What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2025-03-20 compared with 2024-04-01 · 812 added, 785 removed, 311 unchanged (84% of the section changed)

1 unchanged sentence

INDEX TO FINANCIAL STATEMENTS

Report of Independent Registered

Public Accounting Firm (PCAOB ID 273 )

Report of Independent Registered Public Accounting Firm (PCAOB ID 273 )

Consolidated Balance Sheets as of December 31, 2024 and 2023

3 unchanged sentences

Notes to Consolidated Financial Statements

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING

To the Board of Directors and Stockholders of

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Stockholders and the Board of Directors of

Cardio Diagnostics Holdings, Inc.

9 unchanged sentences

generally accepted in the United States of America.

Going Concern

The accompanying consolidated financial statements

have been prepared assuming that the Company will continue as a going concern.

As disclosed in Note 1 to the consolidated financial statements, 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.

Management’s plans regarding these matters are disclosed in Note 1 to the

consolidated financial statements.

The consolidated financial statements do not include any adjustments that might result from the outcome

of this uncertainty.

Basis for Opinion

17 unchanged sentences

Accordingly, we express no such opinion.

Our audits included performing procedures to assess

the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures

Our audits included performing procedures to

assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures

that respond to those risks.

1 unchanged sentence

consolidated financial statements.

Our audits also included evaluating the accounting principles used and significant estimates made by

management, as well as evaluating the overall presentation of the consolidated financial statements.

Our audits also included evaluating the accounting principles used and significant estimates made

by management, as well as evaluating the overall presentation of the consolidated financial statements.

We believe that our audits provide

a reasonable basis for our opinion.

Metis CPA’s LLC

We have served as the Company’s auditor since

Hackensack, New Jersey

April 1, 2024

CARDIO DIAGNOSTICS HOLDINGS,

/s/ Prager Metis CPAs

We have served

as the Company’s auditor since 2021

March 20, 2025

CARDIO DIAGNOSTICS HOLDINGS, INC.

CONSOLIDATED BALANCE SHEETS

7 unchanged sentences

Intangible assets, net

Patent and trademark costs, net

Patent costs, net

LIABILITIES AND STOCKHOLDERS' EQUITY

5 unchanged sentences

Long-term liabilities

Lease liability

Lease liability – long term

Total liabilities

Stockholders’ equity

Preferred stock,

$ .00001 par value;

Stockholders’

stock, $ .00001 par value;

authorized – 100,000,000 shares;

0 shares issued and outstanding as of December 31, 2024 and 2023,

Common stock, $ .00001 par value;

stock, $ .00001 par value;

authorized – 300,000,000 shares;

and 9,514,743 shares issued and outstanding as of December 31, 2023 and 2022, respectively

Additional paid-in capital

Accumulated deficit

45,944,039 and 20,540,409 shares issued and outstanding as of December

31, 2024 and 2023, respectively

paid-in capital

( 22,751,833 )

( 14,368,380 )

Total stockholders’ equity

Total liabilities and

stockholders’ equity

See accompanying notes to the consolidated

financial statements.

CARDIO DIAGNOSTICS HOLDINGS,

CONSOLIDATED STATEMENTS

OF OPERATIONS

liabilities and stockholders’ equity

See accompanying notes to

the consolidated financial statements.

CARDIO DIAGNOSTICS HOLDINGS, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

YEARS ENDED DECEMBER 31,

13 unchanged sentences

Gain on extinguishment of debt

Acquisition related expense

Total other income (expenses)

8 unchanged sentences

Net loss per common share

Weighted average common shares

outstanding – basic and fully diluted

Weighted average common shares outstanding – basic and fully diluted

See accompanying notes to

1 unchanged sentence

CARDIO DIAGNOSTICS HOLDINGS,

CONSOLIDATED STATEMENTS

OF CHANGES IN STOCKHOLDERS’ EQUITY

YEARS ENDED DECEMBER 31,

2023 AND 2022

STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

YEARS ENDED DECEMBER 31, 2024 AND 2023

Additional Paid-in

Balances, December 31, 2022

$ ( 5,991,546 )

Common stock and warrants issued for cash

Placement agent fee

( 1,198,604 )

Recapitalization transaction costs

( 1,535,035 )

Warrants converted to common stock

Common stock issued in merger with Mana Capital Acquisition Corp.

Note receivable converted to common stock in merger

Cash acquired in merger with Mana Capital Acquisition Corp.

Liabilities assumed in merger with Mana Capital Acquisition Corp.

Placement agent fee

Restricted stock awards vested

Notes payable converted to common stock

Compensation for vested stock options

Adjustment to liabilities assumed in merger with Mana

( 8,376,834 )

2 unchanged sentences

( 14,368,380 )

Warrants converted to common stock

Common stock and warrants issued for cash

Placement agent fee

Restricted stock awards vested

Notes payable converted to common stock

Compensation for vested stock options

Adjustment to liabilities assumed in merger with Mana

( 8,383,453 )

4 unchanged sentences

financial statements.

CARDIO DIAGNOSTICS HOLDINGS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

YEARS ENDED DECEMBER 31,

DIAGNOSTICS HOLDINGS, INC.

STATEMENTS OF CASH FLOWS

ENDED DECEMBER 31,

CASH FLOWS FROM OPERATING ACTIVITIES:

1 unchanged sentence

$ ( 8,376,834 )

Adjustments to reconcile net loss to net

cash used in operating activities

Acquisition related expense

Adjustments to reconcile net loss to net cash used in operating activities

Stock-based compensation expense

13 unchanged sentences

Purchases of property and equipment

Cash acquired from acquisition

Repayment of deposit for acquisition

Payments for notes receivable

Payments for lease

Patent and trademark costs incurred

NET CASH USED IN INVESTING ACTIVITIES

CASH FLOWS FROM FINANCING ACTIVITIES:

Proceeds from sale of common stock

Proceeds from convertible notes payable

Proceeds from exercise of warrants

Payments of finance agreement

Payments of recapitalization transaction costs

( 1,535,035 )

Payments of placement agent fee

( 1,198,604 )

NET CASH PROVIDED BY FINANCING ACTIVITIES

NET INCREASE (DECREASE) IN CASH

Payments for right of use asset

and trademark costs incurred

USED IN INVESTING ACTIVITIES

FROM FINANCING ACTIVITIES:

from sale of common stock and warrants

from convertible notes payable, net of original issue discount of $ 500,000

Proceeds from exercise

of finance agreement

of placement agent fee

CASH PROVIDED BY FINANCING ACTIVITIES

NET INCREASE (DECREASE) IN

( 2,833,998 )

CASH – BEGINNING OF YEAR

CASH – END OF YEAR

– BEGINNING OF YEAR

– END OF YEAR

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:

1 unchanged sentence

Non-cash investing and financing activities:

Common stock issued for acquisition

Liabilities assumed in acquisition

Debt discount related to derivative liability

5 unchanged sentences

financial statements.

CARDIO DIAGNOSTICS HOLDINGS, INC.

Notes to Consolidated Financial Statements

DIAGNOSTICS HOLDINGS, INC.

to Consolidated Financial Statements

Years Ended December 31, 2024 and 2023

Note 1 – Organization and Basis of Presentation

The consolidated financial statements presented are

those of Cardio Diagnostics Holdings, Inc., (the “Company”) and its wholly-owned subsidiary, Cardio Diagnostics, Inc.

1 – Organization and Basis of Presentation

consolidated financial statements presented are those of Cardio Diagnostics Holdings, Inc., (the “Company”) and its wholly-owned

subsidiary, Cardio Diagnostics, Inc.

(“Legacy Cardio”).

The Company was incorporated as Mana Capital Acquisition Corp.

(“Mana”) under the laws of the state of Delaware

on May 19, 2021, and Legacy Cardio was formed on January 16, 2017 as an Iowa limited liability company (Cardio Diagnostics, LLC) and was

subsequently incorporated as a Delaware C-Corp on September 6, 2019.

The Company was formed to develop and commercialize a patent-pending

Artificial Intelligence (“AI”)-driven DNA biomarker testing technology (“Core Technology”) for cardiovascular

disease invented at the University of Iowa by the Founders, with the goal of becoming one of the leading medical technology companies

for enabling precision prevention, early detection and treatment of cardiovascular disease.

The Company is transforming the approach to

cardiovascular disease from reactive to proactive.

The Core Technology is being incorporated into a series of products for major types

of cardiovascular disease and associated co-morbidities including coronary heart disease (CHD), stroke, heart failure and diabetes.

Business Combination

On May 27, 2022,

Mana, Mana Merger Sub, Inc.

(“Merger Sub”), a wholly-owned direct subsidiary of Mana, Meeshanthini Dogan, the Shareholders’

Representative, and Legacy Cardio entered into the Business Combination Agreement (the “Merger Agreement”).

October 25, 2022, pursuant to the Merger Agreement, Legacy Cardio merged with and into Merger Sub, with Legacy Cardio surviving as the

wholly-owned subsidiary of Mana.

under the laws of the state of Delaware on May 19, 2021, and Legacy Cardio was formed on January 16, 2017 as an Iowa limited liability

company (Cardio Diagnostics, LLC) and was subsequently incorporated as a Delaware C-Corp on September 6, 2019.

The Company was formed

to develop and commercialize a patent-pending Artificial Intelligence (“AI”)-driven DNA biomarker testing technology (“Core

Technology”) for cardiovascular disease invented at the University of Iowa by the Founders, with the goal of becoming one of the

leading medical technology companies for enabling precision prevention, early detection and treatment of cardiovascular disease.

Company is transforming the approach to cardiovascular disease from reactive to proactive.

The Core Technology is being incorporated

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

stroke, heart failure and diabetes.

On May 27, 2022, Mana, Mana Merger Sub, Inc.

(“Merger Sub”), a wholly-owned direct subsidiary of Mana, Meeshanthini Dogan, the Shareholders’ Representative, and

Legacy Cardio entered into the Business Combination Agreement (the “Merger Agreement”).

On October 25, 2022, pursuant to

the Merger Agreement, Legacy Cardio merged with and into Merger Sub, with Legacy Cardio surviving as the wholly-owned subsidiary of Mana.

Subsequent to the merger, Mana changed its name to Cardio Diagnostics Holdings, Inc.

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.

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.

The 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.

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.

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, or

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.

Note 2 – Merger Agreement and Reverse Recapitalization

discussed in Note 1, on October 25, 2022, the Company (formerly known as Mana) and Legacy Cardio entered into the Merger Agreement,

which has been accounted for as a reverse recapitalization in accordance with GAAP.

Pursuant to the Merger Agreement, the Company

acquired cash of $ 4,021

and assumed liabilities of $ 928,500

2 – Merger Agreement and Reverse Recapitalization

discussed in Note 1, on October 25, 2022, the Company (formerly known as Mana) and Legacy Cardio entered into the Merger Agreement, which

has been accounted for as a reverse recapitalization in accordance with GAAP.

Pursuant to the Merger Agreement, the Company acquired

cash of $ 4,021 and assumed liabilities of $ 928,500 from Mana.

The liabilities assumed of $ 928,500

are payable to two investment bankers and due on October 25, 2023.

The assumed liabilities

decreased to $ 854,475 , after net of an early payment discount of $ 74,025 issued by one of the two investment bankers on March 22,

On March 27, 2023, the Company accepted the early payment discount and paid Ladenburg the net balance due and

payable of $ 419,475 .

On October 24, 2023, the Company paid the remaining post-merger liabilities balance of $ 435,000 to

were payable to two investment bankers and due on October 25, 2023.

The assumed liabilities decreased to $ 854,475 , net of an early payment

discount of $ 74,025 issued by one of the two investment bankers on March 22, 2023.

On March 27, 2023, the Company accepted the early

payment discount and paid Ladenburg the net balance due and payable of $ 419,475 .

On October 24, 2023, the Company paid the remaining

post-merger liabilities balance of $ 435,000 to Benchmark.

common stock had a redemption right in connection with the business combination.

Mana’s 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, the Company’s legacy issued and outstanding 1,976,749

shares of common stock were reversed and the Mana shares of common stock totaling 9,514,743

were recorded, as described in Note 10.

Mana’s 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,

the Company’s legacy issued and outstanding 1,976,749 shares of common stock were reversed and the Mana shares of common stock

totaling 9,514,743 were recorded, as described in Note 10.

Transactions costs incurred in connection with the recapitalization totaled

$ 1,535,035 and were recorded as a reduction to additional paid in capital.

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.

In evaluating the accounting treatment for the earnout,

we have concluded that the earnout is not a liability under Accounting Standards Codification (“ASC”) 480, Distinguishing

Liabilities from Equity, is not subject to the accounting guidance under ASC 718, Compensation—Stock Compensation, and is not subject

to derivative accounting under ASC 815, Derivative and Hedging.

As such, the earnout is recognized in equity at fair value upon the closing

of the Business Combination.

As of the date of filing of this Annual Report on Form 10-K, the Company’s common stock did not trade

at equal to or greater than $12.50 for a period of at least 30 trading days out of 40 consecutive trading days and the Company has not

issued any Earnout Shares.

Note 3 – Summary of Significant Accounting

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

Use of Estimates in the Preparation of Financial

The preparation of financial statements in

conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported

amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements

and the reported amounts of revenues and expenses during the period.

Actual results could differ from those estimates.

Fair Value Measurements

The Company adopted the provisions of ASC Topic

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

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

The estimated fair value of certain

financial instruments, including cash and cash equivalents, accounts receivable, accounts payable and accrued expenses are carried

at historical cost basis, which approximates their fair values because of the short-term nature of these instruments.

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

CARDIO DIAGNOSTICS HOLDINGS, INC.

Notes to Consolidated Financial Statements

Years Ended December 31, 2024 and 2023

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.

evaluating the accounting treatment for the earnout, we have concluded that the earnout is not a liability under Accounting Standards

Codification (“ASC”) 480, Distinguishing Liabilities from Equity, is not subject to the accounting guidance under ASC 718,

Compensation—Stock Compensation, and is not subject to derivative accounting under ASC 815, Derivative and Hedging.

earnout is recognized in equity at fair value upon the closing of the Business Combination.

As of the date of filing of this Annual Report

on Form 10-K, the Company’s common stock did not trade at equal to or greater than $12.50 for a period of at least 30 trading days

out of 40 consecutive trading days and the Company has not issued any Earnout Shares.

3 – Summary of Significant Accounting Policies

of Consolidation

consolidated financial statements include the accounts of the Company and its wholly-owned subsidiary, Legacy Cardio.

All intercompany

accounts and transactions have been eliminated.

of Estimates in the Preparation of Financial Statements

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.

Value Measurements

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

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.

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

ASC 820 also establishes a fair value hierarchy, which requires an entity to maximize the use of observable inputs and minimize

the use of unobservable inputs when measuring fair value.

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

Level 1 – quoted prices

in active markets for identical assets or liabilities

Level 2 – quoted prices

for similar assets and liabilities in active markets or inputs that are observable

1 – quoted prices in active markets for identical assets or liabilities

2 – quoted prices for similar assets and liabilities in active markets or inputs that are observable

Level 3 – inputs that

are unobservable (for example cash flow modeling inputs based on assumptions)

The estimated fair value of the derivative

liability was calculated using the Black-Scholes option pricing model.

The Company uses Level 3 inputs to value its derivative liabilities.

The following table provides a reconciliation of the beginning and ending balances for the major classes of assets and liabilities measured

at fair value using significant unobservable inputs (Level 3) and reflects gains and losses for the years ended December 31, 2023 and

estimated fair value of the derivative liability was calculated using the Black-Scholes option pricing model.

The Company uses Level

3 inputs to value its derivative liabilities.

The following table provides a reconciliation of the beginning and ending balances for

the major classes of assets and liabilities measured at fair value using significant unobservable inputs (Level 3) and reflects gains

and losses for the years ended December 31, 2024 and 2023.

CARDIO DIAGNOSTICS HOLDINGS, INC.

Notes to Consolidated Financial Statements

Years Ended December 31, 2024 and 2023

Schedule of fair value measurements

3 unchanged sentences

( 5,406,220 )

Balance of derivative liabilities – end of

The following

table represents the Company’s derivative instruments that are measured at fair value on a recurring basis as of December 31, 2023,

for each fair value hierarchy level:

Balance of derivative liabilities – end of year

The following table represents the Company’s

derivative instruments that are measured at fair value on a recurring basis as of December 31, 2024 and 2023, for each fair value hierarchy

Schedule of fair value hierarchy level

1 unchanged sentence

Derivative Liabilities

December 31, 2023

Derivative Liabilities

Convertible Instruments

The Company evaluates and accounts for conversion

options embedded in convertible instruments in accordance with ASC 815, Derivatives and Hedging Activities.

Applicable GAAP requires companies to bifurcate

conversion options from their host instruments and account for them as free standing derivative financial instruments according to certain

The criteria include circumstances in which (a) the economic characteristics and risks of the embedded derivative instrument

are not clearly and closely related to the economic characteristics and risks of the host contract, (b) the hybrid instrument that embodies

both the embedded derivative instrument and the host contract is not re-measured at fair value under other GAAP with changes in fair value

reported in earnings as they occur and (c) a separate instrument with the same terms as the embedded derivative instrument would be considered

a derivative instrument.

The Company accounts for convertible

instruments (when it has been determined that the embedded conversion options should not be bifurcated from their host

instruments) as follows:

The Company records, when necessary, discounts to convertible notes for the intrinsic value of conversion

options embedded in debt instruments based upon the differences between the fair value of the underlying common stock at the

commitment date of the note transaction and the effective conversion price embedded in the note.

Debt discounts under these

arrangements are amortized over the term of the related debt to their stated date of redemption.

The Company accounts for the conversion of convertible

debt when a conversion option has been bifurcated using the general extinguishment standards.

The debt and equity linked derivatives are

removed at their carrying amounts and the shares issued are measured at their then-current fair value, with any difference recorded as

a gain or loss on extinguishment of the two separate accounting liabilities.

The Company evaluates and accounts for conversion options

embedded in convertible instruments in accordance with ASC 815, Derivatives and Hedging Activities.

Applicable GAAP requires companies

to bifurcate conversion options from their host instruments and account for them as free standing derivative financial instruments according

to certain criteria.

The criteria include circumstances in which (a) the economic characteristics and risks of the embedded derivative

instrument are not clearly and closely related to the economic characteristics and risks of the host contract, (b) the hybrid instrument

that embodies both the embedded derivative instrument and the host contract is not re-measured at fair value under other GAAP with changes

in fair value reported in earnings as they occur and (c) a separate instrument with the same terms as the embedded derivative instrument

would be considered a derivative instrument.

The Company accounts for

convertible instruments (when it has been determined that the embedded conversion options should not be bifurcated from their host instruments)

The Company records, when necessary, discounts to convertible notes for the intrinsic value of conversion options embedded

in debt instruments based upon the differences between the fair value of the underlying common stock at the commitment date of the note

transaction and the effective conversion price embedded in the note.

Debt discounts under these arrangements are amortized over the term

of the related debt to their stated date of redemption.

Company accounts for the conversion of convertible debt when a conversion option has been bifurcated using the general extinguishment

The debt and equity linked derivatives are removed at their carrying amounts and the shares issued are measured at their then-current

fair value, with any difference recorded as a gain or loss on extinguishment of the two separate accounting liabilities.

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

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.

• Telemedicine

For telemedicine, the telemedicine provider

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

Patients then send their samples to the lab

for biomarker assessments.

For telemedicine, the telemedicine

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

Patients then send their samples to

the lab for biomarker assessments.

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

1 unchanged sentence

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.

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.

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.

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.

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.

CARDIO DIAGNOSTICS HOLDINGS, INC.

Notes to Consolidated Financial Statements

Years Ended December 31, 2024 and 2023

• Employer organizations

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

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.

samples are sent to the lab for biomarker assessments.

The Company performs all quality control, analytical assessments and report generation

and shares test reports with the ordering healthcare provider.

Revenue is recognized upon 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.

The Company accounts for revenue under Accounting

Standards Update (“ASU”) 2014-09, “Revenue from Contracts with Customers (Topic 606)”, using the modified retrospective

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:

Identifying the contract with a customer;

Identifying the performance obligations in the

Determining the transaction price;

Allocating the transaction price to the performance

obligations in the contract;

Recognizing revenue when (or as) the Company satisfies

its performance obligations.

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

The Company accounts for revenue

under Accounting Standards Update (“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.

Research and Development

Research and development costs are expensed

Research and development costs charged to operations for the years ended December 31, 2023 and 2022 were $ 145,182 and $ 40,448 ,

respectively.

Research and development

costs are expensed as incurred.

Research and development costs charged to operations for the years ended December 31, 2024 and 2023 were

$ 29,125 and $ 145,182 , respectively.

Advertising Costs

The Company expenses advertising costs

Advertising costs of $ 158,514 and $ 92,700 were charged to operations for the years ended December 31, 2023 and 2022, respectively.

Cash and Cash Equivalents

The Company expenses advertising costs as incurred.

costs of $ 182,446 and $ 158,514 were charged to operations for the years ended December 31, 2024 and 2023, respectively.

and Cash Equivalents

Cash and cash equivalents are comprised of

cash and highly liquid investments with original maturities of 90 days or less at the date of purchase.

The Company does no t

have any cash equivalents as of December 31, 2023 and 2022.

The Company does no t have any

cash equivalents as of December 31, 2024 and 2023.

Cash is maintained at a major financial institution.

Accounts held at U.S.

financial institutions are insured by the FDIC up to $ 250,000 .

The Company is exposed to credit risk in the event of default by the financial institutions or the issuers of these investments to the

extent the amounts on deposit or invested are in excess of amounts that are insured.

institutions are insured by the FDIC up to $ 250,000 .

The Company is exposed to credit risk in the event of default by the financial institutions

or the issuers of these investments to the extent the amounts on deposit or invested are in excess of amounts that are insured.

The Company’s

accounts at this major financial institution may, at times, exceed the federally insured limits.

The amount in excess of the FDIC insurance

as of December 31, 2024 and 2023, was approximately $ 7.5 million and $ 933,523 , respectively.

The Company has not experienced any losses

on these accounts and management believes, based upon the quality of this major financial institution, that the credit risk with regard

to these deposits is not significant.

Accounts Receivable

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at invoiced amount, net of an allowance for doubtful accounts and bear no interest.

An allowance for losses is established through

a provision for losses charged to expenses.

Receivables are charged against the allowance for losses when management believes collectability

The allowance (if any) is an amount that management believes will be adequate to absorb estimated losses on existing receivables,

based on evaluation of the collectability of the accounts and prior loss experience.

An allowance for losses is established through a provision

for losses charged to expenses.

Receivables are charged against the allowance for losses when management believes collectability is unlikely.

The allowance (if any) is an amount that management believes will be adequate to absorb estimated losses on existing receivables, based

on evaluation of the collectability of the accounts and prior loss experience.

Property and Equipment

Property and equipment are stated at cost.

and equipment are stated at cost.

Maintenance and repairs are charged to expense when incurred.

When property and equipment are retired or otherwise disposed of, the related

cost and accumulated depreciation are removed from the respective accounts and any gain or loss is credited or charged to income.

for both financial reporting and income tax purposes is computed using combinations of the straight line and accelerated methods over

the estimated lives of the respective assets as follows:

When property and equipment are retired

or otherwise disposed of, the related cost and accumulated depreciation are removed from the respective accounts and any gain or loss

is credited or charged to income.

Depreciation for both financial reporting and income tax purposes is computed using combinations of

the straight line and accelerated methods over the estimated lives of the respective assets as follows:

Schedule of estimated lives

Office and computer

Office and computer equipment

Furniture and fixtures

Lab equipment

Leasehold improvements

CARDIO DIAGNOSTICS HOLDINGS, INC.

Notes to Consolidated Financial Statements

Years Ended December 31, 2024 and 2023

Intangible Assets

Intangible assets are acquired individually

or as part of a group of assets, and are initially recorded at cost.

The cost of a group of assets acquired in a transaction is allocated

to the individual assets based on their relative fair values.

Intangible assets are carried at cost less accumulated amortization and

any recorded impairment.

Intangible assets with finite useful lives are amortized using a straight-line method over the period of estimated

The estimated useful life of the Company’s intangible assets (Know-how license) is 5 years .

The Company evaluates intangible

assets for impairment whenever events or changes in circumstances indicate that the assets might be impaired.

Patent and Trademark Costs

The Company accounts for patents in accordance with ASC 350-30, the Company

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

The Company capitalizes patent

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

The Company evaluates its patents’ estimated useful life and begins amortizing the patents when they are brought to

the market or otherwise commercialized.

assets are acquired individually or as part of a group of assets, and are initially recorded at cost.

The cost of a group of assets acquired

in a transaction is allocated to the individual assets based on their relative fair values.

Intangible assets are carried at cost less

accumulated amortization and any recorded impairment.

Intangible assets with finite useful lives are amortized using a straight-line

method over the period of estimated useful life.

The estimated useful life of the Company’s intangible assets (Know-how license)

The Company evaluates intangible assets for impairment whenever events or changes in circumstances indicate that the assets

might be impaired.

The Company accounts for patents in accordance

with ASC 350-30, General Intangibles Other than Goodwill .

The Company capitalizes patent costs representing legal fees associated

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

The Company evaluates its patents’ estimated useful

life and begins amortizing the patents when they are brought to the market or otherwise commercialized.

of Long-Lived Assets

In accordance with ASC 360-10-35, the Company assesses the valuation of components

of its long-lived assets whenever events or circumstances dictate that the carrying value might not be recoverable.

The Company bases

its evaluation on indicators such as the nature of the assets, the future economic benefit of the assets, any historical or future profitability

measurements and other external market conditions or factors that may be present.

If such factors indicate that the carrying amount of

an asset or asset group may not be recoverable, the Company determines whether an impairment has occurred by analyzing an estimate of

undiscounted future cash flows at the lowest level for which identifiable cash flows exist.

If the estimate of undiscounted cash flows

during the estimated useful life of the asset is less than the carrying value of the asset, the Company recognizes a loss for the difference

between the carrying value of the asset and its estimated fair value, generally measured by the present value of the estimated cash flows.

The Company accounts for leases under ASC 842,

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.

In accordance with ASC 360-10-35,

the Company assesses the valuation of components of its long-lived assets whenever events or circumstances dictate that the carrying value

might not be recoverable.

The Company bases its evaluation on indicators such as the nature of the assets, the future economic benefit

of the assets, any historical or future profitability measurements and other external market conditions or factors that may be present.

If such factors indicate that the carrying amount of an asset or asset group may not be recoverable, the Company determines whether an

impairment has occurred by analyzing an estimate of undiscounted future cash flows at the lowest level for which identifiable cash flows

If the estimate of undiscounted cash flows during the estimated useful life of the asset is less than the carrying value of the

asset, the Company recognizes a loss for the difference between the carrying value of the asset and its estimated fair value, generally

measured by the present value of the estimated cash flows.

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

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.

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

1 unchanged sentence

Stock-Based Compensation

The Company accounts for its stock-based awards granted

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

718-20, Awards Classified as Equity, which requires the measurement

of compensation expense for all share-based compensation granted to employees and non-employee directors at fair value on the date of

grant and recognition of compensation expense over the related service period for awards expected to vest.

The Company uses the Black-Scholes

option pricing model to estimate the fair value of its stock options and warrants.

The Black-Scholes option pricing model requires the

input of highly subjective assumptions including the expected stock price volatility of the 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.

The Company accounts for income taxes using the asset

and liability method in accordance with ASC Topic No.

The Company accounts for its stock-based

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

718-20, Awards Classified as Equity, which requires

the measurement of compensation expense for all share-based compensation granted to employees and non-employee directors at fair value

on the date of grant and recognition of compensation expense over the related service period for awards expected to vest.

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.

The Company accounts for income

taxes using the asset and liability method in accordance with ASC Topic No.

740, Income Taxes.

Under this method, deferred tax assets and liabilities are determined

based on differences between financial reporting and tax bases of assets and liabilities, and are measured using the enacted tax rates

and laws that are expected to be in effect when the differences are expected to reverse.

The Company applies the provisions of ASC Topic No.

740 for the financial statement recognition, measurement and disclosure of uncertain tax positions recognized in the Company’s financial

In accordance with this provision, tax positions must meet a more-likely-than-not recognition threshold and measurement attribute

for the financial statement recognition and measurement of a tax position.

Under this method, deferred tax assets

and liabilities are determined based on differences between financial reporting and tax bases of assets and liabilities, and are measured

using the enacted tax rates and laws that are expected to be in effect when the differences are expected to reverse.

The Company applies the provisions

of ASC Topic No.

740 for the financial statement recognition, measurement and disclosure of uncertain tax positions recognized in the

Company’s financial statements.

In accordance with this provision, tax positions must meet a more-likely-than-not recognition threshold

and measurement attribute for the financial statement recognition and measurement of a tax position.

CARDIO DIAGNOSTICS HOLDINGS, INC.

Notes to Consolidated Financial Statements

Years Ended December 31, 2024 and 2023

Recent Accounting Pronouncements

We have reviewed other recent accounting pronouncements

and concluded they are either not applicable to the business, or no material effect is expected on the consolidated financial statements

as a result of future adoption.

Note 4 – Property and Equipment

Property and equipment are carried at cost

and consist of the following at December 31, 2023 and 2022:

We have reviewed other recent

accounting pronouncements and concluded they are either not applicable to the business, or no material effect is expected on the consolidated

financial statements as a result of future adoption.

4 – Property and Equipment

Property and equipment are carried at cost and consist of the following at December 31, 2024 and 2023:

Schedule of property and equipment

1 unchanged sentence

Furniture and fixtures

Lab equipment

Leasehold improvements

Accumulated depreciation

Leasehold improvements of $ 482,170

represent costs of the buildout of the leased laboratory in Iowa City, Iowa that was completed in January 2024.

Depreciation expense of $ 3,790

and $ 0 was charged to operations for the years ended

December 31, 2023 and 2022, respectively.

Note 5 – Intangible Assets

The following table provides detail associated with the Company’s

acquired identifiable intangible assets at December 31, 2023 and 2022:

Leasehold improvements of $ 502,155 represent costs

of the buildout of the leased laboratory in Iowa City, Iowa that was completed in January 2024.

Depreciation expense of $ 113,777 and $ 3,790

was charged to operations for the years ended December 31, 2024 and 2023, respectively.

5 – Intangible Assets

following table provides details associated with the Company’s acquired identifiable intangible assets at December 31, 2024 and

Schedule of intangible assets

1 unchanged sentence

Accumulated amortization

Amortization expense charged to operations

was $ 16,000 for the years ended December 31, 2023 and 2022, respectively.

Note 6 – Patent and Trademark

As of December 31, 2023, in the first family of patents and patent

applications owned solely by UIRF and is exclusively licensed by Cardio, there are five granted patents (US, EU, China, Australia and

Hong Kong) and other pending patent applications.

The Company has pending patent applications in patent families two, three, four and

Legal fees associated with the patents and trademark totaled $ 515,402 and $ 321,308 ,

net of accumulated amortization of $ 3,182 and $ 0 as of December 31, 2023 and 2022, respectively and are presented in the balance sheet

as patent and trademark costs.

Amortization expense charged to operations was $ 3,182 for the year ended December 31, 2023.

Note 7 – Operating Leases

The Company determines if a contract is, or

contains, a lease at contract inception.

Operating leases are included in operating lease right-of-use (“ROU”) assets, current

portion of operating lease liabilities and operating lease liabilities, net of current portion in the Company’s consolidated balance sheets.

Finance leases are included in property and equipment, current portion of finance lease obligations and finance lease obligations, net

of current portion in the Company’s consolidated balance sheets.

ROU assets represent the right to use an underlying

asset for the lease term and lease liabilities represent the obligation to make lease payments arising from the lease.

ROU assets and

lease liabilities are recognized at the commencement date based on the present value of lease payments over the lease term.

ROU assets include initial direct costs incurred by the lessee as well as any lease payments made at or before the commencement date and

exclude lease incentives.

Amortization expense charged to operations was $ 16,000 for the

years ended December 31, 2024 and 2023, respectively.

6 – Patent Costs

As of December 31, 2024, in the first family

of patents and patent applications owned solely by UIRF and is exclusively licensed by Cardio, there are seven granted patents (US (2),

EU, China, Australia, India and Hong Kong) and other pending patent applications.

The Company has pending patent applications in patent

families two, three, four, five and six.

Legal fees associated with the patents totaled $ 701,089 and $ 515,402 , net of accumulated amortization

of $ 6,920 and $ 3,182 as of December 31, 2024 and 2023, respectively and are presented in the consolidated balance sheets as patent costs.

Patents are amortized over their estimated useful lives of approximately 14 and 15 years, respectively.

Amortization expense charged to

operations was $ 3,738 and $ 3,182 for the years ended December 31, 2024 and 2023, respectively.

7 – Operating Leases

The Company determines if

a contract is, or contains, a lease at contract inception.

Operating leases are included in operating lease right-of-use (“ROU”)

assets, current portion of operating lease liabilities and operating lease liabilities, net of current portion in the Company’s

consolidated balance sheets.

Finance leases are included in property and equipment, current portion of finance lease obligations and finance

lease obligations, net of current portion in the Company’s consolidated balance sheets.

ROU assets represent the right

to use an underlying asset for the lease term and lease liabilities represent the obligation to make lease payments arising from the lease.

ROU assets and lease liabilities are recognized at the commencement date based on the present value of lease payments over the lease term.

In addition, ROU assets include initial direct costs incurred by the lessee as well as any lease payments made at or before the commencement

date and exclude lease incentives.

The Company used the implicit rate in the lease in determining the present value of lease payments.

include options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option.

with a term of one year or less are generally not included in ROU assets and corresponding operating lease liabilities.

In 2023, the Company entered into a lease

agreement for office space in Chicago, Illinois, commencing on August 1, 2023 for a term of three years and four months and expiring on

November 30, 2026.

The monthly rent for August to November 2023 was abated and the Company started to make monthly rental installments

from December 2023 of $12,847.

Lease terms include options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option.

Leases with a term of one year or less are generally not included in ROU assets and corresponding operating lease liabilities.

CARDIO DIAGNOSTICS HOLDINGS, INC.

Notes to Consolidated Financial Statements

Years Ended December 31, 2024 and 2023

In 2023, the Company entered

into a lease agreement for office space in Chicago, Illinois, commencing on August 1, 2023 for a term of three years and four months and

expiring on November 30, 2026.

The monthly rent for August to November 2023 was abated and the Company started to make monthly rental

installments from December 2023 of $12,847.

The monthly rental payment increases by approximately 2% every August starting from 2024.

On July 20, 2023, the Company entered into

another lease agreement for laboratory in Iowa City, Iowa, commencing on August 1, 2023 for a term of five years and four months and expiring

on November 30, 2028.

The monthly rent for August to November 2023 was abated and the Company agreed to pay a monthly rent of $ 8,505 ( $ 102,060

annually) commencing December 1, 2023.

In addition, the landlord agreed to provide the Company with a one-time Tenant Improvement Allowance

(“TIA”) in the amount of up to, but not exceeding $50 per rentable square foot of the premises for a maximum allowance of

Pursuant to ASC Topic 842 Leases, the Company

accounted for both leases as operating leases and accounted for the TIA as a lease incentive, which was estimated to be payable on December

The Company received the TIA from landlord in maximum amount of $ 253,000 on January 16, 2024 and recorded a reimbursement receivable

from landlord of $ 253,000 as of December 31, 2023, which was included in Prepaid expenses and other current assets on the consolidated

balance sheets.

another lease agreement for laboratory facilities in Iowa City, Iowa, commencing on August 1, 2023 for a term of five years and four months

and expiring on November 30, 2028.

The monthly rent for August to November 2023 was abated and the Company agreed to pay a monthly rent

of $ 8,505 ($ 102,060 annually) commencing December 1, 2023.

In addition, the landlord agreed to provide the Company with a one-time Tenant

Improvement Allowance (“TIA”) in the amount of up to, but not exceeding $50 per rentable square foot of the premises for a

maximum allowance of $ 253,000 .

Pursuant to ASC Topic 842

Leases, the Company accounted for both leases as operating leases and accounted for the TIA as a lease incentive, which was estimated

to be payable on December 1, 2023.

The Company received the TIA from landlord in maximum amount of $ 253,000 on January 16, 2024 and recorded

a reimbursement receivable from landlord of $ 253,000 as of December 31, 2023, which was included in Prepaid expenses and other current

assets on the consolidated balance sheets.

During the year ended December 31, 2023, the

Company recorded ROU assets of $ 663,875 and operating lease liabilities of $ 642,523 at lease commencement date.

The discount rate used

to determine the present value is the incremental borrowing rate, estimated to be 4.57 % for Chicago lease and 4.24 % for Iowa City lease,

respectively, as the interest rate implicit in our lease is not readily determinable.

As of December 31, 2023, operating lease ROU

assets and operating lease liabilities are recorded on the consolidated balance sheets as follows:

Company recorded ROU assets of $ 663,875 and operating lease liabilities of $ 642,523 at the lease commencement date.

The discount rate

used to determine the present value is the incremental borrowing rate, estimated to be 4.57 % for the Chicago lease and 4.24 % for the Iowa

City lease, respectively, as the interest rate implicit in our lease is not readily determinable.

of December 31, 2024 and 2023, operating lease ROU assets and operating lease liabilities are recorded on the consolidated balance sheets

Schedule of operating lease ROU assets and operating lease liabilities

Operating Lease:

Operating Leases:

Operating lease right-of-use assets, net

2 unchanged sentences

As of December 31, 2024, the weighted-average

remaining lease terms of the two operating leases were 2.9

years and 4.9

years, respectively.

remaining lease terms of the two operating leases were 1.9 years and 3.9 years, respectively.

The following table summarizes maturities

7 unchanged sentences

Total minimum lease payments

CARDIO DIAGNOSTICS HOLDINGS, INC.

Notes to Consolidated Financial Statements

Years Ended December 31, 2024 and 2023

Consolidated rental expense for all operating

1 unchanged sentence

The following table summarizes the cash paid

and related right-of-use operating lease recognized for the year ended December 31, 2023.

and related right-of-use operating lease recognized for the years ended December 31, 2024 and 2023.

Schedule of cash paid and related right-of-use operating lease

Cash paid for amounts included in the measurement of lease liabilities:

Years Ended December 31,

Cash paid for amounts included in the measurement of

lease liabilities:

Operating cash flows from operating leases

Right-of-use lease assets obtained in the exchange for lease liabilities:

Right-of-use lease assets obtained in the exchange for

lease liabilities:

Operating leases

Note 8 – Finance Agreement Payable

On October 25, 2023, the Company entered

into an agreement with a premium financing company to finance its Directors and Officers insurance premiums for 12-month policies effective

8 – Finance Agreement Payable

On October 25, 2023, the Company entered into

an agreement with a premium financing company to finance its Directors and Officers insurance premiums for 12-month policies effective

October 25, 2023.

The amount financed of $ 467,500 is payable in 10 monthly installments plus interest at a rate of 8.95 % through August

Finance agreement payable was $ 374,000 and $ 849,032 at December 31, 2023 and 2022, respectively.

$ 449,041 has been recorded

in prepaid expenses and is being amortized over the life of the policy.

Note 9 – Earnings (Loss) Per Common

The Company calculates net income (loss)

per common share in accordance with ASC 260 “ Earnings Per Share ” (“ASC 260”).

Basic and diluted net earnings

(loss) per common share was determined by dividing net earnings (loss) applicable to common stockholders by the weighted average number

of common shares outstanding during the period.

The Company’s potentially dilutive shares, which include outstanding common stock

options, common stock warrants, and convertible debt have not been included in the computation of diluted net loss per share for the years

ended December 31, 2023 and 2022 as the result would be anti-dilutive.

Accordingly, Directors and Officers insurance premiums of $ 550,000 was recorded in prepaid expenses and was amortized over

the life of the policy until October 25, 2024.

On October 25, 2024, the Company entered into

an agreement with a premium financing company to finance its Directors and Officers insurance premiums for 12-month policies effective

October 25, 2024.

The amount financed of $ 383,455 is payable in 10 monthly installments plus interest at a rate of 8.80 % through August

Accordingly, Directors and Officers insurance premiums of $ 451,124 has been recorded in prepaid expenses and is being amortized

over the life of the policy until October 25, 2025.

Finance agreement payable for above two agreements

was $ 306,764 and $ 374,000 at December 31, 2024 and 2023, respectively.

Unamortized balance of Directors and Officers insurance premiums

was $ 368,315 and $ 449,041 as of December 31, 2024 and 2023, respectively.

9 – Earnings (Loss) Per Common Share

The Company calculates net income (loss) per common

share in accordance with ASC 260 “ Earnings Per Share ” (“ASC 260”).

Basic and diluted net earnings (loss)

per common share was determined by dividing net earnings (loss) applicable to common stockholders by the weighted average number of common

shares outstanding during the period.

The Company’s potentially dilutive shares, which include outstanding common stock options,

and common stock warrants have not been included in the computation of diluted net loss per share for the years ended December 31, 2024

and 2023 as the result would be anti-dilutive.

Schedule of anti dilutive earning per share

Ended December 31,

Stock warrants

1 unchanged sentence

Total shares excluded from calculation

Note 10 – Stockholders’ Equity

10 – Stockholders’ Equity

Stock Transactions

to the Business Combination Agreement on October 25, 2022, the Company issued the following securities:

of conversion rights issued as a component of units in Mana’s initial public offering (the “Public Rights”) were issued

an aggregate of 928,571 shares of the Company’s common stock.

of existing shares of common stock of Legacy Cardio and the holder of equity rights of Legacy Cardio (together, the “Legacy Cardio

Stockholders”) received an aggregate of 6,883,306 shares of the Company’s Common Stock, calculated based on the exchange

ratio of 3.427259 pursuant to the Merger Agreement (the “Exchange Ratio”) for each share of Legacy Cardio Common

Stock held or, in the case of the equity rights holder, that number of shares of the Company’s Common Stock equal to 1% of the Aggregate

Pursuant to the Business Combination Agreement on October

25, 2022, the Company issued the following securities:

Holders of conversion rights issued as a component of units

in Mana’s initial public offering (the “Public Rights”) were issued an aggregate of 928,571 shares of the Company’s

common stock.

Holders of existing shares

of common stock of Legacy Cardio and the holder of equity rights of Legacy Cardio (together, the “Legacy Cardio Stockholders”)

received an aggregate of 6,883,306 shares of the Company’s Common Stock, calculated based on the exchange

ratio of 3.427259 pursuant to the Merger Agreement (the “Exchange Ratio”) for each share of Legacy Cardio Common Stock

held or, in the case of the equity rights holder, that number of shares of the Company’s Common Stock equal to 1% of the Aggregate

Closing Merger Consideration, as defined in the Merger Agreement.

Legacy Cardio Stockholders received, in addition, an aggregate of 43,334 shares of the Company’s Common Stock (“Conversion

Shares”) upon conversion of an aggregate of $ 433,334 in principal amount of promissory notes issued by Mana to Legacy Cardio in

connection with its loan of such amount in order to extend Mana’s duration through October 26, 2022 (the “Extension Notes”),

which Conversion Shares were distributed to the Legacy Cardio Stockholders in proportion to their respective interest in Legacy Cardio.

public stockholders (excluding Mana Capital, LLC, the SPAC sponsor (the “Sponsor”), and Mana’s former officers and directors)

own 34,548 shares of the Company’s Common Stock and the Sponsor, Mana’s former officers and directors and certain permitted

transferees own 1,625,000 shares of the Company’s Common Stock.

after giving effect to the Business Combination, there were 9,514,743 issued and outstanding shares of the Company’s Common Stock.

On October 25, 2022, in connection with the approval

of the Business Combination, the Company’s stockholders approved the Cardio Diagnostics Holdings, Inc.

2022 Equity Incentive Plan

(the “2022 Plan”).

The purpose of the 2022 Plan is to promote the interests of the Company and its stockholders by providing

eligible employees, officers, directors and consultants with additional incentives to remain with the Company and its subsidiaries, to

increase their efforts to make the Company more successful, to reward such persons by providing an opportunity to acquire shares of Common

Stock on favorable terms and to attract and retain the best available personnel to participate in the ongoing business operations of the

The 2022 Plan permits the grant of Incentive Stock Options, Nonstatutory Stock Options, Restricted Stock, Restricted Stock Units,

Stock Appreciation Rights, Performance Units and Performance Shares.

The 2022 Plan, as approved, permits the issuance

of up to 3,265,516

shares of Common Stock (the “Share Reserve”) upon exercise or conversion of grants and awards made from time to time

to officers, directors, employees and consultants, however that the Share Reserve will increase on January 1 st of each calendar

year and ending on and including January 1, 2027 (each, an “Evergreen Date”), in an amount equal to the lesser of (i) 7%

of the total number of shares of Common Stock outstanding on the December 31 st immediately preceding the applicable Evergreen

Date and (ii) such lesser number of shares of Common Stock as determined to be appropriate by the Compensation Committee, which administers

the 2022 Plan, in its sole discretion.

The Legacy Cardio Stockholders

received, in addition, an aggregate of 43,334 shares of the Company’s Common Stock (“Conversion Shares”) upon conversion

of an aggregate of $ 433,334 in principal amount of promissory notes issued by Mana to Legacy Cardio in connection with its loan of such

amount in order to extend Mana’s duration through October 26, 2022 (the “Extension Notes”), which Conversion Shares

were distributed to the Legacy Cardio Stockholders in proportion to their respective interest in Legacy Cardio.

Mana public stockholders

(excluding Mana Capital, LLC, the SPAC sponsor (the “Sponsor”), and Mana’s former officers and directors) own 34,548

shares of the Company’s Common Stock and the Sponsor, Mana’s former officers and directors and certain permitted transferees

own 1,625,000 shares of the Company’s Common Stock.

Immediately after giving effect to the Business Combination,

there were 9,514,743 issued and outstanding shares of the Company’s Common Stock.

CARDIO DIAGNOSTICS HOLDINGS, INC.

Notes to Consolidated Financial Statements

Years Ended December 31, 2024 and 2023

On October 25, 2022, in connection

with the approval of the Business Combination, the Company’s stockholders approved the Cardio Diagnostics Holdings, Inc.

Incentive Plan (the “2022 Plan”).

The purpose of the 2022 Plan is to promote the interests of the Company and its stockholders

by providing eligible employees, officers, directors and consultants with additional incentives to remain with the Company and its subsidiaries,

to increase their efforts to make the Company more successful, to reward such persons by providing an opportunity to acquire shares of

Common Stock on favorable terms and to attract and retain the best available personnel to participate in the ongoing business operations

of the Company.

The 2022 Plan permits the grant of Incentive Stock Options, Nonstatutory Stock Options, Restricted Stock, Restricted Stock

Units, Stock Appreciation Rights, Performance Units and Performance Shares.

2022 Plan, as approved, permits the issuance of up to 3,265,516 shares of Common Stock (the “Share Reserve”) upon exercise

or conversion of grants and awards made from time to time to officers, directors, employees and consultants, however that the Share Reserve

will increase on January 1st of each calendar year and ending on and including January 1, 2027 (each, an “Evergreen Date”),

in an amount equal to the lesser of (i) 7% of the total number of shares of Common Stock outstanding on the December 31st immediately

preceding the applicable Evergreen Date and (ii) such lesser number of shares of Common Stock as determined to be appropriate by the

Compensation Committee, which administers the 2022 Plan, in its sole discretion.

There was no increase in the Share Reserve on January

In January 2024, the Compensation Committee approved an annual increase in the Share Reserve of 1,060,458 shares.

Common Stock Issued

In connection with a private offering memorandum that the

Company issued through a placement agent on January 23, 2024, the Company completed entering into subscription agreements with 7 accredited

investors (the “Subscription Agreements”), whereby the Company issued a total of 561,793 units (“Units”), with

each Unit consisting of (i) one share of the Company’s common stock, $ 0.00001 par value (the “Common Stock”), and (ii)

one six year Common Stock purchase warrant (the “Warrants”), having an exercise price of $ 1.78 per share (the “Private

The Private Placement resulted in the issuance to investors of 561,793 shares of Common Stock and 561,793 Warrants.

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.

The Company intends to use the net proceeds from the Private Placement for working

capital and general corporate purposes.

The Private Placement closed on February 2, 2024.

In connection with the Private Placement, the

Company entered into a Placement Agent Agreement with Altitude Capital Group, LLC, as placement agent (“Altitude Capital”

or the “Placement Agent”).

The Company’s Non-Executive Chairman of the Board owns 10% of Altitude Capital.

to the Placement Agent Agreement, at closing, Altitude Capital was paid a cash commission equal to 10% of the gross proceeds received

by the Company, plus 20% warrant coverage, providing Altitude Capital with the right to purchase 112,353 shares of Common Stock at $1.78

per share through February 2, 2030 (the “Placement Agent Warrants”).

At-the-Market Issuance

In connection with an At-the-Market Issuance Sales Agreement

(the “Sales Agreement”) that the Company entered into with a placement agent on January 26, 2024, the Company sold 24,758,057

shares of Common Stock at various amounts per share to investors for gross proceeds totaling $ 11,546,949 before deducting sales commissions

of $ 288,674 to placement agent, during the year ended December 31, 2024.

The Company also paid the placement agent a fee of $ 55,000 .

Other Common Stock Issuance

During the year ended December 31, 2024, the Company issued

48,568 shares of Common Stock to two consultants for services pursuant to vesting of Restricted Stock Units granted, valued at $ 26,000 .

On March 31, 2024, the Company issued 35,212 shares of Common

Stock to the board of directors for services pursuant to vesting of Restricted Stock Units granted, valued at $ 50,000 .

On March 2, 2023, a shareholder exercised warrants

in exchange for 100,000 common shares for proceeds of $ 390,000 .

During the year ended December 31, 2023,

the Company issued 52,375 common shares to a consultant for services pursuant to vesting of Restricted Stock Units granted, valued at

During the year ended December 31, 2023,

the Company issued 251,172 common shares to the board of directors for services pursuant to vesting of Restricted Stock Units granted,

in exchange for 100,000 shares of Common Stock for proceeds of $ 390,000 .

During the year ended December 31, 2023, the

Company issued 52,375 shares of Common Stock to two consultants for services pursuant to vesting of Restricted Stock Units granted, valued

at $ 44,000 .

During the year ended December 31, 2023, the

Company issued 251,172 shares of Common Stock to the board of directors for services pursuant to vesting of Restricted Stock Units granted,

valued at $ 200,000 .

CARDIO DIAGNOSTICS HOLDINGS, INC.

Notes to Consolidated Financial Statements

Years Ended December 31, 2024 and 2023

In connection with the convertible notes payable

2 unchanged sentences

The number of shares of Common Stock issued was determined based on the terms of the convertible notes.

The Company sold post-merger 2,484,872 (or 725,032

pre-merger) common shares to various investors for proceeds totaling $ 11,986,036

during the year ended December 31, 2022.

The Company paid the placement agent $ 1,198,604

in cash and issued 214,998

The Company issued post-merger 66,465 (or 19,393

pre-merger) common shares to an investor in settlement of a cashless exercise of a warrant agreement.

On October 1, 2019, the Company issued

warrants to a seed funding firm equivalent to 2% of the fully-diluted equity of the Company, or 22,500 common shares at the time of issuance.

On October 1, 2019, the Company issued warrants

to a seed funding firm equivalent to 2% of the fully-diluted equity of the Company, or 22,500 shares of Common Stock at the time of issuance.

The warrant is exercisable on the earlier of the closing date of the next Qualified Equity Financing occurring after the issuance of the

1 unchanged sentence

The exercise price is the price per share of the shares sold to investors in the

next Qualified Equity Financing, or if the warrant becomes exercisable in connection with a Change in Control before the next Qualified

next Qualified Equity Financing, or if the warrant became exercisable in connection with a Change in Control before the next Qualified

Equity Financing, the greater of the quotient obtained by dividing $150,000 by the Pre-financing Capitalization, and the price per share

2 unchanged sentences

of any Change of Control, or 15 years after the issuance of the warrant.

In April 2022, the Company issued fully

vested warrants to investors as part of private placement subscription agreements pursuant to which the Company issued common stock.

shareholder received warrants to purchase 50% of the common stock issued at an exercise price of $ 3.90 per share with an expiration date

of June 30, 2027 .

As of May 23, 2022, the Company issued

fully vested warrants to investors as part of an additional private placement subscription agreements pursuant to which the Company issued

common stock.

Each shareholder received warrants to purchase 50% of the common stock issued at an exercise price of $ 6.21 per share with

an expiration date of five years from the date of issue.

In April 2022, the Company issued fully vested

warrants to investors as part of private placement subscription agreements pursuant to which the Company issued Common Stock.

Each shareholder

received warrants to purchase 50% of the Common Stock issued at an exercise price of $ 3.90 per share with an expiration date of June 30,

As of May 23, 2022, the Company issued fully

vested warrants to investors as part of an additional private placement subscription agreements pursuant to which the Company issued Common

Each shareholder received warrants to purchase 50% of the Common Stock issued at an exercise price of $ 6.21 per share with an expiration

date of five years from the date of issue.

All of the warrants issued by Legacy Cardio

were exchanged in the Business Combination for warrants of the Company based on the merger exchange ratio.

Warrant activity during the years ended December

31, 2023 and 2022 was as follows:

During the year ended December 31, 2024, in

connection with the Private Placement as described above, the Company issued an aggregate of 674,146 warrants.

activity during the years ended December 31, 2024 and 2023 was as follows:

Schedule of warrant activity

Average Remaining

Exercise Price

Average Exercise

Weighted Average Remaining Contractual

Warrants outstanding at December 31, 2022

Warrants granted

Warrants received in merger

Merger adjustment to prior year

Warrants exercised

Warrants outstanding at December 31, 2023

Warrants exercised

Warrants granted

Warrants outstanding at December 31, 2024

On May 6, 2022, Legacy Cardio granted 513,413 stock

options to the board of directors pursuant to the Cardio Diagnostics, Inc.

2022 Equity Incentive Plan.

All of the options granted under

this legacy plan were exchanged for options under the Company’s 2022 Plan adopted by the Company’s stockholders on October

25, 2022, and based on the exchange ratio for the merger, resulted in a total of 1,759,599 options issued upon closing.

Each exchanged

option has an exercise price of $ 3.90 per share with an expiration date of May 6, 2032 .

The exchanged options fully vested upon closing

of the merger.

Option activity during the years ended

December 31, 2023 and 2022 was as follows:

CARDIO DIAGNOSTICS HOLDINGS, INC.

Notes to Consolidated Financial Statements

Years Ended December 31, 2024 and 2023

On June 23, 2023, the Company granted 825,000

stock options to management, which vested immediately on grant date.

Each option has an exercise price of $ 1.26 per share with an expiration

date of June 23, 2033 .

These immediately vested stock options were valued at $ 1,035,273 at grant date based on the Black-Scholes Option

Pricing model.

The following assumptions were utilized in the Black-Scholes valuation of these immediately vested stock options during

the year ended December 31, 2023, risk free interest rate of 5.41 % , volatility of 176 % and an exercise price of $ 1.26 .

On January 23, 2024, the Company authorized

an additional 1,060,458 shares to the Equity Incentive Plan Reserve (the “2022 Plan”) and granted 1,187,826 options to management

and employees, 1,166,826 of which vested immediately with the remaining 21,000 options subject to 50% vesting on June 30, 2024 and 100%

vesting on December 31, 2024.

Each option has an exercise price of $ 2.11 per share with an expiration date of January 23, 2034 .

The immediately

vested 1,166,826 stock options were valued at $ 2,461,404 at grant date based on the Black-Scholes Option Pricing model.

The following

assumptions were utilized in the Black-Scholes valuation of these immediately vested stock options during the year ended December 31,

2024, risk free interest rate of 5.22 % , volatility of 228 % and an exercise price of $2.11.

For the remaining 21,000 options, 7,500 options

were vested on June 30, 2024, 5,000 options were vested on December 31, 2024 and 8,500 options were forfeited before vesting with the

leaving of the employees before December 31, 2024.

The vested stock options were valued at $4,106 at vesting date based on the Black-Scholes

Option Pricing model.

The following assumptions were utilized in the Black-Scholes valuation of these vested stock options during the

year ended December 31, 2024, risk free interest rate of 4.40 % , volatility of 188 % and an exercise price of $ 2.11 .

On June 30, 2024, the Company granted 30,300

stock options to the board of directors, which vested immediately on grant date.

Each option has an exercise price of $0.55 per share

with an expiration date of June 30, 2034 .

These immediately vested stock options were valued at $ 16,625 at grant date based on the Black-Scholes

Option Pricing model.

The following assumptions were utilized in the Black-Scholes valuation of these immediately vested stock options

during the year ended December 31, 2024, risk free interest rate of 4.40 % , volatility of 188 % and an exercise price of $ 0.55 .

On September 30, 2024, the Company granted

74,744 stock options to the board of directors, which vested immediately on grant date.

Each option has an exercise price of $0.22 per

share with an expiration date of September 30, 2034 .

These immediately vested stock options were valued at $ 16,618 at grant date based

on the Black-Scholes Option Pricing model.

The following assumptions were utilized in the Black-Scholes valuation of these immediately

vested stock options during the year ended December 31, 2024, risk free interest rate of 3.79 % , volatility of 184 % and an exercise price

On November 14, 2024, the Company granted 15,728

stock options to two independent directors of the board, which vested immediately on grant date.

Each option has an exercise price of

$0.27 per share with an expiration date of November 14, 2034 .

These immediately vested stock options were valued at $ 4,125 at grant date

based on the Black-Scholes Option Pricing model.

The following assumptions were utilized in the Black-Scholes valuation of these immediately

vested stock options during the year ended December 31, 2024, risk free interest rate of 4.44 % , volatility of 156 % and an exercise price

The two independent directors did not stand for re-election at the 2024 Annual Meeting but did receive the options upon vesting.

On December 31, 2024, the Company granted 13,632

stock options to the board of directors, which vested immediately on grant date.

Each option has an exercise price of $0.92 per share

with an expiration date of December 31, 2034 .

These immediately vested stock options were valued at $ 12,289 at grant date based on the

Black-Scholes Option Pricing model.

The following assumptions were utilized in the Black-Scholes valuation of these immediately vested

stock options during the year ended December 31, 2024, risk free interest rate of 4.58 % , volatility of 146 % and an exercise price of $ 0.92 .

CARDIO DIAGNOSTICS HOLDINGS, INC.

Notes to Consolidated Financial Statements

Years Ended December 31, 2024 and 2023

activity during the years ended December 31, 2024 and 2023 was as follows:

Schedule of option activity

Exercise Price

Average Exercise Price

Average Remaining Contractual Life (Years)

Options outstanding at December 31, 2022

Options granted

Options outstanding at December 31, 2023

Options outstanding at

December 31, 2023

Options granted

Options expired or cancelled or forfeited

Options outstanding at December 31, 2024

Options vested and exercisable at December 31, 2024

Note 11 – Convertible Notes Payable

On March 8, 2023, the Company entered into a securities

purchase agreement (“Securities Purchase Agreement”) with YA II PN, Ltd., an investment fund managed by Yorkville Advisors

Global, LP (“Yorkville”) under which the Company agreed to sell and issue to Yorkville convertible debentures (“Convertible

Debentures”) in a gross aggregate principal amount of up to $ 11.2 million (“Subscription Amount”).

The Convertible Debentures

are convertible into shares of common stock of the Company and are subject to various contingencies being satisfied as set forth in the

Securities Purchase Agreement.

The notes are convertible at any time through the maturity date, which, in each case, is one year from

the date of issuance.

The conversion price shall be determined on the basis of 92 % of the two lowest VWAP (Volume Weighted Average Prices)

of the Common Stock during the prior seven trading day period, initially with a floor conversion price of $ 0.55 , but subsequently lowered

by mutual agreement of the parties to $ 0.20 .

On March 8, 2023, the Company issued and

sold to Yorkville a Convertible Debenture in the principal amount of $ 5.0 million, for which it received $ 4.5 million, with a $ 500,000

original issue discount (“OID”).

Interest on the outstanding principal balance accrues at a rate of 0 % and will increase to

15 % upon an Event of Default for so long as it remains uncured.

The Company recorded a debt discount

related to identified embedded derivatives relating to the conversion features (see Note 12) based on fair values as of the

inception date of the Note.

The calculated debt discount, including the OID, equaled the face of the Note and is being amortized over

the term of the note.

Yorkville fully converted the initial $ 5,000,000 Convertible

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

On January 4, 2024, the Company and Yorkville terminated

the Securities Purchase Agreement dated as of March 8, 2023, as amended, by the mutual consent of the parties, effective as of January

The First Convertible Debenture has been fully converted, and as of January 4, 2024, the obligation of the Company to issue

and sell, and Yorkville’s obligation to purchase, the Second Convertible Debenture has been terminated.

At the time of termination,

there were no outstanding borrowings, advance notices or shares of Common Stock to be issued under the Securities Purchase Agreement.

In addition, there were no fees due by the Company or Yorkville in connection with the termination of the Securities Purchase Agreement.

Note 12 – Derivative Liability

The Company has determined that the conversion

feature embedded in the convertible notes described in Note 11 contain a potential variable conversion amount which constitutes a derivative

which has been bifurcated from the note and recorded as a derivative liability at fair value, with a corresponding discount recorded to

the associated debt.

The excess of the derivative value over the face amount of the note is recorded immediately to interest expense at

inception, which aggregated $4,692,672.

The Company used the Binomial Black-Scholes Option Pricing model to value the conversion features.

The Company used Level 3 inputs for its

valuation methodology for the conversion option liability in determining the fair value using a Black-Scholes option-pricing model with

the following assumption inputs:

On March 8, 2023, the Company

entered into a securities purchase agreement (“Securities Purchase Agreement”) with YA II PN, Ltd., an investment fund managed

by Yorkville Advisors Global, LP (“Yorkville”) under which the Company agreed to sell and issue to Yorkville convertible debentures

(“Convertible Debentures”) in a gross aggregate principal amount of up to $ 11.2 million (“Subscription Amount”).

The Convertible Debentures were convertible into shares of common stock of the Company and were subject to various contingencies being

satisfied as set forth in the Securities Purchase Agreement.

The notes were convertible at any time through the maturity date, which,

in each case, was one year from the date of issuance.

The conversion price was determined on the basis of 92 % of the two lowest VWAP (Volume

Weighted Average Prices) of the Common Stock during the prior seven trading day period, initially with a floor conversion price of $ 0.55 ,

but subsequently lowered by mutual agreement of the parties to $ 0.20 .

On March 8, 2023, the Company

issued and sold to Yorkville a Convertible Debenture in the principal amount of $ 5.0 million, for which it received $ 4.5 million, with

a $ 500,000 original issue discount (“OID”).

Interest on the outstanding principal balance accrued at a rate of 0 % and would

increase to 15 % upon an Event of Default for so long as it remained uncured.

The Company recorded a debt

discount related to identified embedded derivatives relating to the conversion features (see Note 12) based on fair values as of the inception

date of the Note.

The calculated debt discount, including the OID, equaled the face of the Note and was amortized over the term of the

Yorkville fully converted the initial $ 5,000,000

Convertible Debenture into an aggregate of 10,622,119 shares of Common Stock during the year ended December 31, 2023.

On January 4, 2024, the Company

and Yorkville terminated the Securities Purchase Agreement dated as of March 8, 2023, as amended, by the mutual consent of the parties,

effective as of January 4, 2024.

The First Convertible Debenture was fully converted, and as of January 4, 2024, the obligation of the

Company to issue and sell, and Yorkville’s obligation to purchase, the Second Convertible Debenture was terminated.

of termination, there were no outstanding borrowings, advance notices or shares of Common Stock to be issued under the Securities Purchase

In addition, there were no fees due by the Company or Yorkville in connection with the termination of the Securities Purchase

CARDIO DIAGNOSTICS HOLDINGS, INC.

Notes to Consolidated Financial Statements

Years Ended December 31, 2024 and 2023

12 – Derivative Liability

The Company has determined

that the conversion feature embedded in the convertible notes described in Note 11 contain a potential variable conversion amount which

constitutes a derivative which has been bifurcated from the note and recorded as a derivative liability at fair value, with a corresponding

discount recorded to the associated debt.

The excess of the derivative value over the face amount of the note is recorded immediately

to interest expense at inception, which aggregated $4,692,672.

The Company used the Binomial Black-Scholes Option Pricing model to value

the conversion features.

Company used Level 3 inputs for its valuation methodology for the conversion option liability in determining the fair value using a Black-Scholes

option-pricing model with the following assumption inputs:

Schedule of option liability

8 unchanged sentences

$ 0.22 - $ 5.32

Based upon ASC 840-15-25 (EITF Issue 00-19, paragraph

11) the Company has adopted a sequencing approach regarding the application of ASC 815-40 to its outstanding convertible notes.

to the sequencing approach, the Company evaluates its contracts based upon earliest issuance date.

Note 13 – Income Taxes

The reconciliation between income tax expense

computed by applying the federal statutory corporate tax rate and actual income tax expense (benefit) for the year ended December 31,

2023 is as follows:

upon ASC 840-15-25 (EITF Issue 00-19, paragraph 11) the Company has adopted a sequencing approach regarding the application of ASC 815-40

to its outstanding convertible notes.

Pursuant to the sequencing approach, the Company evaluates its contracts based upon earliest issuance

13 – Income Taxes

reconciliation between income tax expense computed by applying the federal statutory corporate tax rate and actual income tax expense

(benefit) for the years ended December 31, 2024 and 2023 is as follows:

Schedule of effective income tax rate reconciliation

1 unchanged sentence

federal income tax rate

State income taxes, net of

federal income tax benefit

Tax effect of expenses that are not

deductible for income tax purposes:

State income taxes, net of federal income tax benefit

Tax effect of expenses that are not deductible for income tax purposes:

Amortization of debt discount

Change in fair value of derivative liability

Stock based compensation

Change in Valuation Allowance

Effective tax rate

At December 31, the significant components

of the deferred tax assets (liabilities) are summarized below:

December 31, the significant components of the deferred tax assets (liabilities) are summarized below:

Schedule of deferred income tax assets

1 unchanged sentence

Net operating losses

Stock-based compensation

Property and equipment

Total deferred tax assets

4 unchanged sentences

Net deferred tax assets

As of December 31, 2023, the Company had

federal net operating loss carryforwards of approximately $ 11.5

million which may be carried forward indefinitely, and state net operating loss carryforwards of approximately $ 11.5

million (Iowa) and $ 10.9 million (Illinois), respectively which expire at various dates from 2040 through 2043.

These net operating loss

carryforwards may be used to offset future taxable income and thereby reduce the Company’s U.S.

CARDIO DIAGNOSTICS HOLDINGS, INC.

Notes to Consolidated Financial Statements

Years Ended December 31, 2024 and 2023

of December 31, 2024, the Company had federal net operating loss carryforwards of approximately $ 17.2 million which may be carried forward

indefinitely, and state net operating loss carryforwards of approximately $ 12.6 million (Iowa) and $ 16.6 million (Illinois), respectively

which expire at various dates from 2040 through 2044.

These net operating loss carryforwards may be used to offset future taxable income

and thereby reduce the Company’s U.S.

federal income taxes.

operating losses may be subject to limitation under Internal Revenue Code Section 382 should there be a greater than 50 %

change in ownership as determined under the regulations.

In assessing the realization of deferred

tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will be realized.

The net operating losses may be subject to limitation under Internal

Revenue Code Section 382 should there be a greater than 50 % change in ownership as determined under the regulations.

In assessing the realization of deferred tax

assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will be realized.

The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which

5 unchanged sentences

will not be realized.

In accordance with ASC 740, a valuation

allowance must be established if it is more likely than not that the deferred tax assets will not be realized.

This assessment is based

upon consideration of available positive and negative evidence, which includes, among other things, the Company’s most recent results

of operations and expected future profitability.

Based on the Company’s cumulative losses in recent years, a full valuation allowance

against the Company’s deferred tax assets as of December 31, 2023 has been established as Management believes that the Company will

not more likely than not realize the benefit of those deferred tax assets.

Therefore, no tax provision has been recorded for the year

ended December 31, 2023.

The Company complies with the provisions

of ASC 740-10 in accounting for its uncertain tax positions.

ASC 740-10 addresses the determination of whether tax benefits claimed or

expected to be claimed on a tax return should be recorded in the financial statements.

Under ASC 740-10, the Company may recognize the

tax benefit from an uncertain tax position only if it is more likely that not that the tax position will be sustained on examination by

the taxing authorities, based on the technical merits of the position.

Management has determined that the Company has no significant uncertain

tax positions requiring recognition under ASC 740-10.

The Company is subject to income tax in

the U.S., and certain state jurisdictions.

In accordance with ASC 740, a valuation allowance

must be established if it is more likely than not that the deferred tax assets will not be realized.

This assessment is based upon consideration

of available positive and negative evidence, which includes, among other things, the Company’s most recent results of operations

and expected future profitability.

Based on the Company’s cumulative losses in recent years, a full valuation allowance against

the Company’s deferred tax assets as of December 31, 2024 and 2023 respectively has been established as Management believes that

the Company will not more likely than not realize the benefit of those deferred tax assets.

Therefore, no tax provision has been recorded

for the years ended December 31, 2024 and 2023, respectively.

The Company complies with

the provisions of ASC 740-10 in accounting for its uncertain tax positions.

ASC 740-10 addresses the determination of whether tax benefits

claimed or expected to be claimed on a tax return should be recorded in the financial statements.

Under ASC 740-10, the Company may recognize

the tax benefit from an uncertain tax position only if it is more likely that not that the tax position will be sustained on examination

by the taxing authorities, based on the technical merits of the position.

Management has determined that the Company has no significant

uncertain tax positions requiring recognition under ASC 740-10.

The Company is subject

to income tax in the U.S., and certain state jurisdictions.

The Company has not been audited by the U.S.

Internal Revenue Service, or any states in connection

with income taxes.

The Company’s tax years generally remain open to examination for all federal and state income tax matters until

its net operating loss carryforwards are utilized and the applicable statutes of limitation have expired.

The federal and state tax authorities

can generally reduce a net operating loss (but not create taxable income) for a period outside the statute of limitations in order to

determine the correct amount of net operating loss which may be allowed as a deduction against income for a period within the statute

of limitations.

The Company recognizes interest and penalties

related to unrecognized tax benefits, if incurred, as a component of income tax expense.

No interest or penalties have been recorded for

the years ended December 31, 2023 and 2022, respectively.

On March 27, 2020, the Coronavirus Aid,

Relief, and Economic Security Act (CARES Act) was enacted in response to the COVID-19 pandemic.

The CARES Act, among other things, permits

NOL carryovers and carrybacks to offset 100% of taxable income for taxable years beginning before 2021.

In addition, the CARES Act allows

NOLs incurred in 2018, 2019, and 2020 to be carried back to each of the five preceding taxable years to generate a refund of previously

paid income taxes.

The Company is currently evaluating the impact of the CARES Act, but at present does not expect that the NOL carryback

provision of the CARES Act would result in a material cash benefit to us.

Note 14 – Commitments and Contingencies

Prior Relationship of Cardio with

Boustead Securities, LLC

At the commencement of efforts to pursue what

ultimately ended in a terminated business acquisition, Legacy Cardio entered into a Placement Agent and Advisory Services Agreement (the

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

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

Internal Revenue Service, or

any states in connection with income taxes.

The Company’s tax years generally remain open to examination for all federal and state

income tax matters until its net operating loss carryforwards are utilized and the applicable statutes of limitation have expired.

federal and state tax authorities can generally reduce a net operating loss (but not create taxable income) for a period outside the statute

of limitations in order to determine the correct amount of net operating loss which may be allowed as a deduction against income for a

period within the statute of limitations.

The Company recognizes

interest and penalties related to unrecognized tax benefits, if incurred, as a component of income tax expense.

No interest or penalties

have been recorded for the years ended December 31, 2024 and 2023, respectively.

March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) was enacted in response to the COVID-19 pandemic.

The CARES Act, among other things, permits NOL carryovers and carrybacks to offset 100% of taxable income for taxable years beginning

In addition, the CARES Act allows NOLs incurred in 2018, 2019, and 2020 to be carried back to each of the five preceding

taxable years to generate a refund of previously paid income taxes.

At present the Company does not expect that the NOL carryback provision

of the CARES Act will result in a material cash benefit to us.

CARDIO DIAGNOSTICS HOLDINGS, INC.

Notes to Consolidated Financial Statements

Years Ended December 31, 2024 and 2023

14 – Commitments and Contingencies

Relationship of Cardio with Boustead Securities, LLC

At the commencement of efforts

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

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

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

escrow agreement relating to that proposed business acquisition after efforts to complete the transaction failed, despite several extensions

of the closing deadline.

Under the terminated Placement Agent Agreement,

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

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

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

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

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

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

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

Boustead Securities responded to the termination

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

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

In its response, Boustead Securities included

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

While Boustead Securities’ contention appears

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

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

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

Legacy Cardio strongly disputes this position.

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

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

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

the business combination on October 25, 2022.

In connection with the proposed business combination, by agreement dated May 13, 2022, Mana

engaged The Benchmark Company, LLC (“Benchmark”) as its M&A advisor.

Upon closing of the business combination, Legacy

Cardio assumed the contractual engagement entered into by Mana.

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 the business combination on October 25, 2022.

In connection with the proposed business combination, by agreement dated May 13,

2022, Mana engaged The Benchmark Company, LLC (“Benchmark”) as its M&A advisor.

Upon closing of the business combination,

Legacy Cardio assumed the contractual engagement entered into by Mana.

On November 14, 2022, the Company and Benchmark entered into Amendment

12 unchanged sentences

proceedings have been instigated.

Demand Letter and Potential Mootness

On June 25, 2022, a plaintiffs’

securities law firm sent a demand letter to the Company alleging that the Company’s Registration Statement on Form S-4 filed (the

“S-4 Registration Statement”) with the Securities and Exchange Commission (“SEC”) on May 31, 2022 omitted material

information with respect to the Business Combination and demanding that the Company and its Board of Directors immediately provide corrective

disclosures in an amendment or supplement to the Registration Statement.

Subsequent thereto, the Company filed amendments to the S-4 Registration

Statement on July 27, 2022, August 23, 2022, September 15, 2022, October 4, 2022 and October 5, 2022 in which it responded to various

comments of the SEC staff and otherwise updated its disclosure.

In October 2022, the SEC completed its review and declared the S-4 registration

statement on October 6, 2022.

On February 23, 2023 and February 27, 2023, plaintiffs’ securities law firm contacted the Company’s

counsel asking who will be negotiating a mootness fee relating to the purported claims set forth in the June 25, 2022 demand letter.

Company vigorously denies that the S-4 Registration Statement, as amended and declared effective,

is deficient in any respect and that no additional supplemental disclosures are material or required.

CARDIO DIAGNOSTICS HOLDINGS, INC.

Notes to Consolidated Financial Statements

Years Ended December 31, 2024 and 2023

Demand Letter and Potential Mootness Fee Claim

June 25, 2022, a plaintiffs’ securities law firm sent a demand letter to the Company alleging that the Company’s Registration

Statement on Form S-4 filed (the “S-4 Registration Statement”) with the Securities and Exchange Commission (“SEC”)

on May 31, 2022 omitted material information with respect to the Business Combination and demanding that the Company and its Board of

Directors immediately provide corrective disclosures in an amendment or supplement to the Registration Statement.

Subsequent thereto,

the Company filed amendments to the S-4 Registration Statement on July 27, 2022, August 23, 2022, September 15, 2022, October 4, 2022

and October 5, 2022 in which it responded to various comments of the SEC staff and otherwise updated its disclosure.

In October 2022,

the SEC completed its review and declared the S-4 registration statement on October 6, 2022.

On February 23, 2023 and February 27, 2023,

plaintiffs’ securities law firm contacted the Company’s counsel asking who will be negotiating a mootness fee relating to

the purported claims set forth in the June 25, 2022 demand letter.

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

as amended and declared effective, is deficient in any respect and that no additional supplemental disclosures are material or required.

The Company believes that the claims asserted in the Demand Letter are without merit and that no further disclosure is required to supplement

the S-4 Registration Statement under applicable laws.

As of the date of filing of this 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

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.

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.

Northland Securities, Inc.

In January 2024, following the Company’s

termination of its agreement with Yorkville and in connection with the Company’s recent at the market offering and/or its February

2024 private placement, a managing director of Northland Securities, Inc.

(“Northland”) contacted the Company claiming the

right to be paid a fee of approximately $ 150,000 pursuant to the agreement of March 1, 2023 between the Company and Northland regarding

the Yorkville financing.

Subsequently, the Company has been advised by another representative of Northland that Northland would not proceed

with any such claim.

The Company does not believe that it owes Northland any sum based on the termination of the Yorkville Securities

Purchase Agreement and the subsequent financing transactions.

The Company cannot preclude the possibility

that claims or lawsuits brought relating to any alleged securities law violations or breaches of fiduciary duty could potentially require

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

In January 2024, following

the Company’s termination of its agreement with Yorkville and in connection with the Company’s recent at the market offering

and/or its February 2024 private placement, a managing director of Northland Securities, Inc.

(“Northland”) contacted the

Company claiming the right to be paid a fee of approximately $ 150,000 pursuant to the agreement of March 1, 2023 between the Company and

Northland regarding the Yorkville financing.

Subsequently, the Company has been advised by another representative of Northland that Northland

would not proceed with any such claim.

The Company does not believe that it owes Northland any sum based on the termination of the Yorkville

Securities Purchase Agreement and the subsequent financing transactions.

The Company cannot preclude

the possibility that claims or lawsuits brought relating to any alleged securities law violations or breaches of fiduciary duty could

potentially require significant time and resources to defend and/or settle and distract its management and board of directors from focusing

on its business.

Directors and Officers Insurance

In connection with the Company’s various

contractual obligations arising in the ordinary course of business, the Company is required to maintain insurance coverage for claims

against its directors and officers.

Notice 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.

CARDIO DIAGNOSTICS HOLDINGS, INC.

Notes to Consolidated Financial Statements

Years Ended December 31, 2024 and 2023

Note 15 – Subsequent Events

The Company evaluated its December 31,

2023 consolidated financial statements for subsequent events through the date the consolidated financial statements were issued.

Common Stock Issued

Private Placement

On February 2, 2024, the Company completed

entering into subscription agreements with 7 accredited investors (the “Subscription Agreements”), whereby the Company issued

a total of 561,793

units (“Units”), with each Unit consisting of (i) one share of the Company’s common stock, $ 0.00001 par value

(the “Common Stock”), and (ii) one six year Common Stock purchase warrant (the “Warrants”), having an exercise

price of $ 1.78

per share (the “Private Placement”).

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

of Common Stock and 561,793 Warrants.

The purchase price of the securities was $ 1.78 per Unit, resulting in gross proceeds to the Company

of $ 1,000,000

and paid a fee of $ 100,000 ,

before deducting placement agent fees (10% or $ 100,000 ) and other offering expenses.

The Company intends to use the net proceeds from

the Private Placement for working capital and general corporate purposes.

The Private Placement closed on February 2, 2024.

In connection with the Private Placement, the

Company entered into a Placement Agent Agreement with Altitude Capital Group, LLC, as placement agent (“Altitude Capital”

or the “Placement Agent”).

Pursuant to the Placement Agent Agreement, at closing, Altitude Capital was paid a cash commission

equal to 10% of the gross proceeds received by the Company, plus 20% warrant coverage, providing Altitude Capital with the right to purchase

112,353 shares of Common Stock at $ 1.78 per share through February 2, 2030 (the “Placement Agent Warrants”).

At-the-Market Issuance

On January 26, 2024, the Company entered into

an At-the-Market Issuance Sales Agreement (the “Sales Agreement”) with Craig-Hallum Capital Group LLC

(“Craig-Hallum”).

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,

if any, 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.

made certain customary representations, warranties and covenants concerning the Company and the offering of the Shares.

Pursuant to the

terms of the Sales Agreement, the Company also provided the Sales Agent with customary indemnification rights, including indemnification

against certain liabilities under the Securities Act .

The Company will pay the Sales

Agent a commission in cash equal to 2.5% of the gross proceeds from the sale of the Shares under the Sales Agreement, if any.

the Company agreed to pay the costs of the Sales Agent’s legal counsel reasonably incurred in connection with entering into the

transactions contemplated by the Sales Agreement in an amount not to exceed $55,000.

Additionally, pursuant to the terms of the Sales

Agreement, the Company agreed to reimburse the Sales Agent’s for its legal fees incurred in connection with its ongoing diligence

requirements arising from the transactions contemplated by the Sales Agreement in an amount not to exceed $5,000 in the aggregate per

calendar quarter.

The offering of Shares will terminate upon the earlier of (i) the sale of the Shares under the Sales Agreement having

an aggregate offering price of $17 million or (ii) the termination of the Sales Agreement as permitted therein.

The Sales Agreement may

be terminated by the Company at any time upon five business days’ prior written notice to the Sales Agent.

The Sales Agent may terminate

the Sales Agreement at any time by providing written notice to the Company.

The Company and the Sales Agent may also terminate the Sales

Agreement by mutual agreement.

Company sold 487,083

common shares for gross proceeds totaling $ 877,869

under the Sales Agreement as of the date of this report.

The Company has paid Craig-Hallum

$ 21,947 in sales commissions.

Stock Option Granted

23, 2024, the Company authorized an additional 1,071,425 shares to the Equity Incentive Plan Reserve (the “2022 Plan”) and

granted 1,187,826 options to management, 1,166,826 of which vested immediately with the remaining 21,000 options subject to 50 % vesting

on June 30, 2024 and 100 % vesting on December 31, 2024.

Each option has an exercise price of $ 2.11 per share with an expiration date of

January 23, 2034 .

The Company evaluated its December 31, 2024 consolidated financial statements

for subsequent events through the date the consolidated financial statements were issued.

Sales of the Company’s Common Stock may

be made pursuant to the Sales Agreement up to an aggregate of $ 9,476,508 under the Company’s Registration Statement on Form

S-3 filed on February 7, 2025 (File No.

333-284775), declared effective by the SEC on February 14, 2025.

Subsequent to December 31, 2024, the Company sold 6,201,377 shares of Common

Stock for gross proceeds totaling $ 3,511,042 under the At-the-Market Issuance Sales Agreement as of the date of this report.

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

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 8. Financial Statements and Supplementary Data