What changed in this filing

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Item 7. Management’s Discussion and Analysis

2026-03-13 compared with 2025-03-20 · 509 added, 465 removed, 41 unchanged (96% of the section changed)

Management’s Discussion and Analysis of Financial Condition and Results of Operations

As a result of the closing

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

GAAP as discussed in Note 2

– Merger Agreement and Reverse Recapitalization, the consolidated financial statements of Cardio Diagnostics, Inc., a Delaware corporation

and our wholly owned subsidiary, are now the financial statements of the Company.

You should read the following discussion and analysis

of our financial condition and results of operations together with our audited consolidated financial statements as of December 31, 2024

and 2023 and for each of the two years in the period ended December 31, 2024 and the related notes included in Part II, Item 8 of this

Annual Report.

Some of the information contained

in this discussion and analysis or set forth elsewhere in this Annual Report, including information with respect to our plans, estimates

and strategy for our business, includes forward-looking statements based upon current expectations that involve risks and uncertainties.

You should read the sections titled “Risk Factors” and “Cautionary Note Regarding Forward Looking Statements”

for a discussion of important factors that could cause actual results to differ materially from the results described in or implied by

the forward-looking statements contained in the following discussion and analysis.

Our historical results are not necessarily indicative

of the results that may be expected for any period in the future.

the context requires otherwise, references to “Cardio,” the “Company,” “we,” “us” and

“our” refer to Cardio Diagnostics Holdings, Inc., a Delaware corporation, together with its consolidated subsidiary.

Cardio was formed to further develop

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

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

Genetic-Epigenetic Engine™.

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

Cardio aims to become one of the leading medical technology companies for enabling improved prevention, early detection and

treatment of cardiovascular disease.

Cardio is transforming the approach to cardiovascular disease from reactive to proactive and hope

to accelerate the adoption of Precision Medicine for all.

We believe that incorporating Cardio’s solutions into routine practice

in primary care and prevention efforts can help alter the trajectory that nearly one in two Americans is expected to develop some form

of cardiovascular disease by 2035.

Cardio believes that it is the

first company to develop and commercialize epigenetics-based clinical tests for cardiovascular disease that have clear value propositions

for multiple stakeholders including (1) patients, (2) clinicians, (3) hospitals/health systems, (4) employers and (5) payors.

to the CDC, epigenetics is the study of how a person’s behaviors and environment can cause changes that affect the way a person’s

Unlike genetic changes, epigenetic changes are reversible and do not change one’s DNA sequence, but they can change

how a person’s body reads a DNA sequence.

Cardio launched its first clinical test, Epi+Gen CHD™,

a three-year symptomatic CHD risk assessment clinical blood test targeting CHD events, including heart attacks, in 2021 during the Covid-19

As a result, the initial strategy for commercialization involved launching the test via telemedicine and in smaller provider

practices such as concierge medicine practices.

The volume of tests through these channels were minimal, and as the circumstances around

Covid-19 pandemic improved, management re-vamped the Company’s go-to-market strategy to include other healthcare verticals and

stakeholders beyond patients and small providers, including larger provider organizations, group purchasing organizations, employers,

As a result of the closing of the Business Combination,

which was accounted for as a reverse recapitalization in accordance with U.S.

GAAP, the consolidated financial statements of Cardio Diagnostics, Inc., a Delaware corporation and our wholly owned

subsidiary, are now the financial statements of the Company.

You should read the following discussion and analysis of our financial condition

and results of operations together with our audited consolidated financial statements as of December 31, 2025 and 2024 and for each of

the two years in the period ended December 31, 2025 and the related notes included in Part II, Item 8 of this Annual Report.

Some of the information contained in this discussion

and analysis or set forth elsewhere in this Annual Report, including information with respect to our plans, estimates and strategy for

our business, includes forward-looking statements based upon current expectations that involve risks and uncertainties.

You should read

the sections titled “Risk Factors” and “Cautionary Note Regarding Forward Looking Statements” for a discussion

of important factors that could cause actual results to differ materially from the results described in or implied by the forward-looking

statements contained in the following discussion and analysis.

Our historical results are not necessarily indicative of the results that

may be expected for any period in the future.

Unless the context

requires otherwise, references to “Cardio,” the “Company,” “we,” “us” and “our”

refer to Cardio Diagnostics Holdings, Inc., a Delaware corporation, together with its consolidated subsidiary.

Cardio was formed to further develop and commercialize

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

stroke, heart failure and diabetes, by leveraging our Artificial Intelligence (“AI”)-driven Multi-Omics Engine™.

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

Cardio aims to become

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

Cardio is transforming the approach to cardiovascular disease from reactive to proactive and hope to accelerate the adoption of Precision

Medicine for all.

We believe that incorporating Cardio’s solutions into routine practice in primary care and prevention efforts

can help alter the trajectory that nearly one in two Americans is expected to develop some form of cardiovascular disease by 2035.

Cardio believes that it is the first company to

develop and commercialize epigenetics-based clinical tests for cardiovascular disease that have clear value propositions for multiple

stakeholders including (1) patients, (2) clinicians, (3) hospitals/health systems, (4) employers and (5) payors.

According to the CDC,

epigenetics is the study of how a person’s behaviors and environment can cause changes that affect the way a person’s genes

Unlike genetic changes, epigenetic changes are reversible and do not change one’s DNA sequence, but they can change how a

person’s body reads a DNA sequence.

Cardio launched its first clinical test, Epi+Gen

CHD™, a three-year symptomatic CHD risk assessment clinical blood test targeting CHD events, including heart attacks, in 2021 during

the COVID-19 pandemic.

As a result, the initial strategy for commercialization involved launching the test via telemedicine and in smaller

provider practices such as concierge medicine practices.

The volume of tests through these channels were minimal, and as the circumstances

around COVID-19 pandemic improved, management re-vamped the Company’s go-to-market strategy to include other healthcare verticals

and stakeholders beyond patients and small providers, including larger provider organizations, group purchasing organizations, employers,

payors and life insurers.

2 unchanged sentences

clinical blood test for the detection of coronary heart disease.

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

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

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

In May 2023, we launched CardioInnovate360™, a

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

assessment and management of cardiovascular diseases.

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

disease risk intelligence platform.

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

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

Despite long partnership and

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

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

To further increase reach

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

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

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

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

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

We have entered into partnerships with seven new provider organizations.

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

Cardio expects that sales and

partnership cycles will continue to be long.

Our ongoing strategy for expanding our business operations and increasing revenue generation

include the following:

The PrecisionCHD™ tests is coupled to Actionable Clinical Intelligence

(“ACI”), a platform that offers new epigenetic and genetic insights to clinicians prescribing the to personalize patient management

and help improve chronic care management.

In May 2023, we launched CardioInnovate360™, a research-use-only (“RUO”) solution

to support the discovery, development and validation of novel biopharmaceuticals for the assessment and management of cardiovascular diseases.

In February 2024, we announced the launch of HeartRisk™, a cardiovascular disease risk intelligence platform.

We believe that our

Epi+Gen CHD™ and PrecisionCHD™ tests are categorized as laboratory-developed tests, or “LDTs.” The new go-to-market

strategy is also being implemented for these products.

Despite long partnership and sales cycles, in some instance as long as 24 months,

Cardio has been able to increase the number of provider organizations offering its tests and has continued the development of a more robust

sales and partnership pipeline.

In the fiscal year ended December 31, 2025, the focus of the Company remained in driving adoption of our

clinical solutions, predominantly among providers, channel partners and employers.

In addition, the Company made progress in its ongoing

expansion to additional markets domestically and internationally with the first international expansion to India, partnering with channel

partners such as YMCA of East Tennessee and Southdale YMCA to offer testing to its members and community, and in setting up our CLIA laboratory

Cardio expects that sales and partnership cycles

will continue to be long, especially with the current economic uncertainty.

Our ongoing strategy for expanding our business operations

and increasing revenue generation include the following:

Develop additional products, including clinical tests for stroke, congestive heart failure and diabetes;

· Expand clinical and health economics evidence portfolio to continue to demonstrate value of products

and increase reach;

· Leverage our newly awarded CPT PLA codes;

Offer laboratory services via our laboratory;

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

Leverage our CPT PLA codes and expand reimbursement efforts with both government and commercial payors;

Expand the adoption of our products across key channels, including health systems and self-insured employers;

including for HeartRisk, Cardio’s new SaaS product;

· Scale our internal operations capabilities with a focus on improving efficiency and reducing our cost

of goods sold;

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

Market Sales Agreement

On January 26, 2024, the Company

entered into the Sales Agreement with Craig-Hallum.

Pursuant to the Sales Agreement, the Company

may sell, at its option, shares of its Common Stock through Craig-Hallum, as sales agent.

Sales of the Common Stock were

made pursuant to the Sales Agreement initially up to an aggregate of $17 million under the Company’s Registration Statement

on Form S-3 filed on January 26, 2024 (File No.

333-276725), declared effective by the SEC on February 1, 2024 (the “Initial Registration

Statement”), and will be made pursuant to the Sales Agreement up to an aggregate of $9,476,508 under the Company’s Registration

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

333-284775), declared effective by the SEC on February 14, 2025 (the “Additional

Registration Statement”).

Subject to the terms and conditions of the Sales Agreement, Craig-Hallum may sell the shares, if any,

only by methods deemed to be an “at the market” offering as defined in Rule 415 promulgated under the Securities Act.

Company has agreed to pay Craig-Hallum a sales commission of 2.5% of the gross proceeds for

sales under the Sales Agreement and to provide Craig-Hallum with customary indemnification and contribution rights, including for liabilities

under the Securities Act.

In addition, the Company is required to reimburse Craig-Hallum for certain specified expenses in connection

with entering into the Sales Agreement.

As of March 20,

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

net of offering costs.

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

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

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

Regulatory Developments

6, 2024, FDA published a final rule amending the definition of an in vitro diagnostic (“IVD”) device to include tests manufactured

by a clinical laboratory.

Pursuant to the rule, laboratory developed tests (“LDTs”), i.e., tests designed, manufactured, and

used within a single CLIA-certified high complexity laboratory, are medical devices subject to FDA regulation under the Federal Food,

Drug, and Cosmetic Act.

The final rule also announced FDA’s intention to apply its medical device requirements to LDTs.

final rule, all LDTs, unless subject to a specific exemption, will be subject to premarket authorization requirements (510(k), de novo

classification, or PMA) for each LDT performed by the laboratory, and to postmarket registration and listing, medical device reporting,

correction, removal, and recall, complaint handling, labeling, investigational device, and quality system requirements.

FDA intends to

phase in these requirements beginning May 6, 2025.

The final rule states that certain categories of LDTs will be subject to enforcement

discretion with respect to some or all of these requirements.

For example, FDA will apply enforcement discretion to currently marketed

LDTs that were first offered prior to May 6, 2024, with respect to most quality system requirements and the requirement for premarket

authorization if they are not modified or modified in only limited ways.

Laboratories performing these tests are subject to other requirements,

including the requirement to submit the labeling for the LDT to FDA for review.

FDA will similarly exercise enforcement discretion with

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

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

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

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

the American Clinical Laboratory

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

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

The ultimate success of these lawsuits, which were subsequently

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

It is also unclear whether

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

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

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

In June 2021, Congress introduced the VALID Act,

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

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

FDA’s new LDT final rule may renew attention

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

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

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

This directive is not binding on the FDA.

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

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

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

Separately, Congress could enact legislation aimed at preventing

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

of Operations

The results of operations presented

below should be reviewed in conjunction with the consolidated financial statements and notes included elsewhere in this Annual Report

on Form 10-K.

Explore additional market opportunities in the US;

Explore partner-led international expansions like that in India;

Explore opportunities to grow presence in India, including with local manufacturing;

Scale our internal operations capabilities with a focus on improving efficiency and reducing our cost of goods sold;

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

Recent Developments

At the Market Sales Agreement

On January 26, 2024, the Company entered into the

Sales Agreement with Craig-Hallum.

Pursuant to the Sales Agreement, the Company may sell, at its option, shares of its Common Stock through

Craig-Hallum, as sales agent.

Sales of the Common Stock were made pursuant to the Sales Agreement initially up to an aggregate of $17

million under the Company’s Registration Statement on Form S-3 filed on January 26, 2024 (File No.

333-276725) and declared effective

by the SEC on February 1, 2024 (the “Initial Registration Statement”).

Additional sales have been, and may continue to be

made, pursuant to the Sales Agreement up to an aggregate of $9,476,508 under the Company’s Registration Statement on Form S-3 filed

on February 7, 2025 (File No.

333-284775), declared effective by the SEC on February 14, 2025 (the “Additional Registration Statement”)

and its accompanying Prospectus Supplement dated February 14, 2025.

Subject to the terms and conditions of the Sales Agreement, Craig-Hallum

may sell the shares, if any, only by methods deemed to be an “at the market” offering as defined in Rule 415 promulgated under

the Securities Act.

The Company has agreed to pay Craig-Hallum a sales commission of 2.5% of the gross proceeds for sales under the Sales

Agreement and to provide Craig-Hallum with customary indemnification and contribution rights, including for liabilities under the Securities

In addition, the Company is required to reimburse Craig-Hallum for certain specified expenses in connection with entering into the

Sales Agreement.

In connection with the Sales Agreement, the Company

sold 825,268 common shares (24,758,057 prior to the Reverse Stock Split) at various amounts per share to investors for gross proceeds

totaling $11,546,949, before deducting sales commissions of $288,921 to placement agent, during the year ended December 31, 2024.

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

During the year ended December 31, 2025, in connection

with the Sales Agreement the Company sold 292,495 shares on the post-reverse stock split basis (which includes 206,713 shares that were

sold prior to the Reverse Stock Split, originally 6,201,377 shares) of Common Stock at various amounts per share to investors for gross

proceeds totaling $3,900,492 before deducting sales commissions of $96,994 to the placement agent.

to December 31, 2025, the Company sold 1,133,418 shares of C ommon Stock for gross proceeds

totaling $3,788,174 under the At-the-Market Issuance Sales

Agreement as of the date of this report.

As of March 13, 2026, we have sold an aggregate

2,251,181 shares of our Common Stock under the Sales Agreement and may sell up to another $5,298,889 of our Common Stock through Craig-Hallum

under the Sales Agreement.

Recent Regulatory and Judicial Developments

Regarding LDTs

On May 6, 2024, FDA published a final rule amending

the definition of an in vitro diagnostic (“IVD”) device to include tests manufactured by a clinical laboratory.

the rule, laboratory developed tests (“LDTs”), i.e., tests designed, manufactured, and used within a single CLIA-certified

high complexity laboratory, are medical devices subject to FDA regulation under the Federal Food, Drug, and Cosmetic Act.

The final rule

also announced FDA’s intention to apply its medical device requirements to LDTs.

Under the final rule, all LDTs, unless subject

to a specific exemption, would be subject to premarket authorization requirements (510(k), de novo classification, or PMA) for each LDT

performed by the laboratory, and to postmarket registration and listing, medical device reporting, correction, removal, and recall, complaint

handling, labeling, investigational device, and quality system requirements.

FDA intends to phase in these requirements beginning May

The final rule stated that certain categories of LDTs would be subject to enforcement discretion with respect to some or all

of these requirements.

For example, FDA would apply enforcement discretion to currently marketed LDTs that were first offered prior to

May 6, 2024, with respect to most quality system requirements and the requirement for premarket authorization if they are not modified

or modified in only limited ways.

Laboratories performing these tests are subject to other requirements, including the requirement to

submit the labeling for the LDT to FDA for review.

FDA would similarly exercise enforcement discretion with respect to premarket authorization

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

On September 19, 2025, the FDA formally rescinded

its May 2024 final rule regulating Laboratory Developed Tests (LDTs) as medical devices, following a March 31, 2025, federal court ruling.

District Court for the Eastern District of Texas found the FDA exceeded its authority, reverting LDT oversight to Clinical

Laboratory Improvement Amendments (CLIA).

There has been no further pursuit by the current administration.

Results of Operations

The results of operations presented below should

be reviewed in conjunction with the consolidated financial statements and notes included elsewhere in this Annual Report on Form 10-K.

The following table sets forth Cardio’s results of operations data for the periods presented:

for the years ended December 31, 2024 and 2023:

Comparisons for the years ended December

31, 2025 and 2024:

Ended December 31,

2 unchanged sentences

Research and development

General and administrative expenses

General and administrative

Total operating expenses

2 unchanged sentences

$ (8,383,453 )

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

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

Cardio has earned only nominal

revenue since inception.

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

Cardio’s net loss for the year ended December

31, 2025 was $6,498,167 as compared to $8,383,453 for the year ended December 31, 2024, a decrease of $1,885,286 primarily as a result

of a decrease in General and Administrative expenses associated with stock compensation issued in

Revenue for the year ended December 31, 2025 was

$14,825 compared to $34,890 for the year ended December 31, 2024.

The decrease in revenue is a result

of the conclusion of the Family Medicine Specialists’ Heart Attack Prevention testing initiative.

providers and other organizations are continuing to be onboarded.

However, there is a one to three quarter period from onboarding to ramping

up usage of tests.

The new provider organizations are also smaller and have fewer patients in general than Family Medicine Specialists.

Growth and Commercial Adoption Considerations

question from investors is why revenue growth does not immediately follow the development and validation of a clinically promising diagnostic

While product development may appear straightforward — develop the test, demonstrate its effectiveness, and launch —

the path from scientific discovery to broad clinical adoption is complex, highly regulated and typically extended in duration.

The commercialization

lifecycle for diagnostic tests generally involves multiple stages:

· Scientific Validation

must conduct rigorous analytical and clinical validation studies to demonstrate the safety, accuracy and clinical utility of its tests.

Publication of supporting data and peer-reviewed evidence is often an important component of this process.

· Regulatory Requirements

on the regulatory pathway, the Company must comply with applicable federal and state regulatory standards.

Regulatory processes may involve

submissions, inspections, or other oversight requirements that can extend development timelines.

· Reimbursement and Coverage

Revenue generation

depends significantly on securing third-party reimbursement.

Following launch, the Company must obtain coverage determinations from government

programs, including the Centers for Medicare & Medicaid Services (“CMS”), and subsequently from commercial payors.

decisions often require demonstration of clinical utility, cost-effectiveness, and economic value relative to the current standard of

The timing and scope of reimbursement approvals can materially impact adoption rates and revenue growth.

· Physician Adoption and Clinical

Broad utilization

frequently depends on physician awareness, education and confidence in the test.

Adoption may accelerate when professional medical societies

incorporate a diagnostic test into clinical guidelines;

however, guideline inclusion typically follows the accumulation of substantial

clinical evidence over time.

· Behavioral and Workflow Integration

a test is validated, reimbursed and supported by clinical data, integration into established clinical workflows and physician practice

patterns can be gradual.

Changes in medical practice often occur incrementally as providers gain familiarity and comfort with new technologies.

the healthcare commercialization process is inherently lengthy and subject to regulatory, reimbursement, evidentiary, and behavioral factors.

Broad clinical adoption of novel diagnostic technologies frequently spans multiple years and, in some cases, may require a decade or more

from initial development to widespread utilization.

Sales and Marketing

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

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

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

in 2024 due to tradeshow attendance.

Expenses related to sales and marketing for the

year ended December 31, 2025 were $766,888 as compared to $1,231,969 for the year ended December 31, 2024, a decrease of $465,081.

overall decrease was primarily due to a restructuring in sales and marketing personnel in 2025.

Research and Development

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

2023, a decrease of $116,057.

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

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

General and Administrative

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

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

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

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

Amortization expense

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

Research and development expense for the year ended

December 31, 2025 was $641,212 as compared to $227,966 for the year ended December 31, 2024, an increase of $413,246.

The overall increase

was due to an increase in research and development personnel in 2025.

General and Administrative Expenses

General and Administrative Expenses for the year

ended December 31, 2025 were $5,025,570 as compared to $6,921,094 for the year ended December 31, 2024, a decrease of $1,895,524.

overall decrease is primarily due to a decrease in stock compensation expenses (mainly as a result of new stock options issued in the

first quarter of 2024), coupled by the decrease in director and officer insurance expense.

General and Administrative Expenses for the year

ended December 31, 2025 included payroll and related costs of $1,366,808, rent and other facility costs of $306,591, legal and professional

fees of $868,826, consulting and contractor fees of $715,764, insurance expense of $618,998, filing fees of $99,115, transfer agent fees

of $62,228, software and web computing expenses of $316,339, board compensation of $198,235, investor relations expenses of $10,133 and

general corporate overhead expenses of $462,533.

General and Administrative Expenses for the year

ended December 31, 2024 included payroll and related costs of $3,213,917, rent and other facility costs of $224,123, legal and professional

fees of $731,209, consulting and contractor fees of $740,516, insurance expense of $714,481, filing fees of $102,514, transfer agent fees

of $67,536, software and web computing expenses of $274,515, board compensation of $199,658, investor relations expense of $82,345 and

general corporate overhead expenses of $570,280.

We expect our general corporate overhead to remain

relatively flat.

Additionally, as a public company, we must comply with changing legal and exchange requirements, including as to regulations

of the SEC and the continued listing requirements of the Nasdaq Capital Market.

We incur annual expenses related to these matters and,

among other things, directors’ and officers’ liability insurance, directors’ fees, reporting requirements of the SEC,

transfer agent fees, Nasdaq listing fees, auditing and legal fees and similar expenses.

The total amortization expense for the year ended

December 31, 2025 was $65,233, consisting of amortization of intangible assets of $5,333 and patent costs of $59,900.

The total amortization

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

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

Total other expenses

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

The total other

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

The total other

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

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

expense for the year ended December 31, 2024 is $19,738, consisting of intangible assets of $16,000 and patent costs of $3,738.

Other income (expenses)

Total other expense for the year ended December

31, 2025 was $(14,089) as compared to $(17,576) for the year ended December 31, 2024.

The total other expense for the year ended December

31, 2025 consists of interest expense of $14,801, net of interest income of $712.

The total other expense for the year ended December

31, 2024 consists of interest expense of $18,640, net of interest income of $1,064.

Liquidity and Capital Resources

describes the ability of a company to generate sufficient cash flows in the short- and long-term to meet the cash requirements of its

business operations, including working capital needs, debt service, acquisitions and investments, and other commitments and contractual

We consider liquidity in terms of cash flows from operations and other sources, and their sufficiency to fund our operating

and investing activities.

Historically, our principal sources of liquidity

have been proceeds from the issuance of equity.

On January 26, 2024, we entered

into the Sales Agreement with Craig-Hallum.

Pursuant to the Sales Agreement, we may sell,

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

Sales of our Common Stock were

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

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

As of March 20,

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

Liquidity describes the ability of a company to

generate sufficient cash flows in the short- and long-term to meet the cash requirements of its business operations, including working

capital needs, debt service, acquisitions and investments and other commitments and contractual obligations.

We consider liquidity in

terms of cash flows from operations and other sources, and their sufficiency to fund our operations.

Historically, our principal sources

of liquidity have been proceeds from the issuance of equity.

On January 26, 2024, we entered into the Sales Agreement

with Craig-Hallum (the “ATM Offering”).

Pursuant to the Sales Agreement and ATM Offering, we may sell, at our option, shares

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

Sales of our Common Stock were made pursuant to the Sales Agreement initially

up to an aggregate of $17 million under a shelf registration statement declared effective in February 2024 (File No.

333-276725) and have

been, and may continue to be made pursuant to the Sales Agreement up to an aggregate of an additional $9,476,508 under a second shelf

registration statement declared effective in February 2025 (File No.

As of March 13, 2026, we sold an aggregate 2,251,181

shares of our Common Stock on a Reverse Stock Split-adjusted basis under the Sales Agreement resulting in proceeds to the Company of

$18,754,735, net of offering costs.

The Company has paid Craig-Hallum $480,890 in sales commissions.

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

shares of Common Stock under the Additional Registration Statement.

On February 2, 2024

2024, we closed a private placement with seven accredited investors, whereby we issued a total of 561,793 units ("Units”),

with each Unit consisting of (i) one share of our Common Stock and (ii) one six-year Common Stock purchase warrant having an exercise

price of $1.78 per share, subject to adjustment (the "Private Placement”).

The Private Placement resulted in the issuance to

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

The purchase price of the

securities was $1.78 per Unit, resulting in gross proceeds to the Company of $1,000,000, before deducting placement agent fees (10% or

$100,000) and other offering expenses.

(pre-dating the 1-for-30 reverse stock split effected in May 2025), in accordance with executed subscription agreements with seven accredited

investors (the “Subscription Agreements”), we closed on the sale of 561,793 units (the “Units”), with each Unit

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

year Common Stock purchase warrant (the “Warrants”), which warrants are exercisable until February 2, 2030 at an exercise

price of $1.78 ($53.40 on a post-reverse stock split basis) per share, subject to adjustment for stock splits, reverse stock splits and

other similar events of recapitalization, including the 1-for-30 reverse stock split we effected on May 12, 2025.

The Units were sold

to the investors in a private placement at a sale price of $1.78 ($53.40 on a post-reverse stock split basis) per Unit (the “Private

Placement”), resulting in gross proceeds to the Company of $1,000,000, before deducting placement agent fees (10% or $100,000) and

other offering expenses.

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

We have subsequently registered the Private Placement Common Stock and the Common Stock issuable upon the exercise of the Private Placement

Warrants on a registration statement on Form S-1 that was declared effective by the SEC on December 3, 2024.

We have had, and expect that

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

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

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

with our ongoing FDA submission activities.

We explore our financing options on an ongoing basis.

However, given recent stock prices

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

be required to close a particular transaction.

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

provided that market conditions are favorable.

At our annual stockholders

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

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

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

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

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

We currently have no specific plans for

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

liquidity needs.

Our long-term future capital

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

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

post-reverse stock split basis, the Company issued 18,727 shares and warrants that are exercisable for 18,727 shares, all at an exercise

price of $53.40 per share.

We have subsequently registered the Private Placement Common Stock and the Common Stock issuable upon the exercise

of the Private Placement Warrants on a registration statement on Form S-1 that was declared effective by the SEC on December 3, 2024 and

subsequently on September 19, 2025.

We have had, and expect that we will continue to

have, an ongoing need to raise additional cash from outside sources to fund our operations and grow our business, given the nominal amount

of revenue we have generated since inception, coupled with substantial expenses both for ongoing business operations and to fund expenses

incurred as a public company.

We expect that our primary cash needs for the remainder of 2026 and for the foreseeable future will be for

funding day-to-day operations and working capital requirements, funding our growth strategy, paying the setup expenses of our internal

laboratory and paying expenses incurred in connection with our ongoing FDA submission activities.

We explore our financing options

on an ongoing basis.

However, given recent stock prices and the extreme volatility of our stock, it continues to be challenging to balance

cash that could be raised and the dilution that might be required to close a particular transaction.

We expect that for the remainder

of 2026, we will rely primarily on the ongoing ATM Offering, provided that market conditions are favorable.

Our long-term future

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

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

efforts, and the continuing market adoption of our products.

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

Unless we are able to generate

significant cash flows from operations, which we do not foresee happening in the near term, we will need to finance our operations through

the issuance of additional equity and/or convertible debt securities.

Looking forward, we expect we will need to raise additional capital

and generate revenues to meet long-term operating requirements.

If we raise additional funds through the issuance of equity or convertible

debt securities, the percentage ownership of our equity holders could be significantly diluted, particularly at current stock price levels,

and these newly-issued securities may have rights, preferences or privileges senior to those of existing equity holders.

If we raise additional

funds by obtaining loans from third parties, the terms of those financing arrangements may include negative covenants or other restrictions

on our business that could impair our operating flexibility and also require us to incur interest expense.

Working capital requirements

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

Unless we are able to generate significant cash

flows from operations, which we do not foresee happening in the near term, we will need to finance our operations through the issuance

of additional equity and/or convertible debt securities.

Looking forward, we expect we will need to raise additional capital and generate

revenues to meet long-term operating requirements.

If we raise additional funds through the issuance of equity or convertible debt securities,

the percentage ownership of our equity holders could be significantly diluted, particularly at current stock price levels, and these newly-issued

securities may have rights, preferences or privileges senior to those of existing equity holders.

If we raise additional funds by obtaining

loans from third parties, the terms of those financing arrangements may include negative covenants or other restrictions on our business

that could impair our operating flexibility and also require us to incur interest expense.

Working capital requirements are expected to

increase in line with the growth of the business.

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

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

fund our activities over the next 12 months.

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

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

We cannot provide any assurance that

we will be successful in doing so.

If we are unable to raise

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

Successful transition to

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

We anticipate

that our principal sources of liquidity, including existing funds and the ATM offering will be sufficient to fund our activities

over the next 12 months.

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

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

We cannot provide any assurance that we will be

successful in doing so.

If we are unable

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

Successful transition

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

ongoing expenses.

There is no assurance that we will be successful in reaching and sustaining profitability.

The exercise prices

of our currently outstanding warrants range from a high of $11.50 to a low of $1.78 (subject to adjustment) per share of Common Stock.

The likelihood that warrant holders will exercise their Warrants, and therefore the amount of cash proceeds that we might receive, is

dependent upon the trading price of our Common Stock, the last reported sales price for which was $0.4630 on March 17, 2025.

If the trading

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

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

There is no guarantee that the

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

no proceeds from the exercise of Warrants.

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

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

will receive any cash from the exercise of Warrants.

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

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

We will continue to evaluate the probability of Warrant

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

Cash at December 31, 2024

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

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

The exercise prices of our currently outstanding

warrants range from a high of $345 to a low of $53.40 (a high of $11.50 to a low of $1.78 before the Reverse Stock Split) (subject to

adjustment) per share of Common Stock.

The likelihood that warrant holders will exercise their warrants, and therefore the amount of

cash proceeds that we might receive, is dependent upon the trading price of our Common Stock, the last reported sales price for which

was $4.76 on March 11, 2026.

If the trading price of our Common Stock is less than the respective exercise prices of our outstanding

warrants, which has been the case for a substantial period of time, we believe holders of any of our warrants will be unlikely to exercise

their warrants.

There is no guarantee that the warrants will be in the money prior to their respective expiration dates, and as such,

the warrants may expire worthless, and we may receive no proceeds from the exercise of warrants.

Given the current differential between

the trading price of our Common Stock and the Warrant exercise prices and the volatility of our stock price, we are not making strategic

business decisions based on an expectation that we will receive any cash from the exercise of warrants.

However, we will use any cash

proceeds received from the exercise of warrants for general corporate and working capital purposes, which would increase our liquidity.

We will continue to evaluate the probability of warrant exercises and the merit of including potential cash proceeds from the exercise

of the warrants in our future liquidity projections.

Cash at December 31, 2025 totaled $5,110,630 as compared to $7,827,487 at December 31, 2024, a decrease

of $2,716,857.

The following table shows our cash flows from operating activities, investing activities and financing activities for

the stated periods:

Net cash used in operating activities

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Cash Used in Operating Activities

Cash used in operating

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

used in operations during the year ended December 31, 2024, is a function of net loss of $8,383,453, adjusted for the following non-cash

operating items:

depreciation of $113,777, amortization of $162,568, and stock based compensation of $2,591,168.

Operating assets and

liabilities fluctuated as follows:

an increase in accounts receivable of $13,652, a decrease of $915,969 in prepaid expenses and other

current assets, a decrease of $155,552 in accounts payable and accrued expenses and a decrease in lease liability of $223,929.

The cash used in

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

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

offset by a change in fair value of derivative liability of $5,406,220, and a gain on extinguishment of debt of $193,350.

Operating assets

and liabilities fluctuated as follows:

an increase in accounts receivable of $4,960, a decrease of $758,669 in prepaid expenses and other

current assets, an increase in deposits of $7,900, a decrease of $781,500 in accounts payable and accrued expenses and an increase in

lease liability of $244,505.

in Investing Activities

Cash used in investing

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

The cash used

in investing activities for the year ended December 31, 2024, was due to $214,765 for purchase of property and equipment and $189,425

Cash used in operating activities for the year ended

December 31, 2025 was $5,726,833, as compared to $4,993,104 for the year ended December 31, 2024.

The cash used in operations during the

year ended December 31, 2025 is a function of net loss of $6,498,167, adjusted for the following non-cash operating items:

of $160,063, amortization of $238,065 and stock-based compensation of $110,235.

Operating assets and liabilities fluctuated as follows:

a decrease in accounts receivable of $10,486, a decrease of $479,974 in prepaid expenses and other current assets, an increase of $9,781

in accounts payable and accrued expenses and a decrease in lease liability of $237,270.

The cash used in operations during the year ended

December 31, 2024 is a function of net loss of $8,383,453, adjusted for the following non-cash operating items:

depreciation of $113,777,

amortization of $162,568, and stock-based compensation of $2,591,168.

Operating assets and liabilities fluctuated as follows:

in accounts receivable of $13,652, a decrease of $915,969 in prepaid expenses and other current assets, a decrease of $155,552 in accounts

payable and accrued expenses and a decrease in lease liability of $223,929.

Cash Used in Investing Activities

Cash used in investing activities for the year ended

December 31, 2025 was $419,310 compared to $404,190 for the year ended December 31, 2024.

The cash used in investing activities for the

year ended December 31, 2025 was due to $187,317 for purchase of property and equipment and $231,993 in patent costs incurred.

used in investing activities for the year ended December 31, 2024 was due to $214,765 for purchase of property and equipment and $189,425

in patent costs incurred.

The cash used in investing activities for the year ended December 31, 2023, was due to $575,663 for purchase

of property and equipment, $21,352 payments for right of use asset and $197,276 in patent and trademark costs incurred.

Cash Provided

by Financing Activities

Cash provided

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

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

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

December 31, 2024.

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

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

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

Cash Provided by Financing Activities

Cash provided by financing activities for the year

ended December 31, 2025 was $3,429,286 as compared to $11,941,258 for the year ended December 31, 2024.

This change was due to

$3,803,498 in proceeds from the sale of Common Stock, net of issuance costs, offset by $374,212 in payments pursuant to a

finance agreement during the year ended December 31, 2025.

Cash provided by financing activities for the year ended December 31, 2024

was due to $12,391,949 in proceeds from the sale of Common Stock and warrants, net of issuance costs, offset by $450,691 in payments pursuant

to the Sales Agreement for the ATM Offering.

Off-Balance Sheet Financing Arrangements

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

As of December 31, 2024, we do

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

However, if one or more of

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

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

Prior Relationships of Cardio with Boustead Securities, LLC

At the commencement

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

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

Securities”).

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

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

despite several extensions of the closing deadline.

Under the terminated Placement

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

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

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

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

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

first refusal”).

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

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

Boustead Securities responded to

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

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

In its response, Boustead

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

While Boustead Securities’

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

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

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

Legacy Cardio strongly

disputes this position.

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

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

at any time during the tail period.

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

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

We did not have any

off-balance sheet arrangements as of December 31, 2025.

Contractual Obligations

As of December 31, 2025, we do not have any ongoing

contractual obligations that would have a negative impact on liquidity and cash flows.

However, if one or more of the following potential

claims that arise from contracts we have entered into were pursued against us, there is the potential that we could see a negative impact

on liquidity and cash flows, depending on the outcome.

Prior Relationships of Cardio with Boustead Securities,

At the commencement of efforts to pursue what ultimately

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

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

This agreement was terminated

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

to that proposed business acquisition after efforts to complete the transaction failed, despite several extensions of the closing deadline.

Under the terminated Placement Agent Agreement,

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

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

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

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

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

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

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

Boustead Securities responded to the termination

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

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

In its response, Boustead Securities included

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

While Boustead Securities’ contention appears

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

Boustead Securities contended that they are due success fees for two years following the termination of the Placement Agent Agreement

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

Legacy Cardio strongly disputes this position.

Notwithstanding

the foregoing, the Company has not consummated any transaction, as defined, with any potential party that purportedly was a contact of

Boustead Securities in connection with the Placement Agent Agreement and has no plans to do so at any time during the tail period.

legal proceedings have been instigated by either party.

The Benchmark Company, LLC Right of First Refusal

As noted in Note

1, the Company completed a business combination with Mana on October 25, 2022.

In connection with the proposed business combination, by

agreement dated May 13, 2022, Mana engaged The Benchmark Company, LLC (“Benchmark”) as its M&A advisor.

Upon closing of

the business combination, Legacy Cardio assumed the contractual engagement entered into by Mana.

On November 14, 2022, Cardio and Benchmark

entered into Amendment No.

1 Engagement Letter (the “Amendment Engagement”).

Pursuant to the Amendment Engagement, Benchmark

has been granted a right of first refusal to act as lead or joint-lead investment banker, lead or joint-lead book-runner and/or lead or

joint-lead placement agent for all future public and private equity and debt offerings through October 25, 2023.

Based on the right of

first refusal, Benchmark alleges that it is owed damages because the Company entered into the Yorkville Convertible Debenture Transaction

(see Note 11 to Notes to Consolidated Financial Statements) without first offering Benchmark the right to serve as the lead or joint-lead

The Company completed a business combination with

Mana on October 25, 2022.

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

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

Upon closing of the business combination, Legacy Cardio assumed the contractual

engagement entered into by Mana.

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

1 Engagement Letter (the “Amendment

Engagement”).

Pursuant to the Amendment Engagement, Benchmark has been granted a right of first refusal to act as lead or joint-lead

investment banker, lead or joint-lead book-runner and/or lead or joint-lead placement agent for all future public and private equity and

debt offerings through October 25, 2023.

Based on the right of first refusal, Benchmark alleges that it is owed damages because the Company

entered into the Yorkville Convertible Debenture Transaction without first offering Benchmark the right to serve as the lead or joint-lead

placement agent for the transaction.

The Company is evaluating the claim.

No legal proceedings have been instigated.

Demand Letter and Potential Mootness Fee Claim

On June 25, 2022, a plaintiffs’

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

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

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

disclosures in an amendment or supplement to the Registration Statement.

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

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

to various comments of the SEC staff and otherwise updated its disclosure.

In October 2022, the SEC completed its review and declared

the S-4 registration statement effective on October 6, 2022.

On February 23, 2023 and February 27, 2023, plaintiffs’ securities

law firm contacted the Company’s counsel asking who will be negotiating a mootness fee relating to the purported claims set forth

in the June 25, 2022 demand letter.

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

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

The Company believes that

the claims asserted in the Demand Letter are without merit and that no further disclosure is required to supplement the S-4 Registration

Statement under applicable laws.

As of the date of filing of this Annual Report on Form 10-K, no lawsuit has been filed against the Company

by that firm.

The firm has indicated its willingness to litigate the matter if a mutually satisfactory resolution cannot be agreed upon;

however, Cardio believes that the final outcome will not have a material adverse impact on its financial condition.

Securities, Inc.

In January 2024, following the

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

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

(“Northland”) contacted the Company

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

regarding the Yorkville financing.

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

not proceed with any such claim.

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

Securities Purchase Agreement and the subsequent financing transactions.

The Company cannot preclude the possibility

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

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

Directors and

Officers Insurance

In connection with

the Company’s various contractual obligations arising in the ordinary course of business, the Company is required to maintain insurance

coverage for claims against its directors and officers.

of Non-Compliance with Nasdaq Listing Requirements

On June 25, 2022,

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.

a plaintiffs’ securities law firm sent a demand letter to the Company alleging that the Company’s Registration Statement

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

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

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

Subsequent thereto, the Company

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

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

In October 2022, the SEC completed

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

On February 23, 2023 and February 27, 2023, plaintiffs’

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

set forth in the June 25, 2022 demand letter.

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

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

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

S-4 Registration Statement under applicable laws.

As of the date of filing of this Annual Report on Form 10-K, no lawsuit has been filed

against the Company by that firm.

Northland Securities, Inc.

In January 2024, following the Company’s termination

of its agreement with Yorkville and in connection with the Company’s at the market offering and/or its February 2024 private

placement, a managing director of Northland Securities, Inc.

(“Northland”) contacted the Company claiming the right to be

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

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

such claim and no legal proceedings have been instigated.

The Company cannot preclude the possibility that

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

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

Directors and Officers Insurance

In connection with the Company’s various contractual

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

directors and officers.

The University of Iowa Research Foundation

Exclusive License Agreement

The Company has a worldwide

exclusive license agreement with the University of Iowa Research Foundation (UIRF) relating to its patent and patent-pending technology

(the “Exclusive License Agreement”).

Under the terms of the Exclusive License Agreement, the Company will have to pay each

(1) 1% of either the:

(i) aggregate consideration (and trailing consideration, if any) for a liquidation event;

or (ii) pre-money

valuation for an initial public offering, (the “Equity Rights”) (2) 2% of annual net sales, and (3) 15% of non-royalty fees

paid to licensee if it enters into one or more sublicensing agreements.

Upon the Closing of the Business Combination, the Company issued

3,639 (109,170 prior to the Reverse Stock Split) Shares of Common Stock to UIRF in accordance with the Equity Rights under the Exclusive

License Agreement.

The Company has had minimal sales of $68,631 to date and has paid 2% or approximately $1,300 in total royalty fees

to UIRF under the exclusive license.

Nasdaq Continued Listing Compliance

On June 3, 2024, we received notice from The Nasdaq

Stock Market LLC (“Nasdaq”) that we were not in compliance with Nasdaq Listing Rule 5550(a)(2) because the closing bid price

of our common stock had been below $1.00 per share for 30 consecutive business days.

We were provided an initial compliance period and,

on December 4, 2024, were granted an additional compliance period through June 2, 2025.

In May 2025, we effected a reverse stock split,

after which we regained compliance with the minimum bid price requirement.

Nasdaq subsequently notified us that we had regained compliance

with Listing Rule 5550(a)(2).

Although we are currently in compliance, the market

price of our common stock has historically experienced volatility and may continue to fluctuate due to factors both within and outside

of our control, including our operating performance, capital market conditions, investor sentiment toward small-cap healthcare companies,

and broader macroeconomic trends.

Reverse stock splits do not guarantee sustained increases in market price, and there can be no assurance

that we will be able to maintain compliance with the minimum bid price requirement or other Nasdaq continued listing standards in the

If the bid price of our common stock were to decline

below $1.00 per share for a sustained period, we could again become non-compliant with Nasdaq’s continued listing requirements.

In addition, continued listing on Nasdaq requires compliance with other quantitative and qualitative standards, including stockholders’

equity thresholds, market value of publicly held shares, corporate governance requirements, and timely filing obligations.

Any future failure to maintain compliance could

result in deficiency notices and, if not cured, could ultimately lead to delisting, which could adversely affect the liquidity and market

value of our common stock and our ability to access the capital markets.

Critical Accounting Policies and Estimates

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

The preparation of its consolidated financial

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

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

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

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

from other sources.

Cardio evaluates its estimates and assumptions on an ongoing basis.

Cardio’s actual results may differ from

these estimates under different assumptions or conditions.

The SEC requested

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

The SEC indicated

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

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

about the effect of matters that are inherently uncertain.

While Cardio’s significant accounting policies are described in more

detail in Note 3 to its consolidated financial statements, Cardio believes that the following accounting policies are those most critical

to the judgments and estimates used in the preparation of its consolidated financial statements.

Cardio accounts

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

718-20, Awards Classified

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

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

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

The Black-Scholes

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

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

related to forfeitures of such grants.

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

the Company’s stock options and warrants.

Quantitative and Qualitative Disclosures About Market Risk

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

interest rate risk.

Our consolidated financial statements are prepared

in accordance with GAAP in the United States.

The preparation of our consolidated financial statements and related disclosures requires

us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenue, costs and expenses and the disclosure

of contingent assets and liabilities in our financial statements.

We base our estimates on historical experience, known trends and events

and various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments

about the carrying values of assets and liabilities that are not readily apparent from other sources.

Management evaluates our estimates

and assumptions on an ongoing basis.

Our actual results may differ from these estimates under different assumptions or conditions.

While our significant accounting policies are described

in more detail in Note 2 to the consolidated financial statements, we believe that the following accounting policies are those most critical

to the judgments and estimates used in the preparation of the consolidated financial statements.

Critical accounting policies are those

that are most important to the portrayal of our financial condition, results of operations and cash flows and require management’s

most difficult, subjective and complex judgments, often as a result of the need to make estimates about the effect of matters that are

inherently uncertain.

If actual results were to differ significantly from estimates made, the reported results could be materially affected.

Stock-Based Compensation

We account for stock-based

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

718-20, Awards Classified as Equity, which

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

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

the Black-Scholes option pricing model to estimate the fair value of our stock options and warrants.

The Black-Scholes option pricing

model requires the input of highly subjective assumptions including the expected stock price volatility of our Common Stock, the risk-free

interest rate at the date of grant, the expected vesting term of the grant, expected dividends and an assumption related to forfeitures

of such grants.

Changes in these subjective input assumptions can materially affect the fair value estimate of our stock options and warrants.

As of December 31, 2025, we were not subject to any market

or interest rate risk.

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

What changed 10-K

Item 7. Management’s Discussion and Analysis