Cardiol Therapeutics(CRDL) - 2025 Q2 - Quarterly Report

Financial Statements This section presents the condensed interim consolidated financial statements, including statements of financial position, loss and comprehensive loss, cash flows, and changes in equity, for the periods ended June 30, 2025 Condensed Interim Consolidated Statements of Financial Position As of June 30, 2025, Cardiol Therapeutics Inc. reported a decrease in total assets and total equity compared to December 31, 2024, while total liabilities increased. Cash and cash equivalents significantly declined | Metric | June 30, 2025 (CAD) | December 31, 2024 (CAD) | | :-------------------------------- | :-------------------- | :---------------------- | | Cash and cash equivalents | $18,195,052 | $30,580,029 | | Total current assets | $19,774,185 | $31,668,159 | | Total assets | $19,937,699 | $31,863,751 | | Total current liabilities | $8,022,826 | $7,009,745 | | Total liabilities | $8,129,824 | $7,135,268 | | Total equity | $11,807,875 | $24,728,483 | Condensed Interim Consolidated Statements of Loss and Comprehensive Loss For the six months ended June 30, 2025, the company reported an increased net loss compared to the same period in 2024, primarily driven by changes in foreign exchange and the absence of derivative liability changes seen in the prior year. Basic and diluted net loss per share decreased | Metric (Six Months Ended June 30) | 2025 (CAD) | 2024 (CAD) | Change (YoY) | | :-------------------------------- | :------------ | :------------ | :----------- | | General and administration | $9,616,128 | $10,114,254 | -4.92% | | Research and development | $6,489,093 | $6,032,573 | +7.57% | | Loss before other income | $(16,105,221) | $(16,146,827) | -0.26% | | Interest income | $428,936 | $684,703 | -37.35% | | Gain (loss) on foreign exchange | $(965,739) | $780,952 | N/A | | Change in derivative liability | $- | $(1,117,556) | N/A | | Net loss and comprehensive loss | $(16,642,024) | $(15,770,505) | +5.53% | | Basic and diluted net loss per share | $(0.20) | $(0.23) | -13.04% | Condensed Interim Consolidated Statements of Cash Flows For the six months ended June 30, 2025, net cash used in operating activities remained stable year-over-year, while cash used in investing activities increased. Net cash provided by financing activities significantly decreased, leading to a larger net change in cash and cash equivalents | Metric (Six Months Ended June 30) | 2025 (CAD) | 2024 (CAD) | Change (YoY) | | :-------------------------------- | :------------ | :------------ | :----------- | | Net cash used in operating activities | $(11,704,341) | $(11,698,496) | +0.05% | | Net cash used in investing activities | $(18,378) | $(7,260) | +153.14% | | Net cash provided by financing activities | $6,572 | $154,437 | -95.75% | | Net change in cash and cash equivalents | $(11,716,147) | $(11,551,319) | +1.43% | | Cash and cash equivalents, end of period | $18,195,052 | $24,021,237 | -24.25% | Condensed Interim Consolidated Statements of Changes in Equity Total equity decreased significantly from December 31, 2024, to June 30, 2025, primarily due to the net loss for the period, partially offset by share-based compensation and proceeds from stock option exercises Total Equity as of June 30, 2025 | Metric (As of June 30, 2025) | Amount (CAD) | | :----------------------------- | :----------- | | Share capital | $179,538,695 | | Contributed surplus | $28,165,305 | | Deficit | $(195,896,125) | | Total equity | $11,807,875 | - Total equity decreased from $24,728,483 at December 31, 2024, to $11,807,875 at June 30, 2025, mainly due to a net loss of $16,642,024 for the period, partially offset by $3,687,156 in share-based compensation and $34,260 from stock options exercised[8] Notes to Condensed Interim Consolidated Financial Statements This section provides detailed disclosures on the company's operations, accounting policies, and specific financial statement line items, including cash, property, liabilities, equity, and commitments Note 1. Nature of operations Cardiol Therapeutics Inc. is a clinical-stage life sciences company focused on developing anti-inflammatory and anti-fibrotic therapies for heart disease, with its lead drug candidate, CardiolRx™, in clinical development. The company's common shares are listed on the Toronto Stock Exchange (TSX) and The Nasdaq Capital Market (Nasdaq) under the symbol "CRDL" - Cardiol Therapeutics Inc. is a clinical-stage life sciences company developing anti-inflammatory and anti-fibrotic therapies for heart disease, with CardiolRx™ (cannabidiol) oral solution as its lead drug candidate[11] - The Corporation's common shares trade on the Toronto Stock Exchange (TSX) and The Nasdaq Capital Market under the symbol "CRDL"[12] Note 2. Material accounting policy information These unaudited condensed interim consolidated financial statements comply with International Accounting Standard 34, Interim Financial Reporting, and are prepared on a historical cost and accrual basis. The accounting policies are consistent with the most recent annual consolidated financial statements as of December 31, 2024 - The financial statements are prepared in accordance with International Accounting Standard 34, Interim Financial Reporting, and do not include all information required for full annual financial statements under IFRS Accounting Standards[13] - Statements are prepared on a historical cost basis using the accrual basis of accounting, except for cash flow information[14] - Accounting policies and methods are consistent with the annual consolidated financial statements for the year ended December 31, 2024[15] Note 3. Cash and cash equivalents Interest income earned on cash and cash equivalents decreased for both the three and six months ended June 30, 2025, compared to the same periods in 2024 Interest Income on Cash and Cash Equivalents | Period Ended June 30 | 2025 (CAD) | 2024 (CAD) | | :------------------- | :--------- | :--------- | | Three months | $180,667 | $307,409 | | Six months | $428,936 | $684,703 | Note 4. Property and equipment The carrying value of property and equipment decreased from $195,592 at December 31, 2024, to $163,514 at June 30, 2025, primarily due to depreciation, partially offset by minor additions Property and Equipment Carrying Value | Category | Carrying Value (Dec 31, 2024) (CAD) | Carrying Value (June 30, 2025) (CAD) | | :----------------- | :---------------------------------- | :----------------------------------- | | Right-of-use asset | $80,586 | $48,594 | | Equipment | $42,307 | $35,961 | | Leasehold improvements | $- | $- | | Office equipment | $21,207 | $19,086 | | Computer equipment | $51,492 | $59,873 | | Total | $195,592 | $163,514 | - Additions to property and equipment for the six months ended June 30, 2025, amounted to $18,378, specifically for computer equipment[18] - Depreciation for the six months ended June 30, 2025, totaled $50,456[18] Note 5. Lease liability The total lease liability decreased to $142,554 as of June 30, 2025, with a current portion of $35,556 and a long-term portion of $106,998. The property lease was extended to October 30, 2028, and revalued with a 15% interest rate Lease Liability Components | Lease Liability Component | Amount (CAD) | | :------------------------ | :----------- | | Balance, June 30, 2025 | $142,554 | | Current portion | $35,556 | | Long-term portion | $106,998 | - The property lease was extended to October 30, 2028, and the lease liability was revalued using a 15% interest rate as of the extension date[19] Note 6. Derivative liability The derivative liability, related to 8,175,000 warrants issued in 2021, was re-valued at each reporting date due to being issued in a foreign currency. All warrants expired unexercised during 2024, resulting in no derivative liability as of June 30, 2025 - 8,175,000 warrants issued on November 5, 2021, were classified as a derivative liability and re-valued at each reporting date[20] - All 8,175,000 warrants expired unexercised during 2024, leading to a zero balance for derivative liability as of June 30, 2025[20] Note 7. Share capital The authorized share capital consists of an unlimited number of common shares without par value. As of June 30, 2025, the number of common shares issued increased to 82,674,725, with a total amount of $179,538,695, primarily due to the exercise of restricted share units and stock options - The authorized share capital consists of an unlimited number of common shares with no par value[21] Share Capital Activity | Activity | Number of common shares | Amount (CAD) | | :------------------------------------------- | :---------------------- | :----------- | | Balance, December 31, 2024 | 82,608,992 | $179,335,421 | | Restricted share units exercised (note 8) | 40,733 | $102,581 | | Stock options exercised (note 8) | 25,000 | $34,260 | | Fair value of stock options exercised (note 8) | - | $22,033 | | Performance share units exercised - shares to be issued (note 8) | - | $44,400 | | Balance, June 30, 2025 | 82,674,725 | $179,538,695 | Note 8. Share-based payments The Corporation operates an Omnibus Equity Incentive Plan, allowing for grants of options, RSUs, PSUs, and DSUs, with a maximum issuance of 15% of outstanding shares. Total share-based compensation expenses increased significantly for the three and six months ended June 30, 2025, compared to the prior year - The Omnibus Equity Incentive Plan permits the grant of options, RSUs, PSUs, and DSUs, with a maximum issuance of 15% of the Corporation's issued and outstanding shares[23] Share-based Compensation Expenses | Share-based Compensation Expenses | Three Months Ended June 30, 2025 (CAD) | Three Months Ended June 30, 2024 (CAD) | Six Months Ended June 30, 2025 (CAD) | Six Months Ended June 30, 2024 (CAD) | | :-------------------------------- | :------------------------------------- | :------------------------------------- | :----------------------------------- | :----------------------------------- | | Total expenses | $2,540,182 | $1,805,586 | $3,687,156 | $2,707,686 | (a) Stock Options Stock option activity for the six months ended June 30, 2025, included 1,510,000 options issued and 1,000,000 cancelled, resulting in 1,802,500 options outstanding. The fair value of stock options at grant date decreased significantly from $1.79 in 2024 to $0.73 in 2025 Stock Option Activity | Stock Option Activity (Six Months Ended June 30) | 2025 (Number) | 2024 (Number) | | :----------------------------------------------- | :------------ | :------------ | | Balance, beginning of period | 1,487,500 | 1,732,500 | | Issued | 1,510,000 | 455,000 | | Expired | (170,000) | (185,000) | | Exercised | (25,000) | (175,000) | | Cancelled | (1,000,000) | - | | Balance, end of period | 1,802,500 | 1,827,500 | Black-Scholes Assumption for Stock Options | Black-Scholes Assumption (Six Months Ended June 30) | 2025 | 2024 | | :-------------------------------------------------- | :-------- | :-------- | | Fair value of stock options at grant date | $0.73 | $1.79 | | Share price | $1.65 | $2.83 | | Exercise price | $1.65 | $2.56 | | Risk-free interest rate | 2.61% | 3.83% | | Expected volatility | 76% | 93% | | Expected life in years | 2.60 | 3.13 | - During the quarter ended June 30, 2025, 1,000,000 stock options were cancelled and replaced with 400,000 PSUs[27] (b) Performance Share Units The number of PSUs outstanding increased to 833,000 as of June 30, 2025, with 857,000 issued and 24,000 redeemed during the period. Subsequent to June 30, 2025, an additional 2,645,000 PSUs were issued and 1,030,723 redeemed PSU Activity | PSU Activity (As of June 30) | 2025 (Number) | 2024 (Number) | | :--------------------------- | :------------ | :------------ | | Balance, beginning of period | - | 2,000,000 | | Issued | 857,000 | 300,000 | | Redeemed | (24,000) | (2,200,000) | | Balance, end of period | 833,000 | 100,000 | - Subsequent to June 30, 2025, 2,645,000 PSUs were issued and 1,030,723 PSUs were redeemed[32][33] (c) Restricted Share Units The number of RSUs outstanding as of June 30, 2025, was 4,811,566, with 40,733 units redeemed during the period. A significant portion of these RSUs are set to expire by July 31, 2025 RSU Activity | RSU Activity (As of June 30) | 2025 (Number) | 2024 (Number) | | :--------------------------- | :------------ | :------------ | | Balance, beginning of period | 4,852,299 | 3,544,887 | | Redeemed | (40,733) | (1,596,034) | | Balance, end of period | 4,811,566 | 1,948,853 | RSUs Outstanding by Expiry Date | Expiry date | Number of RSUs outstanding | | :------------ | :------------------------- | | July 31, 2025 | 1,495,692 | | October 31, 2025 | 32,874 | | July 10, 2027 | 3,283,000 | | Total | 4,811,566 | Note 9. Warrants All warrants expired during 2024, resulting in no outstanding warrants as of December 31, 2024, and June 30, 2025 Warrant Activity | Warrant Activity (As of June 30) | Number of warrants | Amount (CAD) | | :------------------------------- | :----------------- | :----------- | | Balance, December 31, 2023 | 11,628,178 | $3,517,867 | | Expired | (3,453,178) | $(3,517,867) | | Balance, June 30, 2024 | 8,175,000 | $- | | Balance, December 31, 2024 and June 30, 2025 | - | $- | Note 10. Loss per share Basic and diluted loss per share for the three and six months ended June 30, 2025, was $(0.10) and $(0.20) respectively. Diluted loss per share did not include the effect of stock options, PSUs, RSUs, and warrants as they were anti-dilutive Loss per Share and Weighted Average Shares | Metric (Period Ended June 30) | 2025 (CAD) | 2024 (CAD) | | :---------------------------- | :--------- | :--------- | | Basic and diluted net loss per share (three months) | $(0.10) | $(0.10) | | Basic and diluted net loss per share (six months) | $(0.20) | $(0.23) | | Weighted average number of common shares outstanding (three months) | 82,653,373 | 68,751,105 | | Weighted average number of common shares outstanding (six months) | 82,631,305 | 68,005,224 | - Stock options, PSUs, RSUs, and warrants were excluded from diluted loss per share calculations as they were anti-dilutive[38] Note 11. Commitments The Corporation has various commitments including minimum lease payments totaling $357,406 through 2028, consultant service agreements totaling $317,629 through 2027, and contract research services totaling $1,372,917 through 2028 Total Lease Commitments | Year | Base rent (CAD) | Variable rent (CAD) | Total Lease Commitments (CAD) | | :--- | :-------------- | :------------------ | :---------------------------- | | 2025 | $27,688 | $25,923 | $53,611 | | 2026 | $55,376 | $51,846 | $107,222 | | 2027 | $55,376 | $51,846 | $107,222 | | 2028 | $46,146 | $43,205 | $89,351 | | Total | $184,586 | $172,820 | $357,406 | Consultant Commitments | Year | Consultant Commitments (CAD) | | :--- | :--------------------------- | | 2025 | $200,199 | | 2026 | $83,231 | | 2027 | $34,199 | | Total | $317,629 | Contract Research Services Commitments | Year | Contract Research Services Commitments (CAD) | | :--- | :------------------------------------------- | | 2025 | $1,280,272 | | 2026 | $44,306 | | 2027 | $23,085 | | 2028 | $25,254 | | Total | $1,372,917 | Note 12. Operating expenses This note details the non-cash components of general and administration (G&A) and research and development (R&D) expenses. Non-cash share-based compensation significantly increased in both G&A and R&D for the six months ended June 30, 2025, compared to the prior year Non-Cash Operating Expenses | Non-Cash Operating Expenses (Six Months Ended June 30) | 2025 (CAD) | 2024 (CAD) | | :----------------------------------------------------- | :--------- | :--------- | | General and administration expenses: | | | | Depreciation of property and equipment | $50,456 | $81,309 | | Amortization of intangible assets | $- | $42,222 | | Non-cash share-based compensation | $3,066,472 | $2,628,113 | | Research and development expenses: | | | | Non-cash share-based compensation | $620,684 | $79,573 | Note 13. Related party transactions Remuneration for key management personnel, including directors, increased for both the three and six months ended June 30, 2025, compared to the prior year, primarily driven by higher share-based payments Key Management Personnel Remuneration | Key Management Personnel Remuneration | Three Months Ended June 30, 2025 (CAD) | Three Months Ended June 30, 2024 (CAD) | Six Months Ended June 30, 2025 (CAD) | Six Months Ended June 30, 2024 (CAD) | | :------------------------------------ | :------------------------------------- | :------------------------------------- | :----------------------------------- | :----------------------------------- | | Salaries and benefits | $570,714 | $540,335 | $1,875,727 | $1,804,739 | | Share-based payments | $469,829 | $154,291 | $938,789 | $275,731 | | Total | $1,040,543 | $694,626 | $2,814,516 | $2,080,470 | - As of June 30, 2025, no amounts were owed to key management personnel (December 31, 2024 - $nil)[43]