What changed in this filing

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Item 7. Management’s Discussion and Analysis

2025-03-20 compared with 2024-04-01 · 467 added, 511 removed, 39 unchanged (96% of the section changed)

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 as discussed in Note 2 – Merger

Agreement and Reverse Recapitalization, 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, 2023

As a result of the closing

of the Business Combination, which was accounted for as a reverse recapitalization in accordance with U.S.

GAAP as discussed in Note 2

– Merger Agreement and Reverse Recapitalization, 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, 2024

and 2023 and for each of the two years in the period ended December 31, 2024 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.

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.

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.

Cardio was formed to further develop and commercialize

a series of products for major types of cardiovascular disease and associated co-morbidities, including coronary heart disease (“CHD”),

stroke, heart failure and diabetes, by leveraging our Artificial Intelligence (“AI”)-driven Integrated Genetic-Epigenetic

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.

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.

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.

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.

Cardio was formed to further develop

and commercialize a series of products for major types of cardiovascular disease and associated co-morbidities, including coronary heart

disease (“CHD”), stroke, heart failure and diabetes, by leveraging our Artificial Intelligence (“AI”)-driven Integrated

Genetic-Epigenetic Engine™.

As a company, we aspire to give every American adult insight into their unique risk for various cardiovascular

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.

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

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

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:

the launch of Epi+Gen CHD, in March 2023, we announced the launch of our second product, PrecisionCHD™, an integrated epigenetic-genetic

clinical blood test for the detection of coronary heart disease.

The Epi+Gen CHD™ and PrecisionCHD™ tests are coupled to

Actionable Clinical Intelligence (“ACI”), a platform that offers new epigenetic and genetic insights to clinicians prescribing

the to personalize patient management and help improve chronic care management.

In May 2023, we launched CardioInnovate360™, a

research-use-only (“RUO”) solution to support the discovery, development and validation of novel biopharmaceuticals for the

assessment and management of cardiovascular diseases.

In February 2024, we announced the launch of HeartRisk™, a cardiovascular

disease risk intelligence platform.

We believe that our Epi+Gen CHD™ and PrecisionCHD™ tests are categorized as laboratory-developed

tests, or “LDTs.” The new go-to-market strategy is also being implemented for these products.

Despite long partnership and

sales cycles, in some instance as long as 14 months, Cardio was able to increase the reach of its solutions in 2024, generating revenue

from provider organizations and has continued the development of a more robust sales and partnership pipeline.

To further increase reach

and potentially accelerate partnerships and sales cycles, more seasoned sales personnel in the provider and employer verticals were hired.

In addition to increased revenue and number of tests in 2024 compared to 2023, other key developments in 2024 and recently, include:

Recommended pricing for our two Current Procedural Terminology (“CPT”) Proprietary Laboratory Analysis (“PLA”) codes from the American Medical Association, 0440U for PrecisionCHD™ and 0439U for Epi+Gen CHD™, at the Centers for Medicare and Medicaid Services’ (“CMS”) Clinical Laboratory Fee Schedule (CLFS) annual meeting;

Expanded the availability of our Epi+Gen CHD™ test to Family Medicine Specialists’ retail clinical location at Meijer Supercenter;

Received Medicare pricing determination from Centers for Medicare and Medicaid Services (CMS) for PrecisionCHD™ and Epi+Gen CHD™;

We have entered into partnerships with seven new provider organizations.

The new partners include specialized practices in Michigan, Illinois, Texas, Florida, California, and Connecticut, representing various medical specialties including concierge medicine, primary care, and precision medicine.

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;

· 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

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.

· 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;

· Pursue potential strategic partnership(s) and acquisition(s) of one or more synergistic companies.

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), declared effective by the SEC on February 1, 2024 (the “Initial Registration

Statement”), and will 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”).

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.

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 March 20,

2025, the Company sold 30,959,434 shares of its Common Stock under the Sales Agreement resulting in proceeds to the Company of $14,681,556,

net of offering costs.

The Company has paid Craig-Hallum $376,450 in sales commissions.

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.

As of March 20, 2025, the Company has not sold

any additional shares of Common Stock under the Additional Registration Statement.

Regulatory Developments

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.

final rule, all LDTs, unless subject to a specific exemption, will 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 states that certain categories of LDTs will be subject to enforcement

discretion with respect to some or all of these requirements.

For example, FDA will 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 will similarly exercise enforcement discretion with

respect to premarket authorization for LDTs approved by the New York State Clinical Laboratory Evaluation Program (“NYS-CLEP”).

overturned by a court or Congress, or stayed or withdrawn by the new Administration, the final rule will substantially increase costs

and regulatory burdens for many clinical laboratories in ways that may adversely affect their ability to develop, perform, and offer

Two lawsuits challenging FDA’s authority to regulate LDTs have been filed in federal court:

the American Clinical Laboratory

Association filed a lawsuit against FDA on May 29, 2024 in the Eastern District of Texas, while the Association for Molecular Pathology

filed a lawsuit on August 19, 2024 in the Southern District of Texas.

The ultimate success of these lawsuits, which were subsequently

consolidated, or any future lawsuits that may be brought against the FDA challenging the LDT rule, is uncertain.

It is also unclear whether

a court would delay the implementation of the final rule while the litigation is ongoing, which means we may need to initiate steps to

comply with the final rule even if it is ultimately overturned.

proposals addressing the FDA’s oversight of LDTs have been previously introduced.

In June 2021, Congress introduced the VALID Act,

which would have established a new risk-based regulatory framework for in vitro clinical tests (“IVCTs”), a category which

would have included IVDs, LDTs, collection devices and instruments used with such tests.

FDA’s new LDT final rule may renew attention

to the VALID Act or other legislation and may lead to the introduction of new proposals to limit the FDA’s regulatory authority.

On July 12, 2024, the House Appropriations Committee issued a Report accompanying a FY 2025 appropriations bill in which it directed

the FDA to suspend efforts to implement the LDT final rule and to continue working with Congress to modernize the regulatory approach

This directive is not binding on the FDA.

in Administration and in Congress could significantly affect FDA’s ability to implement the final rule or to otherwise regulate

For example, the Department of Health and Human Services, which oversees FDA, could stay enforcement of the rule or seek to rescind

the final rule, or could direct FDA to not regulate LDTs as medical devices.

Separately, Congress could enact legislation aimed at preventing

FDA from regulating LDTs and/or assigning oversight of LDTs to a different agency.

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, 2023 and 2022:

Years Ended December 31,

for the years ended December 31, 2024 and 2023:

Ended December 31,

Operating Expenses

6 unchanged sentences

$ (8,376,834 )

Cardio’s net loss

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.

net loss for the year ended December 31, 2024, was $8,383,453 as compared to $8,376,834 for the year ended December 31, 2023, an increase

of $6,619 primarily as a result of an increase in General and Administrative expenses.

Cardio has earned only nominal

revenue since inception.

Revenue for the year ended December 31, 2024, was $34,890 compared to $17,065 for the year ended December 31,

Sales and Marketing

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.

related to sales and marketing for the year ended December 31, 2024, were $182,446 as compared to $ 158,514

for the year ended December 31, 2023, an increase of $23,932.

The overall increase was due to an increase in sales and marketing activity

in 2024 due to tradeshow attendance.

Research and Development

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

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 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 for the year ended December

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

and development expense for the year ended December 31, 2024, was $29,125 as compared to $145,182 for the year ended December 31,

2023, a decrease of $116,057.

The decrease was attributable to the decrease in laboratory runs performed in 2024 on new product

offerings in the pipeline as compared to laboratory runs performed in 2023.

General and Administrative

administrative expenses for the year ended December 31, 2024, were $8,169,458 as compared to $ $6,936,646 for the year ended December

31, 2023, an increase of $1,232,812.

The overall increase is primarily due to an increase in stock compensation expenses (mainly

as a result of new stock options issued in the first quarter of 2024), offset by the decrease in D&O insurance expense.

Amortization expense

for the year ended December 31, 2024, was $19,738, as compared to $19,182 for the year ended December 31, 2023.

The total amortization

expense for the year ended December 31, 2024 includes the amortization of intangible assets of $16,000 and patent costs of $3,738, respectively,

as compared to $16,000 for intangible assets and $3,182 for patent costs for the year ended December 31, 2023.

Total other expenses

for the year ended December 31, 2024, was $(17,576) as compared to $(1,134,375) for the year ended December 31, 2023.

The total other

expenses for the year ended December 31, 2024 consists of interest expense of $18,640 net of interest income of $1,064.

The total other

expenses for the year ended December 31, 2023 consists of interest expense of $6,735,013 offset by gain on extinguishment of debt of $193,350,

change in fair value of derivative liability of $5,406,220 and interest income of $1,068.

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 operating and investing activities.

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

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 $5,000,000 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

have been funding operations and paying expenses associated with the Business Combination.

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.

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.

If we are unable to raise additional capital when desired, our business, financial condition and results of operations would

Successful transition to attaining profitable operations depends upon achieving a level of revenue adequate to support the

post-merger company.

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.

have been proceeds from the issuance of equity.

On January 26, 2024, we entered

into the Sales Agreement with Craig-Hallum.

Pursuant to the Sales Agreement, we may sell,

at our option, shares of our Common Stock through Craig-Hallum, as sales agent.

Sales of our Common Stock were

made pursuant to the Sales Agreement initially up to an aggregate of $17 million under the Initial Registration Statement, and

will be made pursuant to the Sales Agreement up to an aggregate of $9,476,508 under the Additional Registration Statement.

As of March 20,

2025, we sold 30,959,434 shares of our Common Stock under the Sales Agreement resulting in proceeds to us of $14,681,556, net of offering

The Company has paid Craig-Hallum $376,450 in sales commissions.

As of March 20, 2025, the Company has not sold any additional

shares of Common Stock under the Additional Registration Statement.

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.

We used the net proceeds from the Private Placement for working capital and general corporate purposes.

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.

We have had, and expect that

we will continue to have, an ongoing need to raise additional cash from outside sources to fund our operations and grow our business.

We expect that our primary cash needs in 2025 and for the foreseeable future will be for funding day-to-day operations and working capital

requirements, funding our growth strategy, paying the setup expenses of our internal laboratory and paying expenses incurred in connection

with our ongoing FDA submission activities.

We explore our financing options on an ongoing basis.

However, given recent stock prices

and the extreme volatility of our stock, it continues to be challenging to balance cash that could be raised and the dilution that might

be required to close a particular transaction.

We expect that for the remainder of 2025, we will rely primarily on the ongoing ATM Offering,

provided that market conditions are favorable.

At our annual stockholders

meetings in December 2023 and November 2024, we obtained stockholder approval to offer and sell up to $10,000,000 in securities (up to

50,000,000 shares of Common Stock, subject to adjustment for stock splits, reverse stock splits and other similar recapitalization events)

in a transaction or series of transactions not involving a public offering for a three-month period together with the potential to obtain

Nasdaq’s consent, which we cannot guarantee, for an additional three-month period thereafter, resulting in a possible six-month

period to conduct a financing within the parameters of the stockholder authority, if granted.

We currently have no specific plans for

such an offering but believed having that option available provided our Board of Directors with added flexibility in meeting the Company’s

liquidity needs.

Our long-term future capital

requirements will depend on many factors, including revenue growth rate, the timing and the amount of cash received from customers, the

expansion of sales and marketing activities, the timing and extent of spending to support investments, including research and development

efforts, and the continuing market adoption of our products.

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

and generated negative cash flows from operating activities.

We expect this trend to continue in future periods for the foreseeable future.

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.

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

warrants range from a high of $11.50 to a low of $1.78 per share of Common Stock.

We believe 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 $1.42 on March 28, 2024.

If the trading price of our Common Stock is less than the

respective exercise prices of our outstanding Warrants, we believe holders of our Public Warrants, Sponsor Warrants and Private Placement

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.

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.

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:

anticipate that our principal sources of liquidity, including existing funds and issuances of equity and/or debt, will be sufficient to

fund our activities over the next 12 months.

In order to have sufficient cash to fund our operations beyond the next 12 months and grow

our business, we will need to raise additional funds through the issuance of equity and/or debt.

We cannot provide any assurance that

we will be successful in doing so.

If we are unable to raise

additional capital when desired, our business, financial condition and results of operations would be harmed.

Successful transition to

attaining profitable operations depends upon achieving a level of revenue adequate to support our business plan, balanced against ongoing

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 $11.50 to a low of $1.78 (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 $0.4630 on March 17, 2025.

If the trading

price of our Common Stock is less than the respective exercise prices of our outstanding Warrants, which has been the case for a substantial

period of time, we believe holders of any of our Warrants will be unlikely to exercise their Warrants.

There is no guarantee that the

Warrants will be in the money prior to their respective expiration dates, and as such, the Warrants may expire worthless, and we may receive

no proceeds from the exercise of Warrants.

Given the current differential between the trading price of our Common Stock and the Warrant

exercise prices and the volatility of our stock price, we are not making strategic business decisions based on an expectation that we

will receive any cash from the exercise of Warrants.

However, we will use any cash proceeds received from the exercise of Warrants for

general corporate and working capital purposes, which would increase our liquidity.

We will continue to evaluate the probability of Warrant

exercises and the merit of including potential cash proceeds from the exercise of the Warrants in our future liquidity projections.

Cash at December 31, 2024

totaled $7,827,487 as compared to $1,283,523 at December 31, 2023, a n in crease of $6,543,964.

The 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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Cash Used in Operating Activities

Cash used in operating activities for the year

ended December 31, 2023, was $5,672,175, as compared to $5,090,968 for the year ended December 31, 2022.

The cash used in operations during

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 $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, 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, 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 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.

Cash used in operating

activities for the year ended December 31, 2024, was $4,993,104, as compared to $5,672,175 for the year ended December 31, 2023.

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.

The cash used in

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

depreciation 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, and a gain on extinguishment of debt of $193,350.

Operating assets

and liabilities fluctuated as follows:

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.

in Investing Activities

Cash used in investing

activities for the year ended December 31, 2024, was $404,190 compared to $794,291 for the year ended December 31, 2023.

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.

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 right of use asset and $197,276 in patent and trademark costs incurred.

Cash Provided

by Financing Activities

Cash provided

by financing activities for the year ended December 31, 2024, was $11,941,258 as compared to $3,632,468 for the year ended December 31,

This change was due to $12,546,949 in proceeds from the sale of common stock and warrants

offset by $450,691 in payments pursuant to a finance agreement, and $155,000 in payments of placement agent fees during the year ended

December 31, 2024.

Cash provided by financing activities for the year ended December 31, 2023 was due to $4,500,000 in proceeds from

convertible notes payable, net of original issue discount of $500,000, $390,000 in proceeds from exercise of warrants, offset by $942,532

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

Off-Balance Sheet Financing Arrangements

We did not have any off-balance sheet arrangements

as of December 31, 2023.

Contractual Obligations

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

ultimately ended in the terminated business acquisition referred to above under “Deposit for Acquisition,” Legacy Cardio entered

into a Placement Agent and Advisory Services Agreement (the “Placement Agent Agreement”), dated April 12, 2021, with Boustead

Securities, LLC (“Boustead Securities”).

This agreement was terminated in April 2022, when Legacy Cardio terminated the underlying

agreement and plan of merger and the accompanying escrow agreement relating to that proposed business acquisition after efforts to complete

the transaction failed, despite several extensions of the closing deadline.

Under the terminated Placement Agent Agreement,

Legacy Cardio agreed to certain future rights in favor of Boustead Securities, including (i) a two-year tail period during which Boustead

Securities would be entitled to compensation if Cardio were to close on a transaction (as defined in the Placement Agent Agreement) with

any party that was introduced to Legacy Cardio by Boustead Securities;

and (ii) a right of first refusal to act as the Company’s

exclusive placement agent for 24-months from the end of the term of the Placement Agent Agreement (the “right of first refusal”).

Cardio has taken the position that due to Boustead Securities’ failure to perform as contemplated by the Placement Agent Agreement,

these provisions purporting to provide future rights are null and void.

Boustead Securities responded to the termination

of the Placement Agent Agreement by disputing Legacy Cardio’s contention that it had not performed under the Placement Agent Agreement

because, among other things, Boustead Securities had never sought out prospective investors.

In its response, Boustead Securities included

a list of funds that they had supposedly contacted on Legacy Cardio’s behalf.

While Boustead Securities’ contention appears

to contradict earlier communications from Boustead Securities in which they indicated that they had not made any such contacts or introductions,

Boustead Securities is currently contending that they are due success fees for two years following the termination of the Placement Agent

Agreement on any transaction with any person on the list of supposed contacts or introductions.

Legacy Cardio strongly disputes this position.

Notwithstanding the foregoing, the Company has not consummated any transaction, as defined, with any potential party that purportedly

was a contact of Boustead Securities in connection with the Placement Agent Agreement and has no plans to do so at any time during the

No legal proceedings have been instigated by either party, and Cardio believes that the final outcome will not have a material

adverse impact on its financial condition.

The Benchmark Company, LLC Right of First

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,

Cardio assumed the contractual engagement entered into by Mana.

On November 14, 2022, Cardio and Benchmark entered into Amendment No.

We did not have any off-balance sheet arrangements as of December

As of December 31, 2024, we do

not have any ongoing contractual obligations that would have a negative impact on liquidity and cash flows.

However, if one or more of

the following potential claims that arise from contracts we have entered into were pursued against us, there is the potential that we

could see a negative impact on liquidity and cash flows, depending on the outcome.

Prior Relationships of Cardio with Boustead Securities, LLC

At the commencement

of efforts to pursue what ultimately ended in the terminated business acquisition, Legacy Cardio entered into a Placement Agent and Advisory

Services Agreement (the “Placement Agent Agreement”), dated April 12, 2021, with Boustead Securities, LLC (“Boustead

Securities”).

This agreement was terminated in April 2022, when Legacy Cardio terminated the underlying agreement and plan of merger

and the accompanying escrow agreement relating to that proposed business acquisition after efforts to complete the transaction failed,

despite several extensions of the closing deadline.

Under the terminated Placement

Agent Agreement, Legacy Cardio agreed to certain future rights in favor of Boustead Securities, including (i) a two-year tail period during

which Boustead Securities would be entitled to compensation if Cardio were to close on a transaction (as defined in the Placement Agent

Agreement) with any party that was introduced to Legacy Cardio by Boustead Securities;

and (ii) a right of first refusal to act as the

Company’s exclusive placement agent for 24-months from the end of the term of the Placement Agent Agreement (the “right of

first refusal”).

Cardio has taken the position that due to Boustead Securities’ failure to perform as contemplated by the

Placement Agent Agreement, these provisions purporting to provide future rights are null and void.

Boustead Securities responded to

the termination of the Placement Agent Agreement by disputing Legacy Cardio’s contention that it had not performed under the Placement

Agent Agreement because, among other things, Boustead Securities had never sought out prospective investors.

In its response, Boustead

Securities included a list of funds that they had supposedly contacted on Legacy Cardio’s behalf.

While Boustead Securities’

contention appears to contradict earlier communications from Boustead Securities in which they indicated that they had not made any such

contacts or introductions, Boustead Securities is currently contending that they are due success fees for two years following the termination

of the Placement Agent Agreement on any transaction with any person on the list of supposed contacts or introductions.

Legacy Cardio strongly

disputes this position.

Notwithstanding the foregoing, the Company has not consummated any transaction, as defined, with any potential

party that purportedly was a contact of Boustead Securities in connection with the Placement Agent Agreement and has no plans to do so

at any time during the tail period.

No legal proceedings have been instigated by either party, and Cardio believes that the final outcome

will not have a material adverse impact on its financial condition.

The Benchmark Company, LLC Right of First Refusal

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, 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 (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.

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

(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.

The Company is evaluating the claim.

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.

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.

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.

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.

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

1 unchanged sentence

significant time and resources to defend and/or settle and distract its management and board of directors from focusing on its business.

Critical Accounting Policies and Significant Judgments and Estimates

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.

of Non-Compliance with Nasdaq Listing Requirements

On June 3, 2024,

Cardio Diagnostics Holdings, Inc.

(the “Company”) received a letter (the “First Nasdaq Bid Price Letter”) from The

Nasdaq Stock Market LLC (“Nasdaq”) indicating that the Company is no longer in compliance with Nasdaq Listing Rule 5550(a)(2),

because the minimum bid price of the Company’s common stock (the “Common Stock”) had closed below the minimum $1.00 per

share requirement for continued listing on The Nasdaq Capital Market under Nasdaq Listing Rule 5550(a)(2) (the “Minimum Bid Price

Requirement”).

In accordance with Nasdaq Listing Rule 5810(c)(3)(A), the Company was provided an initial period of 180 calendar

days, or until December 2, 2024, to regain compliance.

On December 4, 2024 (the “Second Nasdaq Bid Price Letter”), Nasdaq

notified the Company that Nasdaq’s Staff has determined that the Company is eligible for an additional 180 calendar day period,

or until June 2, 2025, to regain compliance (the “Second Compliance Period”).

The determination is based on the Company’s

meeting the continued listing requirement for market value of publicly held shares and all other applicable requirements for initial listing

on The Nasdaq Capital Market with the exception of the Minimum Bid Price Requirement, and the Company’s written notice of its intention

to cure the deficiency during the Second Compliance Period by effecting a reverse stock split, if necessary.

If the Company chooses to

implement a reverse stock split, it must complete the split no later than ten business days prior to the end of the Second Compliance

Period in order to timely regain compliance.

As of the date of this report the Common Stock has not regained compliance with the Minimum

Bid Price Requirement.

If we fail to regain

compliance with the minimum bid requirement within the cure period (or extended cure period) or if we fail to continue to meet all applicable

continued listing requirements for Nasdaq in the future, Nasdaq could delist our securities.

Critical Accounting Policies and Estimates

consolidated financial statements are prepared in accordance with GAAP in the United States.

The preparation of its consolidated

financial statements and

related disclosures requires it to make estimates and judgments that affect the reported amounts of assets, liabilities, revenue, costs

and expenses, and the disclosure of contingent assets and liabilities in Cardio’s financial statements.

Cardio bases its estimates

on historical experience, known trends and events and various other factors that it believes are reasonable under the circumstances, the

results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent

The preparation of its consolidated financial

statements and related disclosures requires it to make estimates and judgments that affect the reported amounts of assets, liabilities,

revenue, costs and expenses, and the disclosure of contingent assets and liabilities in Cardio’s financial statements.

its estimates on historical experience, known trends and events and various other factors that it believes are reasonable under the circumstances,

the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent

from other sources.

2 unchanged sentences

these estimates under different assumptions or conditions.

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, 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.

Actual results

could differ from those estimates.

Fair Value Measurements

The Company adopted the provisions of ASC Topic

820, Fair Value Measurements and Disclosures, which defines fair value as used in numerous accounting pronouncements,

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

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

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

these instruments.

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

the effective yields

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

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

ASC 820 defines fair value as the exchange price

that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the

asset or liability in an orderly transaction between market participants on the measurement date.

ASC 820 also establishes a fair value

hierarchy, which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring

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

1 – quoted prices in active markets for

identical assets or liabilities

Level 2 – quoted prices for similar assets

and liabilities in active markets or inputs that are observable

3 – inputs that are unobservable (for

example cash flow modeling inputs based on assumptions)

Revenue Recognition

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

the modified retrospective method.

The modified retrospective adoption used by the Company did not result in a material cumulative effect

adjustment to the opening balance of accumulated deficit.

The Company determines the measurement of revenue

and the timing of revenue recognition utilizing the following core principles:

the contract with a customer;

the performance obligations in the contract;

the transaction price;

the transaction price to the performance obligations in the contract;

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

The SEC requested

that all registrants list their most “critical accounting polices” in the Management Discussion and Analysis.

The SEC indicated

that a “critical accounting policy” is one which is both important to the portrayal of a company’s financial condition

and results, and requires management’s most difficult, subjective or complex judgments, often as a result of the need to make estimates

about the effect of matters that are inherently uncertain.

While 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 statements.

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

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

718-20, Awards

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

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

period for awards expected to vest.

The Company uses the Black-Scholes option pricing model to estimate the fair value of its stock

options and warrants.

The Black-Scholes option pricing model requires the input of highly subjective assumptions including the expected

stock price volatility of the Company’s common stock, the risk-free interest rate at the date of grant, the expected vesting term

of the grant, expected dividends, and an assumption related to forfeitures of such grants.

Changes in these subjective input assumptions

can materially affect the fair value estimate of the Company’s stock options and warrants.

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

718-20, Awards Classified

as Equity, which requires the measurement of compensation expense for all share-based compensation granted to employees and non-employee

directors at fair value on the date of grant and recognition of compensation expense over the related service period for awards expected

The Company uses the Black-Scholes option pricing model to estimate the fair value of its stock options and warrants.

The Black-Scholes

option pricing model requires the input of highly subjective assumptions including the expected stock price volatility of the Company’s

common stock, the risk-free interest rate at the date of grant, the expected vesting term of the grant, expected dividends, and an assumption

related to forfeitures of such grants.

Changes in these subjective input assumptions can materially affect the fair value estimate of

the Company’s stock options and warrants.

Quantitative and Qualitative Disclosures About Market Risk

As of December 31, 2023, we were not subject

to any market or interest rate risk.

As of December 31, 2024, we were not subject to any market or

interest rate risk.

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