Annual Report for Fiscal Year Ending December 31, 2025 (Form 10-K)

Item 7.Management's Discussion and Analysis of Financial Condition and Results of Operations

As a result of the closing of the Business Combination, which was accounted for as a reverse recapitalization in accordance with U.S. GAAP, the consolidated financial statements of Cardio Diagnostics, Inc., a Delaware corporation and our wholly owned subsidiary, are now the financial statements of the Company. You should read the following discussion and analysis of our financial condition and results of operations together with our audited consolidated financial statements as of December 31, 2025 and 2024 and for each of the two years in the period ended December 31, 2025 and the related notes included in Part II, Item 8 of this Annual Report.

Some of the information contained in this discussion and analysis or set forth elsewhere in this Annual Report, including information with respect to our plans, estimates and strategy for our business, includes forward-looking statements based upon current expectations that involve risks and uncertainties. You should read the sections titled "Risk Factors" and "Cautionary Note Regarding Forward Looking Statements" for a discussion of important factors that could cause actual results to differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis. Our historical results are not necessarily indicative of the results that may be expected for any period in the future.

Unless the context requires otherwise, references to "Cardio," the "Company," "we," "us" and "our" refer to Cardio Diagnostics Holdings, Inc., a Delaware corporation, together with its consolidated subsidiary.

Overview

Cardio was formed to further develop and commercialize a series of products for major types of cardiovascular disease and associated co-morbidities, including coronary heart disease ("CHD"), stroke, heart failure and diabetes, by leveraging our Artificial Intelligence ("AI")-driven Multi-Omics Engine™. As a company, we aspire to give every American adult insight into their unique risk for various cardiovascular diseases. Cardio aims to become one of the leading medical technology companies for enabling improved prevention, early detection and treatment of cardiovascular disease. Cardio is transforming the approach to cardiovascular disease from reactive to proactive and hope to accelerate the adoption of Precision Medicine for all. We believe that incorporating 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 PrecisionCHD™ tests is coupled to Actionable Clinical Intelligence ("ACI"), a platform that offers new epigenetic and genetic insights to clinicians prescribing the to personalize patient management and help improve chronic care management. In May 2023, we launched CardioInnovate360™, a research-use-only ("RUO") solution to support the discovery, development and validation of novel biopharmaceuticals for the assessment and management of cardiovascular diseases. In February 2024, we announced the launch of HeartRisk™, a cardiovascular disease risk intelligence platform. We believe that our Epi+Gen CHD™ and PrecisionCHD™ tests are categorized as laboratory-developed tests, or "LDTs." The new go-to-market strategy is also being implemented for these products. Despite long partnership and sales cycles, in some instance as long as 24 months, Cardio has been able to increase the number of provider organizations offering its tests and has continued the development of a more robust sales and partnership pipeline. In the fiscal year ended December 31, 2025, the focus of the Company remained in driving adoption of our clinical solutions, predominantly among providers, channel partners and employers. In addition, the Company made progress in its ongoing expansion to additional markets domestically and internationally with the first international expansion to India, partnering with channel partners such as YMCA of East Tennessee and Southdale YMCA to offer testing to its members and community, and in setting up our CLIA laboratory facility.

Cardio expects that sales and partnership cycles will continue to be long, especially with the current economic uncertainty. Our ongoing strategy for expanding our business operations and increasing revenue generation include the following:

	·	Develop additional products, including clinical tests for stroke, congestive heart failure and diabetes;
	·	Offer laboratory services via our laboratory;
	·	Expand clinical and health economics evidence portfolio to continue to demonstrate value of products and increase reach;
	·	Leverage our CPT PLA codes and expand reimbursement efforts with both government and commercial payors;
	·	Expand the adoption of our products across key channels, including health systems and self-insured employers;
	·	Explore additional market opportunities in the US;
	·	Explore partner-led international expansions like that in India;
	·	Explore opportunities to grow presence in India, including with local manufacturing;
	·	Scale our internal operations capabilities with a focus on improving efficiency and reducing our cost of goods sold; and
	·	Pursue potential strategic partnership(s) and/or acquisition(s) of one or more synergistic companies.

Recent Developments

At the Market Sales Agreement

On January 26, 2024, the Company entered into the Sales Agreement with Craig-Hallum. Pursuant to the Sales Agreement, the Company may sell, at its option, shares of its Common Stock through Craig-Hallum, as sales agent. Sales of the Common Stock were made pursuant to the Sales Agreement initially up to an aggregate of $17 million under the 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 have been, and may continue to 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.

In connection with the Sales Agreement, the Company sold 825,268 common shares (24,758,057 prior to the Reverse Stock Split) at various amounts per share to investors for gross proceeds totaling $11,546,949, before deducting sales commissions of $288,921 to placement agent, during the year ended December 31, 2024. The Company also paid the placement agent a fee of $55,000.

During the year ended December 31, 2025, in connection with the Sales Agreement the Company sold 292,495 shares on the post-reverse stock split basis (which includes 206,713 shares that were sold prior to the Reverse Stock Split, originally 6,201,377 shares) of Common Stock at various amounts per share to investors for gross proceeds totaling $3,900,492 before deducting sales commissions of $96,994 to the placement agent. Subsequent to December 31, 2025, the Company sold 1,133,418 shares of Common Stock for gross proceeds totaling $3,788,174 under the At-the-Market Issuance Sales Agreement as of the date of this report.

As of March 13, 2026, we have sold an aggregate 2,251,181 shares of our Common Stock under the Sales Agreement and may sell up to another $5,298,889 of our Common Stock through Craig-Hallum under the Sales Agreement.

Recent Regulatory and Judicial Developments Regarding LDTs

On May 6, 2024, FDA published a final rule amending the definition of an in vitro diagnostic ("IVD") device to include tests manufactured by a clinical laboratory. Pursuant to the rule, laboratory developed tests ("LDTs"), i.e., tests designed, manufactured, and used within a single CLIA-certified high complexity laboratory, are medical devices subject to FDA regulation under the Federal Food, Drug, and Cosmetic Act. The final rule also announced 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").

On September 19, 2025, the FDA formally rescinded its May 2024 final rule regulating Laboratory Developed Tests (LDTs) as medical devices, following a March 31, 2025, federal court ruling. The U.S. District Court for the Eastern District of Texas found the FDA exceeded its authority, reverting LDT oversight to Clinical Laboratory Improvement Amendments (CLIA). There has been no further pursuit by the current administration.

Results of Operations

The results of operations presented below should be reviewed in conjunction with the consolidated financial statements and notes included elsewhere in this Annual Report on Form 10-K. The following table sets forth Cardio's results of operations data for the periods presented:

Comparisons for the years ended December 31, 2025 and 2024:

		Years Ended December 31,
		2025				2024
Revenue		$	14,825			$	34,890
Operating Expenses
Sales and marketing			766,888				1,231.969
Research and development			641,212				227,966
General and administrative			5,025,570				6,921,094
Amortization			65,233				19,738
Total operating expenses			(6,498,903	)			(8,400,767	)
Other (expense) income			(14,089	)			(17,576	)
Net (loss)		$	(6,498,167	)		$	(8,383,453	)

Cardio's net loss for the year ended December 31, 2025 was $6,498,167 as compared to $8,383,453 for the year ended December 31, 2024, a decrease of $1,885,286 primarily as a result of a decrease in General and Administrative expenses associated with stock compensation issued in 2024.

Revenue

Revenue for the year ended December 31, 2025 was $14,825 compared to $34,890 for the year ended December 31, 2024. The decrease in revenue is a result of the conclusion of the Family Medicine Specialists' Heart Attack Prevention testing initiative.

Additional providers and other organizations are continuing to be onboarded. However, there is a one to three quarter period from onboarding to ramping up usage of tests. The new provider organizations are also smaller and have fewer patients in general than Family Medicine Specialists.

Revenue Growth and Commercial Adoption Considerations

A recurring question from investors is why revenue growth does not immediately follow the development and validation of a clinically promising diagnostic test. While product development may appear straightforward - develop the test, demonstrate its effectiveness, and launch - the path from scientific discovery to broad clinical adoption is complex, highly regulated and typically extended in duration.

The commercialization lifecycle for diagnostic tests generally involves multiple stages:

·

Scientific Validation

The Company must conduct rigorous analytical and clinical validation studies to demonstrate the safety, accuracy and clinical utility of its tests. Publication of supporting data and peer-reviewed evidence is often an important component of this process.

·

Regulatory Requirements

Depending on the regulatory pathway, the Company must comply with applicable federal and state regulatory standards. Regulatory processes may involve submissions, inspections, or other oversight requirements that can extend development timelines.

·

Reimbursement and Coverage

Revenue generation depends significantly on securing third-party reimbursement. Following launch, the Company must obtain coverage determinations from government programs, including the Centers for Medicare & Medicaid Services ("CMS"), and subsequently from commercial payors. Coverage decisions often require demonstration of clinical utility, cost-effectiveness, and economic value relative to the current standard of care. The timing and scope of reimbursement approvals can materially impact adoption rates and revenue growth.

·

Physician Adoption and Clinical Guidelines

Broad utilization frequently depends on physician awareness, education and confidence in the test. Adoption may accelerate when professional medical societies incorporate a diagnostic test into clinical guidelines; however, guideline inclusion typically follows the accumulation of substantial clinical evidence over time.

·

Behavioral and Workflow Integration

Even when a test is validated, reimbursed and supported by clinical data, integration into established clinical workflows and physician practice patterns can be gradual. Changes in medical practice often occur incrementally as providers gain familiarity and comfort with new technologies.

In summary, the healthcare commercialization process is inherently lengthy and subject to regulatory, reimbursement, evidentiary, and behavioral factors. Broad clinical adoption of novel diagnostic technologies frequently spans multiple years and, in some cases, may require a decade or more from initial development to widespread utilization.

Sales and Marketing

Expenses related to sales and marketing for the year ended December 31, 2025 were $766,888 as compared to $1,231,969 for the year ended December 31, 2024, a decrease of $465,081. The overall decrease was primarily due to a restructuring in sales and marketing personnel in 2025.

Research and Development

Research and development expense for the year ended December 31, 2025 was $641,212 as compared to $227,966 for the year ended December 31, 2024, an increase of $413,246. The overall increase was due to an increase in research and development personnel in 2025.

General and Administrative Expenses

General and Administrative Expenses for the year ended December 31, 2025 were $5,025,570 as compared to $6,921,094 for the year ended December 31, 2024, a decrease of $1,895,524. The overall decrease is primarily due to a decrease in stock compensation expenses (mainly as a result of new stock options issued in the first quarter of 2024), coupled by the decrease in director and officer insurance expense.

General and Administrative Expenses for the year ended December 31, 2025 included payroll and related costs of $1,366,808, rent and other facility costs of $306,591, legal and professional fees of $868,826, consulting and contractor fees of $715,764, insurance expense of $618,998, filing fees of $99,115, transfer agent fees of $62,228, software and web computing expenses of $316,339, board compensation of $198,235, investor relations expenses of $10,133 and general corporate overhead expenses of $462,533.

General and Administrative Expenses for the year ended December 31, 2024 included payroll and related costs of $3,213,917, rent and other facility costs of $224,123, legal and professional fees of $731,209, consulting and contractor fees of $740,516, insurance expense of $714,481, filing fees of $102,514, transfer agent fees of $67,536, software and web computing expenses of $274,515, board compensation of $199,658, investor relations expense of $82,345 and general corporate overhead expenses of $570,280.

We expect our general corporate overhead to remain relatively flat. Additionally, as a public company, we must comply with changing legal and exchange requirements, including as to regulations of the SEC and the continued listing requirements of the Nasdaq Capital Market. We incur annual expenses related to these matters and, among other things, directors' and officers' liability insurance, directors' fees, reporting requirements of the SEC, transfer agent fees, Nasdaq listing fees, auditing and legal fees and similar expenses.

Amortization

The total amortization expense for the year ended December 31, 2025 was $65,233, consisting of amortization of intangible assets of $5,333 and patent costs of $59,900. The total amortization expense for the year ended December 31, 2024 is $19,738, consisting of intangible assets of $16,000 and patent costs of $3,738.

Other income (expenses)

Total other expense for the year ended December 31, 2025 was $(14,089) as compared to $(17,576) for the year ended December 31, 2024. The total other expense for the year ended December 31, 2025 consists of interest expense of $14,801, net of interest income of $712. The total other expense for the year ended December 31, 2024 consists of interest expense of $18,640, net of interest income of $1,064.

Liquidity and Capital Resources

Liquidity describes the ability of a company to generate sufficient cash flows in the short- and long-term to meet the cash requirements of its business operations, including working capital needs, debt service, acquisitions and investments and other commitments and contractual obligations. We consider liquidity in terms of cash flows from operations and other sources, and their sufficiency to fund our operations. Historically, our principal sources of liquidity have been proceeds from the issuance of equity.

On January 26, 2024, we entered into the Sales Agreement with Craig-Hallum (the "ATM Offering"). Pursuant to the Sales Agreement and ATM Offering, we may sell, at our option, shares of our Common Stock through Craig-Hallum, as sales agent. Sales of our Common Stock were made pursuant to the Sales Agreement initially up to an aggregate of $17 million under a shelf registration statement declared effective in February 2024 (File No. 333-276725) and have been, and may continue to be made pursuant to the Sales Agreement up to an aggregate of an additional $9,476,508 under a second shelf registration statement declared effective in February 2025 (File No. 333-284775).

As of March 13, 2026, we sold an aggregate 2,251,181 shares of our Common Stock on a Reverse Stock Split-adjusted basis under the Sales Agreement resulting in proceeds to the Company of $18,754,735, net of offering costs. The Company has paid Craig-Hallum $480,890 in sales commissions.

On February 2, 2024 (pre-dating the 1-for-30 reverse stock split effected in May 2025), in accordance with executed subscription agreements with seven accredited investors (the "Subscription Agreements"), we closed on the sale of 561,793 units (the "Units"), with each Unit consisting of (i) one share of the 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, given the nominal amount of revenue we have generated since inception, coupled with substantial expenses both for ongoing business operations and to fund expenses incurred as a public company. We expect that our primary cash needs for the remainder of 2026 and for the foreseeable future will be for funding day-to-day operations and working capital requirements, funding our growth strategy, paying the setup expenses of our internal laboratory and paying expenses incurred in connection with our ongoing FDA submission activities. We explore our financing options on an ongoing basis. However, given recent stock prices and the extreme volatility of our stock, it continues to be challenging to balance cash that could be raised and the dilution that might be required to close a particular transaction. We expect that for the remainder of 2026, we will rely primarily on the ongoing ATM Offering, provided that market conditions are favorable.

Our long-term future capital requirements will depend on many factors, including revenue growth rate, the timing and the amount of cash received from customers, the expansion of sales and marketing activities, the timing and extent of spending to support investments, including research and development efforts, and the continuing market adoption of our products. In each fiscal year since our inception, we have incurred losses from operations and generated negative cash flows from operating activities. We expect this trend to continue in future periods for the foreseeable future.

Unless we are able to generate significant cash flows from operations, which we do not foresee happening in the near term, we will need to finance our operations through the issuance of additional equity and/or convertible debt securities. Looking forward, we expect we will need to raise additional capital and generate revenues to meet long-term operating requirements. If we raise additional funds through the issuance of equity or convertible debt securities, the percentage ownership of our equity holders could be significantly diluted, particularly at current stock price levels, and these newly-issued securities may have rights, preferences or privileges senior to those of existing equity holders. If we raise additional funds by obtaining loans from third parties, the terms of those financing arrangements may include negative covenants or other restrictions on our business that could impair our operating flexibility and also require us to incur interest expense.

Working capital requirements are expected to increase in line with the growth of the business. We have no lines of credit or other bank financing arrangements. We anticipate that our principal sources of liquidity, including existing funds and the ATM offering will be sufficient to fund our activities over the next 12 months. In order to have sufficient cash to fund our operations beyond the next 12 months and grow our business, we will need to raise additional funds through the issuance of equity and/or debt. We cannot provide any assurance that we will be successful in doing so.

If we are unable to raise additional capital when desired, our business, financial condition and results of operations would be harmed. Successful transition to attaining profitable operations depends upon achieving a level of revenue adequate to support our business plan, balanced against ongoing expenses. There is no assurance that we will be successful in reaching and sustaining profitability.

The exercise prices of our currently outstanding warrants range from a high of $345 to a low of $53.40 (a high of $11.50 to a low of $1.78 before the Reverse Stock Split) (subject to adjustment) per share of Common Stock. The likelihood that warrant holders will exercise their warrants, and therefore the amount of cash proceeds that we might receive, is dependent upon the trading price of our Common Stock, the last reported sales price for which was $4.76 on March 11, 2026. If the trading price of our Common Stock is less than the respective exercise prices of our outstanding warrants, which has been the case for a substantial period of time, we believe holders of any of our warrants will be unlikely to exercise their warrants. There is no guarantee that the warrants will be in the money prior to their respective expiration dates, and as such, the warrants may expire worthless, and we may receive no proceeds from the exercise of warrants. Given the current differential between the trading price of our Common Stock and the Warrant exercise prices and the volatility of our stock price, we are not making strategic business decisions based on an expectation that we will receive any cash from the exercise of warrants. However, we will use any cash proceeds received from the exercise of warrants for general corporate and working capital purposes, which would increase our liquidity. We will continue to evaluate the probability of warrant exercises and the merit of including potential cash proceeds from the exercise of the warrants in our future liquidity projections.

Cash at December 31, 2025 totaled $5,110,630 as compared to $7,827,487 at December 31, 2024, a decrease of $2,716,857. The following table shows our cash flows from operating activities, investing activities and financing activities for the stated periods:

		2025				2024
Net cash used in operating activities		$	5,726,833			$	4,993,104
Net cash used in investing activities			419,310				404,190
Net cash provided by financing activities			3,429,286				11,941,258

Cash Used in Operating Activities

Cash used in operating activities for the year ended December 31, 2025 was $5,726,833, as compared to $4,993,104 for the year ended December 31, 2024. The cash used in operations during the year ended December 31, 2025 is a function of net loss of $6,498,167, adjusted for the following non-cash operating items: depreciation of $160,063, amortization of $238,065 and stock-based compensation of $110,235. Operating assets and liabilities fluctuated as follows: a decrease in accounts receivable of $10,486, a decrease of $479,974 in prepaid expenses and other current assets, an increase of $9,781 in accounts payable and accrued expenses and a decrease in lease liability of $237,270.

The cash used in operations during the year ended December 31, 2024 is a function of net loss of $8,383,453, adjusted for the following non-cash operating items: depreciation of $113,777, amortization of $162,568, and stock-based compensation of $2,591,168. Operating assets and liabilities fluctuated as follows: an increase in accounts receivable of $13,652, a decrease of $915,969 in prepaid expenses and other current assets, a decrease of $155,552 in accounts payable and accrued expenses and a decrease in lease liability of $223,929.

Cash Used in Investing Activities

Cash used in investing activities for the year ended December 31, 2025 was $419,310 compared to $404,190 for the year ended December 31, 2024. The cash used in investing activities for the year ended December 31, 2025 was due to $187,317 for purchase of property and equipment and $231,993 in patent costs incurred. The cash used in investing activities for the year ended December 31, 2024 was due to $214,765 for purchase of property and equipment and $189,425 in patent costs incurred.

Cash Provided by Financing Activities

Cash provided by financing activities for the year ended December 31, 2025 was $3,429,286 as compared to $11,941,258 for the year ended December 31, 2024. This change was due to$3,803,498 in proceeds from the sale of Common Stock, net of issuance costs, offset by $374,212 in payments pursuant to a finance agreement during the year ended December 31, 2025. Cash provided by financing activities for the year ended December 31, 2024 was due to $12,391,949 in proceeds from the sale of Common Stock and warrants, net of issuance costs, offset by $450,691 in payments pursuant to the Sales Agreement for the ATM Offering.

Off-Balance Sheet Financing Arrangements

We did not have any off-balance sheet arrangements as of December 31, 2025.

Contractual Obligations

As of December 31, 2025, we do not have any ongoing contractual obligations that would have a negative impact on liquidity and cash flows. However, if one or more of the following potential claims that arise from contracts we have entered into were pursued against us, there is the potential that we could see a negative impact on liquidity and cash flows, depending on the outcome.

Prior Relationships of Cardio with Boustead Securities, LLC

At the commencement of efforts to pursue what ultimately ended in the terminated business acquisition, Legacy Cardio entered into a Placement Agent and Advisory Services Agreement (the "Placement Agent Agreement"), dated April 12, 2021, with Boustead Securities, LLC ("Boustead Securities"). This agreement was terminated in April 2022, when Legacy Cardio terminated the underlying agreement and plan of merger and the accompanying escrow agreement relating to that proposed business acquisition after efforts to complete the transaction failed, despite several extensions of the closing deadline.

Under the terminated Placement Agent Agreement, Legacy Cardio agreed to certain future rights in favor of Boustead Securities, including (i) a two-year tail period during which Boustead Securities would be entitled to compensation if Cardio were to close on a transaction (as defined in the Placement Agent Agreement) with any party that was introduced to Legacy Cardio by Boustead Securities; and (ii) a right of first refusal to act as the 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 contended that they are due success fees for two years following the termination of the Placement Agent Agreement on any transaction with any person on the list of supposed contacts or introductions. Legacy Cardio strongly disputes this position. Notwithstanding the foregoing, the Company has not consummated any transaction, as defined, with any potential party that purportedly was a contact of Boustead Securities in connection with the Placement Agent Agreement and has no plans to do so at any time during the tail period. No legal proceedings have been instigated by either party.

The Benchmark Company, LLC Right of First Refusal

The Company completed a business combination with Mana on October 25, 2022. In connection with the proposed business combination, by agreement dated May 13, 2022, Mana engaged The Benchmark Company, LLC ("Benchmark") as its M&A advisor. Upon closing of the business combination, Legacy Cardio assumed the contractual engagement entered into by Mana. On November 14, 2022, Cardio and Benchmark entered into Amendment No. 1 Engagement Letter (the "Amendment Engagement"). Pursuant to the Amendment Engagement, Benchmark has been granted a right of first refusal to act as lead or joint-lead investment banker, lead or joint-lead book-runner and/or lead or joint-lead placement agent for all future public and private equity and debt offerings through October 25, 2023. Based on the right of first refusal, Benchmark alleges that it is owed damages because the Company entered into the Yorkville Convertible Debenture Transaction without first offering Benchmark the right to serve as the lead or joint-lead placement agent for the transaction. No legal proceedings have been instigated.

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 is required to supplement the S-4 Registration Statement under applicable laws. As of the date of filing of this Annual Report on Form 10-K, no lawsuit has been filed against the Company by that firm.

Northland Securities, Inc.

In January 2024, following the Company's termination of its agreement with Yorkville and in connection with the Company's at the market offering and/or its February 2024 private placement, a managing director of Northland Securities, Inc. ("Northland") contacted the Company claiming the right to be paid a fee of approximately $150,000 pursuant to the agreement of March 1, 2023 between the Company and Northland regarding the Yorkville financing. Subsequently, the Company has been advised by another representative of Northland that Northland would not proceed with any such claim and no legal proceedings have been instigated.

The Company cannot preclude the possibility that claims or lawsuits brought relating to any alleged securities law violations or breaches of fiduciary duty could potentially require significant time and resources to defend and/or settle and distract its management and board of directors from focusing on its business.

Directors and Officers Insurance

In connection with the 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 $68,631 to date and has paid 2% or approximately $1,300 in total royalty fees to UIRF under the exclusive license.

Nasdaq Continued Listing Compliance

On June 3, 2024, we received notice from The Nasdaq Stock Market LLC ("Nasdaq") that we were not in compliance with Nasdaq Listing Rule 5550(a)(2) because the closing bid price of our common stock had been below $1.00 per share for 30 consecutive business days. We were provided an initial compliance period and, on December 4, 2024, were granted an additional compliance period through June 2, 2025.

In May 2025, we effected a reverse stock split, after which we regained compliance with the minimum bid price requirement. Nasdaq subsequently notified us that we had regained compliance with Listing Rule 5550(a)(2).

Although we are currently in compliance, the market price of our common stock has historically experienced volatility and may continue to fluctuate due to factors both within and outside of our control, including our operating performance, capital market conditions, investor sentiment toward small-cap healthcare companies, and broader macroeconomic trends. Reverse stock splits do not guarantee sustained increases in market price, and there can be no assurance that we will be able to maintain compliance with the minimum bid price requirement or other Nasdaq continued listing standards in the future.

If the bid price of our common stock were to decline below $1.00 per share for a sustained period, we could again become non-compliant with Nasdaq's continued listing requirements. In addition, continued listing on Nasdaq requires compliance with other quantitative and qualitative standards, including stockholders' equity thresholds, market value of publicly held shares, corporate governance requirements, and timely filing obligations.

Any future failure to maintain compliance could result in deficiency notices and, if not cured, could ultimately lead to delisting, which could adversely affect the liquidity and market value of our common stock and our ability to access the capital markets.

Critical Accounting Policies and Estimates

Our consolidated financial statements are prepared in accordance with GAAP in the United States. The preparation of our consolidated financial statements and related disclosures requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenue, costs and expenses and the disclosure of contingent assets and liabilities in our financial statements. We base our estimates on historical experience, known trends and events and various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Management evaluates our estimates and assumptions on an ongoing basis. Our actual results may differ from these estimates under different assumptions or conditions.

While our significant accounting policies are described in more detail in Note 2 to the consolidated financial statements, we believe that the following accounting policies are those most critical to the judgments and estimates used in the preparation of the consolidated financial statements. Critical accounting policies are those that are most important to the portrayal of our financial condition, results of operations and cash flows and require 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.

Stock-Based Compensation

We account for stock-based awards granted under our employee compensation plan in accordance with ASC Topic No. 718-20, Awards Classified as Equity, which requires the measurement of compensation expense for all share-based compensation granted to employees and non-employee directors at fair value on the date of grant and recognition of compensation expense over the related service period for awards expected to vest. We use the Black-Scholes option pricing model to estimate the fair value of our stock options and warrants. The Black-Scholes option pricing model requires the input of highly subjective assumptions including the expected stock price volatility of our Common Stock, the risk-free interest rate at the date of grant, the expected vesting term of the grant, expected dividends and an assumption related to forfeitures of such grants. Changes in these subjective input assumptions can materially affect the fair value estimate of our stock options and warrants.

As of December 31, 2025, we were not subject to any market or interest rate risk.