UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
(Mark One)
| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For
the quarterly period ended
| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
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(Former name or former address, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) |
Name of each exchange on which registered | ||
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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
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As of November 12, 2025, there were shares of the registrant’s Common Stock, $0.00001 par value, issued and outstanding.
CARDIO DIAGNOSTICS HOLDINGS, INC.
FORM 10-Q
For the Quarter Ended September 30, 2025
TABLE OF CONTENTS
| Introductory Note | i | |
| Note About Forward-Looking Statements | ii | |
| Part I — Financial Information | ||
| Item 1. | Financial Statements (unaudited) | 1 |
| Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 19 |
| Item 3. | Quantitative and Qualitative Disclosures About Market Risk | 27 |
| Item 4. | Controls and Procedures | 27 |
| Part II — Other Information | ||
| Item 1. | Legal Proceedings | 28 |
| Item 1A. | Risk Factors | 28 |
| Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds | 28 |
| Item 3. | Defaults upon Senior Securities | 28 |
| Item 4. | Mine Safety Disclosures | 28 |
| Item 5. | Other Information | 28 |
| Item 6. | Exhibits | 28 |
i
INTRODUCTORY NOTE
Unless the context dictates otherwise, references in this Quarterly Report on Form 10-Q 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 with Mana Capital Acquisition Corp (“Mana”). Legacy Cardio 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 Quarterly Report on Form 10-Q 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.
SPECIAL NOTE ABOUT FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). All statements other than statements of historical fact are “forward-looking statements” for purposes of federal and state securities laws, including, but not limited to, changes in laws or regulations, any statements about our business (including the impact of a re-emergence of COVID-19 variants or any other pandemic, epidemic or infectious disease outbreak on our business), financial condition, operating results, plans, objectives, expectations and intentions, any guidance on, or projections of, earnings, revenue or other financial items, or otherwise, and our future liquidity, including cash flows; any statements of any plans, strategies, and objectives of management for future operations, such as the material opportunities that we believe exist for our Company; any statements concerning proposed products and services, developments, mergers or acquisitions; or strategic transactions; any statements regarding management’s view of future expectations and prospects for us; any statements about prospective adoption of new accounting standards or effects of changes in accounting standards; any statements regarding future economic conditions or performance; any statements of belief; any statements of assumptions underlying any of the foregoing; and other statements that are not historical facts. Forward-looking statements may be identified by the use of forward-looking terms such as “anticipate,” “could,” “can,” “may,” “might,” “potential,” “predict,” “should,” “estimate,” “expect,” “project,” “believe,” “think,” “plan,” “envision,” “intend,” “continue,” “target,” “seek,” “contemplate,” “budgeted,” “will,” “would,” and the negative of such terms, other variations on such terms or other similar or comparable words, phrases, or terminology. These forward-looking statements present our estimates and assumptions only as of the date of this Quarterly Report on Form 10-Q and are subject to change.
Forward-looking statements involve risks and uncertainties and are based on the current beliefs, expectations, and certain assumptions of management. Some or all of such beliefs, expectations, and assumptions may not materialize or may vary significantly from actual results. Such statements are qualified by important economic, competitive, governmental, and technological factors that could cause our business, strategy, or actual results or events to differ materially from those in our forward-looking statements. Factors that might cause or contribute to such differences include, but are not limited to, the risk factors discussed under the heading “Risk Factors” in Part I, Item IA of our Annual Report on Form 10-K for the year ended December 31, 2024, filed with the Securities and Exchange Commission (“SEC”) on March 20, 2025 (the “2024 Form 10-K”) and in subsequent reports we file with the SEC. Although we believe that the expectations reflected in our forward-looking statements are reasonable, actual results could differ materially from those projected or assumed in any of our forward-looking statements. Our future financial condition and results of operations, as well as any forward-looking statements, are subject to change, and significant risks and uncertainties that could cause actual conditions, outcomes, and results to differ materially from those indicated by such statements. Consequently, all of the forward-looking statements made in this Form 10-Q are qualified by these cautionary statements and there can be no assurance that the actual results or developments anticipated by the Company will be realized or, even if substantially realized, that they will have the expected consequence to or effects on the Company or its business or operations. The Company assumes no obligations to update any such forward-looking statements.
ii
PART I: FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
CARDIO DIAGNOSTICS HOLDINGS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
| September 30, 2025 | December 31, 2024 | |||||||
| ASSETS | ||||||||
| Current assets | ||||||||
| Cash | $ | $ | ||||||
| Accounts receivable | ||||||||
| Prepaid expenses and other current assets | ||||||||
| Total current assets | ||||||||
| Long-term assets | ||||||||
| Property and equipment, net | ||||||||
| Right of use assets, net | ||||||||
| Intangible assets, net | ||||||||
| Deposits | ||||||||
| Patent costs, net | ||||||||
| Total assets | $ | $ | ||||||
| LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||
| Current liabilities | ||||||||
| Accounts payable and accrued expenses | $ | $ | ||||||
| Lease liability - current | ||||||||
| Finance agreement payable | ||||||||
| Total current liabilities | ||||||||
| Long-term liabilities | ||||||||
| Lease liability – long term | ||||||||
| Total liabilities | ||||||||
| Stockholders' equity | ||||||||
| Preferred stock, $ par value; authorized - shares; shares issued and outstanding as of September 30, 2025 and December 31, 2024, respectively | ||||||||
| Common stock, $
par value; authorized - shares; and shares issued and outstanding as of September 30, 2025 and December 31, 2024, respectively* | ||||||||
| Additional paid-in capital | ||||||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Total stockholders' equity | ||||||||
| Total liabilities and stockholders' equity | $ | $ | ||||||
| * |
The accompanying notes are an integral part of these unaudited condensed financial statements.
| 1 |
CARDIO DIAGNOSTICS HOLDINGS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
| THREE
MONTHS ENDED SEPTEMBER 30, | NINE
MONTHS ENDED SEPTEMBER 30, | |||||||||||||||
| 2025 | 2024 | 2025 | 2024 | |||||||||||||
| Revenue | $ | $ | $ | $ | ||||||||||||
| Operating expenses | ||||||||||||||||
| Selling, general and administrative expenses | ||||||||||||||||
| Total operating expenses | ||||||||||||||||
| Loss from operations | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Other income (expenses) | ||||||||||||||||
| Interest income | ||||||||||||||||
| Interest expense | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Total other income (expenses) | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Loss before provision for income taxes | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Provision for income taxes | ||||||||||||||||
| Net loss | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Basic and fully diluted income (loss) per common share: | ||||||||||||||||
| Net loss per common share* | $ | ) | $ | ) | $ | ) | $ | ) | ||||||||
| Weighted average common shares outstanding - basic and fully diluted* | ||||||||||||||||
| * |
The accompanying notes are an integral part of these unaudited condensed financial statements.
| 2 |
CARDIO DIAGNOSTICS HOLDINGS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
Nine Months Ended September 30, 2025 and 2024
(UNAUDITED)
| Additional | ||||||||||||||||||||
| Common stock | Paid-in | Accumulated | ||||||||||||||||||
| Shares* | Amount* | Capital | Deficit | Totals | ||||||||||||||||
| Balances, December 31, 2024 | $ | $ | $ | ( | ) | $ | ||||||||||||||
| Common stock issued for cash, net of issuance costs | ||||||||||||||||||||
| Restricted stock awards vested | ||||||||||||||||||||
| Compensation for vested stock options | — | |||||||||||||||||||
| Net loss | — | ( | ) | ( | ) | |||||||||||||||
| Balances, March 31, 2025 | $ | $ | $ | ( | ) | $ | ||||||||||||||
| Restricted stock awards vested | ||||||||||||||||||||
| Compensation for vested stock options | — | |||||||||||||||||||
| Fractional shares adjustment | ||||||||||||||||||||
| Net loss | — | ( | ) | ( | ) | |||||||||||||||
| Balances, June 30, 2025 | $ | $ | $ | ( | ) | $ | ||||||||||||||
| Common stock issued for cash, net of issuance costs | ||||||||||||||||||||
| Compensation for vested stock options | — | |||||||||||||||||||
| Net loss | — | ( | ) | ( | ) | |||||||||||||||
| Balances, September 30, 2025 | $ | $ | $ | ( | ) | $ | ||||||||||||||
| Balances, December 31, 2023 | $ | $ | $ | ( | ) | $ | ||||||||||||||
| Common stock and warrants issued for cash, net of issuance costs | ||||||||||||||||||||
| Restricted stock awards vested | ||||||||||||||||||||
| Compensation for vested stock options | — | |||||||||||||||||||
| Net loss | — | ( | ) | ( | ) | |||||||||||||||
| Balances, March 31, 2024 | $ | $ | $ | ( | ) | $ | ||||||||||||||
| Common stock issued for cash | ||||||||||||||||||||
| Restricted stock awards vested | ||||||||||||||||||||
| Compensation for vested stock options | — | |||||||||||||||||||
| Net loss | — | ( | ) | ( | ) | |||||||||||||||
| Balances, June 30, 2024 | $ | $ | $ | ( | ) | $ | ||||||||||||||
| Common stock issued for cash | ||||||||||||||||||||
| Restricted stock awards vested | ||||||||||||||||||||
| Compensation for vested stock options | — | |||||||||||||||||||
| Net loss | — | ( | ) | ( | ) | |||||||||||||||
| Balances, September 30, 2024 | $ | $ | $ | ( | ) | $ | ||||||||||||||
| * |
The accompanying notes are an integral part of these unaudited condensed financial statements.
| 3 |
CARDIO DIAGNOSTICS HOLDINGS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
| Nine Months Ended September 30, | ||||||||
| 2025 | 2024 | |||||||
| CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Adjustments to reconcile net loss to net cash used in operating activities | ||||||||
| Depreciation | ||||||||
| Amortization | ||||||||
| Stock-based compensation expense | ||||||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts receivable | ( | ) | ||||||
| Prepaid expenses and other current assets | ||||||||
| Accounts payable and accrued expenses | ( | ) | ||||||
| Lease liability | ( | ) | ( | ) | ||||
| NET CASH USED IN OPERATING ACTIVITIES | ( | ) | ( | ) | ||||
| CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||
| Purchases of property and equipment | ( | ) | ( | ) | ||||
| Patent costs incurred | ( | ) | ( | ) | ||||
| NET CASH USED IN INVESTING ACTIVITIES | ( | ) | ( | ) | ||||
| CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||
| Proceeds from sale of common stock and warrants, net of issuance costs | ||||||||
| Payments of finance agreement | ( | ) | ( | ) | ||||
| NET CASH PROVIDED BY FINANCING ACTIVITIES | ||||||||
| NET (DECREASE) INCREASE IN CASH | ( | ) | ||||||
| CASH - BEGINNING OF PERIOD | ||||||||
| CASH - END OF PERIOD | $ | $ | ||||||
| SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION: | ||||||||
| Cash paid during the period for: | ||||||||
| Interest | $ | $ | ||||||
| Income taxes | $ | $ | ||||||
The accompanying notes are an integral part of these unaudited condensed financial statements.
| 4 |
CARDIO DIAGNOSTICS HOLDINGS, INC.
NOTES TO CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
(UNAUDITED)
Note 1 - Organization and Basis of Presentation
The condensed 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.
Interim Financial Statements
The following (a) consolidated balance sheet as of December 31, 2024, which has been derived from audited financial statements, and (b) the unaudited condensed consolidated interim financial statements of the Company as of and for the period ended September 30, 2025 have been prepared in accordance with the instructions to Form 10-Q and Rule 8-03 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three and nine months ended September 30, 2025 are not necessarily indicative of results that may be expected for the year ending December 31, 2025 or any future periods. These unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto for the year ended December 31, 2024 included in the Company’s Annual Report on Form 10-K, filed with the Securities and Exchange Commission (“SEC”) on March 20, 2025.
Reverse Stock Split
The Company held its 2024 annual meeting of
stockholders on November 15, 2024, where the Company’s stockholders approved a reverse stock split at a ratio within a range
of
On April 10, 2025, the Company’s Board of Directors determined to effect the reverse stock split of the common stock at a 1-for-30 ratio (the "Reverse Stock Split”) and approved the filing of a Certificate of Amendment (the "Certificate of Amendment”) to the Third Amended and Restated Certificate of Incorporation of the Company to effect the Reverse Stock Split.
On May 12, 2025, the Company filed the Certificate of Amendment with the Delaware Secretary of State to effect the Reverse Stock Split, effective immediately after the close of trading on Nasdaq on May 12, 2025 (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 Company’s 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. The Reverse Stock Split was implemented for the purpose of regaining compliance with the minimum bid price requirement for continued listing of the Company’s common stock on the Nasdaq Capital Market.
As a result of the Reverse Stock Split, the number of shares of common stock outstanding was reduced from 52,160,487 shares to shares, exclusive of 27 whole shares issued for rounding up fractional shares (which was issued in May 2025), and the number of authorized shares of common stock remains million shares.
Unless otherwise indicated, all issued, and outstanding stock and per share amounts contained in the accompanying condensed consolidated financial statements have been adjusted to reflect the 1-for-30 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 Company’s 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.
| 5 |
CARDIO DIAGNOSTICS HOLDINGS, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) |
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:
| September 30, 2024 | ||||||||||||
| As Previously Reported | Impact of Reverse Stock Split | As Revised | ||||||||||
| Common stock - shares | ) | |||||||||||
| Common stock - amount | $ | $ | ( | ) | $ | |||||||
| Additional paid-in capital | $ | $ | $ | |||||||||
| June 30, 2024 | ||||||||||||
| As Previously Reported | Impact of Reverse Stock Split | As Revised | ||||||||||
| Common stock - shares | ) | |||||||||||
| Common stock - amount | $ | $ | ( | ) | $ | |||||||
| Additional paid-in capital | $ | $ | $ | |||||||||
| March 31, 2024 | ||||||||||||
| As Previously Reported | Impact of Reverse Stock Split | As Revised | ||||||||||
| Common stock - shares | ) | |||||||||||
| Common stock - amount | $ | $ | ( | ) | $ | |||||||
| Additional paid-in capital | $ | $ | $ | |||||||||
| December 31, 2024 | ||||||||||||
| As Previously Reported | Impact of Reverse Stock Split | As Revised | ||||||||||
| Common stock - shares | ) | |||||||||||
| Common stock - amount | $ | $ | ( | ) | $ | |||||||
| Additional paid-in capital | $ | $ | $ | |||||||||
| December 31, 2023 | ||||||||||||
| As Previously Reported | Impact of Reverse Stock Split | As Revised | ||||||||||
| Common stock - shares | ) | |||||||||||
| Common stock - amount | $ | $ | ( | ) | $ | |||||||
| Additional paid-in capital | $ | $ | $ | |||||||||
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:
| Nine months ended September 30, 2024 | ||||||||||||
| As Previously Reported | Impact of Reverse Stock Split | As Revised | ||||||||||
| Loss attributable to common shareholders | $ | ( | ) | $ | $ | ( | ) | |||||
| Weighted average shares used to compute basic and diluted EPS | ) | |||||||||||
| Loss per share - basic and diluted | $ | ) | $ | ) | $ | ) | ||||||
| Three months ended September 30, 2024 | ||||||||||||
| As Previously Reported | Impact of Reverse Stock Split | As Revised | ||||||||||
| Loss attributable to common shareholders | $ | ( | ) | $ | $ | ( | ) | |||||
| Weighted average shares used to compute basic and diluted EPS | ) | |||||||||||
| Loss per share - basic and diluted | $ | ) | $ | ) | $ | ) | ||||||
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:
| Nine months ended September 30, 2024 | ||||||||||||
| As Previously Reported | Impact of Reverse Stock Split | As Revised | ||||||||||
| Common stock options | ( | ) | ||||||||||
| Common stock warrants | ( | ) | ||||||||||
| 6 |
CARDIO DIAGNOSTICS HOLDINGS, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) |
Stock options were adjusted retroactively to give effect to the Reverse Stock Split for the nine months ended September 30, 2024:
| As Previously Reported | Impact of Reverse Stock Split | As Revised | ||||||||||||||||||||||
| Options Outstanding | Weighted Average Exercise Price | Options Outstanding | Weighted Average Exercise Price | Options Outstanding | Weighted Average Exercise Price | |||||||||||||||||||
| Options outstanding at December 31, 2023 | $ | ) | $ | $ | ||||||||||||||||||||
| Options granted | $ | ) | $ | $ | ||||||||||||||||||||
| Options cancelled | ) | $ | $ | ) | $ | |||||||||||||||||||
| Options outstanding at September 30, 2024 | $ | ) | $ | $ | ||||||||||||||||||||
| Options vested and exercisable at September 30, 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 nine months ended September 30, 2024:
| As Previously Reported | Impact of Reverse Stock Split | As Revised | ||||||||||||||||||||||
| Warrant
shares Outstanding | Weighted
Average Exercise Price | Warrant
shares Outstanding | Weighted
Average Exercise Price | Warrant
shares Outstanding | Weighted
Average Exercise Price | |||||||||||||||||||
| Warrants outstanding at December 31, 2023 | $ | ( | ) | $ | $ | |||||||||||||||||||
| Warrants granted | $ | ) | $ | $ | ||||||||||||||||||||
| Warrants outstanding at September 30, 2024 | $ | ( | ) | $ | $ | |||||||||||||||||||
Note 2 – Summary of Significant Accounting Policies
Principles of Consolidation
The condensed 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.
| 7 |
CARDIO DIAGNOSTICS HOLDINGS, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) |
Segments
The Company uses the “management approach” in determining reportable operating segments. The management approach considers the internal organization and reporting used by the Company’s chief operating decision maker (“CODM”), who is our chief executive officer, for making operating decisions and assessing performance as the source for determining the Company’s 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 Company’s revenues are generated from products tests for major types of cardiovascular disease, and therefore the Company has one operating segment for financial reporting purposes. The Company’s 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.
Reportable segment information is presented below:
| |
|
September 30, 2025 |
|
|
December 31, 2024 |
|
||
| Current Segment assets | ||||||||
| Cash | $ | $ | ||||||
| Accounts receivable | ||||||||
| Prepaid expenses and other current assets | ||||||||
| Total current segment assets | ||||||||
| Long-term segment assets | ||||||||
| Property and equipment, net | ||||||||
| Right of use assets, net | ||||||||
| Intangible assets, net | ||||||||
| Deposits | ||||||||
| Patent costs, net | ||||||||
| Total segment assets | $ | $ | ||||||
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:
| Nine Months Ended September 30, | ||||||||
| Revenue | 2025 | 2024 | ||||||
| Product Test sales | $ | $ | ||||||
| Total Segment Revenue | $ | $ | ||||||
| Segment Operating Expenses | ||||||||
| Payroll and related costs | $ | $ | ||||||
| Rent and facility expense | ||||||||
| Legal and professional expense | ||||||||
| Consulting and contractor expense | ||||||||
| Insurance expense | ||||||||
| Filing fees expense | ||||||||
| Transfer agent expense | ||||||||
| Software and web computing expense | ||||||||
| Board compensation expense | ||||||||
| Investor relations expense | ||||||||
| Other segment items (a) | ||||||||
| Research and development expense | ||||||||
| Sales and marketing expense | ||||||||
| Amortization expense | ||||||||
| Interest expense, net | ||||||||
| Total Segment Operating Expenses | ||||||||
| Total Segment Net Income (Loss) | $ | ( | ) | $ | ( | ) | ||
| (a) |
| 8 |
CARDIO DIAGNOSTICS HOLDINGS, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) |
| Three Months Ended September 30, | ||||||||
| Revenue | 2025 | 2024 | ||||||
| Product Test sales | $ | $ | ||||||
| Total Segment Revenue | $ | $ | ||||||
| Segment Operating Expenses | ||||||||
| Payroll and related costs | $ | $ | ||||||
| Rent and facility expense | ||||||||
| Legal and professional expense | ||||||||
| Consulting and contractor expense | ||||||||
| Insurance expense | ||||||||
| Filing fees expense | ||||||||
| Transfer agent expense | ||||||||
| Software and web computing expense | ||||||||
| Board compensation expense | ||||||||
| Investor relations expense | ||||||||
| Other segment items (a) | ||||||||
| Research and development expense | ||||||||
| Sales and marketing expense | ||||||||
| Amortization expense | ||||||||
| Interest expense, net | ||||||||
| Total Segment Operating Expenses | ||||||||
| Total Segment Net Income (Loss) | $ | ( | ) | $ | ( | ) | ||
| (a) |
Research and Development
Research and development costs are expensed as
incurred. Research and development costs charged to operations for the nine months ended September 30, 2025 and 2024 were $
Advertising Costs
The Company expenses advertising costs as incurred. Advertising
costs of $
| 9 |
CARDIO DIAGNOSTICS HOLDINGS, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) |
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
Reclassification
Certain prior period amounts have been reclassified to conform with the current period presentation. On the condensed 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.
Recent 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. The Company will adopt the standard on the effective date in our annual reporting for the year ended December 31, 2025. The standard can be applied either prospectively or retrospectively.
Disaggregation of Income Statement Expenses
In November 2024, the FASB issued ASU No. 2024-03, “Income Statement—Reporting Comprehensive Income—Expense 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 entity’s 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 Instruments—Credit 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 condensed consolidated financial statements as a result of future adoption.
| 10 |
CARDIO DIAGNOSTICS HOLDINGS, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) |
Note 3 – Property and Equipment
Property and equipment are carried at cost and consist of the following at September 30, 2025 and December 31, 2024:
| 2025 | 2024 | |||||||
| Office and computer equipment | $ | $ | ||||||
| Furniture and fixtures | ||||||||
| Lab equipment | ||||||||
| Leasehold improvements | ||||||||
| Less: Accumulated depreciation | ( | ) | ( | ) | ||||
| Total | $ | $ | ||||||
Leasehold improvements of $
Depreciation expense of $
Note 4 – Intangible Assets
The following table provides details associated with the Company’s acquired identifiable intangible assets at September 30, 2025 and December 31, 2024:
| 2025 | 2024 | |||||||
| Know-how license | $ | $ | ||||||
| Less: Accumulated amortization | ( | ) | ( | ) | ||||
| Total | $ | $ | ||||||
Amortization expense charged to operations was
$
Note 5 – Patent Costs
As of September 30, 2025, our patent portfolio includes six 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 and six. Legal fees associated with the patents totaled $
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 Company’s 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 Company’s condensed 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 terminate the 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.
| 11 |
CARDIO DIAGNOSTICS HOLDINGS, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) |
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 increased by approximately 2% every August starting from August 2024.
On July 20, 2023, the Company entered into another
lease agreement for laboratory facilities 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
$
Pursuant to ASC Topic 842 Leases, the Company
accounted for both leases as operating leases and accounted for the TIA as a lease incentive, which was estimated to be payable on December
1, 2023. The Company received the TIA from the landlord in maximum amount of $
During the year ended December 31, 2023, the Company
recorded ROU assets of $
As of September 30, 2025 and December 31, 2024, operating lease ROU assets and operating lease liabilities are recorded on the condensed consolidated balance sheets as follows:
| September 30, 2025 | December 31, 2024 | |||||||
| Operating Leases: | ||||||||
| Operating lease right-of-use assets, net | $ | $ | ||||||
| Current portion of operating lease liabilities | $ | $ | ||||||
| Operating lease liabilities, net of current portion | $ | $ | ||||||
As of September 30, 2025, the weighted-average
remaining lease terms of the two operating leases were
The following table summarizes maturities of operating lease liabilities based on lease terms as of December 31:
| 2025 (remaining period) | $ | |||||
| 2026 | ||||||
| 2027 | ||||||
| 2028 | ||||||
| Total lease payments | ||||||
| Less: Imputed interest | ||||||
| Present value of lease liabilities | $ | |||||
At September 30, 2025, the Company had the following future minimum payments due under the non-cancelable lease:
| 2025 (remaining period) | $ | |||||
| 2026 | ||||||
| 2027 | ||||||
| 2028 | ||||||
| Total minimum lease payments | $ | |||||
Consolidated rental expense for all operating
leases was $
The following table summarizes the cash paid and related right-of-use operating lease recognized for the nine months ended September 30, 2025 and 2024.
| Nine Months Ended September 30, | ||||||||
| 2025 | 2024 | |||||||
| Cash paid for amounts included in the measurement of lease liabilities: | ||||||||
| Operating cash flows from operating leases | $ | $ | ||||||
| Reduction of lease liabilities: | ||||||||
| Operating leases | $ | $ | ||||||
| 12 |
CARDIO DIAGNOSTICS HOLDINGS, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) |
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 effective
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 $
Finance agreement payable for this agreement was
$
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 Company’s 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 nine months ended September 30, 2025 and 2024 as the result would be anti-dilutive.
| Nine Months Ended September 30, | ||||||||
| 2025 | 2024 | |||||||
| Stock warrants | ||||||||
| Stock options | ||||||||
| Total shares excluded from calculation | ||||||||
Note 9 – Stockholders’ Equity
Stock Transactions
On October 25, 2022, in connection with the approval of the Business Combination, the Company’s 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.
The 2022 Plan, as approved, permits the issuance of up to 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, 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 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 shares (2,871,638 prior to the Reverse Stock Split).
| 13 |
CARDIO DIAGNOSTICS HOLDINGS, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) |
Common Stock Issued
Private Placement
On February 2, 2024 (pre-dating the
In connection with the Private Placement, the
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 233,051 shares on the post-reverse
stock split basis (which includes 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 $
In connection with the Sales Agreement, the Company
sold common shares (9,165,931 prior to the Reverse Stock Split) at various amounts per share to investors for gross proceeds totaling
$
Other Common Stock Issuance
During the three and nine months ended September
30, 2025, the Company issued shares and 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 $
During the three and nine months ended September
30, 2024, the Company issued common shares (18,746 prior to the Reverse Stock Split) and shares (32,665 prior to the Reverse
Stock Split) to 2 consultants for services pursuant to vesting of Restricted Stock Units granted, valued at $
On March 31, 2024, the Company issued 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 $
Warrants
During the nine months ended September 30, 2025 and 2024, in connection
with the Private Placement as described above, the Company issued warrants that are exercisable for an aggregate of
| 14 |
CARDIO DIAGNOSTICS HOLDINGS, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) |
Warrant activity during the nine months ended September 30, 2025 and 2024 was as follows:
| Warrant shares Outstanding | Weighted Average Exercise Price | Weighted Average Remaining Contractual Life (Years) | ||||||||||
| Warrants outstanding at December 31, 2023 | $ | |||||||||||
| Warrants granted | ||||||||||||
| Warrants outstanding at September 30, 2024 | $ | |||||||||||
| Warrants outstanding at December 31, 2024 | $ | |||||||||||
| No warrant activity | ||||||||||||
| Warrants outstanding at September 30, 2025 | $ | |||||||||||
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”) and granted options
(1,187,826 prior to the Reverse Stock Split) to management and employees, (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 . The immediately vested stock options (1,166,826 prior to the Reverse Stock Split) were
valued at $
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 and granted 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 $per share ($0.33
prior to the Reverse Stock Split) with an expiration date of . These immediately vested stock options were valued at $
On June 30, 2025, the Company granted 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 . These immediately vested stock options were valued at $
On September 30, 2025, the Company granted 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 . These immediately vested stock options were valued at $
On June 30, 2024, the Company granted stock options (30,300 prior
to the Reverse Stock Split) to the board of directors, which vested immediately on 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 of . These immediately vested stock options were
valued at $
| 15 |
CARDIO DIAGNOSTICS HOLDINGS, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) |
On September 30, 2024, the Company
granted stock options (74,744 prior to the Reverse Stock Split) to the board of directors, which vested immediately on 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 of . These immediately vested stock options were valued at $
Option activity during the nine months ended September 30, 2025 and 2024 was as follows:
| Options Outstanding | Weighted Average Exercise Price | Weighted Average Remaining Contractual Life (Years) | ||||||||||
| Options outstanding at December 31, 2023 | $ | |||||||||||
| Options granted | ||||||||||||
| Options expired or cancelled or forfeited | ) | |||||||||||
| Options outstanding at September 30, 2024 | $ | |||||||||||
| Options vested and exercisable at September 30, 2024 | $ | |||||||||||
| Options outstanding at December 31, 2024 | $ | |||||||||||
| Options granted | ||||||||||||
| Options expired or cancelled or forfeited | ) | |||||||||||
| Options outstanding at September 30, 2025 | $ | |||||||||||
| Options vested and exercisable at September 30, 2025 | $ | |||||||||||
Note 10 – 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.
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 Company’s 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 Cardio’s 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 Cardio’s 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 is currently contending 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, and Cardio believes that the final outcome will not have a material adverse impact on its financial condition.
| 16 |
CARDIO DIAGNOSTICS HOLDINGS, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) |
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”).
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 Company’s 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 October 6, 2022. On February 23, 2023 and February 27, 2023, plaintiffs’ securities law firm contacted the Company’s 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 Quarterly Report on Form 10-Q, no lawsuit has been filed against the Company by that firm. The firm has indicated its willingness to litigate the matter if a mutually satisfactory resolution cannot be agreed upon; however, Cardio believes that the final outcome will not have a material adverse impact on its financial condition.
Northland Securities, Inc.
In January 2024, following the Company’s
termination of its agreement with Yorkville and in connection with the Company’s recent 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 $
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.
| 17 |
CARDIO DIAGNOSTICS HOLDINGS, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) |
Directors and Officers Insurance
In connection with the Company’s 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 $65,076 to date and has paid 2% or approximately $1,300 in total royalty fees to UIRF under the exclusive license.
Note 11 – Subsequent Events
The Company evaluated its September 30, 2025 condensed consolidated financial statements for subsequent events through the date the consolidated financial statements were issued.
Common Stock Issued
Subsequent to September 30, 2025, the Company
sold common shares for gross proceeds totaling $
| 18 |
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis provide information that Cardio’s management believes is relevant to an assessment and understanding of Cardio’s results of operations and financial condition. You should read the following discussion and analysis of Cardio’s results of operations and financial condition together with its unaudited condensed consolidated financial statements and related notes to those statements included elsewhere in this Quarterly Report on Form 10-Q, and its audited consolidated financial statements and related notes to those statements included in the Company’s 2024 Annual Report on Form 10-K that was filed on March 20, 2025 (the “2024 Form 10-K”). In addition to historical financial information, this discussion contains forward-looking statements based upon Cardio’s current expectations that involve risks and uncertainties, including those described in the section titled, “Special Note About Forward-Looking Statements,” above. Cardio’s actual results could differ materially from such forward-looking statements as a result of various factors, including those set forth under “Risk Factors” in the 2024 Form 10-K (Item 1A therein). 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 Integrated Genetic-Epigenetic 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 Cardio’s 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 person’s behaviors and environment can cause changes that affect the way a person’s genes work. Unlike genetic changes, epigenetic changes are reversible and do not change one’s DNA sequence, but they can change how a person’s 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 Company’s 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 Epi+Gen CHD™ and PrecisionCHD™ tests are 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 14 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 nine months ended September 30, 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 such as the VA and international, partnering with the YMCA of East Tennessee to offer testing to its members and community, and in setting up our laboratory facility.
| 19 |
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 once our laboratory setup is complete; | |
| · | 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; | |
| · | Expand the adoption of our products across key channels, including health systems and self-insured employers, including for HeartRisk, Cardio’s SaaS product; | |
| · | Explore additional market opportunities in the US and internationally; | |
| · | 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 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 Company’s 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 may be made pursuant to the Sales Agreement up to an aggregate of $9,476,508 under the Company’s 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.
As of November 12, 2025, the Company sold 1,117,763 shares of its Common Stock on a Reverse Stock Split-adjusted basis under the Sales Agreement resulting in proceeds to the Company of $15,061,270, net of offering costs. The Company has paid Craig-Hallum $386,186 in sales commissions.
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 FDA’s 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 March 31, 2025, a federal district court vacated the FDA final rule, thereby cancelling the rulemaking’s associated requirements. The court held that laboratory developed tests do not meet the definition of a medical device under the Federal Food, Drug, and Cosmetic (“FD&C”) Act and the FDA therefore lacks jurisdiction to regulate them. Laboratories no longer need to comply with the regulatory changes that were set to take effect on May 6, 2025, or with the rulemaking’s other requirements. The federal government did not seek a stay of the district court’s opinion and did not file an appeal of the ruling, which means the district court decision remains in effect.
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 Quarterly Report on Form 10-Q. The following table sets forth Cardio’s results of operations data for the periods presented:
Comparisons for the three months ended September 30, 2025 and 2024:
The following table presents summary of consolidated operating results for the three-month periods indicated:
| Three Months Ended September 30, | ||||||||
| 2025 | 2024 | |||||||
| Revenue | ||||||||
| Revenue | $ | 2,855 | $ | 6,580 | ||||
| Operating Expenses | ||||||||
| Selling, general and administrative expenses | 1,714,452 | 1,415,547 | ||||||
| Total operating expenses | (1,714,452 | ) | (1,415,547 | ) | ||||
| Other (expense) income | (2,939 | ) | (3,599 | ) | ||||
| Net (loss) | $ | (1,714,536 | ) | $ | (1,412,566 | ) | ||
Comparisons for the nine months ended September 30, 2025 and 2024:
The following table presents summary of consolidated operating results for the nine-month periods indicated:
| Nine Months Ended September 30, | ||||||||
| 2025 | 2024 | |||||||
| Revenue | ||||||||
| Revenue | $ | 11,270 | $ | 30,378 | ||||
| Operating Expenses | ||||||||
| Selling, general and administrative expenses | 5,032,126 | 6,879,853 | ||||||
| Total operating expenses | (5,032,126 | ) | (6,879,853 | ) | ||||
| Other (expense) income | (11,943 | ) | (14,670 | ) | ||||
| Net (loss) | $ | (5,032,799 | ) | $ | (6,864,145 | ) | ||
Net Loss
Cardio’s net loss for the three months ended September 30, 2025 was $1,714,536 as compared to $1,412,566 for the three months ended September 30, 2024, an increase of $301,970. The increase in net loss was primarily the result of an increase in Selling, General and Administrative expenses associated with an increase in personnel and professional fees in 2025.
Cardio’s net loss for the nine months ended September 30, 2025 was $5,032,799 as compared to $6,864,145 for the nine months ended September 30, 2024, a decrease of $1,831,346. The decrease in net loss was primarily the result of a decrease in General and Administrative expenses associated with stock compensation issued in 2024.
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Revenue
Cardio had $2,855 and $6,580 in revenue for the three months ended September 30, 2025 and 2024, respectively.
Cardio had $11,270 and $30,378 in revenue for the nine months ended September 30, 2025 and 2024, respectively. 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 lesser patients in general than Family Medicine Specialists.
Selling, General and Administrative Expenses
Selling, General and Administrative Expenses for the three months ended September 30, 2025, were $1,714,452 as compared to $1,415,547 for the three months ended September 30, 2024, an increase of $298,905. The overall increase was primarily due to an increase in personnel, legal and professional expenses, consulting and contractor expenses, research and development expenses and sales and marketing expenses.
Selling, General and Administrative Expenses for the three months ended September 30, 2025 included payroll and related costs of $351,238, research and development expense of $189,049, sales and marketing expense of $192,703, rent and other facility costs of $67,231, legal and professional fees of $258,796, consulting and contractor fees of $201,891, insurance expense of $158,323, filing fees of $29,410, transfer agent fees of $11,314, software and web computing expenses of $70,741, board compensation of $49,762, investor relations expense of $1,448, general corporate overhead expenses of $126,891 and amortization expense of $5,655. The total amortization expense for the three months ended September 30, 2025 is for patent costs.
Selling, General and Administrative Expenses for the three months ended September 30, 2024 included payroll and related costs of $511,248, research and development expense of $5,247, sales and marketing expense of $52,059, rent and other facility costs of $70,745, legal and professional fees of $145,800, consulting and contractor fees of $163,836, insurance expense of $184,109, filing fees of $5,255, transfer agent fees of $15,398, software and web computing expenses of $79,717, board compensation of $49,952, investor relations expense of $8,929, general corporate overhead expenses of $118,450 and amortization expense of $4,802. The total amortization expense for the three months ended September 30, 2024 is for intangible assets of $4,000 and patent costs of $802 respectively.
Selling, General and Administrative Expenses for the nine months ended September 30, 2025, were $5,032,126 as compared to $6,879,853 for the nine months ended September 30, 2024, a decrease of $1,847,727. The overall decrease is primarily due to stock compensation expenses of $2,568,753 in the nine months of 2024 as compared to $86,152 in the same period of 2025, offset by more payroll related expenses due to more personnel in 2025.
Selling, General and Administrative Expenses for the nine months ended September 30, 2025 included payroll and related costs of $1,312,755, research and development expense of $354,345, sales and marketing expense of $445,566, rent and other facility costs of $223,085, legal and professional fees of $770,060, consulting and contractor fees of $528,598, insurance expense of $473,153, filing fees of $71,700, transfer agent fees of $23,250, software and web computing expenses of $251,055, board compensation of $149,152, investor relations expenses of $8,948, general corporate overhead expenses of $360,881 and amortization expense of $59,578. The total amortization expense for the nine months ended September 30, 2025 is for intangible assets of $5,333 and patent costs of $54,245 respectively.
Selling, General and Administrative Expenses for the nine months ended September 30, 2024 included payroll and related costs of $3,898,268, research and development expense of $23,367, sales and marketing expense of $144,240, rent and other facility costs of $171,967, legal and professional fees of $590,273, consulting and contractor fees of $560,113, insurance expense of $547,667, filing fees of $82,212, transfer agent fees of $35,551, software and web computing expenses of $217,205, board compensation of $149,910, investor relations expense of $76,453, general corporate overhead expenses of $368,238 and amortization expense of $14,389. The total amortization expense for the nine months ended September 30, 2024 is for intangible assets of $12,000 and patent costs of $2,389 respectively.
We expect our general corporate overhead to remain relatively flat. However, we expect an increase in payroll and related costs and other facility costs, including furnishing the laboratory facility, capital expenditure of laboratory equipment, and other laboratory materials, in order to put our company laboratory into operation in the fourth quarter of 2025. Additionally, as a public company, we expect to have to 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 additional annual expenses related to these matters and, among other things, additional directors’ and officers’ liability insurance, directors’ fees, reporting requirements of the SEC, transfer agent fees, increased auditing and legal fees and similar expenses.
Other income (expenses)
Total other expense for the three months ended September 30, 2025, was $(2,939) as compared to $(3,599) for the three months ended September 30, 2024. The total other expense for the three months ended September 30, 2025, consists of interest expense of $3,128, net of interest income of $189. The total other expense for the three months ended September 30, 2024, consists of interest expense of $3,879, net of interest income of $280.
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Total other expense for the nine months ended September 30, 2025, was $(11,943) as compared to $(14,670) for the nine months ended September 30, 2024. The total other expense for the nine months ended September 30, 2025, consists of interest expense of $12,509, net of interest income of $566. The total other expense for the nine months ended September 30, 2024, consists of interest expense of $15,513, net of interest income of $843.
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. Pursuant to the Sales Agreement, 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 will continue to be made pursuant to the Sales Agreement up to an aggregate of $9,476,508 under a second shelf registration statement declared effective in February 2025 (File No. 333-284775).
As of November 12, 2025, the Company sold 1,117,763 shares of its Common Stock on a Reverse Stock Split-adjusted basis under the Sales Agreement resulting in proceeds to the Company of $15,061,270, net of offering costs. The Company has paid Craig-Hallum $386,186 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 Company’s 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. We expect that our primary cash needs for the remainder of 2025 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 2025, we will rely primarily on the ongoing ATM Offering, provided that market conditions are favorable.
At our 2025 annual meeting of stockholders, our stockholders approved the future issuance of shares of Common Stock and/or securities convertible into or exercisable for Common Stock equal to 20% or more of the Common Stock outstanding in one or more non-public transactions as required by Nasdaq Marketplace Listing Rule 5635(d) (the "Share Issuance Proposal”). This proposal was identical to the proposals approved by our stockholders in 2023 and 2024, neither of which we relied upon for financing options, and the authorizations provided thereby expired. Any non-public financing transaction undertaken in connection with this approval will be conducted within the parameters set forth in the Share Issuance Proposal described in the proxy statement for the 2025 annual meeting. We currently have no specific plans for such an offering but believe having that option available provides our Board of Directors with added flexibility in meeting the Company’s liquidity needs.
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.
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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 issuances of equity and/or debt, 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 3.86 on November 10, 2025. 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 September 30, 2025 totaled $6,355,218 as compared to $7,827,487 at December 31, 2024, a decrease of $1,472,269. The following table shows Cardio’s cash flows from operating activities, investing activities and financing activities for the stated periods.
| Nine months ended September 30, | ||||||||
| 2025 | 2024 | |||||||
| Net cash used in operating activities | $ | 4,364,984 | $ | 3,600,809 | ||||
| Net cash used in investing activities | 340,951 | 349,577 | ||||||
| Net cash provided by financing activities | 3,233,666 | 4,649,453 | ||||||
Cash Used in Operating Activities
Cash used in operating activities for the nine months ended September 30, 2025 was $4,364,984 as compared to $3,600,809 for the nine months ended September 30, 2024. The cash used in operations during the nine months ended September 30, 2025 is a function of net loss of $5,032,799 adjusted for the following non-cash operating items: depreciation of $115,843, amortization of $188,208, $86,152 in stock-based compensation, a decrease of $7,391 in accounts receivable, a decrease of $383,650 in prepaid expenses and other current assets, an increase of $63,073 in accounts payable and accrued expenses and a decrease in lease liability of $176,502.
The cash used in operations during the nine months ended September 30, 2024 is a function of net loss of $6,864,145 adjusted for the following non-cash operating items: depreciation of $76,341, amortization of $115,632, $2,568,753 in stock-based compensation, an increase of $9,140 in accounts receivable, a decrease of $846,715 in prepaid expenses and other current assets, a decrease of $168,405 in accounts payable and accrued expenses and a decrease in lease liability of $166,560.
Cash Used in Investing Activities
Cash used in investing activities for the nine months ended September 30, 2025 was $340,951 compared to $349,577 for the nine months ended September 30, 2024. The cash used in investing activities for the nine months ended September 30, 2025 and 2024 was due to purchases of property and equipment and patent costs incurred.
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Cash Provided by Financing Activities
Cash provided by financing activities for the nine months ended September 30, 2025 was $3,233,666 as compared to $4,649,453 for the nine months ended September 30, 2024. Cash provided by financing activities for the nine months ended September 30, 2025 was due to $3,540,430 in net proceeds from the sale of common stock offset by $306,764 in payments of finance agreement. Cash provided by financing activities for the nine months ended September 30, 2024 was due to $5,023,453 in net proceeds from the sale of common stock and warrants offset by $374,000 in payments pursuant to a finance agreement.
Off-Balance Sheet Financing Arrangements
We did not have any off-balance sheet arrangements as of September 30, 2025.
Contractual Obligations
As of September 30, 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 Company’s 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 Cardio’s 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 Cardio’s 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 is currently contending 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, and Cardio believes that the final outcome will not have a material adverse impact on its financial condition.
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. The Company is evaluating the claim. No legal proceedings have been instigated.
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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 Company’s 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 Company’s 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 was required to supplement the S-4 Registration Statement under applicable laws. As of the date of filing of this Quarterly Report on Form 10-Q, no lawsuit has been filed against the Company by that firm. The firm has indicated its willingness to litigate the matter if a mutually satisfactory resolution cannot be agreed upon; however, Cardio believes that the final outcome will not have a material adverse impact on its financial condition.
Northland Securities, Inc.
In January 2024, following the Company’s termination of its agreement with Yorkville and in connection with the Company’s recent 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. The Company does not believe that it owes Northland any sum based on the termination of the Yorkville Securities Purchase Agreement and the subsequent financing transactions.
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 Company’s 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 $65,076 to date and has paid 2% or approximately $1,300 in total royalty fees to UIRF under the exclusive license.
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 the Company, 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 the Company materially breaches its 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 the Company enters liquidation, has a receiver or administrator appointed over any assets related to the license agreement, ceases to carry on business, files for bankruptcy or if an involuntary bankruptcy petition is filed against the Company.
Critical Accounting Policies and Significant Judgments and Estimates
Cardio’s consolidated financial statements are prepared in accordance with GAAP in the United States. The preparation of its consolidated financial statements and related disclosures requires it 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 Cardio’s financial statements. Cardio bases its estimates on historical experience, known trends and events and various other factors that it believes 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. Cardio evaluates its estimates and assumptions on an ongoing basis. Cardio’s actual results may differ from these estimates under different assumptions or conditions.
Our senior management has reviewed the critical accounting policies and estimates with the Audit Committee of our Board of Directors. For a description of the Company’s critical accounting policies and estimates, refer to “Part II—Item 7—Management’s Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting Policies and Estimates” in our most recent Annual Report on Form 10-K for the year ended December 31, 2024, which was filed with the SEC on March 20, 2025. Critical accounting policies are those that are most important to the portrayal of our financial condition, results of operations and cash flows and require management’s 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. There were no significant changes to our critical accounting policies and estimates during the three and nine months ended September 30, 2025.
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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Pursuant to Item 305(e) of Regulation S-K, the Company is not required to provide the information required by this Item as it is a “smaller reporting company.”
ITEM 4. 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 of our disclosure controls and procedures as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, as of the end of the period covered by this Quarterly Report. 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. Based on such additional analysis, management believes that the financial statements included in this Form 10-Q 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 SEC’s 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.
Management’s 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 period ended September 30, 2025.
Inadequate Segregation of Duties. This material weakness did not result in a material misstatement of the Company’s 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 three and nine months ended September 30, 2025:
| • | Implementation of Approval Matrices: We are developing a formalized approval matrix requiring dual authorization for significant financial 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 September 30, 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 has not been any change in our internal control over financial reporting that occurred during the three and nine months ended September 30, 2025 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
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PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
From time-to-time, the Company may be involved in various civil actions as part of its normal course of business. The Company is not a party to any litigation that is material to ongoing operations as defined in Item 103 of Regulation S-K as of the period ended September 30, 2025.
ITEM 1A. RISK FACTORS
There have been no material changes to the risk factors previously described in Item 1A of Part I of our Annual Report on Form 10-K for the fiscal year ended December 31, 2024. These risk factors, collectively, describe some of the assumptions, risks, uncertainties and other factors that could adversely affect our business or that could otherwise result in changes that differ materially from our expectations. We may disclose changes to such risk factors or disclose additional risk factors from time to time in our future filings with the SEC, including as set forth below. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition or future results.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. MINE SAFETY DISCLOSURES
None.
ITEM 5. OTHER INFORMATION
None of the
Company’s directors or officers
ITEM 6. EXHIBITS
The following exhibits are filed as part of, or incorporated by reference into, this Quarterly Report on Form 10-Q.
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| Incorporation by Reference | ||||||||||
| Exhibit Number | Description | Form | Exhibit | Filing Date | ||||||
| 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 pursuant to 18 U.S. C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 | |||||||||
| 32.2+ | Certification of Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 | |||||||||
| 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. | |
| + |
Furnished herewith. The certifications attached as Exhibit 32.1 and Exhibit 32.2 that accompany this Quarterly Report on Form 10-Q are deemed furnished and not filed with the Securities and Exchange Commission and are 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 Quarterly Report on Form 10-Q, irrespective of any general incorporation language contained in such filing.
|
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SIGNATURES
Pursuant to the requirements 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. | ||
| Date: November 12, 2025 | By: | /s/ Elisa Luqman |
| Elisa Luqman | ||
| Chief Financial Officer | ||
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