What changed in this filing

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Item 7. Management’s Discussion and Analysis

2024-04-01 compared with 2023-03-31 · 352 added, 291 removed, 198 unchanged (76% of the section changed)

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disease by 2035.

believes 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)

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

Cardio’s ongoing strategy for expanding

its business operations includes the following:

Develop blood-based and saliva-based products for stroke, congestive heart failure and diabetes;

Build out clinical and health economics evidence in order to obtain payer reimbursement for Cardio’s tests;

Expand its testing process outside of a single high complexity CLIA laboratory to multiple laboratories, including hospital laboratories;

Introduce the test across several additional key channels, including health systems and self-insured employers;

Pursue the potential acquisition of one or more laboratories and/or synergistic companies in the telemedicine, AI or remote patient monitoring space.

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, 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.

Despite long partnership and sales cycles, in some instance as long as 14 months, Cardio in 2023 generated revenue from patient(s), small

provider(s), larger provider(s) and employer(s) and has developed a more robust sales and partnership pipeline.

In addition to revenue,

other key developments since our last Form 10-Q filing as of September 30, 2023, include:

· Planned launch of a new lab and fulfillment center to expand

testing capacity, reduce costs, reduce turnaround time and improved margins.

· Entering into a Supply and Distribution Agreement with one

of India’s premier organizations, Aimil Ltd, to lay the pre-marketing groundwork via Aimil’s extensive healthcare network.

· Receiving an Innovative Technology Contract from Vizient,

the largest group purchasing organization with a customer base encompassing 60% of hospitals and 97% of academic medical centers in the

· Publication of a key peer-reviewed study on PrecisionCHD

development and validation for the detection of coronary heart disease in the Journal of American Heart Association.

· An agreement with Family Medicine Specialists to test at

least 1,200 of their BlueCross BlueShield and other health plan patients

across four locations.

· Obtained two Current Procedural Terminology (CPT) Proprietary

Laboratory Analysis (PLA) codes from the American Medical Association, 0440U for PrecisionCHD and 0439U for Epi+Gen CHD.

· The launch of HeartRisk, a cardiovascular risk intelligence

platform, initially for employers to provide insights that combine HIPAA-compliant anonymized and aggregated clinical cardiovascular risk

data with industry and geographic data, with the aim of helping employers understand the cardiovascular risks in their workforce compared

to population and industry benchmarks.

Cardio expects that sales and partnership

cycles will continue to be long.

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;

Expand clinical and health economics evidence portfolio to continue to demonstrate value of products and increase reach;

Leverage our newly awarded CPT PLA codes;

Expand the adoption of our products across key channels, including health systems and self-insured employers, including for HeartRisk, Cardio’s new SaaS product;

Scale our internal operations capabilities with a focus on improving efficiency

and reducing our cost of goods sold;

potential strategic partnership(s) and acquisition(s)

of one or more synergistic companies.

Recent Developments

The Business Combination

On October 25, 2022, we consummated the Business Combination.

to the Business Combination Agreement, Merger Sub merged with and into Legacy Cardio, with Legacy Cardio surviving the merger and becoming

a wholly-owned direct subsidiary of Mana.

Thereafter, Merger Sub ceased to exist, and Mana was renamed Cardio Diagnostics Holdings, Inc.

The Business Combination was accounted for as

a reverse recapitalization, in accordance with GAAP.

Under the guidance in ASC 805, Mana was treated as the “acquired” company

for financial reporting purposes.

Legacy Cardio was deemed the accounting predecessor of the combined business, and Cardio Diagnostics

Holdings, Inc., as the parent company of the combined business, was the successor SEC registrant, meaning that our financial statements

for previous periods will be disclosed in the registrant’s periodic reports filed with the SEC.

The Business Combination

had a significant impact on the Company’s reported financial position and results as a consequence of the reverse recapitalization.

As noted in Note 1 to the Company’s consolidated financial statements, the Company’s financial position reflects current liabilities

that include existing, deferred liabilities originally incurred by Mana that are payable by the Company to Ladenburg Thalmann & Co.,

(“Ladenburg”) and I-Bankers Securities, Inc.

(“I-Bankers”), the underwriters of Mana’s initial public

offering, and The Benchmark Company, LLC (“Benchmark”), the

M&A advisor Mana retained in connection with the Business Combination.

The aggregate amount of the liabilities owed to these investment

bankers, as assumed by the Company in connection with the Business Combination, totals $928,500.

This sum reflects a decrease in the amount

of the original liabilities incurred by Mana, including a 30% decrease in the liability owed to Ladenburg and I-Bankers and a 46% decrease

in the original liability incurred by Mana to Benchmark .

The $928,500 is due and payable to the investment bankers on October 25, 2023.

However, on March 25, 2023, Ladenburg offered us a 15%

early pay discount on the balance due.

On March 27, 2023, we accepted the early pay discount and paid Ladenburg the net balance due and

payable of $419,475.

The balance of $435,000 owed to Benchmark remains due and payable on October 25, 2023.

In addition, the Company acquired only $4,021

in cash after the payment of transaction costs and outstanding accounts payable, primarily as a result of a redemption rate of over 99%

by the holders of Mana’s publicly-traded Common Stock, which shares had a redemption right in connection with the Business Combination.

Specifically, Mana’s public stockholders exercised their right to redeem 6,465,452 shares of Common Stock, which constituted approximately

99.5% of the shares with redemption rights, for cash at a redemption price of approximately $10.10 per share, for an aggregate redemption

amount of $65,310,892 .

In accounting for the reverse

recapitalization, Legacy Cardio’s 1,976,749 issued and outstanding common shares were reversed, and the Mana common shares totaling

9,514,743 were recorded, as described in Note 7.

As additional consideration for the transaction, Cardio will issue to each holder

who was entitled to merger consideration at the Closing, its pro rata proportion of up to 1,000,000 shares of our authorized

but unissued common stock (the “Earnout Shares” or “Contingently Issuable Common Stock”), if on or prior to the

fourth anniversary of the Closing Date (the “Earnout Period”), the VWAP of the Company’s Common Stock equals or exceeds

four different price triggers for 30 of any 40 consecutive trading days, as follows:

(i) one-quarter of the Earnout Shares will be issued

if the VWAP equals or exceeds $12.50 per share for the stated period;

(ii) one-quarter of the Earnout Shares will be issued if the VWAP

equals or exceeds $15.00 per share for the stated period;

(iii) one-quarter of the Earnout Shares will be issued if the VWAP equals or

exceeds $17.50 for the stated period;

and (iv) one-quarter of the Earnout Shares will be issued if the VWAP equals or exceeds $20.00 for

the stated period.

As an SEC-registered and Nasdaq-listed company,

post-merger, the Company will need to hire additional personnel and implement procedures and processes to address public company regulatory

requirements and customary practices.

The Company expects to incur additional annual expenses as a public company for, among other things,

directors’ and officers’ liability insurance, director fees, and additional internal and external accounting, legal and administrative

COVID-19 Impact

The global COVID-19 pandemic continues to evolve.

The extent of the impact of the COVID-19 pandemic on Cardio’s business, operations and development timelines and plans remains uncertain

and will depend on certain developments, including the duration and spread of the outbreak and its impact on Cardio’s development

activities, third-party manufacturers, and other third parties with whom Cardio does business, as well as its impact on regulatory authorities

and Cardio’s key scientific and management personnel.

The ultimate impact of the COVID-19 pandemic

is highly uncertain and subject to change.

To the extent possible, Cardio is conducting business as usual, with necessary or advisable

modifications to employee travel and with certain of its employees working remotely all or part of the time.

Cardio will continue to actively

monitor the evolving situation related to COVID-19 and may take further actions that alter our operations, including those that federal,

state or local authorities may require, or that we determine in the best interests of our employees and other third parties with whom

we do business.

At this point, the extent to which the COVID-19pandemic may affect our future business, operations and development timelines

and plans, including the resulting impact on Cardio’s expenditures and capital needs, remains uncertain.

At the Market Sales Agreement

26, 2024, the Company entered into an At-the-Market Issuance Sales Agreement (the “Sales Agreement”) with Craig-Hallum

Capital Group LLC (“Craig-Hallum”).

Pursuant to the Sales Agreement, the Company may sell, at its option, up to an aggregate

of $17 million in shares of its Common Stock through Craig-Hallum, as sales agent.

Sales of the Common Stock made pursuant to the

Sales Agreement have been or will be made under the Company’s Registration Statement on Form S-3 filed on January 26,

2024 (File No.

333-276725) (the “Registration Statement”), which was declared effective by the Securities and Exchange Commission

on February 1, 2024.

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 April 1, 2024, the Company

has sold 487,083 shares of its common stock under the Sales Agreement resulting in proceeds to the Company of $855,922, net of

offering costs.

The Company has paid Craig-Hallum $ 21,947 in sales commissions.

Results of Operations

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Comparisons for the years ended December 31, 2023 and 2022:

Ended December 31,

Years Ended December 31,

Operating Expenses

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Other (expense) income

Net Loss Attributable to Legacy Cardio

$ (8,376,834 )

$ (4,660,985 )

Cardio’s net loss

attributable for the year ended December 31, 2022, was $4,660,985 as compared to $620,448 for the year ended December 31, 2021, an increase

of $4,040,537 primarily as a result of an increase in General and Administrative expenses.

Cardio has earned only nominal revenue since

Revenue for the year ended December 31, 2022 was $950 compared to $901 for the year ended December 31, 2021.

Revenue was generated

through the Elicity telemedicine platform.

for the year ended December 31, 2023, was $8,376,834 as compared to $4,660,985 for the year ended December 31, 2022, an increase of $3,715,849

primarily as a result of an increase in General and Administrative expenses.

earned only nominal revenue since inception.

Revenue for the year ended December 31, 2023, was $17,065 compared to $950 for the year ended

December 31, 2022.

Revenue was generated through multiple revenue channels,

including, telemedicine platform, provider organizations, and employers.

Sales and Marketing

Expenses related to sales and marketing for

the year ended December 31, 2 022 were $92,700 as compared to $103,318 for

the year ended December 31, 2021, a decrease of $10,618.

The overall decrease

was due to a decrease in outsourced sales and marketing contracting related to the launching of our first product, Epi+Gen CHD™

in January 2021 as opposed to an increase in 2022 of hiring of staff utilized for sale and marketing efforts.

Expenses related

to sales and marketing for the year ended December 31, 2 023,

were $158,514 as compared to $92,700 for the year ended December 31, 2022,

an increase of $65,814.

The overall increase was due to an increase in sales and marketing campaign efforts in 2023.

Research and Development

Research and development expense for year ended

December 31, 2022, was $40,448 as compared to $31,468 for year ended December 31, 2021, an increase of $8,980.

The increase was attributable

to laboratory runs performed in the 2022 period, whereas less laboratory runs were performed in the corresponding period in 2021.

Research and development expense for the

year ended December 31, 2023, was $145,182 as compared to $40,448 for year ended December 31, 2022, an increase of $104,734.

increase was attributable to increased laboratory runs performed in the 2023, as compared to laboratory runs performed in 2022.

General and Administrative Expenses

and administrative expenses for the year ended December 31,2022 were $4,400,253 as compared to $470,563 for the

administrative expenses for the year ended December 31, 2023, were $6,936,646 as compared to $4,400,253 for the

year ended December 31, 2022, an increase of $2,536,393.

The overall increase is primarily due to an increase in personnel and legal and

accounting expenses related to financing and merger transactional activity .

Amortization expense for year ended December

The overall increase is primarily due to a stock compensation of $1,035,273,

an increase in rent, personnel, and office and software expenses related to new offices and the new internal lab setup.

Amortization expense for the year ended December 31,

2023, was $19,182, as compared to $16,000 for the year ended December 31, 2022.

The total amortization expense includes the amortization

of intangible assets.

The total amortization expense for the year ended December

31, 2023 includes the amortization of intangible assets of $16,000 and patent costs of $3,182, respectively.

Liquidity and Capital Resources

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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 operating and investing activities.

principal sources of liquidity have been proceeds from the issuance of equity and warrant exercises.

More recently, upon

signing the YA Securities Purchase Agreement on March 8, 2023, we issued and sold to YA II PN, Ltd.

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 operating and investing activities.

Historically, our principal sources of liquidity

have been proceeds from the issuance of equity and warrant exercises.

More recently, upon signing the YA Securities Purchase Agreement

on March 8, 2023 (the “Securities Purchase Agreement”), we issued and sold to YA II PN, Ltd.

(“Yorkville”) a Convertible

Debenture in the principal amount of $5.0million for a purchase price of $4.5 million (the “First YA Convertible Debenture”)

to provide additional liquidity.

Pursuant to the YA Securities Purchase Agreement, the parties further agreed that we will issue and sell

to Yorkville, and Yorkville will purchase from us, a second YA Convertible Debenture in the principal amount of $6.2 million for a purchase

price of $5.58 million, subject to the satisfaction or waiver of the conditions set forth in the YA Securities Purchase Agreement.

conditions include, but are not limited to:

(i) the SEC shall have declared effective a resale registration statement covering shares

of Common Stock issuable upon conversion of the First YA Convertible Debenture;

and (ii) we shall have obtained stockholder approval for

the issuance of the shares of Common Stock issuable upon conversion of the YA Convertible Debentures that would be in excess of the “Exchange

Cap” (as defined in the YA Securities Purchase Agreement).

Our primary cash needs are for day-to-day operations,

to fund working capital requirements, to fund our growth strategy, including investments and acquisitions, and to pay $435,000 of deferred

contractual obligations originally incurred by Mana to one of its investment bankers, which is payable on October 25, 2023, as well as

other accounts payable.

Debenture in the principal amount of $5,000,000 for a purchase price of $4,500,000 to provide additional liquidity.

Yorkville fully converted

the $5,000,000 Convertible Debenture into an aggregate of 10,622,119 common shares during the year ended December 31, 2023.

The Securities

Purchase Agreement contemplated the issuance of a second convertible debenture in the amount of $6,200,000.

However, prior to the issuance

of the second convertible debenture, the Company and Yorkville terminated the Securities Purchase Agreement by the mutual consent of the

parties, effective as of January 4, 2024.

On February 2, 2024, we closed a private placement

with seven accredited investors, whereby we issued a total of 561,793 units (“Units”), with each Unit consisting of (i) one

share of our Common Stock and (ii) one six-year Common Stock purchase warrant having an exercise price of $1.78 per share, subject to

adjustment (the “Private Placement”).

The Private Placement resulted in the issuance to investors of 561,793 shares of Common

Stock and 561,793 warrants in an unregistered offering of securities.

The purchase price of the securities was $1.78 per Unit, resulting

in gross proceeds to the Company of $1,000,000, before deducting placement agent fees (10% or $100,000) and other offering expenses.

intend to use the net proceeds from the Private Placement for working capital and general corporate purposes.

As noted in Recent Developments, above, we

entered into an At-the Market Sales Agreement with Craig-Hallum on January 26, 2024.

As of April 1, 2024, we have received $877,869 in

gross proceeds from the ATM sales, and we have available up to $16.1 million in future sales of our Common Stock that we may elect to

make under the Sales Agreement.

We expect that our primary cash needs in 2024 will

be for day-to-day operations, funding 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.

On March 22, 2023, Ladenburg, one of

Mana’s investment bankers, offered us a 15% early pay discount on the balance due.

On March 27, 2023, we accepted Ladenburg’s

early pay discount offer and paid Ladenburg the net balance due and payable of $419,475.

The remaining assumed liabilities balance of

$435,000 was paid in full in October 2023.

Accordingly, as of the date of this report, the Company has paid in full all of the liabilities

it assumed in the Business Combination.

Our principal uses of cash in recent periods

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continuing market adoption of our products.

each fiscal year since our inception, we have incurred losses from operations

and generated negative cash flows from operating activities.

We also have negative working capital and stockholders’ deficit as

of December 31, 2022.

Our total current liabilities as of December 31, 2022 are $1,947,770.

As noted above, on March 8, 2023, we

issued and sold the First YA Convertible Debenture, thereby increasing our current liabilities by $5.0 million, with the expectation that

we will issue and sell the Second YA Convertible Debenture in the principal amount of $6.2 million in the second quarter of 2023.

We received less proceeds from the Business

Combination than we initially expected.

The projections that we prepared in June 2022 in connection with the Business Combination assumed

that we would receive at least an aggregate of $15 million in capital from the Business Combination and the Legacy Cardio private placements

conducted in 2022 prior to the Business Combination.

This base amount anticipated at least $5.0 million in proceeds remaining in the Trust

Account following payment of the requested redemptions.

At Closing, we received only $4,021 in cash from the Trust Account due to higher

than expected redemptions by Mana public stockholders and higher than expected expenses in connection with the Business Combination and

residual Mana expenses.

Accordingly, we have less cash available to pursue our anticipated growth strategies and new initiatives than

we projected.

This has caused, and may continue to cause, significant delays in, or limit the scope of, our planned acquisition strategy

and our planned product expansion timeline.

Our failure to achieve our projected results could harm the trading price of our securities

and our financial position, and adversely affect our future profitability and cash flows.

Because of the extremely high rate of redemptions

by Mana public stockholders in connection with the Business Combination and higher than anticipated transaction costs, we have almost

no Trust fund proceeds available to pursue our anticipated growth strategies and new initiatives, including our acquisition strategy.

This has had a material impact on our projected estimates and assumptions and actual results of operations and financial condition.

recorded nominal revenue in 2022 of $950.

It is likely that revenue in 2023 will also fall short of the projections.

Nevertheless, we

believe that the fundamental elements of our business strategy remain unchanged, although the scale and timing of specific initiatives

have been temporarily negatively impacted as a result of having significantly less than anticipated capital on hand following the Business

and expect that we will continue to have, an ongoing need to raise additional cash from outside sources to fund our operations and expand

In each fiscal year since our inception, we have incurred losses from operations and generated

negative cash flows from operating activities.

to explore our financing options, such as equity private placement transactions.

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

We expect that for the remainder of 2024, we will rely on the ongoing ATM offering, provided that market conditions are favorable.

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 expand

our business.

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post-merger company.

expect that working capital requirements will continue to be funded through a combination of existing funds and further issuances of securities.

Working capital requirements are expected to increase in line with the growth of the business.

Existing working capital, further advances

and debt instruments, and anticipated cash flow are expected to be adequate to fund operations over the next 12 months.

We have no lines

of credit or other bank financing arrangements.

In connection with our business plan, management anticipates additional increases

in operating expenses and capital expenditures relating to:

(i) developmental expenses associated with a start-up business and (ii) marketing

Cardio intends to finance these expenses with further issuances of securities and debt issuances.

Thereafter, 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,

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.

We expect that working capital requirements

will continue to be funded through a combination of existing funds and further issuances of securities.

Working capital requirements are

expected to increase in line with the growth of the business.

Existing working capital, further advances and debt instruments, and anticipated

cash flow are expected to be adequate to fund operations over the next 12 months.

We have no lines of credit or other bank financing arrangements.

In connection with our business plan, management anticipates additional increases in operating expenses and capital expenditures

(i) developmental expenses associated with a start-up business and (ii) marketing expenses.

Cardio intends to finance these

expenses with further issuances of securities and debt issuances.

Thereafter, 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, 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.

The exercise prices of our currently outstanding

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proceeds from the exercise of the Warrants in our future liquidity projections.

Cash at December

31, 2022 totaled $4,117,521 as compared to $512,767 at December 31, 2021, an increase of $3,604,754.

following table shows Cardio’s cash flows from operating activities, investing activities and financing activities for the stated

at December 31, 2023 totaled $1,283,523 as compared to $4,117,521

at December 31, 2022, a decrease of $2,833,998.

following table shows our cash flows from operating activities, investing activities and financing activities for the stated periods:

Net cash used in operating activities

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the year ended December 31, 2023, is a function of net loss of $8,376,834, adjusted for the following non-cash operating items:

of $16,000 and $112,534 in acquisition related expense, offset by a decrease in accounts receivable of $901, an increase of $690,821 in

prepaid expenses and other current assets, an increase in deposits of $4,950 and an increase of $136,353 in accounts payable and accrued

of $3,790, amortization of $107,830, stock based compensation of $1,279,273, and non-cash interest expense of $6,704,522, offset by a

change in fair value of derivative liability of $5,406,220, a gain on extinguishment of debt of $193,350, an increase in accounts receivable

of $4,960, a decrease of $758,669 in prepaid expenses and other current assets, an increase in deposits of $7,900, a decrease of $781,500

in accounts payable and accrued expenses and an increase in lease liability of $244,505.

The cash used in operations during the year

ended December 31, 2022, is a function of net loss of $4,660,985, adjusted for the following non-cash operating items:

amortization of

$16,000 and $112,534 in acquisition related expense, offset by a decrease in accounts receivable of $901, an increase of $690,821 in prepaid

expenses and other current assets, an increase in deposits of $4,950 and an increase of $136,353 in accounts payable and accrued expenses.

Cash Used in Investing Activities

Cash used in investing activities for the year

ended December 31, 2022, was $368,001 compared to $364,029 for the year ended December 31, 2021.

The cash used in investing activities

for the year ended December 31, 2022 was due to $4,021 cash acquired from acquisition, $137,466 repayment of deposit for acquisition,

$433,334 payments for notes receivable and $76,154 in patent costs incurred.

Cash used in investing activities for the year ended

December 31, 2023, was $794,291 compared to $368,001 for the year ended December 31, 2022.

The cash used in investing activities for the

year ended December 31, 2023, was due to $575,663 for purchase of property and equipment, $21,352 payments for lease and $197,276 in patent

and trademark costs incurred.

The cash used in investing activities for the year ended December 31, 2022 was due to $4,021 cash

acquired from acquisition, $137,466 repayment of deposit for acquisition, $433,334 payments for notes receivable and $76,154 in patent

costs incurred.

Cash Provided by Financing Activities

Cash provided by financing activities for the

year ended December 31, 2022 was $9,063,723 as compared to $1,225,000 for the year ended December 31, 2021.

Cash provided by financing activities for the year

ended December 31, 2023, was $3,632,468 as compared to $9,063,723 for the year ended December 31, 2022.

This change was due to $4,500,000

in proceeds from the sale of common stock, offset by $188,674 in payments of finance agreement, $1,535,035 in payments of recapitalization

transaction costs and $1,198,604 in placement agent fees, during the year ended December 31, 2022.

in proceeds from convertible note, $390,000 in proceeds from the exercise of warrants offset by $942,532 in payments pursuant to a finance

agreement, and $315,000 in placement agent fees during the year ended December 31, 2023.

Cash provided by financing activities for the

year ended December 31, 2022 was due to $11,986,036 in proceeds from the sale of common stock, offset by $188,674 in payments of finance

agreement, $1,535,035 in payments of recapitalization transaction costs and $1,198,604 in payments of placement agent fees, during the

year ended December 31, 2022.

Going Concern

The accompanying consolidated financial

statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities

in the normal course of business.

The Company has generated only nominal revenue in the past two years.

The Company had a net loss

of $8,376,834 for the year ended December 31, 2023 and an accumulated deficit of $14,368,380 at December 31, 2023.

These factors, among

others, raise substantial doubt about the ability of the Company to continue as a going concern for a reasonable period of time.

Company’s continuation as a going concern is dependent upon its ability to obtain necessary equity financing and ultimately from

generating revenues to continue operations.

The Company expects that working capital requirements will continue to be funded through

a combination of its existing funds and further issuances of securities.

Working capital requirements are expected to increase in line

with the growth of the business.

Existing working capital, further advances and debt instruments, and anticipated cash flow are

expected to be adequate to fund operations over the next twelve months.

The Company has no lines of credit or other bank financing arrangements.

Additional issuances of equity or convertible debt securities will result in dilution to current stockholders.

Further, such securities

might have rights, preferences or privileges senior to common stock.

Additional financing may not be available upon acceptable terms,

If adequate funds are not available or are not available on acceptable terms, the Company may not be able to take advantage

of prospective new business endeavors or opportunities, which could significantly and materially restrict business operations.

The consolidated financial statements do

not include any adjustments that might result from the outcome of this uncertainty relating to the recoverability and classification of

recorded asset amounts or the amounts and classification of liabilities that might be necessary should the Company be unable to continue

as a going concern.

Off-Balance Sheet Financing Arrangements

did not have any off-balance sheet arrangements as of December 31, 2022.

We did not have any off-balance sheet arrangements

as of December 31, 2023.

Contractual Obligations

The following summarizes Cardio’s

contractual obligations as of December 31 , 2022 and the effects that

such obligations are expected to have on its liquidity and cash flows in future periods:

Deposit for Acquisition

On April 14, 2021, Legacy Cardio deposited $250,000

with an escrow agent in connection with a planned business acquisition.

Legacy Cardio subsequently decided to terminate the acquisition

and recorded expenses of $112,534 in connection with the termination, which amount is presented as other expenses in the consolidated

statements of operations.

The remaining escrow balance of $137,466 was returned to Legacy Cardio on July 26, 2022.

Related Party Transactions

The Company reimburses Behavioral Diagnostic,

LLC (“BDLLC”), a company owned by its Chief Medical Officer for a portion of the salaries of

the Company’s Chief Executive Officer and its Chief Technology Officer, who is the husband of the CEO.

Payments to BDLLC for salaries

totaled $83,767 and $0 for the years ended December 31 , 2021 and 2022,

respectively.

Prior Mana Obligations

to its Investment Bankers

See “ Recent Developments – Business

Combination ” above for a discussion of the contractual obligations due and payable on October 25, 2023 to Ladenburg/I-Bankers

and Benchmark in the aggregate amount of $928,500 for deferred investment banking fees originally entered into by Mana prior to the Business

Combination, as reduced at and after the closing of the Business Combination.

On March 25, 2023, Ladenburg offered the Company a 15% early

pay discount on the balance due.

On March 27, 2023, we accepted the early pay discount and paid Ladenburg the net balance due and payable

The balance of $435,000 owed to Benchmark remains due and payable on October 25, 2023.

Prior Relationships

of Cardio with Boustead Securities, LLC

As of December 31, 2023, 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

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adverse impact on its financial condition.

The Benchmark Company,

LLC Right of First Refusal

As noted in Note 1, 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.

The Benchmark Company, LLC Right of First

As noted in Note 1, 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,

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for all future public and private equity and debt offerings through October 25, 2023.

In this regard, the Company and Benchmark are in

discussions regarding whether Benchmark might have any rights arising from the Company having entered into the convertible debenture financing

in March 2023.

No legal proceedings have been instigated, and the parties are continuing to discuss a resolution to this matter.

Demand Letter and

Potential Mootness Fee Claim

Based on the right of first refusal, Benchmark alleges that it is

owed damages because the Company entered into the Yorkville Convertible Debenture Transaction (see Note 11 to Notes to Consolidated Financial

Statements) without first offering Benchmark the right to serve as the lead or joint-lead placement agent for the transaction.

is evaluating the claim.

No legal proceedings have been instigated.

Demand Letter and Potential Mootness Fee Claim

On June 25, 2022, a plaintiffs’ securities

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The Company vigorously denies that the S-4 Registration Statement, as amended

and declared effective, is deficient in any respect.

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

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.

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.

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.

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.

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.

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

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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

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

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these estimates under different assumptions or conditions.

While Cardio’s significant accounting

policies are described in more detail in Note 2 to its consolidated financial statements, Cardio believes that the following accounting

policies are those most critical to the judgments and estimates used in the preparation of its consolidated financial statements.

Cardio’s significant accounting policies are described in more detail in Note 3 to its consolidated financial statements,

Cardio believes that the following accounting

policies are those most critical to the judgments and estimates used in the preparation of its consolidated financial

Principles of Consolidation

The consolidated financial statements include the

accounts of the Company and its wholly owned-subsidiary, Cardio Diagnostics, LLC.

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 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

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.

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establishes a framework for measuring fair value and expands disclosure of fair value measurements.

The estimated fair value of certain financial

instruments, including cash and cash equivalents, accounts payable and accrued expenses are carried at historical cost basis, which approximates

their fair values because of the short-term nature of these instruments.

The carrying amounts of our short- and long-term credit obligations

approximate fair value because the effective yields on these

obligations, which include contractual interest rates taken together with other features such as concurrent issuances of warrants and/or

embedded conversion options, are comparable to rates of returns for instruments of similar credit risk.

estimated fair value of certain financial instruments, including cash and cash equivalents, accounts receivable, accounts payable

and accrued expenses are carried at historical cost basis, which approximates their fair values because of the short-term nature of

these instruments.

The carrying amounts of our short- and long-term credit obligations approximate fair value because

the effective yields

on these obligations, which include contractual interest rates taken together with other features such as concurrent issuances of

warrants and/or embedded conversion options, are comparable to rates of returns for instruments of similar credit risk.

ASC 820 defines fair value as the exchange price

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ASC 820 describes three levels of inputs that may be used to measure fair value:

Level 1 – quoted prices in active markets for

1 – quoted prices in active markets for

identical assets or liabilities

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and liabilities in active markets or inputs that are observable

Level 3 – inputs that are unobservable (for

3 – inputs that are unobservable (for

example cash flow modeling inputs based on assumptions)

Revenue Recognition

The Company hosts

its product, Epi+Gen CHD™ on InTeleLab’s Elicity platform (the “Lab”).

The Lab collects payments from patients

upon completion of eligibility screening.

Patients then send their samples to MOgene, a high complexity CLIA lab, which perform the biomarker

Upon receipt of the raw biomarker data from MOgene, the Company

performs all quality control, analytical assessments and report generation and shares test reports with the Elicity healthcare provider

via the Elicity platform.

Revenue is recognized upon receipt of payments from the Lab for each test at the end of each month.

The Company offers its products, Epi+Gen CHD and PrecisionCHD,

via telemedicine providers, provider organizations such as concierge practices, longevity clinics, and risk-bearing provider organizations,

and employer organizations.

The Company is continuing to expand its markets and payment optionality, and therefore, other organization

types not listed below may be added, and from time-to-time, there may be additional payment options.

For telemedicine, the telemedicine provider collects

payments from patients upon completion of eligibility screening and test order.

Patients then send their samples to the lab for biomarker

The Company performs all quality control, analytical assessments and report generation and shares test reports with the ordering

healthcare provider.

Revenue is recognized upon invoicing the telemedicine providers.

Telemedicine providers are invoiced at the end of

each month for all tests completed since prior invoicing.

Provider organizations

For provider organizations, the cost of each test

is negotiated prior to testing commencing.

Pricing is determined based largely on the provider organization type and testing volume commitment.

Upon ordering a test, a patient’s sample is sent to the lab for biomarker assessments.

The Company performs all quality control,

analytical assessments and report generation and shares test reports with the ordering healthcare provider.

Revenue is recognized upon

invoicing the provider organization.

The provider organization is invoiced the agreed upon pricing at the end of each month for all samples

accepted or tests completed since prior invoicing.

Employer organizations

For employer organizations, the cost of each test is negotiated prior

to testing commencing.

Pricing is determined based largely on testing volume commitment.

Patient samples are sent to the lab for biomarker

The Company performs all quality control, analytical assessments and report generation and shares test reports with the

ordering healthcare provider.

Revenue is recognized upon invoicing the employer organization.

The employer organization is invoiced the

agreed upon pricing once a heart disease fair is completed or all testing is completed.

Company accounts for revenue under (“ASU”) 2014-09, “Revenue from Contracts with Customers (Topic 606)”, using

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revenue when (or as) the Company satisfies its performance obligations.

Cardio accounts for patents in accordance with

ASC 350-30, General Intangibles Other than Goodwill .

The Company capitalizes patent costs representing legal fees associated

with filing patent applications and amortize them on a straight-line basis.

are in the process of evaluating its patents' estimated useful life and will begin amortizing the patents when they are brought to the

market or otherwise commercialized.

Cardio accounts

for patents in accordance with ASC 350-30, General Intangibles Other than Goodwill .

The Company capitalizes patent costs representing

legal fees associated with filing patent applications and amortize them on a straight-line basis.

evaluates its patents’ estimated useful life and begins amortizing the patents when they are brought to the market or otherwise

commercialized.

The Company accounts

for leases under ASC 842, “Leases”.

The Company determines if an arrangement

is a lease or contains a lease at inception of the arrangement.

Operating lease liabilities are recognized based on the present value

of the remaining lease payments, discounted using the discount rate for the lease at the commencement date.

As the rate implicit in the

lease is not readily determinable for the operating lease, the Company generally uses an incremental borrowing rate based on information

available at the commencement date to determine the present value of future lease payments.

Operating lease right-of-use assets (“ROU

assets”) represent the Company’s right to control the use of an identified asset for the lease term and lease liabilities

represent the Company’s obligation to make lease payments arising from the lease.

ROU assets are generally recognized based on

the amount of the initial measurement of the lease liability.

Lease expense is recognized on a straight-line basis over the lease term.

The Company elected to keep leases with an initial term of 12 months or less off the balance sheet.

ROU assets are reviewed

for impairment when indicators of impairment are present.

ROU assets from operating and finance leases are subject to the impairment

guidance in ASC 360, Property, Plant, and Equipment, as ROU assets are long-lived nonfinancial assets.

ROU assets are tested for impairment

individually or as part of an asset group if the cash flows related to the ROU assets are not independent from the cash flows of other

assets and liabilities.

An asset group is the unit of accounting for long-lived assets to be held and used, which represents the lowest

level for which identifiable cash flows are largely independent of the cash flows of other groups of assets and liabilities.

Stock-Based Compensation

Cardio accounts for its stock-based awards granted

under its employee compensation plan in accordance with ASC Topic No.

718-20, Awards Classified as Equity, which requires

the measurement of compensation expense for all share-based compensation granted to

accounts for its stock-based awards granted under its employee compensation plan in accordance with ASC Topic No.

718-20, Awards

Classified as Equity, which requires the measurement of compensation expense for all share-based compensation granted to

employees and non-employee directors at fair value on the date of grant and recognition of compensation expense over the related service

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 7. Management’s Discussion and Analysis