PART I [Business Overview](index=3&type=section&id=Item%201.%20Business) Cardio Diagnostics develops AI-driven genetic-epigenetic tests for proactive cardiovascular disease management - Cardio Diagnostics was founded in 2017 to develop and commercialize AI-driven DNA biomarker testing technology for cardiovascular diseases, aiming to transform care from reactive to proactive[107](index=107&type=chunk)[108](index=108&type=chunk)[332](index=332&type=chunk) - The company's core technology, the AI-driven Integrated Genetic-Epigenetic Engine™, enables rapid development of diagnostic solutions by identifying robust genetic and epigenetic biomarkers[108](index=108&type=chunk)[131](index=131&type=chunk)[132](index=132&type=chunk) - Key products include Epi+Gen CHD™ (three-year symptomatic CHD risk assessment), PrecisionCHD™ (early detection of coronary heart disease), and HeartRisk™ (a cardiovascular risk intelligence platform)[119](index=119&type=chunk)[133](index=133&type=chunk)[146](index=146&type=chunk) - Cardio's strategy involves building compelling evidence, engaging experts and stakeholders, prioritizing strategic acquisitions, pursuing payor coverage, and evaluating FDA pathways[110](index=110&type=chunk) - The company has secured an Innovative Technology Contract from Vizient, Inc., covering over **60% of U.S. hospitals**, and an agreement with Family Medicine Specialists to test at least **1,200 patients**[119](index=119&type=chunk)[183](index=183&type=chunk) - Cardio holds **five patent families**, including issued patents in multiple countries and numerous pending applications, protecting methods and compositions for detecting cardiovascular disease and diabetes biomarkers[202](index=202&type=chunk)[209](index=209&type=chunk)[215](index=215&type=chunk) [Company Overview](index=6&type=section&id=Company%20Overview) [Industry Background](index=7&type=section&id=Industry%20Background) [Our Strategy](index=9&type=section&id=Our%20Strategy) [Our Technology](index=10&type=section&id=Our%20Technology) [Our Products and Services](index=11&type=section&id=Our%20Products%20and%20Services) [Our Market Opportunity](index=15&type=section&id=Our%20Market%20Opportunity) [Go-To-Market Strategy for Epi+Gen CHD™ and PrecisionCHD™](index=16&type=section&id=Go-To-Market%20Strategy%20for%20Epi%2BGen%20CHD%E2%84%A2%20and%20PrecisionCHD%E2%84%A2) [Our Competitive Strengths](index=18&type=section&id=Our%20Competitive%20Strengths) [Competition](index=19&type=section&id=Competition) [Intellectual Property](index=21&type=section&id=Intellectual%20Property) [Government Regulation](index=23&type=section&id=Government%20Regulation) [Employees and Human Capital Resources](index=29&type=section&id=Employees%20and%20Human%20Capital%20Resources) [Corporation Information](index=29&type=section&id=Corporation%20Information) [Emerging Growth Status](index=29&type=section&id=Emerging%20Growth%20Status) [Available Information](index=30&type=section&id=Available%20Information) [Risk Factors](index=26&type=section&id=Item%201A.%20Risk%20Factors) Cardio Diagnostics faces risks from its limited operating history, unproven business model, intense competition, and regulatory changes - The company has a limited operating history, generated nominal revenue (**$17,065 in 2023**), and incurred significant net losses (**$8,376,834 in 2023**), raising substantial doubt about its ability to continue as a going concern[85](index=85&type=chunk)[299](index=299&type=chunk)[342](index=342&type=chunk) - The market for epigenetic tests is new and unproven, and the company's business model is unproven, making future growth and profitability uncertain[353](index=353&type=chunk)[354](index=354&type=chunk)[355](index=355&type=chunk) - Cardio relies on a limited number of suppliers, contract manufacturers, and a single CLIA laboratory, posing risks of supply chain interruptions and delays[373](index=373&type=chunk)[378](index=378&type=chunk) - The FDA is considering reclassifying Laboratory-Developed Tests (LDTs) as medical devices, which could subject Cardio's tests to stringent premarket clearance/approval and post-market controls, incurring substantial costs and delays[34](index=34&type=chunk)[257](index=257&type=chunk)[236](index=236&type=chunk) - Obtaining adequate coverage and reimbursement from third-party payors for its tests is a challenging, time-consuming, and costly process, which is critical for commercial success and widespread adoption[263](index=263&type=chunk)[283](index=283&type=chunk)[284](index=284&type=chunk) - The company's intellectual property, including core technology licensed from UIRF, could be subject to termination if obligations are breached or if unaffiliated third parties gain access to technical information for competitive products[23](index=23&type=chunk)[25](index=25&type=chunk)[419](index=419&type=chunk)[452](index=452&type=chunk) - Compliance with federal and state privacy and security regulations (e.g., HIPAA, CCPA, CPRA) for personally identifiable and protected health information is critical, with potential for significant liability and reputational harm from breaches or non-compliance[449](index=449&type=chunk)[461](index=461&type=chunk)[474](index=474&type=chunk) [Risk Factor Summary](index=5&type=section&id=Risk%20Factor%20Summary) [Risks Related to Our Limited Operating History and Early Stage of Growth](index=30&type=section&id=Risks%20Related%20to%20Our%20Limited%20Operating%20History%20and%20Early%20Stage%20of%20Growth) [Risks Related to Our Business and Industry](index=34&type=section&id=Risks%20Related%20to%20Our%20Business%20and%20Industry) [Risks Related to Our Business Operations](index=38&type=section&id=Risks%20Related%20to%20Our%20Business%20Operations) [Risks Related to Our Intellectual Property](index=40&type=section&id=Risks%20Related%20to%20Our%20Intellectual%20Property) [Risks Related to Government Regulation](index=42&type=section&id=Risks%20Related%20to%20Government%20Regulation) [Risks Related to Customer Privacy, Cybersecurity and Data](index=45&type=section&id=Risks%20Related%20to%20Customer%20Privacy%2C%20Cybersecurity%20and%20Data) [General Risks Affecting Our Company](index=46&type=section&id=General%20Risks%20Affecting%20Our%20Company) [Risks Related to Our Securities](index=47&type=section&id=Risks%20Related%20to%20Our%20Securities) [Unresolved Staff Comments](index=50&type=section&id=Item%201B.%20Unresolved%20Staff%20Comments) The company has no unresolved staff comments to report - The company states that Item 1B is not applicable, indicating no unresolved staff comments[541](index=541&type=chunk) [Cybersecurity](index=50&type=section&id=Item%201C.%20Cybersecurity) Cardio Diagnostics' cybersecurity program, governed by SOC2 and HIPAA, integrates risk management and incident response - Cardio's cybersecurity program is governed by SOC2 and HIPAA frameworks, focusing on identifying, assessing, responding to, and managing cybersecurity risks[532](index=532&type=chunk)[542](index=542&type=chunk) - Key components of the program include skilled information security personnel, external service providers, employee training, periodic policy reviews, and an incident response plan[543](index=543&type=chunk)[544](index=544&type=chunk) - The company has not identified any material risks from known cybersecurity threats that have impacted or are reasonably likely to impact its business[545](index=545&type=chunk) - The Board of Directors oversees cybersecurity risk, with management providing periodic reports on material threats[546](index=546&type=chunk)[547](index=547&type=chunk) [Risk Management and Strategy](index=54&type=section&id=Risk%20Management%20and%20Strategy) [Governance](index=54&type=section&id=Governance) [Properties](index=51&type=section&id=Item%202.%20Properties) Cardio Diagnostics leases its principal executive offices in Chicago and a laboratory in Iowa City under multi-year agreements - The company leases its principal executive offices in Chicago, IL, for approximately **$13,000 per month**, with a **three-year term** commencing December 1, 2023[550](index=550&type=chunk) - A laboratory is leased in Iowa City, IA, for approximately **$8,505 per month**, with a **five-year term** also commencing December 1, 2023[550](index=550&type=chunk) [Legal Proceedings](index=51&type=section&id=Item%203.%20Legal%20Proceedings) Cardio Diagnostics is not currently a party to any material litigation or other legal proceedings - The company is not currently involved in any material litigation or legal proceedings[551](index=551&type=chunk) [Mine Safety Disclosures](index=51&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) The company has no disclosures related to mine safety - Item 4 is not applicable to the company's operations[557](index=557&type=chunk) PART II [Market for Common Equity and Stockholder Matters](index=51&type=section&id=Item%205.%20Market%20for%20Registrant%27s%20Common%20Equity%2C%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) Cardio Diagnostics' common stock and warrants are listed on Nasdaq, with no cash dividends anticipated as earnings are reinvested - Common Stock and Warrants are listed on the Nasdaq Capital Market under symbols '**CDIO**' and '**CDIOW**' respectively[574](index=574&type=chunk) - As of April 1, 2024, there were **37 record holders** of common stock and **8,528,766 warrants outstanding**[558](index=558&type=chunk)[560](index=560&type=chunk) - The company has never paid dividends on its common stock and does not anticipate paying any cash dividends in the foreseeable future, intending to retain earnings for business operations and expansion[114](index=114&type=chunk)[502](index=502&type=chunk)[559](index=559&type=chunk) [Market Information](index=55&type=section&id=Market%20Information) [Dividends](index=55&type=section&id=Dividends) [Warrants](index=55&type=section&id=Warrants) [Securities Authorized for Issuance Under Equity Compensation Plans](index=55&type=section&id=Securities%20Authorized%20for%20Issuance%20Under%20Equity%20Compensation%20Plans) [Sales of Unregistered Securities](index=55&type=section&id=Sales%20of%20Unregistered%20Securities) [Issuer Purchases of Equity Securities](index=55&type=section&id=Issuer%20Purchases%20of%20Equity%20Securities) [Reserved](index=52&type=section&id=Item%206.%20Reserved) This item is reserved and contains no information [Management's Discussion and Analysis](index=52&type=section&id=Item%207.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Cardio Diagnostics, an early-stage medical technology company, reported nominal revenue and increased net losses in 2023, relying on external financing - Cardio's strategy involves leveraging CPT PLA codes, developing additional products (stroke, heart failure, diabetes tests), expanding clinical evidence, increasing adoption across key channels (health systems, self-insured employers), scaling internal operations, and pursuing strategic partnerships/acquisitions[588](index=588&type=chunk) - The company recently launched HeartRisk™, a cardiovascular risk intelligence platform, and secured an Innovative Technology Contract from Vizient, Inc[572](index=572&type=chunk)[586](index=586&type=chunk) Key Financial Highlights (Years Ended December 31) | Metric | 2023 | 2022 | | :---------------------------------- | :----------- | :----------- | | Revenue | $17,065 | $950 | | Sales and marketing expenses | $158,514 | $92,700 | | Research and development expenses | $145,182 | $40,448 | | General and administrative expenses | $6,936,646 | $4,400,253 | | Net loss | $(8,376,834) | $(4,660,985) | - Net loss increased by **$3,715,849** in 2023 compared to 2022, primarily due to a **$2,536,393** increase in General and Administrative expenses, including **$1,035,273** in stock compensation[443](index=443&type=chunk)[596](index=596&type=chunk) - The company's continuation as a going concern is dependent on obtaining necessary equity financing and generating revenues, as it has incurred significant losses and accumulated a deficit of **$14,368,380** at December 31, 2023[299](index=299&type=chunk)[342](index=342&type=chunk)[601](index=601&type=chunk) - In 2023, the company received **$4.5 million** from a convertible debenture (fully converted to **10,622,119 common shares**) and **$855,922** (net) from an At-the-Market offering, with **$16.1 million** still available[583](index=583&type=chunk)[590](index=590&type=chunk)[611](index=611&type=chunk) [Overview](index=56&type=section&id=Overview) [Recent Developments](index=57&type=section&id=Recent%20Developments) [Results of Operations](index=58&type=section&id=Results%20of%20Operations) [Liquidity and Capital Resources](index=59&type=section&id=Liquidity%20and%20Capital%20Resources) [Off-Balance Sheet Financing Arrangements](index=60&type=section&id=Off-Balance%20Sheet%20Financing%20Arrangements) [Contractual Obligations](index=60&type=section&id=Contractual%20Obligations) [Critical Accounting Policies and Significant Judgments and Estimates](index=62&type=section&id=Critical%20Accounting%20Policies%20and%20Significant%20Judgments%20and%20Estimates) [Quantitative and Qualitative Disclosures About Market Risk](index=58&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) As of December 31, 2023, Cardio Diagnostics was not subject to any material market or interest rate risk - The company reported no exposure to market or interest rate risk as of December 31, 2023[472](index=472&type=chunk) [Financial Statements and Supplemental Data](index=58&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplemental%20Data) This section presents Cardio Diagnostics' audited consolidated financial statements for 2023 and 2022, including balance sheets, statements of operations, cash flows, and notes - The independent auditor, Prager Metis CPA's LLC, issued an opinion stating that the consolidated financial statements for 2023 and 2022 present fairly the company's financial position and cash flows, but noted a 'going concern' uncertainty due to nominal revenue and accumulated deficits[298](index=298&type=chunk)[299](index=299&type=chunk) Consolidated Balance Sheet Highlights (December 31) | Metric | 2023 | 2022 | | :---------------------------------- | :----------- | :----------- | | Cash | $1,283,523 | $4,117,521 | | Total current assets | $2,765,680 | $5,885,887 | | Total assets | $4,462,365 | $6,249,478 | | Total current liabilities | $841,142 | $1,947,770 | | Total liabilities | $1,504,241 | $1,947,770 | | Total stockholders' equity | $2,958,124 | $4,301,708 | | Accumulated deficit | $(14,368,380) | $(5,991,546) | Consolidated Statements of Cash Flows Highlights (Years Ended December 31) | Cash Flow Activity | 2023 | 2022 | | :---------------------------------- | :----------- | :----------- | | Net cash used in operating activities | $(5,672,175) | $(5,090,968) | | Net cash used in investing activities | $(794,291) | $(368,001) | | Net cash provided by financing activities | $3,632,468 | $9,063,723 | | Net increase (decrease) in cash | $(2,833,998) | $3,604,754 | | Cash – End of Year | $1,283,523 | $4,117,521 | - Cash decreased by **$2,833,998** in 2023, primarily due to significant cash used in operating activities (**$5.67 million**) and investing activities (**$0.79 million**), partially offset by cash from financing activities (**$3.63 million**)[614](index=614&type=chunk)[598](index=598&type=chunk)[600](index=600&type=chunk) [Report of Independent Registered Public Accounting Firm](index=65&type=section&id=Report%20of%20Independent%20Registered%20Public%20Accounting%20Firm) [Consolidated Balance Sheets](index=66&type=section&id=Consolidated%20Balance%20Sheets) [Consolidated Statements of Operations](index=67&type=section&id=Consolidated%20Statements%20of%20Operations) [Consolidated Statements of Changes in Stockholders' Equity](index=68&type=section&id=Consolidated%20Statements%20of%20Changes%20in%20Stockholders'%20Equity) [Consolidated Statements of Cash Flows](index=69&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) [Notes to Consolidated Financial Statements](index=70&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) [Changes in and Disagreements with Accountants](index=59&type=section&id=Item%209.%20Changes%20in%20and%20Disagreements%20with%20Accountants%20on%20Accounting%20and%20Financial%20Disclosure) The company reported no changes in or disagreements with accountants on accounting and financial disclosure - The company reported no changes in or disagreements with accountants on accounting and financial disclosure[793](index=793&type=chunk) [Controls and Procedures](index=59&type=section&id=Item%209A.%20Controls%20and%20Procedures) Cardio Diagnostics' disclosure controls were ineffective as of December 31, 2023, though financial statements are fairly presented, with no material changes in internal control - As of December 31, 2023, the company's disclosure controls and procedures were deemed not effective[752](index=752&type=chunk) - Despite the ineffectiveness of disclosure controls, management believes the financial statements fairly present the company's financial position, results of operations, and cash flows[752](index=752&type=chunk) - No material changes in internal control over financial reporting occurred during the period ended December 31, 2023[771](index=771&type=chunk) [Evaluation of Disclosure Controls and Procedures](index=84&type=section&id=Evaluation%20of%20Disclosure%20Controls%20and%20Procedures) [Changes in Internal Control over Financial Reporting](index=84&type=section&id=Changes%20in%20Internal%20Control%20over%20Financial%20Reporting) [Other Information](index=59&type=section&id=Item%209B.%20Other%20Information) The company reported no other information for this item - The company stated that Item 9B is not applicable[796](index=796&type=chunk) [Disclosure Regarding Foreign Jurisdictions that Prevent Inspections](index=59&type=section&id=Item%209C.%20Disclosure%20Regarding%20Foreign%20Jurisdictions%20that%20Prevent%20Inspections) The company reported no disclosures regarding foreign jurisdictions that prevent inspections - The company reported no disclosures regarding foreign jurisdictions that prevent inspections[772](index=772&type=chunk) PART III [Directors, Executive Officers and Corporate Governance](index=60&type=section&id=Item%2010.%20Directors%2C%20Executive%20Officers%20and%20Corporate%20Governance) Cardio Diagnostics' corporate governance includes a seven-member Board with independent directors, key executive officers, and policies for ethics and related party transactions - The Board of Directors consists of **seven members**, with Paul Burton, James Intrater, Stanley K. Lau, MD, and Oded Levy identified as independent directors[782](index=782&type=chunk)[783](index=783&type=chunk) - Key executive officers include Meeshanthini V. Dogan (CEO), Robert Philibert (CMO), Elisa Luqman (CFO), Timur Dogan (CTO), and Khullani Abdullahi (VP of Revenue and Strategy)[798](index=798&type=chunk)[799](index=799&type=chunk) - The company has an Audit Committee, Compensation Committee, and Nominating and Corporate Governance Committee, all with independent director representation[808](index=808&type=chunk)[826](index=826&type=chunk)[831](index=831&type=chunk) - A written code of business conduct and ethics applies to all employees and directors, and a policy for reviewing and approving related party transactions is in place[624](index=624&type=chunk)[879](index=879&type=chunk) - The company provides indemnification agreements to its directors and executive officers, which may be broader than statutory provisions, to attract and retain qualified individuals[627](index=627&type=chunk)[815](index=815&type=chunk) [Executive Officers](index=85&type=section&id=Executive%20Officers) [Non-Employee Members of the Board of Directors](index=86&type=section&id=Non-Employee%20Members%20of%20the%20Board%20of%20Directors) [Family Relationships](index=87&type=section&id=Family%20Relationships) [Corporate Governance](index=88&type=section&id=Corporate%20Governance) [Board Committees](index=88&type=section&id=Board%20Committees) [Guidelines for Selecting Director Nominees](index=90&type=section&id=Guidelines%20for%20Selecting%20Director%20Nominees) [Code of Ethics](index=90&type=section&id=Code%20of%20Ethics) [Conflicts of Interest](index=91&type=section&id=Conflicts%20of%20Interest) [Limitation on Liability and Indemnification of Officers and Directors](index=91&type=section&id=Limitation%20on%20Liability%20and%20Indemnification%20of%20Officers%20and%20Directors) [Section 16(a) Beneficial Ownership Reporting Compliance](index=92&type=section&id=Section%2016(a)%20Beneficial%20Ownership%20Reporting%20Compliance) [Executive Compensation](index=67&type=section&id=Item%2011.%20Executive%20Compensation) Cardio Diagnostics' 2023 executive compensation included base salaries and significant equity awards, with no cash bonuses, and non-employee directors received RSU awards 2023 Summary Compensation Table for Named Executive Officers | Name | Position | 2023 Salary ($) | 2023 Bonus ($) | 2023 Option Awards ($) | 2023 All Other Compensation ($) | 2023 Total ($) | | :---------------------- | :-------------------------------- | :-------------- | :------------- | :--------------------- | :------------------------------ | :------------- | | Meeshanthini V. Dogan | CEO | 300,000 | 0 | 341,640 | 7,253 | 648,893 | | Warren Hosseinion | Non-executive Chairman | 300,000 | 0 | 155,291 | 0 | 455,291 | | Elisa Luqman | CFO | 275,000 | 0 | 72,469 | 0 | 347,469 | - No annual cash bonuses were awarded to NEOs in 2023, though employment agreements provide for eligibility based on performance[866](index=866&type=chunk) - In January 2024, **1,187,826 options** were granted to management under the 2022 Equity Incentive Plan, with most vesting immediately[768](index=768&type=chunk) - Non-employee directors received **$12,500** in RSU awards quarterly in 2023, vesting and settling on the grant date, and similar awards are planned for 2024[664](index=664&type=chunk)[849](index=849&type=chunk) - Employment agreements for the CEO and CFO include annual base salaries (**$300,000** and **$275,000** respectively), eligibility for cash bonuses and long-term incentives, and severance benefits under specific termination conditions[955](index=955&type=chunk)[961](index=961&type=chunk)[962](index=962&type=chunk) [Overview](index=92&type=section&id=Overview) [2023 Summary Compensation Table](index=92&type=section&id=2023%20Summary%20Compensation%20Table) [Narrative to the Summary Compensation Table](index=93&type=section&id=Narrative%20to%20the%20Summary%20Compensation%20Table) [2023 Base Salary](index=93&type=section&id=2023%20Base%20Salary) [Annual Bonuses](index=93&type=section&id=Annual%20Bonuses) [Equity Compensation](index=93&type=section&id=Equity%20Compensation) [Retirement Plan](index=94&type=section&id=Retirement%20Plan) [Employee Benefits and Perquisites](index=94&type=section&id=Employee%20Benefits%20and%20Perquisites) [Outstanding Equity Awards at Fiscal Year-End Table](index=95&type=section&id=Outstanding%20Equity%20Awards%20at%20Fiscal%20Year-End%20Table) [Agreements with Our Executive Officers and Non-Executive Chairman of the Board](index=95&type=section&id=Agreements%20with%20Our%20Executive%20Officers%20and%20Non-Executive%20Chairman%20of%20the%20Board) [Director Compensation](index=96&type=section&id=Director%20Compensation) [Security Ownership of Certain Beneficial Owners and Management](index=71&type=section&id=Item%2012.%20Security%20Ownership%20of%20Certain%20Beneficial%20Owners%20and%20Management%20and%20Related%20Stockholder%20Matters) This section details beneficial ownership of Cardio Diagnostics' common stock as of April 1, 2024, with executive officers and directors owning **22.50%** as a group Beneficial Ownership of Common Stock (April 1, 2024) | Name | Amount and Nature of Beneficial Ownership | Approximate Percentage of Outstanding Shares | | :---------------------------------- | :---------------------------------------- | :------------------------------------------- | | Meeshanthini V. Dogan | 3,020,422 | 9.04% | | Robert Philibert | 2,455,257 | 7.35% | | Warren Hosseinion | 618,248 | 1.85% | | Elisa Luqman | 322,772 | 0.97% | | James Intrater | 62,793 | — | | Stanley K. Lau | 91,522 | — | | Oded Levy | 62,793 | — | | Paul Burton | — | — | | Timur Dogan | 563,812 | 1.69% | | Khullani Abdullahi | 318,682 | 0.95% | | All Executive Officers and Directors as a Group (10 individuals) | 7,516,301 | 22.50% | - Percentage ownership is based on **21,591,119 shares** of Common Stock outstanding as of April 1, 2024[4](index=4&type=chunk)[876](index=876&type=chunk) - Beneficial ownership includes shares subject to options or warrants exercisable within **60 days**[665](index=665&type=chunk) [Beneficial Ownership Table](index=96&type=section&id=Beneficial%20Ownership%20Table) [Certain Relationships and Related Transactions, and Director Independence](index=71&type=section&id=Item%2013.%20Certain%20Relationships%20and%20Related%20Transactions%2C%20and%20Director%20Independence) Cardio Diagnostics has a policy for reviewing and approving related party transactions, including an exclusive patent license from UIRF and employment of the CEO's spouse - The company has a policy for reviewing and approving 'related party transactions' exceeding **$120,000** or **1% of average total assets**, involving directors, executive officers, or **5%+ beneficial owners**[879](index=879&type=chunk) - The audit committee is responsible for considering the facts and circumstances of each related party transaction, including comparability to arm's-length dealings[879](index=879&type=chunk) - Cardio has an exclusive, worldwide patent license from the University of Iowa Research Foundation (UIRF), and co-founders Meeshanthini Dogan and Robert Philibert are entitled to **25% of income** from earnings from their inventions under UIRF's policy[667](index=667&type=chunk)[878](index=878&type=chunk) - Timur Dogan, spouse of CEO Meeshanthini Dogan, is a full-time employee of the company[878](index=878&type=chunk) [Related Party Policy](index=98&type=section&id=Related%20Party%20Policy) [Exclusive License Agreement with UIRF](index=98&type=section&id=Exclusive%20License%20Agreement%20with%20UIRF) [Invention and Non-Disclosure Agreements](index=98&type=section&id=Invention%20and%20Non-Disclosure%20Agreements) [Principal Accounting Fees and Services](index=72&type=section&id=Item%2014.%20Principal%20Accounting%20Fees%20and%20Services) This section details fees paid to Prager Metis CPA's LLC for audit services in 2023 and 2022, with no other services provided, and an audit committee pre-approval policy Fees Paid to Prager Metis CPA's LLC (Years Ended December 31) | Fee Type | 2023 ($) | 2022 ($) | | :------------------ | :------- | :------- | | Audit Fees | 85,500 | 84,000 | | Audit-Related Fees | — | — | | Tax Fees | — | — | | All Other Fees | — | — | | Total Fees | 85,500 | 84,000 | - The audit committee has a policy for pre-approving all auditing services and permitted non-audit services[647](index=647&type=chunk)[882](index=882&type=chunk) - No other professional services were provided by Prager Metis in 2023 that would require considering their compatibility with auditor independence[856](index=856&type=chunk) [Fees Paid to the Independent Registered Public Accounting Firm](index=98&type=section&id=Fees%20Paid%20to%20the%20Independent%20Registered%20Public%20Accounting%20Firm) [Auditor Independence](index=98&type=section&id=Auditor%20Independence) [Pre-Approval Policy](index=98&type=section&id=Pre-Approval%20Policy) PART IV [Exhibits, Financial Statement Schedules](index=73&type=section&id=Item%2015.%20Exhibits%2C%20Financial%20Statement%20Schedules) This section lists all exhibits and financial statement schedules filed as part of the Annual Report on Form 10-K, including key agreements and certifications - All schedules are omitted if not applicable or if the required information is shown in the Financial Statements or notes[858](index=858&type=chunk) - The consolidated financial statements are listed in the accompanying Index to Financial Statements on page F-1[884](index=884&type=chunk) - The exhibit index includes key documents such as the Agreement and Plan of Merger, the 2022 Equity Incentive Plan, employment agreements, and certifications of principal executive and financial officers[885](index=885&type=chunk) [Financial Statements](index=100&type=section&id=Financial%20Statements) [Exhibit Index](index=100&type=section&id=Exhibit%20Index) [Form 10-K Summary](index=101&type=section&id=Item%2016.%20Form%2010-K%20Summary) The company states that there is no Form 10-K Summary - The company states that there is no Form 10-K Summary[859](index=859&type=chunk)

CHICAGO--(BUSINESS WIRE)--Cardio Diagnostics Holdings, Inc. (NASDAQ: CDIO), an AI-powered precision cardiovascular medicine company, announces that the Company will showcase its groundbreaking HeartRiskTM and Actionable Clinical IntelligenceTM platforms at the American College of Cardiology’s 73rd Annual Scientific Session (ACC.24), taking place in Atlanta, GA, from April 6-8, 2024. Cardio Diagnostics' mission is in lockstep with this year's ACC.24 conference theme, "Advancing Cardiovascular Care for All." ...

CHICAGO--(BUSINESS WIRE)--Cardio Diagnostics Holdings, Inc. (NASDAQ: CDIO), an AI-driven precision cardiovascular medicine company, announces that the U.S. Patent and Trademark Office has issued a notice of allowance to University of Iowa Research Foundation ("UIRF") for U.S. Application No. 17,857,723 titled Compositions and Methods for Detecting Predisposition to Cardiovascular Disease, which is exclusively licensed to the Company from UIRF, and that was co-invented by Cardio Diagnostics' founders, Meesha ...

CHICAGO--(BUSINESS WIRE)--Cardio Diagnostics Holdings, Inc. (Nasdaq: CDIO), an AI-driven precision cardiovascular medicine company, announced today the nationwide rollout and a significant expansion of its groundbreaking HeartRisk™ platform. HeartRisk combines insights from HIPAA-compliant anonymized and aggregated clinical cardiovascular data obtained through Cardio Diagnostics’ Epi+Gen CHD and PrecisionCHD clinical tests, with industry and geographic data to enable real-time population-level cardiovascula ...

CHICAGO--(BUSINESS WIRE)--Cardio Diagnostics Holdings, Inc. (NASDAQ: CDIO), an AI-driven precision cardiovascular medicine company, today announced that the Company’s AI-driven epigenetic-genetic blood tests, Epi+Gen CHD and PrecisionCHD, will be available beginning Q2 2024 in a retail healthcare setting inside the Walmart Supercenter in Round Lake Beach, Illinois. Round Lake Beach, a northern suburb of Chicago in Lake County, has been chosen as the strategic starting point for this retail healthcare initi ...

CHICAGO--(BUSINESS WIRE)--Cardio Diagnostics Holdings, Inc. (NASDAQ: CDIO), an AI-driven precision cardiovascular medicine company, announces that Houston-based resTOR Longevity Clinic will integrate Cardio Diagnostics' solutions into its battery of tests for new patients in its longevity-focused concierge clinic. This collaboration marks a significant milestone for Cardio Diagnostics, as resTOR will be the first longevity clinic in America to incorporate Cardio Diagnostics' innovative blood-based epigeneti ...

CHICAGO--(BUSINESS WIRE)--Cardio Diagnostics Holdings, Inc. (Nasdaq: CDIO), an AI-driven precision cardiovascular medicine company, today announced the appointment of Dr. Vimal Ramjee, MD FACC CCMS, as a Strategic Advisor. Dr. Ramjee is a cardiologist and a health innovation leader, serving as the National Co-Chair of Cardiology and Innovation at CommonSpirit Health Enterprise and is also a member of the American Heart Association Board of Directors. The appointment of Dr. Ramjee as a Strategic Advisor t ...

Financial Performance - For the nine months ended September 30, 2023, revenue was $11,755, compared to $0 for the same period in 2022[243]. - Cardio's net loss for the nine months ended September 30, 2023, was $6,987,905, an increase of $4,704,977 from the prior year[242]. - Cardio's net loss for the three months ended September 30, 2023, was $1,932,382, compared to $1,150,875 for the same period in 2022, an increase of $781,507[226]. - Total other expenses for the nine months ended September 30, 2023, were $(1,287,444), compared to $(112,534) for the same period in 2022[248]. Expenses - Research and development expenses for the nine months ended September 30, 2023, were $137,690, up from $9,361 in the same period of 2022, reflecting an increase of $128,329[230]. - General and administrative expenses for the nine months ended September 30, 2023, were $5,444,920, compared to $2,083,460 for the same period in 2022, an increase of $3,361,460[246]. - Sales and marketing expenses for the nine months ended September 30, 2023, were $115,226, an increase of $49,653 from $65,573 in the same period of 2022[244]. - The company expects to incur additional annual expenses as a public company, including directors' and officers' liability insurance and increased legal and accounting costs[237]. Shareholder Actions - Cardio issued 231,092 common shares valued at $150,000 to independent directors during the nine months ended September 30, 2023[201]. - Stockholders approved the issuance of up to 20,363,637 shares of common stock upon conversion of $11.2 million in principal amount of convertible debentures[268]. - The first Convertible Debenture of $5.0 million has been fully converted into 10,622,119 shares, leaving 9,741,518 shares available for a second Convertible Debenture of $6.2 million[268]. - If unable to honor conversion requests, the company may need to repay outstanding principal and interest, impacting cash resources for operations and growth[268]. Liabilities - As of September 30, 2023, convertible notes payable amounted to $967,184, net of a debt discount of $732,816[208]. - The company has a liability of $928,500 owed to investment bankers due on October 25, 2023, reflecting a 30% decrease in liability to certain underwriters[222]. - Following the business combination, the company’s financial position reflects liabilities originally incurred by Mana, totaling $928,500[222]. Regulatory Compliance - The company received a Nasdaq deficiency letter indicating its common stock bid price closed below the $1.00 minimum requirement for continued listing[197]. - The company received a letter from Nasdaq indicating non-compliance with the minimum bid price requirement, with a compliance period until March 19, 2024[238]. - The FDA proposed regulations that could impose significant additional costs on the company if enacted, affecting laboratory developed tests[240]. - A proposed new FDA regulation on laboratory developed tests (LDTs) could classify them as medical devices, requiring adherence to a more stringent regulatory framework[269]. - Compliance with the proposed FDA regulation could be time-consuming and expensive, potentially diverting resources from other business aspects[269]. - The proposed regulation may hinder the company's ability to introduce new tests to the market in a timely manner, affecting competitive position and market share[269]. - Failure to comply with FDA regulations could result in legal actions, including fines and penalties, impacting financial performance[269]. Business Strategy - Cardio aims to develop blood-based products for stroke, heart failure, and diabetes, and expand testing processes to multiple laboratories[221]. - The company plans to pursue acquisitions in the telemedicine, AI, or remote patient monitoring sectors[221]. - Cardio's strategy includes building clinical and health economics evidence to obtain payer reimbursement for its tests[221]. Share Redemption - The company experienced a redemption rate of over 99%, with 6,465,452 shares redeemed for a total of $65,310,892 at approximately $10.10 per share[196].

Part I — Financial Information [Financial Statements](index=4&type=section&id=Item%201.%20Financial%20Statements) The unaudited condensed consolidated financial statements for the period ended June 30, 2023, show a significant increase in net loss, minimal revenue, and improved cash from convertible notes, with details provided across key financial statements and notes [Condensed Consolidated Balance Sheets](index=5&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) As of June 30, 2023, total assets increased to $6.76 million, total liabilities grew significantly to $3.85 million due to convertible notes and derivative liability, and total stockholders' equity decreased to $2.91 million Condensed Consolidated Balance Sheet Data (unaudited) | Account | June 30, 2023 ($) | December 31, 2022 ($) | | :--- | :--- | :--- | | **Total Assets** | **6,756,904** | **6,249,478** | | Cash | 5,044,328 | 4,117,521 | | **Total Liabilities** | **3,848,380** | **1,947,770** | | Convertible notes payable, net | 915,202 | — | | Derivative liability | 1,998,752 | — | | **Total Stockholders' Equity** | **2,908,524** | **4,301,708** | [Condensed Consolidated Statements of Operations](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) The company reported minimal revenue of $1,725, with net loss widening substantially to $4.02 million for the quarter and $5.06 million for the six-month period, primarily due to increased general and administrative expenses and non-cash interest expenses from convertible debt Statement of Operations Highlights (unaudited) | Metric | Three Months Ended June 30, 2023 ($) | Three Months Ended June 30, 2022 ($) | Six Months Ended June 30, 2023 ($) | Six Months Ended June 30, 2022 ($) | | :--- | :--- | :--- | :--- | :--- | | Revenue | 1,725 | — | 1,725 | — | | Total operating expenses | 2,554,866 | 786,964 | 4,257,995 | 1,019,519 | | General and administrative expenses | 2,506,148 | 751,117 | 4,068,276 | 956,144 | | Loss from operations | (2,553,141) | (786,964) | (4,256,270) | (1,019,519) | | Net loss | (4,022,905) | (841,998) | (5,055,523) | (1,132,053) | | Net loss per common share | (0.39) | (0.16) | (0.51) | (0.23) | [Condensed Consolidated Statements of Cash Flows](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) For the six months ended June 30, 2023, net cash used in operating activities increased to $2.94 million, while net cash provided by financing activities was $4.01 million, resulting in a $0.93 million increase in the cash balance to $5.04 million Cash Flow Summary (unaudited) | Cash Flow Activity | Six Months Ended June 30, 2023 ($) | Six Months Ended June 30, 2022 ($) | | :--- | :--- | :--- | | Net Cash Used in Operating Activities | (2,941,899) | (580,862) | | Net Cash Used in Investing Activities | (140,273) | (38,606) | | Net Cash Provided by Financing Activities | 4,008,979 | 9,766,727 | | **Net Increase (Decrease) in Cash** | **926,807** | **9,147,259** | | **Cash - End of Period** | **5,044,328** | **9,660,026** | [Notes to Condensed Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) The notes detail the company's October 2022 reverse recapitalization, significant accounting policies including fair value measurements for derivative liabilities, specifics on March 2023 convertible debenture financing, and discussions of commitments and contingencies including disputes with former placement agents - The company completed a business combination with Mana Capital Acquisition Corp. on October 25, 2022, which was accounted for as a reverse recapitalization Legacy Cardio is the accounting predecessor[10](index=10&type=chunk)[49](index=49&type=chunk)[50](index=50&type=chunk) - On March 8, 2023, the company entered into a securities purchase agreement with Yorkville to sell convertible debentures for **up to $11.2 million** The **first tranche of $5.0 million** was issued on the same day[98](index=98&type=chunk)[127](index=127&type=chunk)[128](index=128&type=chunk) - The conversion features of the convertible notes are treated as a derivative liability, recorded at fair value The initial fair value of the derivative exceeded the note's face value, resulting in an **immediate charge to interest expense of $4.69 million**[101](index=101&type=chunk)[130](index=130&type=chunk) - The company is in disputes with Boustead Securities over a terminated placement agent agreement and with The Benchmark Company over a right of first refusal for financing activities No legal proceedings have been initiated for these matters[102](index=102&type=chunk)[105](index=105&type=chunk)[132](index=132&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=17&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the company's strategy to commercialize epigenetics-based cardiovascular tests, highlighting the minimal cash proceeds from the October 2022 business combination, the substantial increase in net loss due to higher G&A and interest expenses, and the ongoing reliance on recent convertible debt financing for liquidity and future capital needs - The company's strategy focuses on developing and commercializing epigenetics-based clinical tests for cardiovascular diseases like CHD, stroke, and heart failure[139](index=139&type=chunk)[160](index=160&type=chunk) - The business combination resulted in over 99.5% of Mana's public shares being redeemed, providing **only $4,021 in cash** from the SPAC trust account, significantly impacting the company's capital and growth plans[142](index=142&type=chunk)[196](index=196&type=chunk) - The company's principal source of liquidity has shifted from equity issuances to convertible debt, specifically a March 2023 agreement with Yorkville for **up to $11.2 million**[153](index=153&type=chunk)[174](index=174&type=chunk) Results of Operations Comparison (Six Months Ended June 30) | Metric | 2023 ($) | 2022 ($) | Change ($) | | :--- | :--- | :--- | :--- | | Revenue | 1,725 | — | 1,725 | | General & administrative expenses | 4,068,276 | 956,144 | 3,112,132 | | Total operating expenses | 4,257,995 | 1,019,519 | 3,238,476 | | Net loss | (5,055,523) | (1,132,053) | (3,923,470) | [Quantitative and Qualitative Disclosures About Market Risk](index=25&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) As a "smaller reporting company," Cardio Diagnostics Holdings, Inc. is **not required to provide** the information for this item - The company is a "smaller reporting company" and is therefore **not required to provide** quantitative and qualitative disclosures about market risk[236](index=236&type=chunk) [Controls and Procedures](index=25&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that the company's disclosure controls and procedures were **not effective as of June 30, 2023**, though they believe the financial statements in the Form 10-Q are fairly presented after additional analyses - Management concluded that the company's disclosure controls and procedures were **not effective as of June 30, 2023**[192](index=192&type=chunk) - **No changes were made** to the internal control over financial reporting during the six months ended June 30, 2023, that materially affected, or are reasonably likely to materially affect, internal controls[237](index=237&type=chunk) Part II — Other Information [Legal Proceedings](index=26&type=section&id=Item%201.%20Legal%20Proceedings) The company reports that it is **not involved in any material legal proceedings** as of June 30, 2023 - As of June 30, 2023, the company is **not involved in any material legal proceedings**[238](index=238&type=chunk) [Risk Factors](index=26&type=section&id=Item%201A.%20Risk%20Factors) **No material changes to risk factors** have occurred since the last Annual Report on Form 10-K for the fiscal year ended December 31, 2022 - **No material changes to risk factors** have occurred since the last Annual Report on Form 10-K[239](index=239&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=26&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company reported **no unregistered sales of equity securities** during the period - There were **no unregistered sales of equity securities** to report for the period[219](index=219&type=chunk) [Other Information](index=26&type=section&id=Item%205.%20Other%20Information) The company entered into two new operating lease agreements effective August 1, 2023, for medical laboratory and office space in Iowa City for **five years and four months**, and for office space in Chicago for a **40-month term** - On July 20, 2023, the company entered into a **five-year, four-month lease** for medical lab and office space in Iowa City, Iowa, with rent commencing December 1, 2023[222](index=222&type=chunk)[240](index=240&type=chunk) - On June 15, 2023, the company entered into a **40-month lease** for office space in Chicago, Illinois, with rent commencing December 1, 2023[225](index=225&type=chunk)[243](index=243&type=chunk) [Exhibits](index=28&type=section&id=Item%206.%20Exhibits) **A list of all exhibits** filed as part of the Quarterly Report on Form 10-Q is provided, including merger agreements, corporate governance documents, financing agreements, new lease agreements, and officer certifications - **A list of all exhibits** filed with or incorporated by reference into the Form 10-Q is provided[229](index=229&type=chunk)[246](index=246&type=chunk)

Part I [Part I — Financial Information](index=5&type=section&id=Part%20I%20%E2%80%94%20Financial%20Information) This section presents the unaudited financial statements, management's discussion and analysis, and disclosures on controls and market risks for the reporting period [Financial Statements (unaudited)](index=5&type=section&id=Item%201.%20Financial%20Statements%20(unaudited)) The company presents its unaudited condensed consolidated financial statements for the quarter ended March 31, 2023, reflecting a **net loss of $1.03 million** and a cash position of **$6.7 million** [Condensed Consolidated Balance Sheets](index=5&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) The condensed consolidated balance sheets present the company's financial position, showing **total assets of $8.55 million** and **total liabilities of $5.13 million** as of March 31, 2023 Condensed Consolidated Balance Sheet Summary (unaudited) | Account | March 31, 2023 | December 31, 2022 | | :--- | :--- | :--- | | **Assets** | | | | Cash | $6,707,770 | $4,117,521 | | Total current assets | $8,138,031 | $5,885,887 | | **Total assets** | **$8,551,611** | **$6,249,478** | | **Liabilities & Equity** | | | | Total liabilities | $5,129,496 | $1,947,770 | | Total stockholders' equity | $3,422,115 | $4,301,708 | | **Total liabilities and stockholders' equity** | **$8,551,611** | **$6,249,478** | [Condensed Consolidated Statements of Operations](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) The condensed consolidated statements of operations report a **net loss of $1.03 million** for the three months ended March 31, 2023, with no revenue generated Condensed Consolidated Statement of Operations (unaudited) | Metric | Three Months Ended March 31, 2023 | Three Months Ended March 31, 2022 | | :--- | :--- | :--- | | Revenue | $0 | $0 | | Total operating expenses | $1,703,129 | $232,555 | | **Net loss** | **$(1,032,618)** | **$(290,055)** | | Net loss per common share | $(0.11) | $(0.07) | | Weighted average common shares outstanding | 9,547,177 | 4,223,494 | [Condensed Consolidated Statements of Cash Flows](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) The condensed consolidated statements of cash flows show a **net increase in cash of $2.59 million** for the three months ended March 31, 2023, primarily from financing activities Condensed Consolidated Statement of Cash Flows Summary (unaudited) | Cash Flow Activity | Three Months Ended March 31, 2023 | Three Months Ended March 31, 2022 | | :--- | :--- | :--- | | Net cash used in operating activities | $(1,649,067) | $(186,090) | | Net cash used in investing activities | $(52,674) | $(16,436) | | Net cash provided by financing activities | $4,291,990 | $0 | | **Net increase (decrease) in cash** | **$2,590,249** | **$(202,526)** | | Cash - End of period | $6,707,770 | $310,241 | [Notes to Financial Statements](index=9&type=section&id=Notes%20to%20Financial%20Statements) The notes provide detailed information on significant accounting policies, recent business combinations, convertible debenture financing, and various commitments and contingencies - The company completed a business combination with Mana Capital Acquisition Corp. on October 25, 2022, accounted for as a **reverse recapitalization**, with Legacy Cardio as the accounting acquirer[54](index=54&type=chunk)[55](index=55&type=chunk) - On March 8, 2023, the company issued a convertible debenture to Yorkville (YA II PN, Ltd.) for a principal amount of **$5.0 million**, yielding **$4.5 million** in net proceeds after a **$500,000** original issue discount[100](index=100&type=chunk)[102](index=102&type=chunk) - The convertible note's conversion feature was bifurcated and recorded as a derivative liability at a fair value of **$9.19 million** at inception, with the **$4.69 million** excess over face value recognized as interest expense[104](index=104&type=chunk)[63](index=63&type=chunk) - The company faces several commitments and contingencies, including a right of first refusal for future offerings, a dispute with a former placement agent, and a demand letter regarding S-4 Registration Statement disclosures[108](index=108&type=chunk)[110](index=110&type=chunk)[112](index=112&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=19&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the company's financial performance, highlighting a **net loss of $1.03 million** for Q1 2023, primarily due to increased general and administrative expenses, with liquidity boosted by a **$4.5 million** convertible debenture financing [Overview and Strategy](index=19&type=section&id=Overview%20and%20Strategy) Cardio's primary objective is to develop and commercialize AI-driven, epigenetics-based clinical tests for cardiovascular diseases, supported by a growth strategy focused on new products and market expansion - Cardio's primary objective is to develop and commercialize **AI-driven, epigenetics-based clinical tests** for cardiovascular diseases such as coronary heart disease, stroke, and heart failure[119](index=119&type=chunk) - The company's growth strategy focuses on developing new products, building clinical evidence for payer reimbursement, expanding its laboratory network, and pursuing synergistic acquisitions[126](index=126&type=chunk) [Results of Operations](index=21&type=section&id=Results%20of%20Operations) The results of operations show a **net loss of $1.03 million** for Q1 2023, primarily driven by increased general and administrative expenses and partially offset by a non-cash gain from derivative liability Results of Operations Comparison (Q1 2023 vs Q1 2022) | Line Item | Three Months Ended March 31, 2023 | Three Months Ended March 31, 2022 | | :--- | :--- | :--- | | Revenue | $0 | $0 | | Sales and marketing | $49,551 | $22,398 | | Research and development | $86,665 | $1,130 | | General and administrative | $1,562,128 | $205,027 | | **Net Loss** | **$(1,032,618)** | **$(290,055)** | - General and administrative expenses increased by **$1.36 million** year-over-year, mainly due to higher personnel, legal, and accounting costs as a public company and for financing activities[136](index=136&type=chunk) - Total other income was **$670,511**, primarily from a **$5.69 million** non-cash gain on derivative liability fair value change, partially offset by **$5.02 million** in mostly non-cash interest expense[138](index=138&type=chunk) [Liquidity and Capital Resources](index=23&type=section&id=Liquidity%20and%20Capital%20Resources) The company's liquidity was primarily boosted by a **$4.5 million** convertible debenture, but it faces an ongoing need for additional capital due to minimal proceeds from the business combination and expected low warrant exercise cash - The company's principal liquidity source was a **$5.0 million** convertible debenture, yielding **$4.5 million** in cash, with an additional **$6.2 million** debenture planned for Q2 2023 pending approval[141](index=141&type=chunk) - The Business Combination yielded only **$4,021** in cash due to a **~99.5% redemption rate**, delaying growth and acquisition strategies[123](index=123&type=chunk)[145](index=145&type=chunk) - The company has an ongoing need to raise additional capital to fund operations and expansion, having incurred losses since inception[147](index=147&type=chunk)[149](index=149&type=chunk) - Management does not expect significant cash proceeds from warrant exercises, as the current stock price is well below the **$3.90 to $11.50** per share exercise prices[150](index=150&type=chunk) [Critical Accounting Policies](index=26&type=section&id=Critical%20Accounting%20Policies) The company's critical accounting policies involve significant judgments and estimates in areas such as fair value measurements, revenue recognition, patent costs, and stock-based compensation - The company's critical accounting policies involve significant judgments and estimates, particularly in **Fair Value Measurements, Revenue Recognition, Patent Costs, and Stock-Based Compensation**[171](index=171&type=chunk)[174](index=174&type=chunk)[178](index=178&type=chunk)[180](index=180&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=28&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company is not required to provide quantitative and qualitative disclosures about market risk as it qualifies as a "smaller reporting company" - The company is not required to provide quantitative and qualitative disclosures about market risk as it qualifies as a "smaller reporting company" under SEC rules[182](index=182&type=chunk) [Controls and Procedures](index=28&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that the company's disclosure controls and procedures were **not effective** as of the end of the quarter, with no material changes to internal control over financial reporting - Based on an evaluation as of the end of the quarter, the company's principal executive officer and principal financial officer concluded that the company's disclosure controls and procedures were **not effective**[182](index=182&type=chunk) - There were no changes in the company's internal control over financial reporting during the quarter that have materially affected, or are reasonably likely to materially affect, internal controls[185](index=185&type=chunk) Part II [Part II — Other Information](index=29&type=section&id=Part%20II%20%E2%80%94%20Other%20Information) This section covers legal proceedings, risk factors, unregistered sales of equity, defaults, other information, and a list of exhibits [Legal Proceedings](index=29&type=section&id=Item%201.%20Legal%20Proceedings) As of March 31, 2023, the company is not involved in any material legal proceedings impacting its ongoing operations - As of March 31, 2023, the company is not involved in any material legal proceedings[188](index=188&type=chunk) [Risk Factors](index=29&type=section&id=Item%201A.%20Risk%20Factors) The company highlights significant risks of potential dilution from future issuance of a large number of common shares, including those from warrants, options, and convertible debentures, which could depress stock price - Future sales of a large number of common shares in the public market, or the perception thereof, could cause the stock price to decline, with several effective registration statements covering millions of shares for resale and warrant exercise[190](index=190&type=chunk)[191](index=191&type=chunk)[193](index=193&type=chunk) - A significant number of shares are subject to issuance upon the exercise of outstanding warrants and options, and the conversion of convertible debentures, potentially causing **substantial dilution** to existing security holders[1](index=1&type=chunk)[5](index=5&type=chunk) Outstanding Dilutive Securities | Security Type | Number of Shares/Units | Exercise/Conversion Price Range | | :--- | :--- | :--- | | Public Warrants | 3,249,993 | $11.50 | | Sponsor Warrants | 2,500,000 | $11.50 | | Exchanged Options | 1,759,600 | $3.90 | | Legacy Private Placement Warrants | 2,104,627 | $3.90 - $6.21 | | Convertible Debentures (Principal) | $11.2 million (potential total) | Variable, based on stock price | [Unregistered Sales of Equity Securities and Use of Proceeds](index=31&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company reported no unregistered sales of equity securities or use of proceeds during the reporting period - No unregistered sales of equity securities or use of proceeds were reported[7](index=7&type=chunk) [Defaults upon Senior Securities](index=31&type=section&id=Item%203.%20Defaults%20upon%20Senior%20Securities) The company reported no defaults upon senior securities during the period - No defaults upon senior securities were reported[8](index=8&type=chunk) [Other Information](index=31&type=section&id=Item%205.%20Other%20Information) The company reported no other material information for the period - No other information was reported[8](index=8&type=chunk) [Exhibits](index=31&type=section&id=Item%206.%20Exhibits) This section lists exhibits filed with the Quarterly Report, including the Agreement and Plan of Merger, corporate governance documents, warrant agreements, and convertible debenture financing agreements - The report includes a list of exhibits filed or incorporated by reference, such as the Agreement and Plan of Merger, corporate governance documents, warrant agreements, convertible debenture agreements, and Officer Certifications[10](index=10&type=chunk)[6](index=6&type=chunk)