business, education or public service; | |
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should possess the requisite intelligence, education and experience to make a significant contribution to the Board of Directors and bring a range of skills, diverse perspectives and backgrounds to its deliberations; and | |
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should have the highest ethical standards, a strong sense of professionalism and intense dedication to serving the interests of the stockholders. | |
The nominating and
governance committee will consider a number of qualifications relating to management and leadership experience, background and integrity
and professionalism in evaluating a persons candidacy for membership on the Board of Directors. The nominating and governance
committee may require certain skills or attributes, such as financial or accounting experience, to meet specific board needs that arise
from time to time and will also consider the overall experience and makeup of its members to obtain a broad and diverse mix of board
members. The nominating and governance committee does not distinguish among nominees recommended by stockholders and other persons.
**Code of Ethics**
The Company has adopted a written code of business
conduct and ethics that applies to its principal executive officer, principal financial or accounting officer or person serving similar
functions and all of our other employees and members of our board of directors. The code of ethics codifies the business and ethical principles
that govern all aspects of our business. Cardio intends to make any legally required disclosures regarding amendments to, or waivers of,
provisions of our code of ethics on our website.
**Compensation Recovery (Clawback)
Policy**
Effective October 2, 2023, we adopted a compensation
recovery policy (the Clawback Policy), which provides that if we are required to prepare an accounting restatement due to
any material non-compliance with financial reporting requirements under the federal securities laws, then the Board or a duly established
committee thereof may require certain officers, including our executive officers named in the Summary Compensation Table presented later
in this proxy statement (our NEOs), to repay or forfeit any excess compensation in the event it finds, in
its sole discretion, that the executive officer contributed to the circumstances requiring the restatement and that it involved either
(a) intentional misconduct or an intentional violation of any of the Companys rules or applicable legal or regulatory requirements
or (b) fraud. Excess compensation refers to the pre-tax amount in excess of what would have been paid to the executive officer
under the accounting restatement of any incentive-based compensation that is granted, earned or vested based on the attainment of a performance
measure during the three-year period preceding the date on which we are required to prepare such accounting restatement. The Clawback
Policy applies to incentive-based compensation granted after the adoption of this policy.
| 75 | |
| | |
**Conflicts of Interest**
Potential investors should be aware of the following
potential conflicts of interests:
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None of our officers and directors is required to commit their full time to our affairs and, accordingly, they may have conflicts of interest in allocating their time among various business activities. | |
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In the course of their other business activities, our officers and directors may become aware of investment and business opportunities which may be appropriate for presentation to our company as well as the other entities with which they are affiliated. Our Management has pre-existing fiduciary duties and contractual obligations to such entities (as well as to us) and may have conflicts of interest in determining to which entity a particular business opportunity should be presented. | |
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Our officers and directors may in the future become affiliated with entities engaged in business activities similar to those intended to be conducted by our company. | |
The conflicts described above may not be resolved
in our favor.
All ongoing and future transactions between us and
any of our management team or their respective affiliates, will be on terms believed by us to be no less favorable to us than are available
from unaffiliated third parties. Such transactions will require prior approval by a majority of our uninterested "independent
directors or the members of our board of directors who do not have an interest in the transaction, in either case who had access, at our
expense, to our attorneys or independent legal counsel. We will not enter into any such transaction unless our disinterested "independent
directors determine that the terms of such transaction are no less favorable to us than those that would be available to us with respect
to such a transaction from unaffiliated third parties.
**Limitation on Liability and Indemnification
of Officers and Directors**
The Company intends to enter into indemnification
agreements with each of its directors and executive officers that may be broader than the specific indemnification provisions contained
in the DGCL. These indemnification agreements, which have been authorized for execution by the Cardio board of directors, requires the
Company, among other things, to indemnify its directors and executive officers against liabilities that may arise by reason of their status
or service. These indemnification agreements also require the Company to advance all expenses reasonably and actually incurred by its
directors and executive officers in investigating or defending any such action, suit or proceeding. Our By-laws provide that Cardio must
indemnify and advance expenses to Cardios directors and officers to the fullest extent authorized by the DGCL. We believe that
these agreements and By-laws provisions are necessary to attract and retain qualified individuals to serve as directors and executive
officers.
Cardio maintains insurance policies under which
its directors and officers are insured, within the limits and subject to the limitations of those policies, against certain expenses in
connection with the defense of, and certain liabilities which might be imposed as a result of, actions, suits, or proceedings to which
they are parties by reason of being or having been its directors or officers. The coverage provided by these policies may apply whether
or not the Company would have the power to indemnify such person against such liability under the provisions of the DGCL. At present,
we are not aware of any pending litigation or proceeding involving any person who will be one of the Companys directors or officers
or is or was one of its directors or officers, or is or was one of its directors or officers serving at its request as a director, officer,
employee or agent of another corporation, partnership, joint venture, trust or other enterprise, for which indemnification is sought,
and we are not aware of any threatened litigation that may result in claims for indemnification.
The DGCL authorizes corporations to limit or eliminate
the personal liability of directors of corporations and their stockholders for monetary damages for breaches of directors fiduciary
duties, subject to certain exceptions. Our Second Amended and Restated Certificate of Incorporation includes a provision that eliminates
the personal liability of directors for damages for any breach of fiduciary duty as a director where, in civil proceedings, the person
acted in good faith and in a manner that person reasonably believed to be in or not opposed to the best interests of our Company or, in
criminal proceedings, where the person had no reasonable cause to believe that his or her conduct was unlawful.
The limitation of liability, advancement and indemnification
provisions in our Second Amended and Restated Certificate of Incorporation and our By-laws may discourage stockholders from bringing lawsuit
against directors for breach of their fiduciary duty. These provisions also may have the effect of reducing the likelihood of derivative
litigation against directors and officers, even though such an action, if successful, might otherwise benefit Cardio and our stockholders.
In addition, investors may be adversely affected to the extent Cardio pays the costs of settlement and damage awards against directors
and officers pursuant to these indemnification provisions.
There is currently no pending material litigation
or proceeding involving any of Cardios directors, officers, or employees for which indemnification is sought.
| 76 | |
| | |
**Section 16(a) Beneficial Ownership Reporting
Compliance; Delinquent Section 16(a) Reports**
Section 16(a) of the Securities Exchange Act of
1934, as amended, or the Exchange Act, requires our executive officers, directors, and persons who beneficially own more than 10% of a
registered class of our equity securities to file with the Securities and Exchange Commission initial reports of ownership and reports
of changes in ownership of our shares of common stock and other equity securities. These executive officers, directors, and greater than
10% beneficial owners are required by SEC regulation to furnish us with copies of all Section 16(a) forms filed by such reporting persons.
Based solely on our review of such forms furnished
to us and written representations from certain reporting persons, we believe that, during the fiscal year ended December 31, 2025, our
directors, executive officers, and ten percent stockholders complied with all Section 16(a) filing requirements, except with respect to:
(i) an option grant of 151 shares on a post-Reverse Stock Split basis made on December 31, 2024 to Mr. Intrater, a Form 4 for which was
filed on January 15, 2025, (ii) an option grant of 151 shares on a post-Reverse Stock Split basis made on December 31, 2024 to Mr. Burton
a Form 4 for which was filed on January 15, 2025, (iii) an option grant of 76 shares on a post-Reverse Stock Split basis made on December
31, 2024 to Ms. Betts a Form 3 for which was filed on February 5, 2025, (iv) an option grant of 76 shares on a post-Reverse Stock Split
basis made on December 31, 2024 to Dr. Fung a Form 3 for which was filed on March 13, 2025, (v) option grants of 1,559 shares each made
on September 30, 2025 to each of Dr. Fung, Ms. Betts, Mr. Intrater, and Mr. Burton for which Forms 4 were filed on October 3, 2025. As
a result, each of Dr. Fung, Ms. Betts, Mr. Intrater, and Mr. Burton each had 2 delinquent filings in 2025.
**Securities Trading**
The Company has adopted a Securities Trading Policy
that governs the purchase, sale, and/or other dispositions of the Company's securities by our directors, officers and employees that are
reasonably designed to promote compliance with insider trading laws, rules and regulations, and any listing standards applicable to the
Company. A copy of our policy against insider trading is incorporated by reference as Exhibit 19.1 to this Annual Report. Our policy against
insider trading prohibits directors, officers, employees and other covered persons from engaging in transactions while aware of material
nonpublic information about the Company. Directors, officers and certain other employees are subject to pre-clearance requirements for
all transactions in the Companys securities and are generally prohibited from transacting in the Companys securities during
designated blackout periods. Our policy against insider trading prohibits employees, officers and directors from engaging in any speculative
or hedging transactions in our securities. We prohibit transactions such as puts, calls, swaps, forward sale contracts, and other derivatives
or similar arrangements or instruments designed to hedge or offset decreases in the market value of our securities. No employee, officer
or director may engage in short sales of our securities, hold our securities in a margin account, purchase shares of our stock on margin
or pledge our securities as collateral for a loan.
**Item
11. Executive Compensation**
**Overview**
This section discusses the material components of
the executive compensation program for our executive officers who are named in the 2025 Summary Compensation Table below.
For the year ended December 31, 2025, our named executive officers (NEOs)
and their positions were as follows:
|
|
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Meeshanthini V. Dogan, Chief Executive Officer; | |
|
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Warren Hosseinion, Non-executive Chairman of the Board*; and | |
|
|
|
Elisa Luqman, Chief Financial Officer | |
|
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Timur Dogan, Chief Technology Officer | |
*Dr. Hosseinion provides ongoing services to our
company as Chairman of the Board and as a consultant. As such, he is not an executive officer and would not be included in the executive
compensation tables or accompanying narrative as an NEO under SEC disclosure rules. However, because his contractual compensation is significant
and would be payable to him, even if he were no longer our Chairman, we are treating him as an NEO in this Item 11 in the interest of
full disclosure of the compensation payable to the highest paid persons who work for our company. Dr. Hosseinion is not considered a Named
Executive Officer for any purpose other than the following disclosures.
| 77 | |
| | |
**2025 Summary Compensation Table**
The following table sets forth information concerning
the compensation of our named executive officers for fiscal years ended December 31, 2025 and 2024.
|
Current Officers Name & Principal Position |
|
Year |
|
|
Salary ($) |
|
|
Bonus |
|
|
Stock |
|
|
Option Awards (2) |
|
|
All Other Compensation ($) |
|
|
Total |
| |
|
|
|
|
|
|
|
($) |
|
|
|
($) |
|
|
|
($) |
|
|
|
($) |
|
|
|
($) |
|
|
|
($) |
| |
|
Meeshanthini V. Dogan, |
|
2025 |
|
|
|
300,000 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
12,300 |
(1) |
|
|
312,300 |
| |
|
CEO |
|
2024 |
|
|
|
300,000 |
|
|
|
0 |
|
|
|
0 |
|
|
|
1,004,656 |
|
|
|
11,000 |
(1) |
|
|
1,315,656 |
| |
|
Warren Hosseinion, |
|
2025 |
|
|
|
300,000 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
300,000 |
| |
|
Chairman |
|
2024 |
|
|
|
300,000 |
|
|
|
0 |
|
|
|
0 |
|
|
|
75,349 |
|
|
|
0 |
|
|
|
375,349 |
| |
|
Elisa Luqman, |
|
2025 |
|
|
|
275,000 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
275,000 |
| |
|
CFO |
|
2024 |
|
|
|
275,000 |
|
|
|
0 |
|
|
|
0 |
|
|
|
75,349 |
|
|
|
0 |
|
|
|
350,349 |
| |
|
Timur Dogan, |
|
2025 |
|
|
|
250,000 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
10,300 |
(1) |
|
|
260,300 |
| |
|
CTO |
|
2024 |
|
|
|
250,000 |
|
|
|
0 |
|
|
|
0 |
|
|
|
502,328 |
|
|
|
9,167 |
(1) |
|
|
761,495 |
| |
****
|
|
(1) |
All Other Compensation includes Cardios contribution to the Companys 401(k) account on behalf of the executive and health and dental insurance coverage. | |
|
|
(2) |
Discretionary stock option grants made in 2024 by the Compensation Committee. The 2024 amounts reflect the grant date fair values of performance awards based upon the Nasdaq closing stock price of $2.11 on the date of grant. | |
**Narrative to the Summary Compensation Table**
**2025 Base Salary**
The named executive officers receive a base salary
to compensate them for services rendered to our company. The base salary payable to each named executive officer is intended to provide
a fixed component of compensation reflecting the executives skill set, experience, role and responsibilities. In 2025, the base
salaries paid to each of Dr. Dogan, Dr. Hosseinion, Ms. Luqman and Mr. Dogan are set forth in the Summary Compensation Table
above in the column titled Salary. Each of the NEOs has entered into an employment agreement (or, in the case of Dr. Hosseinion,
a Non- Executive Chairman and Consulting Agreement), which became effective as of the Closing of the Business Combination. A brief summary
of those agreements is set forth below under the caption, Agreements with Our Executive Officers and Non-Executive Chairman of
the Board.
**Annual Bonuses**
We do not currently maintain an annual bonus
program for our employees, including our named executive officers. However, the employment agreements and, in the case of Dr. Hosseinion,
his Non-Executive Chairman and Consulting Agreement, provide that our named executive officers are eligible to receive an annual cash
bonus based on the extent to which, in the discretion of the Board, each such person achieves or exceeds specific and measurable individual
and Company performance objectives. The Board did not award any annual bonuses in 2025 and 2024.
****
| 78 | |
| | |
**Equity Compensation**
The Cardio Diagnostics Holdings, Inc. 2022 Equity
Incentive Plan (the 2022 Equity Plan), was adopted by the Mana Board of Directors and approved by the Mana stockholders
in connection with the Business Combination.
The 2022 Plan, as approved, permitted the issuance
of up to 108,850 shares (3,265,516 prior to the Reverse Stock Split) of Common Stock (the Share Reserve) upon exercise or
conversion of grants and awards made from time to time to officers, directors, employees and consultants, provided, however that the Share
Reserve will increase on January 1st of each calendar year and ending on and including January 1, 2027 (each, an Evergreen Date),
in an amount equal to the lesser of (i) 7% of the total number of shares of Common Stock outstanding on the December 31st immediately
preceding the applicable Evergreen Date and (ii) such lesser number of shares of Common Stock as determined to be appropriate by the Compensation
Committee, which administers the 2022 Plan, in its sole discretion. In January 2024, the Compensation Committee approved an annual increase
in the Share Reserve of 35,349 shares (1,060,458 prior to the Reverse Stock Split). On March 31, 2025, the Compensation Committee approved
an increase in the Share Reserve of 95,721 shares (2,871,638 prior to the Reverse Stock Split).
On March 31, 2025, we granted 2,524 stock options
(75,756 prior to the Reverse Stock Split) to the board of directors, which vested immediately on grant date. Each option has an exercise
price of $9.90 per share ($0.33 prior to the Reverse Stock Split) with an expiration date of March 31, 2035. On June 30, 2025, we granted
6,944 stock options to the board of directors, which vested immediately on the grant date. Each
option has an exercise price of$3.60 per share with an expiration date ofJune 30, 2035. On September 30, 2025, we granted
6,236 stock options to the board of directors, which vested immediately on the grant date. Each
option has an exercise price of$4.01 per sharewith an expiration date ofSeptember 30, 2035. On December 31, 2025, we
granted 9,224 stock options to the board of directors, which vested immediately on the grant date.
Each option has an exercise price of$2.71 per share with an expiration date ofDecember 31, 2035.
On January 23, 2024, we granted 39,594 options (1,187,826
prior to the Reverse Stock Split) to management and employees, 38,894 (1,166,826 prior to the Reverse Stock Split) of which vested immediately
with the remaining 700 options (21,000 prior to the Reverse Stock Split) subject to 50% vesting on June 30, 2024 and 100% vesting on December
31, 2024. Each option has an exercise price of $63.30 per share ($2.11 prior to the Reverse Stock Split) with an expiration date of January
23, 2034. For the remaining 700 options (21,000 prior to the Reverse Stock Split), 250 options (7,500 prior to the Reverse Stock Split)
were vested on June 30, 2024, 167 options (5,000 prior to the Reverse Stock Split) were vested on December 31, 2024 and 283 options (8,500
prior to the Reverse Stock Split) were forfeited before vesting with the leaving of the employees before December 31, 2024.
On June 30, 2024, we granted 1,012 stock options
(30,300 prior to the Reverse Stock Split) to the board of directors, which vested immediately on
the grant date. Each option has an exercise price of$16.50 per share ($0.55 prior to the Reverse Stock Split) with an expiration
date ofJune 30, 2034. On September 30, 2024, we granted 2,492 stock options (74,744 prior to the Reverse Stock Split) to the board
of directors, which vested immediately on the grant date. Each option has an exercise price
of$6.60 per share ($0.22 prior to the Reverse Stock Split)with an expiration date ofSeptember 30, 2034. On November
14, 2024, we granted 524 stock options (15,728 prior to the Reverse Stock Split) to the board of directors, which vested immediately
on the grant date. Each option has an exercise price of$8.10 per share ($0.27 prior to the Reverse Stock Split) with an expiration
date ofNovember 14, 2034. On December 31, 2024, we granted 454 stock options (13,632 prior to the Reverse Stock Split) to the board
of directors, which vested immediately on the grant date. Each option has an exercise price
of$27.60 per share ($0.92 prior to the Reverse Stock Split) with an expiration date ofDecember 31, 2034. In the future, we
may grant cash and equity incentive awards to directors, employees (including our named executive officers) and consultants in order to
continue to attract, motivate and retain the talent for which we compete.
A total of 80,628 shares were available for issuance
under the 2022 Equity Plan at December 31, 2025. At December 31, 2025, there were 144,320 options outstanding for the purchase of Common
Stock, all of which were vested and exercisable.
| 79 | |
| | |
The following table sets forth information as of
December 31, 2025 regarding Common Stock that may be issued under the 2022 Equity Plan, which, as of the date of this report, is the only
equity compensation plan that has been adopted by our Board of Directors.
|
Plan Category |
|
(A)
Number of Securities to be issued upon exercise
of outstanding options, warrants and rights |
|
(B)
Weighted average per share exercise price of
outstanding options, warrants and rights |
|
(C)
Number of Securities remaining available for
future issuance under equity compensation plans (excluding securities reflected in column (A)) |
| |
|
Equity compensation plans approved by security holders |
|
|
144,320 |
(1) |
|
68.79 |
(2) |
|
80,628 |
(3) | |
|
Equity compensation plans not approved by security holders |
|
|
|
|
|
|
|
|
|
| |
|
|
(1) |
Includes
144,320 outstanding options to purchase shares of Common Stock under the 2022 Equity Plan. | |
|
|
(2) |
58,652
outstanding options are exercisable at $117, 25,300 outstanding options are exercisable at $37.80, 30,958 outstanding options are
exercisable at $63.30, 1,012 outstanding options are exercisable at $16.50, 2,492 outstanding options are exercisable at $6.60, 524
outstanding options are exercisable at $8.10, 454 outstanding options are exercisable at $27.60, 2,524 outstanding options are exercisable
at $9.90, 6,944 outstanding options are exercisable at $3.60, 6,236 outstanding options are exercisable at $4.01 and 9,224 outstanding
options are exercisable at $2.71 subject to adjustment for stock splits, reverse stock splits and other similar events of recapitalization.
All options and per share exercise price are on a Reverse Stock Split-adjusted basis. | |
|
|
(3) |
This
amount includes the deduction of 2,061 shares in settlement of RSUs issued in 2025, 2,793 shares (83,780 prior to the Reverse Stock
Split) in settlement of RSUs issued in 2024 and 10,118 shares (303,547 prior to the Reverse Stock Split) in settlement of RSUs issued
in 2023 to our independent directors and advisors. This amount does not include any additional shares that may become available for
future issuance under the 2022 Equity Plan pursuant to the automatic increase to the share reserve on January 1 of each of our calendar
years through 2027 (each, an Evergreen Date) by the number of shares equal to the lesser of (i) 7% of the total number
of shares of Common Stock outstanding on the December 31st immediately preceding the applicable Evergreen Date and (ii) such lesser
number of shares of Common Stock as determined to be appropriate by the committee in its sole discretion. Effective March, 2025,
the 2022 Equity Plan increased by 95,721 shares pursuant to the evergreen provision of the plan. | |
Refer to Note 9 to
the consolidated financial statements included in this annual report for additional information relating to outstanding options.
**Equity Award Grant Practices**
Our equity-based incentive awards are designed to
align our interests and the interests of our stockholders with those of our employees and consultants, including our Named Executive Officers.
The Board or Compensation Committee is responsible for approving equity grants. We typically grant equity awards to new hires or employees
receiving bonuses annually for the previous fiscal years performance. Annual awards are typically granted in the first quarter
of each year. Generally, our equity awards granted to our Named Executive Officers vest over four years, subject to the employees
continued employment with us on each vesting date. The independent board of directors annual compensation is paid 50% in the form of stock
options, payable quarterly. The regularly-scheduled grant dates for the independent board of directors stock options are the last calendar
day of the each fiscal quarter.
The Board and Compensation Committee does not take
material nonpublic information into account when determining the timing and terms of equity-based awards, and the Company does not time
the disclosure of material nonpublic information for the purpose of affecting the value of executive compensation. For all stock option
awards, the exercise price is the closing price of our Common Stock on the Nasdaq Capital Market on the date of the grant. If the grant
date falls on a non-trading day, the exercise price is the closing price of our Common Stock on the Nasdaq Capital Market on the last
trading day preceding the date of grant. We have not timed the disclosure of material nonpublic information for the purpose of affecting
the value of executive compensation for any Named Executive Officer grants in fiscal year 2025.
| 80 | |
| | |
**Other Elements of Compensation**
*Retirement Plan*
**
We maintain a 401(k) retirement savings plan for
our employees, including our named executive officers, who satisfy certain eligibility requirements. The Internal Revenue Code allows
eligible employees to defer a portion of their compensation, within prescribed limits, on a pre-tax basis through contributions to the
401(k) plan. We believe that providing a vehicle for tax- deferred retirement savings though our 401(k) plan adds to the overall desirability
of our executive compensation package and further incentivizes our employees, including our named executive officers, in accordance with
our compensation policies.
*Employee Benefits and Perquisites*
**
Health/Welfare Plans. All of our full-time employees,
including our named executive officers, are eligible to participate in our health and welfare plans, including:
|
|
|
medical, dental and vision benefits; | |
|
|
|
medical and dependent care flexible spending accounts; | |
|
|
|
life insurance and accidental death and dismemberment; | |
We believe the benefits described above are necessary
and appropriate to provide a competitive compensation package to our employees, including our named executive officers. We do not provide
any perquisites to our named executive officers.
*No Tax Gross-Ups*
**
We do not make gross-up
payments to cover our named executive officers personal income taxes that may pertain to any of the compensation or benefits paid
or provided by our Company.
**Outstanding Equity Awards at Fiscal Year-End
Table**
The following table summarizes the number of shares
of common stock underlying outstanding equity incentive plan awards for each named executive officer as of December 31, 2025. We have
made no stock awards under the 2022 Plan and accordingly, that portion of the table has been omitted.
****
|
|
|
Option Awards | |
|
Name |
|
Number of Securities Underlying Unexercised Options (#)(1) |
|
|
Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options (#) |
|
|
Option Exercise Price ($) |
|
|
Option Expiration Date | |
|
|
|
|
Exercisable |
|
|
|
Unexercisable |
|
|
|
|
|
|
|
|
|
|
| |
|
Meeshanthini V. Dogan |
|
|
9,075 |
|
|
|
|
|
|
|
|
|
|
$ |
37.80 |
|
|
6/23/2033 | |
|
|
|
|
22,848 |
|
|
|
|
|
|
|
|
|
|
$ |
117.00 |
|
|
5/6/2032 | |
|
|
|
|
15,875 |
|
|
|
|
|
|
|
|
|
|
$ |
63.30 |
|
|
1/23/2034 | |
|
Warren Hosseinion |
|
|
4,125 |
|
|
|
|
|
|
|
|
|
|
$ |
37.80 |
|
|
6/23/2033 | |
|
|
|
|
11,424 |
|
|
|
|
|
|
|
|
|
|
$ |
117.00 |
|
|
5/6/2032 | |
|
|
|
|
1,191 |
|
|
|
|
|
|
|
|
|
|
$ |
63.30 |
|
|
1/23/2034 | |
|
Elisa Luqman |
|
|
1,925 |
|
|
|
|
|
|
|
|
|
|
$ |
37.80 |
|
|
6/23/2033 | |
|
|
|
|
5,712 |
|
|
|
|
|
|
|
|
|
|
$ |
117.00 |
|
|
5/6/2032 | |
|
|
|
|
1,191 |
|
|
|
|
|
|
|
|
|
|
$ |
63.30 |
|
|
1/23/2034 | |
|
Timur Dogan |
|
|
5,225 |
|
|
|
|
|
|
|
|
|
|
$ |
37.80 |
|
|
6/23/2033 | |
|
|
|
|
1,353 |
|
|
|
|
|
|
|
|
|
|
$ |
117.00 |
|
|
5/6/2032 | |
|
|
|
|
7,938 |
|
|
|
|
|
|
|
|
|
|
$ |
63.30 |
|
|
1/23/2034 | |
****
****
****
| 81 | |
| | |
**Agreements with Our Executive Officers and
Non-Executive Chairman of the Board**
In connection with preparations for the Business
Combination, Cardio executed employment agreements as of May 27, 2022 with each person expected to be named an executive officer of the
combined entity. The agreements became effective upon Closing of the Business Combination in October 2022. The principal terms of each
of agreements is as follows:
*Employment Agreement between Cardio and Meeshanthini
V. Dogan (Chief Executive Officer)*
**
Dr. Dogans five-year employment agreement
provides for (i) an annual base salary of $300,000, (ii) eligibility to receive an annual cash bonus based on the extent to which, in
the discretion of the Board, Dr. Dogan achieves or exceeds specific and measurable individual and Company performance objectives, and
(iii) eligibility to participate in any long-term incentive plan that is made available to similarly positioned executives, employee benefit
or group insurance plans maintained from time to time by Cardio. Long-term incentive plan awards may include cash, or equity awards settled
in shares of Company stock, including but not limited to stock options, restricted stock and performance shares. If Dr. Dogan were to
leave the Company as a "Good Leaver, as defined in the employment agreement, terms of any long-term incentive award will be
deemed satisfied immediately prior to such termination and as such, all awards and grants will be deemed fully vested. In addition, Dr.
Dogan will be reimbursed for her reasonable and usual business expenses incurred on behalf of the Company. Severance benefits will be
payable in the event Dr. Dogans termination is either by the Company without cause or by her with "good reason, as
defined in the agreement. In such event and in addition to accrued salary benefits as of the date of termination, the Company will pay
Dr. Dogan an amount equal to a (x) two times the sum of her most recent base salary and target annual bonus and (y) an amount in cash
equal to the Companys premium amounts paid for her coverage under group medical, dental and vision programs for a period of 24
months. The agreement also contains customary confidentiality, non- solicitation, non-competition and cooperation provisions. The employment
agreement will automatically renew for an additional year following the initial term and any renewal term, unless either party provides
60-days written notice before the end of the then-current term. The Company may terminate Dr. Dogans employment without
cause (as defined in the agreement) by providing 60 days advance written notice. Dr. Dogan may terminate her employment for any
reason.
*Non-Executive Chairman and Consulting Agreement
between Cardio and Warren Hosseinion*
**
Cardio has retained Dr. Hosseinion under a five-year
consulting agreement to serve as Non-Executive Chairman of the Board following the Merger and to provide other services as requested.
Upon expiration of such provision, the agreement may be renewed for an additional one-year term. In addition to his duties as Chairman,
the agreement provides that Dr. Hosseinion will provide consulting services assisting management in developing business strategy and business
plans, identifying business opportunities and identifying strategic relationships and strategies to further develop the Companys
brand. In the event he is not reelected as Chairman of the Board, the terms of this agreement will continue strictly as a consulting services
agreement.
Conversely, if his
consulting services are terminated, such termination will not affect his Chairman Services, provided that he remains eligible to serve
as Chairman. For his Chairman services and consulting services, the agreement provides for a fee of $300,000 per year payable in monthly
installments of $25,000. In addition, Dr. Hosseinion is entitled to be awarded any equity compensation otherwise payable to Board members
in connection with their service on the Board and to be reimbursed for all reasonable and necessary business expenses incurred in the
performance of his consulting services and Chairman services. If Dr. Hosseinions services are terminated by the Company other
than for Cause (as defined in the agreement), including any discharge without Cause, liquidation or dissolution of the Company, or a
termination caused by death or Disability (as defined in the agreement), the Company will pay Dr. Hosseinion (or his estate) the consulting
fees equal to two times his annual consulting compensation, payable within 60 days, in one lump sum, plus any expenses owing for periods
prior to and including the date of termination of the consulting services. The agreement also contains customary confidentiality, non-solicitation,
non-disparagement and cooperation provisions. Either party may terminate the agreement without cause after giving prior written notice
to the other party. The agreement may be terminated by the Company at any time for cause, as defined in the agreement.
*Employment Agreement between Cardio and Elisa
Luqman (Chief Financial Officer)*
**
Ms. Luqmans five-year employment agreement
provides for (i) an annual base salary of $275,000, (ii) eligibility to receive an annual cash bonus based on the extent to which, in
the discretion of the Board, Ms. Luqman achieves or exceeds specific and measurable individual and Company performance objectives, and
(iii) eligibility to participate in any long-term incentive plan that is made available to similarly positioned executives, employee benefit
or group insurance plans maintained from time to time by Cardio. Long-term incentive plan awards may include cash, or equity awards settled
in shares of Company stock, including but not limited to stock options, restricted stock and performance shares. If Ms. Luqman were to
leave the Company as a "Good Leaver, as defined in the employment agreement, terms of any long-term incentive award will be
deemed satisfied immediately prior to such termination and as such, all awards and grants will be deemed fully vested. In addition, Ms.
Luqman will be reimbursed for her reasonable and usual business expenses incurred on behalf of the Company. Severance benefits will be
payable in the event Ms. Luqmans termination is either by the Company without cause or by her with "good reason, as
defined in the agreement. In such event and in addition to accrued salary benefits as of the date of termination, the Company will pay
Ms. Luqman an amount equal to a (x) the sum of her most recent base salary and target annual bonus and (y) an amount in cash equal to
the Companys premium amounts paid for her coverage under group medical, dental and vision programs for a period of 12 months, provided
that she has elected continued coverage under COBRA. The agreement also contains customary confidentiality, non-solicitation, non-competition
and cooperation provisions. The employment agreement will automatically renew for an additional year following the initial term and any
renewal term, unless either party provides 60-days written notice before the end of the then-current term. The Company may terminate
Ms. Luqmans employment without cause (as defined in the agreement) by providing 60 days advance written notice. Ms. Luqman
may terminate her employment for any reason.
| 82 | |
| | |
*Employment Agreement between Cardio and Tim Dogan
(Chief Technical Officer)*
Dr. Dogans five-year employment agreement
provides for (i) an annual base salary of $250,000, (ii) eligibility to receive an annual cash bonus based on the extent to which, in
the discretion of the Board, Dr. Dogan achieves or exceeds specific and measurable individual and Company performance objectives, and
(iii) eligibility to participate in any long-term incentive plan that is made available to similarly positioned executives, employee benefit
or group insurance plans maintained from time to time by Cardio. Long-term incentive plan awards may include cash, or equity awards settled
in shares of Company stock, including but not limited to stock options, restricted stock and performance shares. If Dr. Dogan were to
leave the Company as a Good Leaver, as defined in the employment agreement, terms of any long-term incentive award will
be deemed satisfied immediately prior to such termination and as such, all awards and grants will be deemed fully vested. In addition,
Dr. Dogan will be reimbursed for his reasonable and usual business expenses incurred on behalf of the Company. Severance benefits will
be payable in the event Dr. Dogans termination is either by the Company without cause or by him with good reason,
as defined in the agreement. In such event and in addition to accrued salary benefits as of the date of termination, the Company will
pay Dr. Dogan an amount equal to a (x) the sum of his most recent base salary and target annual bonus and (y) an amount in cash equal
to the Companys premium amounts paid for his coverage under group medical, dental and vision programs for a period of 12 months,
provided that he has elected continued coverage under COBRA. The agreement also contains customary confidentiality, non-solicitation,
non-competition and cooperation provisions. The employment agreement will automatically renew for an additional year following the initial
term and any renewal term, unless either party provides 60-days written notice before the end of the then-current term. The Company
may terminate Dr. Dogans employment without cause (as defined in the agreement) by providing 60 days advance written notice.
Dr. Dogan may terminate his employment for any reason.
**Director Compensation**
****
The following individuals served as non-employee
directors of the Company for all or part of 2025 (other than Dr. Hosseinion, who, as discussed above, is being treated as an NEO for purposes
of the compensation disclosure in this Annual Report): Paul Burton, James Intrater, Wendy J. Betts and Peter K. Fung, MD. The following
table sets forth information concerning the compensation for our non-employee directors for services rendered during the year ended December
31, 2025. Additionally, we reimburse our non-employee directors for reasonable travel and other out-of-pocket expenses incurred in connection
with attending board of director and committee meetings or undertaking other business on behalf of Cardio.
|
Name | |
Fees Earned or Paid in Cash ($) | | |
Stock Awards ($) | | |
All Other Compensation ($) | | |
Total ($) | | |
|
Paul Burton | |
| 25,000 | | |
| 25,000 | | |
| | | |
| 50,000 | | |
|
James Intrater | |
| 25,000 | | |
| 25,000 | | |
| | | |
| 50,000 | | |
|
Wendy J. Betts | |
| 25,000 | | |
| 25,000 | | |
| | | |
| 50,000 | | |
|
Peter K. Fung, MD | |
| 25,000 | | |
| 25,000 | | |
| | | |
| 50,000 | | |
*Narrative Disclosure to Non-Employee Director
Compensation Table*
**
During 2025, Cardio compensated our non-employee,
independent directors for service as a director with a combination of option grants in the amount of $25,000 and cash payments in the
amount of $25,000.
On
March 31, 2025, June 30, 2025, September 30, 2025, and December 31, 2025, each independent director received $6,250 in cash payments
and $6,250 in stock options awards.The
number of shares of Common Stock into which the options may be exercised were based on the closing price of our Common Stock on March
31, 2025, June 30, 2025, September 30, 2025 and December 31, 2025, respectively. Directors who transitioned on or off the Board are compensated
on a pro-rata basis for days of service.
Non-employee directors are also eligible to be granted
options under the Companys 2022 Equity Incentive Plan.
We reimburse our non-employee directors for reasonable
travel and out-of-pocket expenses incurred in connection with attending board of director and committee meetings or undertaking other
business on behalf of our Company.
As discussed below under Certain Relationships
and Related Party Transactions, we have entered into indemnification agreements with, and obtained directors liability protection
for, our officers and directors.
| 83 | |
| | |
*Compensation of Other Members of the Board of
Directors*
**
In fiscal 2025, Dr. Dogan, our co-founder and Chief
Executive Officer, and Dr. Hosseinion, our Non-Executive Chairman of the Board, were compensated as an employee and a consultant, respectively,
and did not receive any additional compensation for service on our Board. Their total 2025 compensation in all capacities is reflected
in the Summary Compensation Table. As noted in connection with the Summary Compensation Table above, Dr. Hosseinions compensation
is disclosed as though he is a Named Executive Officer in order to provide complete transparency as to the compensation he is paid by
us as Non-Executive Chairman and a consultant to our company. Robert Philibert, our co-founder, Chief Medical Officer and a director,
is not compensated for his service as a member of the Board of Directors.
**Item
12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters**
****
The following table sets forth information
regarding the beneficial ownership of the Companys Common Stock as of March 13, 2026 by:
|
|
|
each person known to the Company to be the beneficial owner of more than 5% of the Companys Common Stock; | |
|
|
|
each person who is a named executive officer or a director of the Company and | |
|
|
|
all of the Companys executive officers and directors as a group. | |
Beneficial ownership is determined in accordance
with SEC rules and includes voting or investment power with respect to securities. Except as indicated by the footnotes below, the Company
believes, based on the information furnished to it as of the Closing of the Business Combination, that the persons named in the table
below have, sole voting and investment power with respect to all stock that they beneficially own, subject to applicable community property
laws. All Company stock subject to options or warrants exercisable within 60 days of the date of the table are deemed to be outstanding
and beneficially owned by the persons holding those options or warrants for the purpose of computing the number of shares beneficially
owned and the percentage ownership of that person. They are not, however, deemed to be outstanding and beneficially owned for the purpose
of computing the percentage ownership of any other person.
| 84 | |
| | |
Subject to the paragraph above, percentage ownership
of outstanding shares is based on 2,959,469 shares of the Companys Common Stock outstanding
as of March 13, 2026.
|
Name and Address of Beneficial Owner (1) | |
Amount and Nature of Beneficial Ownership | | |
Approximate Percentage of Outstanding Shares | | |
|
Directors, Executive Officers and Greater than 5% Holders | |
| | | |
| | | |
|
Meeshanthini V. Dogan (2) | |
| 121,773 | | |
| 4.11 | % | |
|
Robert Philibert (3) | |
| 82,979 | | |
| 2.80 | % | |
|
Warren Hosseinion (4) | |
| 20,609 | | |
| | | |
|
Elisa Luqman (5) | |
| 10,759 | | |
| * | | |
|
James Intrater (7) | |
| 9,646 | | |
| ** | | |
|
Peter K. Fung (8) | |
| 6,308 | | |
| * | | |
|
Wendy Betts (8) | |
| 6,308 | | |
| * | | |
|
Paul Burton (7) | |
| 7,553 | | |
| * | | |
|
Timur Dogan (6) | |
| 121,773 | | |
| 4.11 | % | |
|
All Executive Officers and Directors as a Group (9 individuals) * Less than 1%. | |
| 265,935 | | |
| 8.99 | % | |
|
(1) |
|
Unless otherwise noted, the address for the persons in the table is 311 West Superior Street, Suite 444, Chicago IL 60654. | |
|
(2) |
|
Meeshanthini Dogan and Timur Dogan are married. The beneficial ownership of Meeshanthini Dogan reflected in the table includes the shares and options of Timur Dogan. Meeshanthini Dogans direct ownership is 52,882 shares of Common Stock, 47,798 shares issuable upon exercise of options, and 2,299 shares of Common Stock held jointly with her spouse. | |
|
(3) |
|
Robert Philibert a Director and Chief Medical Officer (CMO) of the registrant, is the direct owner of 2,523 of the securities of the registrant reported herein, owns and controls BD Holding Inc., the direct owner of 52,882 of the securities of the registrant reported herein, owns and controls Behavioral Diagnostics LLC, the direct owner of 471 of the securities of the registrant reported herein, 26,849shares issuable upon exercise of options, and his spouse is the direct owner of254 of the securities of the registrant reported herein. | |
|
(4) |
|
Includes 16,740 shares of common stock issuable upon exercise of options. | |
|
(5) |
|
Includes 8,828 shares of common stock issuable upon exercise of options. | |
|
(6) |
|
Timur Dogan and Meeshanthini Dogan are married. The beneficial ownership of Timur Dogan reflected in the table includes the shares and options of Meeshanthini Dogan. Timur Dogans direct ownership is 4,278 shares of common stock, 14,516 shares issuable upon exercise of options and 2,299 shares of common stock held jointly with his spouse. | |
|
(7) |
|
Includes 7,259 shares of common stock issuable upon exercise of options. | |
|
(8) |
|
Includes 6,308 shares of common stock issuable upon exercise of options. | |
**Item
13. Certain Relationships, and Related Transactions and Director Independence**
****
There have been no transactions since January 1,
2025 or proposed transactions to which we have been or will be a party in which the amount involved exceeded or will exceed the lesser
of $120,000 or 1% of the average of our total assets at year-end for the last two completed fiscal years, and in which any of our directors,
executive officers or, to our knowledge, beneficial owners of more than 5% of our capital stock or any member of the immediate family
of any of the foregoing persons had or will have a direct or indirect material interest, other than transactions that are described under
the section Executive and Director Compensation.
Cardio has an exclusive, worldwide patent license
of the Core Technology from the University of Iowa Research Foundation (UIRF). Under UIRFs Inventions Policy inventors are generally
entitled to 25% of income from earnings from their inventions. Consequently, Meeshanthini Dogan and Robert Philibert may benefit from
this policy.
Timur Dogan, the Companys Chief Technology
Officer is the spouse of Meeshanthini (Meesha) Dogan, the Companys Co-Founder, Chief Executive Officer and Director.
| 85 | |
| | |
At the Closing of the Business Combination, Dr.
M. Dogan, Dr. Philibert, Ms. Luqman, and Dr. T. Dogan
each entered into an Invention and Non-Disclosure Agreement. An integral part of the Invention and Non-Disclosure Agreement is the disclosure
by the employee of any discoveries, ideas, inventions, improvements, enhancements, processes, methods, techniques, developments, software
and works of authorship (developments) that were created, made, conceived or reduced to practice by the employee prior to
his or her employment by Cardio and that are not assigned to the Company. Dr. Philiberts agreement lists certain developments that
are epigenetic methods unrelated to the current mission of Cardio and that were developed separate and apart from Cardio. There is no
assurance that as the Company broadens the scope of its products and services that one or more of Dr. Philiberts developments could
be relevant. Under the agreement, all rights to the developments listed by Dr. Philibert are his sole property and their use, if desired
by the Company, would be in the sole discretion of Dr. Philibert, who is under no obligation to license or otherwise grant permission
to the Company to use them.
Our Certificate of Incorporation, as amended, restated
and currently in effect, and our Bylaws provide for indemnification and advancement of expenses for our directors and officers to the
fullest extent permitted by Delaware law, subject to certain limited exceptions. We have entered into indemnification agreements with
each member of our Board and several of our officers.
Warren Hosseinion M.D., who serves as the Non-Executive
Chairman of the Board of the Company, is also a minority ten percent (10%) owner of Altitude Capital Group LLC (Altitude),
a separate entity engaged as the placement agent for our private placement that closed in February, 2024, for which Dr. Hosseinion did
not receive any compensation. This ownership interest creates a potential conflict of interest because Dr. Hosseinion may have a financial
interest in the success of Altitude, which could affect his decision-making with respect to any offering and other matters related to
the Company. However, the Company has established policies and procedures designed to address and mitigate any potential conflicts of
interest that may arise in connection with Mr. Hosseinions dual roles. All material agreements and arrangements between the Company
and Altitude have to be reviewed and approved by the Company's independent Board of Directors.
**Related Party Policy**
The audit committee
of the board of directors had adopted a policy setting forth the policies and procedures for its review and approval or ratification
of related party transactions. The policy provides that a related party transaction is defined in the policy
as any consummated or proposed transaction or series of transactions: (i) in which the Company was or is to be a participant; (ii) the
amount of which exceeds (or is reasonably expected to exceed) the lesser of $120,000 or 1% of the average of the Companys total
assets at year-end for the prior two completed fiscal years in the aggregate over the duration of the transaction (without regard to
profit or loss); and (iii) in which a related party had, has or will have a direct or indirect material interest. Related
parties under this policy included: (i) Cardios directors, nominees for director or executive officers; (ii) any record
or beneficial owner of more than 5% of any class of Cardios voting securities; (iii) any immediate family member of any of the
foregoing if the foregoing person is a natural person; and (iv) any other person who maybe a related person pursuant to
Item 404 of Regulation S-K under the Exchange Act. Pursuant to the policy, the audit committee would consider (i) the relevant facts
and circumstances of each related party transaction, including if the transaction is on terms comparable to those that could be obtained
in arms-length dealings with an unrelated third party, (ii) the extent of the related partys interest in the transaction,
(iii) whether the transaction contravenes our code of ethics or other policies, (iv) whether the audit committee believes the relationship
underlying the transaction to be in the best interests of Cardio and its stockholders and (v) the effect that the transaction may have
on a directors status as an independent member of Cardios board and on his or her eligibility to serve on Cardios
boards committees. The policy requires that the Companys management present to the audit committee each proposed related
party transaction, including all relevant facts and circumstances relating thereto. Under the policy, the Company is permitted to consummate
related party transactions only if the audit committee approves or ratifies the transaction in accordance with the guidelines set forth
in the policy. The policy does not permit any director or executive officer to participate in the discussion of, or decision concerning,
a related person transaction in which he or she is the related party.
| 86 | |
| | |
**Item
14. Principal Accounting Fees and Services******
**Fees Paid to the Independent Registered Public
Accounting Firm**
****
The following table presents fees for professional
audit services and other services rendered by Prager Metis CPAs, LLC for the fiscal years ended December 31, 2025 and 2024:
|
| |
For the Year Ended December31, 2025 | | |
For the Year Ended December31, 2024 | | |
|
Audit Fees(1) | |
$ | 144,750 | | |
$ | 107,500 | | |
|
Audit-Related Fees(2) | |
| 47,000 | | |
| 42,500 | | |
|
Tax Fees(3) | |
| | | |
| | | |
|
All Other Fees(4) | |
| | | |
| | | |
|
Total Fees | |
$ | 191,750 | | |
$ | 150,000 | | |
|
(1) |
|
Audit Fees. Audit fees consist of fees billed for professional services rendered for the audit of our year-end financial statements, reviews of our quarterly interim financial statements, and services that are normally provided by our independent registered public accounting firm in connection with statutory and regulatory filings. As noted above, we engaged Prager Metis CPAs, LLC to conduct the audit of our financial statements for the years ended December 31, 2025 and 2024. | |
|
(2) |
|
Audit-Related Fees. Audit-related fees consist of fees billed for assurance and related services that are reasonably related to performance of the audit or review of our year-end consolidated financial statements and are not reported under Audit Fees. These services include attest services that are not required by statute or regulation and consultation concerning financial accounting and reporting standards. | |
|
(3) |
|
Tax Fees. Tax fees consist of fees billed for professional services relating to tax compliance, tax planning and tax advice. We did not pay our independent registered public accountants for tax services for the periods shown in the table above. | |
|
(4) |
|
All Other Fees. All other fees consist of fees billed for all other services including permitted due diligence services related to potential business combinations. We did not pay our independent registered public accountants for other services for the periods shown in the table above. | |
**Auditor Independence**
In 2025, there were no other professional services
provided by Prager Metis CPAs, LLC, other than those listed above, that would have required our Audit Committee to consider their compatibility
with maintaining the independence of Prager Metis CPAs, LLC.
**Pre-Approval Policies and Procedures**
****
Our Audit Committee is required to pre-approve the
audit and non-audit services performed by our independent registered public accounting firm in order to assure that the provision of such
services does not impair the auditors independence. Any proposed services exceeding pre-approved cost levels require specific pre-approval
by our Audit Committee.
Our Audit Committee at least annually reviews and
provides general pre-approval for the services that may be provided by the independent registered public accounting firm. The term of
the general pre-approval is 12 months from the date of approval, unless our Audit Committee specifically provides for a different period.
If our Audit Committee has not provided general pre-approval, then the type of service requires specific pre-approval by our Audit Committee.
All services performed and related fees billed by
Prager Metis CPAs, LLC during fiscal years 2024 and 2025 were pre-approved by our Audit Committee pursuant to regulations of the SEC.
| 87 | |
| | |
**PART****IV**
****
**Item 15. Exhibits and Financial Statement Schedules**
**1. Financial Statements**
As part of this Annual Report on Form10-K,
the consolidated financial statements are listed in the accompanying Index to Financial Statements on page F-1.
**2. Financial Statement Schedules**
All schedules are omitted because they are not
applicable, or the required information is shown in the Financial Statements or notes thereto.
**3. Exhibit Index**
|
|
|
|
Incorporation
by Reference | |
|
Exhibit Number |
Description |
|
Form |
|
Exhibit |
|
Filing
Date | |
|
|
|
|
|
|
|
|
| |
|
2.1 |
Agreement and Plan of Merger dated as of May 27, 2022 by and among Mana Capital Acquisition Corp., Mana Merger Sub, Inc., Cardio Diagnostics, Inc., and Meeshanthini (Meesha) Dogan, as representatives of the shareholders (included as Annex A to the Proxy Statement/Prospectus) |
|
8-K |
|
2.1 |
|
5/31/22 | |
|
2.2 |
Amendment dated September 15, 2022 to Agreement and Plan of Merger dated as of May 27, 2022 by and among Mana Capital Acquisition Corp., Mana Merger Sub, Inc., Cardio Diagnostics, Inc., and Meeshanthini (Meesha) Dogan, as representatives of the shareholders |
|
8-K |
|
2.1 |
9/15/22 | |
|
2.3 |
Waiver Agreement dated as of October 25, 2022 with respect to Agreement and Plan of Merger dated as of May 27, 2022, as amended on September 15, 2022 |
|
8-K |
|
2.3 |
|
10/31/22 | |
|
3.1 |
Third Amended and Restated Certificate of Incorporation of Cardio Diagnostics Holdings, Inc., dated May 30, 2023 |
|
8-K |
|
3.1 |
|
5/30/23 | |
|
3.2 |
By-laws |
|
S-1 |
|
3.3 |
|
10/19/21 | |
|
4.1 |
Specimen Stock Certificate |
|
S-1/A |
|
4.2 |
|
11/10/21 | |
|
4.2 |
Specimen Warrant Certificate (contained in Exhibit 4.3) |
|
8-K |
|
4.1 |
|
11/26/21 | |
|
4.3 |
Warrant Agreement, dated November 22, 2021, by and between the Company and Continental Stock Transfer & Trust Company, as warrant agent |
|
8-K |
|
4.1 |
|
11/26/21 | |
|
4.4 |
Form of Private Placement Warrant |
|
8-K |
|
4.1 |
|
2/2/24 | |
|
4.5 |
Description of Securities |
|
10-K |
|
4.5 |
|
4/1/2024 | |
|
10.1 |
Form of Non-Competition and Non-Solicitation Agreement |
|
S-4 |
|
10.8 |
|
5/31/22 | |
|
10.2# |
Form of Board of Directors Agreement, dated June 19, 2023 |
|
8-K |
|
10.1 |
|
6/22/23 | |
|
10.3 |
Registration Rights Agreement, dated November 22, 2021, by and among the Company, the Sponsor and other holders party thereto |
|
8-K |
|
10.4 |
|
11/26/21 | |
|
10.4# |
Cardio Diagnostics Holdings, Inc. 2022 Equity Incentive Plan and related forms of agreements |
|
10-K |
|
10.4 |
|
4/1/2024 | |
|
10.5# |
Form of Indemnification Agreement |
|
S-1 |
|
10.5 |
|
12/12/22 | |
|
10.6# |
Employment Agreement, executed as of May 27, 2022, between Cardio Diagnostics, Inc. and Meeshanthini Dogan |
|
S-4/A |
|
10.13 |
|
8/23/22 | |
|
10.7# |
Employment Agreement, executed as of May 27, 2022, between Cardio Diagnostics, Inc. and Robert Philibert |
|
S-4/A |
|
10.14 |
|
8/23/22 | |
|
10.8# |
Employment Agreement, executed as of May 27, 2022, between Cardio Diagnostics, Inc. and Elisa Luqman |
|
S-4/A |
|
10.15 |
|
8/23/22 | |
|
10.9# |
Employment Agreement, executed as of May 27, 2022, between Cardio Diagnostics, Inc. and Timur Dogan |
|
S-4/A |
|
10.16 |
|
8/23/22 | |
|
10.11# |
Non-Executive Chairman and Consulting Agreement between Cardio Diagnostics, Inc. and Warren Hosseinion |
|
S-4/A |
|
10.18 |
|
8/23/22 | |
|
10.12 |
Exclusive License Agreement between Cardio Diagnostics, LLC and the University of Iowa Research Foundation dated May 2, 2017 |
|
S-4/A |
|
10.11 |
|
8/23/22 | |
|
10.13 |
First Amendment to Exclusive License Agreement between Cardio Diagnostics, Inc. and the University of Iowa Research Foundation dated September 2, 2022 |
|
S-4/A |
|
10.19 |
|
9/15/22 | |
|
10.14 |
Lease Agreement, dated July 20, 2023, between the Registrant and 246 Group LC dba North Point Crossing |
|
10-Q |
|
10.1 |
|
8/14/23 | |
|
10.15 |
Office Building Lease Agreement, dated June 15, 2023, between the Registrant and 311 W. Superior, L.L.C. |
|
10-Q |
|
10.2 |
|
8/14/23 | |
|
10.16 |
Engagement Letter, dated as of May 13, 2022, between Mana Capital Acquisition Corp. and The Benchmark Company, LLC |
|
10-K |
|
10.18 |
|
3/31/23 | |
|
10.17 |
Amendment No. 1 to Engagement Letter, dated November 14, 2022, between the Registrant and The Benchmark Company, LLC |
|
10-K |
|
10.19 |
|
3/31/23 | |
|
10.18 |
At the Market Offering Agreement, dated January 26, 2024, between Cardio Diagnostics Holdings, Inc. and Craig-Hallum Capital Group, LLC |
|
S-3 |
|
1.2 |
|
1/26/24 | |
|
19.1 |
Securities Insider Trading Policy |
|
10-K |
|
19.1 |
|
3/20/2025 | |
|
21.1* |
List of Subsidiaries |
|
|
|
|
|
| |
|
23.1* |
Consent of Prager Metis CPAs, LLC, independent registered public accounting firm |
|
|
|
|
|
| |
|
24.1* |
Power of Attorney(included on signature page of this Form 10-K) |
|
|
|
|
|
| |
|
31.1* |
Certification of Principal Executive Officer Pursuant to Exchange Act Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 |
|
|
|
|
|
| |
|
31.2* |
Certification of Principal Financial Officer Pursuant to Exchange Act Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 |
|
|
|
|
|
| |
|
32.1*+ |
Certification of Principal Executive Officer and Principal Financial Officer pursuant to 18 U.S. C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 |
|
|
|
|
|
| |
|
97# |
Cardio Diagnostics Holdings, Inc. Clawback Policy |
|
10-K |
|
97.1 |
|
4/1/2024 | |
|
101.INS*++ |
Inline XBRL Instance Document (the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document) |
|
|
|
|
|
| |
|
101.SCH*++ |
XBRL Taxonomy Extension Schema Document. |
|
|
|
|
|
| |
|
101.CAL*++ |
XBRL Taxonomy Extension Calculation Linkbase Document |
|
|
|
|
|
| |
|
101.DEF*++ |
XBRL Taxonomy Extension Definition Linkbase Document |
|
|
|
|
|
| |
|
101.LAB*++ |
XBRL Taxonomy Extension Label Linkbase Document |
|
|
|
|
|
| |
|
101.PRE*++ |
XBRL Taxonomy Extension Presentation Linkbase Document |
|
|
|
|
|
| |
|
104* |
Cover Page Interactive Date File (embedded with the Inline XBRL document) |
|
|
|
|
|
| |
|
* |
|
Filed herewith. | |
|
# |
|
Indicates a management contract or compensatory plan, contract or arrangement. | |
|
|
|
Certain of the exhibits or schedules to this Exhibit have been omitted in accordance with Regulation S-K Item 601(a)(5). The Registrant agrees to furnish a copy of all omitted exhibits and schedules to the SEC upon its request; provided, however, that the Registrant may request confidential treatment pursuant to Rule 24b-2 of the Exchange Act, as amended, for any schedule or exhibit so furnished. | |
|
+ |
|
Furnished herewith. The certifications attached as Exhibit 32.1 that accompanies this Annual Report on Form 10-K is deemed furnished and not filed with the Securities and Exchange Commission and is not to be incorporated by reference into any filing of Cardio Diagnostics Holdings,, Inc. under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, whether made before or after the date of this Annual Report on Form 10-K, irrespective of any general incorporation language contained in such filing. | |
|
++ |
|
Furnished herewith. Pursuant to Rule 406T of Regulation S-T, the Interactive Data Files on Exhibit 101 hereto are deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, are deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise are not subject to liability under those sections. | |
**Item 16. Form 10-K Summary**
None.
| 88 | |
| | |
**SIGNATURES**
****
Pursuant to the requirements
of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by
the undersigned, thereunto duly authorized.
|
|
Cardio Diagnostics Holdings, Inc. | |
|
|
| |
|
Dated: March 13, 2026 |
By: |
/s/ Meeshanthini V. Dogan | |
|
|
|
Meeshanthini V. Dogan | |
|
|
|
Chief Executive Officer | |
|
|
|
(Principal Executive Officer)
| |
**POWER OF ATTORNEY**
Each person whose signature
appears below constitutes and appoints Meeshanthini V. Dogan and Elisa Luqman, and each one of them, as her true and lawful attorneys-in-fact
and agents, with full power of substitution and resubstitution, for her and in their name, place, and stead, in any and all capacities,
to sign any and all amendments to this Annual Report on Form 10-K, and to file the same, with all exhibits thereto and other documents
in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them,
full power and authority to do and perform each and every act and thing requisite and necessary to be done in connection therewith, as
fully to all intents and purposes as he or she might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact
and agents or any of them, or his or her substitute or substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements
of the Securities Exchange Act of 1934, this Annual Report on Form 10-K has been signed by the following persons on behalf of the registrant
and in the capacities and on the dates indicated.
|
Signature |
|
Title and Capacity |
Date | |
|
|
|
|
| |
|
|
|
|
| |
|
/s/ Meeshanthini V. Dogan |
|
Chief Executive Officer and Director |
March 13, 2026 | |
|
Meeshanthini V. Dogan, PhD |
|
|
| |
|
|
|
|
| |
|
|
|
|
| |
|
/s/ Elisa Luqman |
|
Chief Financial Officer and Principal |
March 13, 2026 | |
|
Elisa Luqman |
|
Accounting Officer |
| |
|
|
|
|
| |
|
|
|
|
| |
|
/s/ Warren Hosseinion |
|
Director (Chairman of the Board) |
March 13, 2026 | |
|
Warren Hosseinion, MD |
|
|
| |
|
|
|
|
| |
|
|
|
|
| |
|
/s/ James Intrater |
|
Director |
March 13, 2026 | |
|
James Intrater |
|
|
| |
|
|
|
|
| |
|
|
|
|
| |
|
/s/ Peter K. Fung |
|
Director |
March 13, 2026 | |
|
Peter K. Fung |
|
|
| |
|
|
|
|
| |
|
|
|
|
| |
|
/s/ Wendy J. Betts |
|
Director |
March 13, 2026 | |
|
Wendy J. Betts |
|
|
| |
|
|
|
|
| |
|
|
|
|
| |
|
/s/ Robert Philibert |
|
Director |
March 13, 2026 | |
|
Robert Philibert, MD |
|
|
| |
|
|
|
|
| |
|
|
|
|
| |
|
/s/ Paul Burton |
|
Director |
March 13, 2026 | |
|
Paul Burton |
|
|
| |
****
****
| 89 | |
| | |