Cardio Diagnostics Holdings, Inc. 10-K

Item 8. Financial Statements and Supplemental Data INDEX TO FINANCIAL STATEMENTS Page Report of Independent Registered Public Accounting Firm (PCAOB ID 273 ) F-1 Consolidated Balance Sheets as of December 31, 2025 and 2024 F-2 Consolidated Statements of Operations for the Years Ended December 31, 2025 and 2024 F-3 Consolidated Statements of Changes in Stockholders’ Equity for the Years Ended December 31, 2025 and 2024 F-4 Consolidated Statements of Cash Flows for the Years Ended December 31, 2025 and 2024 F-5 Notes to Consolidated Financial Statements F-6 67 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Stockholders and the Board of Directors of Cardio Diagnostics Holdings, Inc. Opinion on the Consolidated Financial Statements We have audited the accompanying consolidated balance sheets of Cardio Diagnostics Holdings, Inc. (the “Company”) as of December 31, 2025 and 2024, and the related consolidated statements of operations, changes in stockholders’ equity, and cash flows for the years ended December 31, 2025 and 2024, and the related notes (collectively referred to as the consolidated financial statements). In our opinion, the consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Company as of December 31, 2025 and 2024, and the results of its operations and its cash flows for the years ended December 31, 2025 and 2024, in conformity with accounting principles generally accepted in the United States of America. Basis for Opinion These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. 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 that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in 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. /s/ Prager Metis CPAs, LLC We have served as the Company’s auditor since 2021 Hackensack, New Jersey March 13, 2026 F- 1 CARDIO DIAGNOSTICS HOLDINGS, INC. CONSOLIDATED BALANCE SHEETS DECEMBER 31, 2025 2024 ASSETS Current assets Cash $ 5,110,630 $ 7,827,487 Accounts receivable 8,126 18,612 Prepaid expenses and other current assets 801,947 944,683 Total current assets 5,920,703 8,790,782 Long-term assets Property and equipment, net 700,115 672,861 Right of use assets, net 259,565 432,397 Intangible assets, net — 5,333 Deposits 12,850 12,850 Patent costs, net 873,182 701,089 Total assets $ 7,766,415 $ 10,615,312 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities Accounts payable and accrued expenses $ 97,442 $ 87,661 Lease liability - current 237,607 237,270 Finance agreement payable 269,790 306,764 Total current liabilities 604,839 631,695 Long-term liabilities Lease liability - long term 188,222 425,829 Total liabilities 793,061 1,057,524 Stockholders' equity Preferred stock, $ .00001 par value; authorized - 100,000,000 shares; 0 shares issued and outstanding as of December 31, 2025 and 2024, respectively — — Common stock, $ .00001 par value; authorized - 300,000,000 shares; 1,826,051 and 1,531,468 shares issued and outstanding as of December 31, 2025 and 2024, respectively * 18 15 Additional paid-in capital 36,223,336 32,309,606 Accumulated deficit ( 29,250,000 ) ( 22,751,833 ) Total stockholders' equity 6,973,354 9,557,788 Total liabilities and stockholders' equity $ 7,766,415 $ 10,615,312 * Retroactively restated for thirty-for-one share consolidation on May 12, 2025. See accompanying notes to the consolidated financial statements. F- 2 CARDIO DIAGNOSTICS HOLDINGS, INC. CONSOLIDATED STATEMENTS OF OPERATIONS YEARS ENDED DECEMBER 31, 2025 2024 Revenue $ 14,825 $ 34,890 Operating expenses Sales and marketing 766,888 1,231,969 Research and development 641,212 227,966 General and administrative 5,025,570 6,921,094 Amortization 65,233 19,738 Total operating expenses 6,498,903 8,400,767 Loss from operations ( 6,484,078 ) ( 8,365,877 ) Other income (expenses) Interest income 712 1,064 Interest expense ( 14,801 ) ( 18,640 ) Total other income (expenses) ( 14,089 ) ( 17,576 ) Loss before provision for income taxes ( 6,498,167 ) ( 8,383,453 ) Provision for income taxes — — Net loss $ ( 6,498,167 ) $ ( 8,383,453 ) Basic and fully diluted income (loss) per common share: Net loss per common share* $ ( 3.71 ) $ ( 9.35 ) Weighted average common shares outstanding - basic and fully diluted* 1,751,417 896,424 * Retroactively restated for thirty-for-one share consolidation on May 12, 2025. See accompanying notes to the consolidated financial statements. F- 3 CARDIO DIAGNOSTICS HOLDINGS, INC. CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY YEARS ENDED DECEMBER 31, 2025 AND 2024 Common stock Additional Paid-in Accumulated Shares* Amount * Capital Deficit Totals Balances, December 31, 2023 684,680 $ 7 $ 17,326,497 $ ( 14,368,380 ) $ 2,958,124 Common stock and warrants issued for cash, net of issuance costs 843,995 8 12,391,941 — 12,391,949 Restricted stock awards vested 2,793 — 76,000 — 76,000 Compensation for vested stock options — — 2,515,168 — 2,515,168 Net loss — — — ( 8,383,453 ) ( 8,383,453 ) Balances, December 31, 2024 1,531,468 15 32,309,606 ( 22,751,833 ) 9,557,788 Common stock issued for cash, net of issuance costs 292,495 3 3,803,495 — 3,803,498 Fractional shares adjustment 27 — — — — Restricted stock awards vested 2,061 — 12,000 — 12,000 Compensation for vested stock options — — 98,235 — 98,235 Net loss — — — ( 6,498,167 ) ( 6,498,167 ) Balances, December 31, 2025 1,826,051 $ 18 $ 36,223,336 $ ( 29,250,000 ) $ 6,973,354 * Retroactively restated for thirty-for-one share consolidation on May 12, 2025. See accompanying notes to the consolidated financial statements. F- 4 CARDIO DIAGNOSTICS HOLDINGS, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS YEARS ENDED DECEMBER 31, 2025 2024 CASH FLOWS FROM OPERATING ACTIVITIES: Net loss $ ( 6,498,167 ) $ ( 8,383,453 ) Adjustments to reconcile net loss to net cash used in operating activities Depreciation 160,063 113,777 Amortization 238,065 162,568 Stock-based compensation expense 110,235 2,591,168 Changes in operating assets and liabilities: Accounts receivable 10,486 ( 13,652 ) Prepaid expenses and other current assets 479,974 915,969 Accounts payable and accrued expenses 9,781 ( 155,552 ) Lease liability ( 237,270 ) ( 223,929 ) NET CASH USED IN OPERATING ACTIVITIES ( 5,726,833 ) ( 4,993,104 ) CASH FLOWS FROM INVESTING ACTIVITIES: Purchases of property and equipment ( 187,317 ) ( 214,765 ) Patent costs incurred ( 231,993 ) ( 189,425 ) NET CASH USED IN INVESTING ACTIVITIES ( 419,310 ) ( 404,190 ) CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from sale of common stock and warrants, net of issuance costs 3,803,498 12,391,949 Payments of finance agreement ( 374,212 ) ( 450,691 ) NET CASH PROVIDED BY FINANCING ACTIVITIES 3,429,286 11,941,258 NET (DECREASE) INCREASE IN CASH ( 2,716,857 ) 6,543,964 CASH - BEGINNING OF YEAR 7,827,487 1,283,523 CASH - END OF YEAR $ 5,110,630 $ 7,827,487 SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION: Cash paid during the year for: Interest $ 14,801 $ 18,640 Income taxes $ — $ — Non-cash investing and financing activities: Financing agreement entered into for prepaid insurance $ 337,238 $ 383,455 See accompanying notes to the consolidated financial statements. F- 5 CARDIO DIAGNOSTICS HOLDINGS, INC. Notes to Consolidated Financial Statements Years Ended December 31, 2025 and 2024 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. (“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. Reverse Stock Split On May 12, 2025, the Company filed a Certificate of Amendment to the Third Amended and Restated Certificate of Incorporation of the Company with the Delaware Secretary of State to effect a reverse stock split at a 1-for-30 ratio (the “Effective Time”). At the Effective Time, every 30 shares of issued and outstanding Common Stock automatically combined into one issued share of common stock, with no change in par value. No fractional shares were issued as a result of the Reverse Stock Split. Instead of issuing fractional shares, the Company rounded shares up or down to the nearest whole number as determined by DTC at the participant level. The Reverse Stock Split did not modify any voting rights or other terms of the Common Stock. The Company’s Common Stock began trading on a reverse stock split-adjusted basis on The Nasdaq Capital Market at the open of the markets on May 13, 2025. As a result, the number of shares of Common Stock outstanding was reduced from 52,160,487 shares to 1,738,683 shares, exclusive of 27 whole shares issued for rounding up fractional shares (which were issued in May 2025), and the number of authorized shares of Common Stock remains 300 million shares. Unless otherwise indicated, all issued and outstanding stock and per share amounts contained in the accompanying consolidated financial statements have been adjusted to reflect the 1-for-30 Reverse Stock Split for all prior periods presented. Proportionate adjustments were made to the exercise prices and number of shares issuable under the Company’s equity incentive plans, and the number of shares underlying outstanding equity awards, as applicable. The impacts of the Reverse Stock Split were applied retroactively for all periods presented in accordance with applicable guidance, less the number of rounded whole shares issued for fractional shares on May 12, 2025. Therefore, prior period amounts are different than those previously reported. Certain amounts within the following tables may not foot due to rounding. The following table illustrates changes in equity, as previously reported prior to, and as adjusted subsequent to, the impact of the Reverse Stock Split retroactively adjusted for the periods presented: Schedule of subsequent events December 31, 2024 As Previously Reported Impact of Reverse Stock Split As Revised Common stock - shares 45,944,039 ( 44,412,571 ) 1,531,468 Common stock - amount $ 459 $ ( 444 ) $ 15 Additional paid-in capital $ 32,309,162 $ 444 $ 32,309,606 December 31, 2023 As Previously Reported Impact of Reverse Stock Split As Revised Common stock - shares 20,540,409 ( 19,855,729 ) 684,680 Common stock - amount $ 205 $ ( 198 ) $ 7 Additional paid-in capital $ 17,326,299 $ 198 $ 17,326,497 F- 6 CARDIO DIAGNOSTICS HOLDINGS, INC. Notes to Consolidated Financial Statements Years Ended December 31, 2025 and 2024 The following table illustrates changes in loss per share and weighted average shares outstanding, as previously reported prior to, and as adjusted subsequent to, the impact of the Reverse Stock Split retroactively adjusted for the periods presented: Schedule of loss per share and weighted average shares outstanding Year ended December 31, 2024 As Previously Reported Impact of Reverse Stock Split As Revised Loss attributable to common shareholders $ ( 8,383,453 ) — $ ( 8,383,453 ) Weighted average shares used to compute basic and diluted EPS 26,892,705 ( 25,996,281 ) 896,424 Loss per share - basic and diluted $ ( 0.31 ) $ ( 9.04 ) $ ( 9.35 ) The following shares of common stock exercisable or issuable from outstanding stock options and warrants were not included in the computation of diluted shares outstanding because the effect would be anti-dilutive: Schedule of warrants exercisable Year ended December 31, 2024 As Previously Reported Impact of Reverse Stock Split As Revised Common stock options 3,594,202 ( 3,474,395 ) 119,807 Common stock warrants 8,528,766 ( 8,244,474 ) 284,292 Stock options were adjusted retroactively to give effect to the Reverse Stock Split for the year ended December 31, 2024: Schedule of Warrants adjustment As Previously Reported Impact of Reverse Stock Split As Revised Options Weighted Average Exercise Options Weighted Average Exercise Options Weighted Average Exercise Outstanding Price Outstanding Price Outstanding Price Options outstanding at December 31, 2023 2,584,599 $ 3.06 ( 2,498,446 ) $ 88.66 86,153 $ 91.72 Options granted 1,322,231 $ 1.93 ( 1,278,157 ) $ 56.07 44,074 $ 58.00 Options expired or forfeited or cancelled ( 312,628 ) $ 1.93 302,208 $ 55.99 ( 10,420 ) $ 57.92 Options outstanding at December 31, 2024 3,594,202 $ 2.74 ( 3,474,395 ) $ 79.51 119,807 $ 82.25 Options vested and exercisable at December 31, 2024 3,594,202 $ 2.74 ( 3,474,395 ) $ 79.51 119,807 $ 82.25 F- 7 CARDIO DIAGNOSTICS HOLDINGS, INC. Notes to Consolidated Financial Statements Years Ended December 31, 2025 and 2024 Warrant shares issuable upon exercise of a warrant and the related exercise price per whole share of Common Stock were adjusted retroactively to give effect to the Reverse Stock Split for the year ended December 31, 2024: Schedule of Warrants adjustment As Previously Reported Impact of Reverse Stock Split As Revised Warrant shares Weighted Average Exercise Warrant shares Weighted Average Exercise Warrant shares Weighted Average Exercise Outstanding Price Outstanding Price Outstanding Price Warrants outstanding at December 31, 2023 7,854,620 $ 9.70 ( 7,592,799 ) $ 281.35 261,821 $ 291.05 Warrants granted 674,146 $ 1.78 ( 651,675 ) $ 51.62 22,471 $ 53.40 Warrants outstanding at December 31, 2024 8,528,766 $ 9.08 ( 8,244,474 ) $ 263.18 284,292 $ 272.26 Note 2 – Summary of Significant Accounting Policies Principles of Consolidation The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiary, Legacy Cardio. All intercompany accounts and transactions have been eliminated. Use of Estimates in the Preparation of Financial Statements The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the period. Actual results could differ from those estimates. Segments The Company uses the “management approach” in determining reportable operating segments. The management approach considers the internal organization and reporting used by the Company’s chief operating decision maker (“CODM”), who is our chief executive officer, for making operating decisions and assessing performance as the source for determining the Company’s reportable segments. Management, including the CODM, reviews operating results solely by monthly revenue and operating results of the Company and, as such, the Company has determined that the Company has one operating segment (product testing) as defined by ASC Topic 280 “Segment Reporting”. One hundred percent of the Company’s revenues are generated from product tests for major types of cardiovascular disease, and therefore the Company has one operating segment for financial reporting purposes. The Company’s principal products are its Epi+Gen CHD and PrecisionCHD tests. Epi+Gen CHD assesses the risk for a coronary heart disease event, including a heart attack, in the next three years. PrecisionCHD aids in diagnosing and managing coronary heart disease. The tests can be paid for by provider organizations, patients, and/or employers. Customers are generally charged for tests utilized for the minimum committed test volume and the pricing can vary based on organization type, size and volume. F- 8 CARDIO DIAGNOSTICS HOLDINGS, INC. Notes to Consolidated Financial Statements Years Ended December 31, 2025 and 2024 Reportable segment information is presented below: Schedule of segment information December 31, 2025 December 31, 2024 Current Segment assets Cash $ 5,110,630 $ 7,827,487 Accounts receivable 8,126 18,612 Prepaid expenses and other current assets 801,947 944,683 Total current segment assets 5,920,703 8,790,782 Long-term segment assets Property and equipment, net 700,115 672,861 Right of use assets, net 259,565 432,397 Intangible assets, net — 5,333 Deposits 12,850 12,850 Patent costs, net 873,182 701,089 Total segment assets $ 7,766,415 $ 10,615,312 The accounting policies of the product testing segment are the same as those described in the summary of significant accounting policies. The measure of segment assets is reported on the balance sheet as total consolidated assets. Reportable segment operating results are presented below: Years Ended December 31, 2025 2024 Revenue Product Test sales $ 14,825 $ 34,890 Total Segment Revenue $ 14,825 $ 34,890 Segment Operating Expenses Payroll and related costs $ 1,366,808 $ 3,213,917 Rent and facility expense 306,591 224,123 Legal and professional expense 868,826 731,209 Consulting and contractor expense 715,764 740,516 Insurance expense 618,998 714,481 Filing fees expense 99,115 102,514 Transfer agent expense 62,228 67,536 Software and web computing expense 316,339 274,515 Board compensation expense 198,235 199,658 Investor relations expense 10,133 82,345 Other segment items (a) 462,533 570,280 Research and development expense 641,212 227,966 Sales and marketing expense 766,888 1,231,969 Amortization expense 65,233 19,738 Interest expense, net 14,089 17,576 Total Segment Operating Expenses 6,512,992 8,418,343 Total Segment Net Income (Loss) $ ( 6,498,167 ) $ ( 8,383,453 ) (a) Other segment items included in segment net income (loss) include shipping expense, taxes expense, subscription fees expense, bank fees expense and other overhead expense. F- 9 CARDIO DIAGNOSTICS HOLDINGS, INC. Notes to Consolidated Financial Statements Years Ended December 31, 2025 and 2024 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. The carrying amounts of our short- and long-term credit obligations approximate fair value because the effective yields on these obligations, which include contractual interest rates taken together with other features such as concurrent issuances of warrants and/or embedded conversion options, are comparable to rates of returns for instruments of similar credit risk. ASC 820 defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. ASC 820 also establishes a fair value hierarchy, which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring 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 Level 3 – inputs that are unobservable (for example cash flow modeling inputs based on assumptions) Determining which category an asset or liability falls within the hierarchy requires significant judgment. The Company evaluates its hierarchy disclosures each quarter. There are no financial instruments measured at fair value on a recurring basis. Revenue Recognition The Company offers its products, Epi+Gen CHD and PrecisionCHD, via telemedicine providers, provider organizations such as concierge practices, and longevity clinics, 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. The Company performs all quality control, analytical assessments and report generation and shares test reports with the ordering healthcare provider. Revenue is recognized upon completing the testing of patient samples. Telemedicine providers are invoiced at the end of each month for all tests completed or orders received since prior invoicing. F- 10 CARDIO DIAGNOSTICS HOLDINGS, INC. Notes to Consolidated Financial Statements Years Ended December 31, 2025 and 2024 • Provider organizations For provider organizations, the cost of each test is negotiated prior to testing commencing. Pricing is determined based largely on the provider organization type and testing volume commitment. Upon ordering a test, a patient’s sample is sent to the lab for biomarker assessments. The Company performs all quality control, analytical assessments and report generation and shares test reports with the ordering healthcare provider. Revenue is recognized upon completing the testing of patient samples. 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. Patients are also able to pay directly for the test electronically. • Employer organizations For employer organizations, the cost of each test is negotiated prior to testing commencing. Pricing is determined based largely on testing volume commitment. Patient samples are sent to the lab for biomarker 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 completing testing of patient samples. The employer organization is invoiced the agreed upon pricing once a heart disease fair is completed or sample is received and accepted or all testing is completed. The Company accounts for revenue under Accounting Standards Update (“ASU”) 2014-09, “Revenue from Contracts with Customers (Topic 606)”. The Company determines the measurement of revenue and the timing of revenue recognition utilizing the following core principles: 1. Identifying the contract with a customer; 2. Identifying the performance obligations in the contract; 3. Determining the transaction price; 4. Allocating the transaction price to the performance obligations in the contract; and 5. Recognizing revenue when (or as) the Company satisfies its performance obligations. Research and Development Research and development costs are expensed as incurred. Research and development costs charged to operations for the years ended December 31, 2025 and 2024 were $ 641,212 and $ 227,966 , respectively. Advertising Costs The Company expenses advertising costs as incurred. Advertising costs of $ 105,121 and $ 182,446 were charged to operations for the years ended December 31, 2025 and 2024, respectively. Cash 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, 2025 and 2024. 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. 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, 2025 and 2024, was approximately $ 4.8 million and $ 7.5 million, 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 Accounts receivable is stated at invoiced amount, net of an allowance for doubtful accounts and bear no interest. An allowance for credit 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. F- 11 CARDIO DIAGNOSTICS HOLDINGS, INC. Notes to Consolidated Financial Statements Years Ended December 31, 2025 and 2024 Property and Equipment and Depreciation Property 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. Depreciation is computed using the straight line method over the estimated lives of the respective assets as follows: Schedule of estimated lives Office and computer equipment 5 years Furniture and fixtures 7 years Lab equipment 7 years Leasehold improvements 7 years 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 useful life. 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 Costs 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. Impairment 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. Leases The Company accounts for leases under ASC 842, “Leases”. The Company determines if an arrangement is a lease or contains a lease at inception of the arrangement. Operating lease liabilities are recognized based on the present value of the remaining lease payments, discounted using the discount rate for the lease at the commencement date. As the rate implicit in the lease is not readily determinable for the operating lease, the Company generally uses an incremental borrowing rate based on information available at the commencement date to determine the present value of future lease payments. Operating lease right-of-use assets (“ROU assets”) represent the Company’s right to control the use of an identified asset for the lease term and lease liabilities represent the Company’s obligation to make lease payments arising from the lease. ROU assets are generally recognized based on the amount of the initial measurement of the lease liability. Lease expense is recognized on a straight-line basis over the lease term. The Company elected to keep leases with an initial term of 12 months or less off the balance sheet. ROU assets are reviewed for impairment when indicators of impairment are present. ROU assets from operating and finance leases are subject to the impairment guidance in ASC 360, Property, Plant, and Equipment, as ROU assets are long-lived nonfinancial assets. ROU assets are tested for impairment individually or as part of an asset group if the cash flows related to the ROU assets are not independent from the cash flows of other assets and liabilities. An asset group is the unit of accounting for long-lived assets to be held and used, which represents the lowest level for which identifiable cash flows are largely independent of the cash flows of other groups of assets and liabilities. F- 12 CARDIO DIAGNOSTICS HOLDINGS, INC. Notes to Consolidated Financial Statements Years Ended December 31, 2025 and 2024 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. Income Taxes 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 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. Reclassification Certain prior period amounts have been reclassified to conform with the current period presentation. On the consolidated statements of changes in stockholders’ equity and cash flows, payment of placement agent fee has been combined with common stock and warrants issued for cash rather than being separated out, to present net proceeds. On the consolidated statements of operations, prior period amounts of sales and marketing, research and development, and general and administrative under operating expenses have been reclassified to conform with 2025 fiscal year presentation for better reflecting the function of these expenses. Recent Accounting Pronouncements Recently adopted accounting pronouncements Income Taxes In December 2023, the FASB issued ASU No. 2023-09, Improvements to Income Tax Disclosures (“ASU 2023-09”). ASU 2023-09 is intended to improve income tax disclosures primarily through enhanced disclosure of income tax rate reconciliation items, and disaggregation of income (loss) from continuing operations, income tax expense (benefit) and income taxes paid, net disclosures by federal, state and foreign jurisdictions, among others. ASU 2023-09 was effective for annual reporting periods beginning after December 15, 2024. We adopted this ASU on a prospective basis effective January 1, 2025. Refer to Note 10, Income Taxes for the inclusion of new disclosures required. Recently issued accounting pronouncements not yet adopted Disaggregation of Income Statement Expenses In November 2024, the FASB issued ASU No. 2024-03, “Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses”, which requires disaggregated disclosure of income statement expenses for public business entities. ASU 2024-03 requires new financial statement disclosures in tabular format, disaggregating information about prescribed categories underlying any relevant income statement expense caption. The prescribed categories include, among other things, purchases of inventory, employee compensation, depreciation, and intangible asset amortization. Additionally, entities must disclose the total amount of selling expenses and, in annual reporting periods, an entity’s definition of selling expenses. ASU 2024-03 is effective for annual reporting periods beginning after December 15, 2026, and for interim reporting periods within fiscal years beginning after December 15, 2027. The guidance can be applied prospectively with an option for retrospective application. Early adoption is also permitted. We are currently evaluating the provisions of this ASU. Financial Instruments – Measurement of Credit Losses for Accounts Receivable and Contract Assets In July 2025, the FASB issued ASU No. 2025-05, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets. The amendments in this update provide a practical expedient permitting an entity to assume that conditions at the balance sheet date remain unchanged over the life of the asset when estimating expected credit losses for current classified accounts receivable and contract assets. This update is effective for annual periods beginning after December 15, 2025, including interim periods within those fiscal years. Adoption of this ASU can be applied prospectively for reporting periods after its effective date. Early adoption is permitted. The Company is currently evaluating the impact that ASU 2025-05 will have on the consolidated financial statements. 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. F- 13 CARDIO DIAGNOSTICS HOLDINGS, INC. Notes to Consolidated Financial Statements Years Ended December 31, 2025 and 2024 Note 3 – Property and Equipment Property and equipment are carried at cost and consist of the following at December 31, 2025 and 2024: Schedule of property and equipment 2025 2024 Office and computer equipment $ 29,264 $ 21,032 Furniture and fixtures 115,839 96,818 Lab equipment 330,487 170,423 Leasehold improvements 502,155 502,155 Less: Accumulated depreciation ( 277,630 ) ( 117,567 ) Total $ 700,115 $ 672,861 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 $ 160,063 and $ 113,777 was charged to operations for the years ended December 31, 2025 and 2024, respectively. Note 4 – Intangible Assets The following table provides details associated with the Company’s acquired identifiable intangible assets at December 31, 2025 and 2024: Schedule of intangible assets 2025 2024 Know-how license $ 80,000 $ 80,000 Less: Accumulated amortization ( 80,000 ) ( 74,667 ) Total $ — $ 5,333 Amortization expense charged to operations was $ 5,333 and $ 16,000 for the years ended December 31, 2025 and 2024, respectively. Note 5 – Patent Costs As of December 31, 2025, our patent portfolio includes seven patent families. In the first family of patents and patent applications owned solely by UIRF and exclusively licensed by Cardio, there are granted patents in the US (two), EU (subsequently validated in the United Kingdom, France, Germany, Italy, Switzerland, Ireland and Hong Kong), China, Australia, India, and Japan and other pending patent applications. The Company also has pending patent applications in patent families two, three, four, five, six and seven. Legal fees associated with the patents totaled $ 873,182 and $ 701,089 , net of accumulated amortization of $ 66,820 and $ 6,920 as of December 31, 2025 and 2024, 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 $ 59,900 and $ 3,738 for the years ended December 31, 2025 and 2024, respectively. Note 6 – 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. 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. F- 14 CARDIO DIAGNOSTICS HOLDINGS, INC. Notes to Consolidated Financial Statements Years Ended December 31, 2025 and 2024 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 $ 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. The Company received the TIA from the landlord in the maximum amount of $ 253,000 on January 16, 2024. During the year ended December 31, 2023, the 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 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, 2025 and 2024, operating lease ROU assets and operating lease liabilities are recorded on the consolidated balance sheets as follows: Schedule of operating lease ROU assets and operating lease liabilities December 31, 2025 December 31, 2024 Operating Leases: Operating lease right-of-use assets, net $ 259,565 $ 432,397 Current portion of operating lease liabilities $ 237,607 $ 237,270 Operating lease liabilities, net of current portion $ 188,222 $ 425,829 As of December 31, 2025, the weighted-average remaining lease terms of the two operating leases were 0.9 years and 2.9 years, respectively. As of December 31, 2024, the weighted-average remaining lease terms of the two operating leases were 1.9 years and 3.9 years, respectively. The following table summarizes maturities of operating lease liabilities based on lease terms as of December 31: Schedule of future minimum payments due 2026 $ 250,152 2027 102,060 2028 93,555 Total lease payments 445,767 Less: Imputed interest 19,938 Present value of lease liabilities $ 425,829 At December 31, 2025, the Company had the following future minimum payments due under the non-cancelable lease: 2026 $ 250,152 2027 102,060 2028 93,555 Total minimum lease payments $ 445,767 Consolidated rental expense for all operating leases was $ 237,015 and $ 204,717 for the years ended December 31, 2025 and 2024, respectively. F- 15 CARDIO DIAGNOSTICS HOLDINGS, INC. Notes to Consolidated Financial Statements Years Ended December 31, 2025 and 2024 The following table summarizes the cash paid and related right-of-use operating lease recognized for the years ended December 31, 2025 and 2024. Schedule of cash paid and related right-of-use operating lease Years Ended December 31, 2025 2024 Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from operating leases $ 260,612 $ 257,508 Reduction of lease liabilities: Operating leases $ 237,270 $ 223,929 Note 7 – 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 was payable in 10 monthly installments plus interest at a rate of 8.95 % through August 25, 2024 . Accordingly, Directors and Officers insurance premiums of $ 550,000 have been recorded in prepaid expenses and were amortized over the life of the policy until October 25, 2024. As of October 31, 2024, this finance agreement was paid in full and insurance premiums were fully amortized. 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 was payable in 10 monthly installments plus interest at a rate of 8.80 % through August 25, 2025 . Accordingly, Directors and Officers insurance premiums of $ 451,124 have been recorded in prepaid expenses and were amortized over the life of the policy until October 25, 2025. As of October 31, 2025, this finance agreement was paid in full and insurance premiums were fully amortized. On October 25, 2025, 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, 2025. The amount financed of $ 337,238 is payable in 10 monthly installments plus interest at a rate of 7.35 % through August 25, 2026 . Accordingly, Directors and Officers insurance premiums of $ 396,750 have been recorded in prepaid expenses and is being amortized over the life of the policy until October 25, 2026. Finance agreements payable was $ 269,790 and $ 306,764 at December 31, 2025 and 2024, respectively. Unamortized balance of Directors and Officers insurance premiums was $ 323,922 and $ 368,315 as of December 31, 2025 and 2024, respectively. Note 8 - 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 shares of Common Stock presented below on a post-reverse stock split basis that are exercisable or issuable from 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, 2025 and 2024 as the result would be anti-dilutive. Schedule of anti dilutive earning per share Years Ended December 31, 2025 2024 Stock warrants 284,292 284,292 Stock options 144,320 119,807 Total shares excluded from calculation 428,612 404,099 Note 9 – Stockholders’ Equity 2022 Equity Incentive Plan On October 25, 2022, 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 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. F- 16 CARDIO DIAGNOSTICS HOLDINGS, INC. Notes to Consolidated Financial Statements Years Ended December 31, 2025 and 2024 The 2022 Plan, as approved, permits the issuance of up to 108,850 shares (3,265,516 prior to the Reverse Stock Split) 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, provided, 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. In January 2024, the Compensation Committee approved an annual increase in the Share Reserve of 35,349 shares (1,060,458 prior to the Reverse Stock Split). On March 31, 2025, the Compensation Committee approved an increase in the Share Reserve of 95,721 shares (2,871,638 prior to the Reverse Stock Split). As a result, the Company has the ability to initially issue an aggregate of 239,920 shares (on a post-reverse stock split basis) of Common Stock under the 2022 Equity Incentive Plan, of which 144,320 options have been granted and are currently exercisable. In addition, after deduction of 14,972 shares (on a post-reverse stock split basis) in settlement of RSUs issued to our independent directors and advisors in 2023 to 2025, a total of 80,628 shares were available for issuance under the 2022 Equity Plan at December 31, 2025. Common Stock Issued Private Placement On February 2, 2024 (pre-dating the 1-for-30 reverse stock split effected in May 2025), in accordance with executed subscription agreements with seven accredited investors (the “Subscription Agreements”), the Company 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 the Company 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. The Company used the net proceeds from the Private Placement for working capital and general corporate purposes. On a post-reverse stock split basis, the Company issued 18,727 shares and warrants that are exercisable for 18,727 shares, all at an exercise price of $ 53.40 per share, during the year ended December 31, 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. 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 3,745 shares (112,353 prior to the Reverse Stock Split) of Common Stock at $53.40 per share ($1.78 prior to the Reverse Stock Split) 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 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, during the year ended December 31, 2025. In connection with the Sales Agreement, the Company sold 825,268 common shares (24,758,057 prior to the Reverse Stock Split) at various amounts per share to investors for gross proceeds totaling $ 11,546,949 , before deducting sales commissions of $ 288,921 to placement agent, during the year ended December 31, 2024. The Company also paid the placement agent a fee of $ 55,000 . Other Common Stock Issuance During the year ended December 31, 2025, the Company issued 2,061 shares (on a Reverse Stock Split-adjusted basis) of Common Stock to a consultant for services pursuant to vesting of Restricted Stock Units granted, valued at $ 12,000 . During the year ended December 31, 2024, the Company issued 1,619 shares ( 48,568 prior to the Reverse Stock Split) of Common Stock to 2 consultants for services pursuant to vesting of Restricted Stock Units granted, valued at $26,000. On March 31, 2024, the Company issued 1,174 shares (35,212 prior to the Reverse Stock Split) of Common Stock to the board of directors for services pursuant to vesting of Restricted Stock Units granted, valued at $ 50,000 . F- 17 CARDIO DIAGNOSTICS HOLDINGS, INC. Notes to Consolidated Financial Statements Years Ended December 31, 2025 and 2024 Warrants During the years ended December 31, 2025 and 2024, in connection with the Private Placement as described above, the Company issued warrants that are exercisable for an aggregate of 0 and 22,471 shares of Common Stock (674,146 prior to the Reverse Stock Split), respectively. Warrant activity during the years ended December 31, 2025 and 2024 was as follows: Schedule of Warrant activity Warrant shares Outstanding Weighted Average Exercise Price Weighted Average Remaining Contractual Life (Years) Warrants outstanding at December 31, 2023 261,821 $ 291.05 3.72 Warrants granted 22,471 53.40 Warrants outstanding at December 31, 2024 284,292 272.26 2.91 No warrant activity — — Warrants outstanding at December 31, 2025 284,292 $ 272.26 1.91 Options On January 23, 2024, the Company authorized an additional 35,349 shares (1,060,458 prior to the Reverse Stock Split) to the Equity Incentive Plan Reserve (the “2022 Plan”). On March 31, 2025, the Company authorized an additional 95,721 shares (2,871,638 prior to the Reverse Stock Split) to the 2022 Plan. On March 31, 2025, the Company granted 2,524 stock options (75,756 prior to the Reverse Stock Split) to the board of directors, which vested immediately on grant date. Each option has an exercise price of $ 9.90 per share ($0.33 prior to the Reverse Stock Split) with an expiration date of March 31, 2035 . These immediately vested stock options were valued at $ 24,612 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, 2025, risk free interest rate of 4.3908 % , volatility of 148 % and an exercise price of $ 9.90 ($0.33 prior to the Reverse Stock Split). On June 30, 2025, the Company granted 6,944 stock options to the board of directors, which vested immediately on grant date. Each option has an exercise price of $ 3.60 per share with an expiration date of June 30, 2035 . These immediately vested stock options were valued at $ 24,778 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, 2025, risk free interest rate of 4.39 % , volatility of 161 % and an exercise price of $ 3.60 . On September 30, 2025, the Company granted 6,236 stock options to the board of directors, which vested immediately on grant date. Each option has an exercise price of $ 4.01 per share with an expiration date of September 30, 2035 . These immediately vested stock options were valued at $ 24,762 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, 2025, risk free interest rate of 4.42 % , volatility of 159 % and an exercise price of $ 4.01 . F- 18 CARDIO DIAGNOSTICS HOLDINGS, INC. Notes to Consolidated Financial Statements Years Ended December 31, 2025 and 2024 On December 31, 2025, the Company granted 9,224 stock options to the board of directors, which vested immediately on grant date. Each option has an exercise price of $ 2.71 per share with an expiration date of December 31, 2035 . These immediately vested stock options were valued at $ 24,083 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, 2025, risk free interest rate of 4.41 % , volatility of 126 % and an exercise price of $ 2.71 . On January 23, 2024, the Company granted 39,594 options (1,187,826 prior to the Reverse Stock Split) to management and employees, 38,894 (1,166,826 prior to the Reverse Stock Split) of which vested immediately with the remaining 700 options (21,000 prior to the Reverse Stock Split) subject to 50% vesting on June 30, 2024 and 100% vesting on December 31, 2024. Each option has an exercise price of $63.30 per share ($2.11 prior to the Reverse Stock Split) with an expiration date of January 23, 2034 . The immediately vested 38,894 stock options (1,166,826 prior to the Reverse Stock Split) 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 fiscal year ended December 31, 2025, risk free interest rate of 5.22 % , volatility of 228 % and an exercise price of $ 63.30 ($2.11 prior to the Reverse Stock Split). For the remaining 700 options (21,000 prior to the Reverse Stock Split), 250 options (7,500 prior to the Reverse Stock Split) were vested on June 30, 2024, 167 options (5,000 prior to the Reverse Stock Split) were vested on December 31, 2024 and 283 options (8,500 prior to the Reverse Stock Split) 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 $ 63.30 ($2.11 prior to the Reverse Stock Split). On June 30, 2024, the Company granted 1,012 stock options (30,300 prior to the Reverse Stock Split) to the board of directors, which vested immediately on grant date. Each option has an exercise price of $ 16.50 per share ($0.55 prior to the Reverse Stock Split) 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 $ 16.50 ($0.55 prior to the Reverse Stock Split). On September 30, 2024, the Company granted 2,492 stock options (74,744 prior to the Reverse Stock Split) to the board of directors, which vested immediately on grant date. Each option has an exercise price of $ 6.60 per share ($0.22 prior to the Reverse Stock Split) 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 of $ 6.60 ($0.22 prior to the Reverse Stock Split). On November 14, 2024, the Company granted 524 stock options (15,728 prior to the Reverse Stock Split) to two independent directors of the board, which vested immediately on grant date. Each option has an exercise price of $ 8.10 per share ($0.27 prior to the Reverse Stock Split) 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 of $ 8.10 ($0.27 prior to the Reverse Stock Split). 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 454 stock options (13,632 prior to the Reverse Stock Split) to the board of directors, which vested immediately on grant date. Each option has an exercise price of $ 27.60 per share ($0.92 prior to the Reverse Stock Split) 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 $ 27.60 ($0.92 prior to the Reverse Stock Split). Option activity during the years ended December 31, 2025 and 2024 was as follows: Schedule of option activity Options Outstanding Weighted Average Exercise Price Weighted Average Remaining Contractual Life (Years) Options outstanding at December 31, 2023 86,153 $ 91.72 8.71 Options granted 44,074 58.00 Options expired or cancelled or forfeited ( 10,420 ) 57.92 Options outstanding at December 31, 2024 119,807 82.25 8.12 Options granted 24,928 4.01 Options expired or cancelled or forfeited ( 415 ) 63.30 Options outstanding at December 31, 2025 144,320 $ 68.79 7.58 Options vested and exercisable at December 31, 2025 144,320 $ 68.79 Note 10 - Income Taxes Upon adoption of ASU 2023-09, Improvements to Income Tax Disclosures, as described in Note 2, Summary of Significant Accounting Policies , our loss before provision for income taxes for the year ended December 31, 2025 was as follows: Schedule of provision for income tax Year Ended December 31, 2025 Domestic $ ( 6,498,167 ) Foreign — Loss before provision for income taxes $ ( 6,498,167 ) Loss before provision for income taxes for the year ended December 31, 2024 was $8,383,453. Upon adoption of ASU 2023-09, Improvements to Income Tax Disclosures, as described in Note 2, Summary of Significant Accounting Policies , the reconciliation of taxes at the federal statutory rate to our provision for income taxes for the year ended December 31, 2025 was as follows: Schedule of effective income tax rate reconciliation Amount Percent Statutory U.S. federal income tax rate $ ( 1,364,615 ) ( 21.0 )% State income taxes, net of federal income tax benefit — 0.0 Tax effect of expenses that are not deductible for income tax purposes: Stock based compensation 20,629 0.3 Change in Valuation Allowance 1,343,986 20.7 Provision for income taxes $ — 0.0 % The reconciliation of taxes at the federal statutory rate to our provision for income taxes for the year ended December 31, 2024 in accordance with the guidance prior to the adoption of ASU 2023-09 was as follows: Year Ended December 31, 2024 Statutory U.S. federal income tax rate ( 21.0 )% State income taxes, net of federal income tax benefit ( 0.0 )% Tax effect of expenses that are not deductible for income tax purposes: Stock based compensation 6.3 % Change in Valuation Allowance 14.7 % Effective tax rate 0.0 % At December 31, the significant components of the deferred tax assets (liabilities) are summarized below: Schedule of deferred income tax assets 2025 2024 Deferred Tax Assets: Net operating losses $ 6,681,394 $ 5,580,034 Other 2,328 2,328 Property and equipment 81,991 25,169 Total deferred tax assets 6,765,713 5,607,531 Deferred Tax Liabilities — — Valuation Allowance ( 6,765,713 ) ( 5,607,531 ) Net deferred tax assets $ — $ — F- 19 CARDIO DIAGNOSTICS HOLDINGS, INC. Notes to Consolidated Financial Statements Years Ended December 31, 2025 and 2024 As of December 31, 2025, the Company had federal net operating loss carryforwards of approximately $ 23.5 million which may be carried forward indefinitely, and state net operating loss carryforwards of approximately $ 624,000 (Iowa) and $ 22.8 million (Illinois), respectively which expire at various dates from 2040 through 2045. These net operating loss carryforwards may be used to offset future taxable income and thereby reduce the Company’s U.S. federal income taxes. 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 those temporary differences become deductible. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income and tax planning strategies in making this assessment. Based on the assessment, management has established a full valuation allowance against all of the deferred tax assets for every period because it is more likely than not that all of the deferred tax assets 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, 2025 and 2024 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, 2025 and 2024, 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 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, 2025 and 2024, respectively. Note 11 – 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”). 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. F- 20 CARDIO DIAGNOSTICS HOLDINGS, INC. Notes to Consolidated Financial Statements Years Ended December 31, 2025 and 2024 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 were 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 disputed 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 had no plans to do so at any time during the tail period. No legal proceedings have been instigated by either party. The Benchmark Company, LLC Right of First Refusal The Company completed 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 No. 1 Engagement Letter (the “Amendment Engagement”). Pursuant to the Amendment Engagement, the parties agreed that the Company would pay Benchmark $230,000 at the closing of the business combination and an additional $435,000 on October 25, 2023. Both of those payments have been made in full. In addition, the Amendment Engagement provided that Benchmark has been granted a right of first refusal to act as lead or joint-lead investment banker, lead or joint-lead book- runner and/or lead or joint-lead placement agent for all future public and private equity and debt offerings through October 25, 2023. Based on the right of first refusal, Benchmark alleges that it is owed damages because the Company entered into the Yorkville Convertible Debenture Transaction without first offering Benchmark the right to serve as the lead or joint-lead placement agent for the transaction. No legal proceedings have been instigated. Demand Letter and Potential Mootness Fee Claim On June 25, 2022, a plaintiffs’ securities law firm sent a demand letter to the Company alleging that the Company’s Registration Statement on Form S-4 filed (the “S-4 Registration Statement”) with the Securities and Exchange Commission (“SEC”) on May 31, 2022 omitted material information with respect to the Business Combination and demanding that the Company and its Board of Directors immediately provide corrective disclosures in an amendment or supplement to the Registration Statement. Subsequent thereto, the Company filed amendments to the S-4 Registration Statement on July 27, 2022, August 23, 2022, September 15, 2022, October 4, 2022 and October 5, 2022 in which it responded to various comments of the SEC staff and otherwise updated its disclosure. In October 2022, the SEC completed its review and declared the S-4 registration statement on effective 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. Northland Securities, Inc. In January 2024, following the Company’s termination of its agreement with Yorkville and in connection with the Company’s at the market offering and/or its February 2024 private placement, a managing director of Northland Securities, Inc. (“Northland”) contacted the Company claiming the right to be paid a fee of approximately $ 150,000 pursuant to the agreement of March 1, 2023 between the Company and Northland regarding the Yorkville financing. Subsequently, the Company has been advised by another representative of Northland that Northland would not proceed with any such claim and no legal proceedings have been instituted. 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. F- 21 CARDIO DIAGNOSTICS HOLDINGS, INC. Notes to Consolidated Financial Statements Years Ended December 31, 2025 and 2024 Directors and Officers Insurance In connection with the Company’s various contractual obligations arising in the ordinary course of business, the Company is required to maintain insurance coverage for claims against its directors and officers. The University of Iowa Research Foundation Exclusive License Agreement The Company has a worldwide exclusive license agreement with the University of Iowa Research Foundation (UIRF) relating to its patent and patent-pending technology (the “Exclusive License Agreement”). Under the terms of the Exclusive License Agreement, the Company will have to pay each of: (1) 1% of either the: (i) aggregate consideration (and trailing consideration, if any) for a liquidation event; or (ii) pre-money valuation for an initial public offering, (the “Equity Rights”) (2) 2% of annual net sales, and (3) 15% of non-royalty fees paid to licensee if it enters into one or more sublicensing agreements. Upon the Closing of the Business Combination, the Company issued 3,639 (109,170 prior to the Reverse Stock Split) Shares of Common Stock to UIRF in accordance with the Equity Rights under the Exclusive License Agreement. The Company has had minimal sales of $68,631 to date and has paid 2% or approximately $1,300 in total royalty fees to UIRF under the exclusive license. Note 12 – Subsequent Events The Company evaluated its December 31, 2025 consolidated financial statements for subsequent events through the date the consolidated financial statements were issued. Common Stock Issued Subsequent to December 31, 2025 and through March 13, 2026, the Company sold 1,133,418 shares of Common Stock for gross proceeds totaling $ 3,788,174 under the At-the-Market Issuance Sales Agreement as of the date of this report. F-22 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure None.