Cadrenal Therapeutics(CVKD) - 2024 Q1 - Quarterly Report

PART I. FINANCIAL INFORMATION Item 1. Financial Statements (Unaudited) This section presents the unaudited financial statements for Q1 2024, including balance sheets, statements of operations, cash flows, and notes, highlighting a reduced net loss and changes in equity Balance Sheets This section presents the company's financial position, detailing assets, liabilities, and equity for the reporting periods | Metric | March 31, 2024 ($) | December 31, 2023 ($) | | :--------------------------- | :----------------- | :-------------------- | | Total Current Liabilities | $856,315 | $826,875 | | Total Liabilities | $856,315 | $826,875 | | Total Stockholders' Equity | $6,192,116 | $7,692,375 | | Total Liabilities & Equity | $7,048,431 | $8,519,250 | - Total stockholders' equity decreased by approximately $1.5 million from December 31, 2023, to March 31, 2024[4] Statements of Operations and Comprehensive Loss This section details the company's financial performance for Q1 2024, showing revenues, expenses, and net loss | Metric | Three Months Ended March 31, 2024 ($) | Three Months Ended March 31, 2023 ($) | | :----------------------------------- | :------------------------------------ | :------------------------------------ | | General and administrative expenses | $1,125,993 | $964,732 | | Research and development expenses | $629,025 | $3,235,317 | | Total operating expenses | $1,755,615 | $4,200,239 | | Loss from operations | $(1,755,615) | $(4,200,239) | | Interest and dividend income | $(92,327) | $- | | Net loss and comprehensive loss | $(1,663,288) | $(5,173,574) | | Net loss per common share, basic and diluted | $(0.10) | $(0.48) | - Research and development expenses decreased by 80.5% year-over-year, from $3,235,317 in Q1 2023 to $629,025 in Q1 2024[148] - Net loss per common share improved from $(0.48) in Q1 2023 to $(0.10) in Q1 2024[148] Statements of Changes in Stockholders' Equity This section outlines changes in the company's equity during the period, including share issuances, compensation, and net loss impacts | Metric | Balance, Dec 31, 2023 | Issuance of common shares from exercise of prefunded warrants | Equity-based compensation - options ($) | Net loss ($) | Balance, Mar 31, 2024 ($) | | :----------------------------------- | :-------------------- | :------------------------------------------------------------ | :-------------------------------------- | :------------ | :------------------------ | | Common Shares | 13,022,754 | 2,985,715 | - | - | 16,008,469 | | Stock Amount ($) | $13,022 | $2,986 | - | - | $16,008 | | Additional Paid-In Capital ($) | $22,750,768 | $(2,688) | $162,731 | - | $22,910,811 | | Accumulated Deficit ($) | $(15,071,415) | - | - | $(1,663,288)$ | $(16,734,703)$ | | Total Stockholders' Equity ($) | $7,692,375 | $298 | $162,731 | $(1,663,288)$ | $6,192,116$ | - The company issued 2,985,715 common shares from the exercise of prefunded warrants, contributing $298 to total stockholders' equity[7] - Equity-based compensation for options totaled $162,731 for the three months ended March 31, 2024[7] Statements of Cash Flows This section presents the company's cash inflows and outflows from operating, investing, and financing activities for the quarter | Metric | Three Months Ended March 31, 2024 ($) | Three Months Ended March 31, 2023 ($) | | :----------------------------------- | :------------------------------------ | :------------------------------------ | | Net cash used in operating activities | $(1,836,380) | $(1,412,794) | | Net cash provided by financing activities | $298 | $5,408,575 | | Net change in cash | $(1,836,082) | $3,995,781 | | Cash, beginning of period | $8,402,500 | $32,586 | | Cash, end of period | $6,566,418 | $4,028,367 | - Cash used in operating activities increased by approximately 29.9% from Q1 2023 to Q1 2024[150] - Financing activities provided significantly less cash in Q1 2024 ($298) compared to Q1 2023 ($5,408,575), which included IPO proceeds[150] Notes to Financial Statements These notes detail the company's business, accounting policies, drug development, funding needs, and specific financial treatments - Cadrenal Therapeutics is developing tecarfarin, a late-stage oral anticoagulant, for rare cardiovascular conditions, holding orphan drug and Fast Track designations[57][59][151] - The company has incurred operating losses and negative cash flows since inception and will require additional funding to complete its planned Phase 3 clinical trial and NDA submission[11][29][152] - The financial statements are prepared assuming a going concern, but the company needs to raise additional funds through partnering, equity, or debt financings[11][29][152] Note 1. Description of Business and Summary of Significant Accounting Policies This note describes Cadrenal Therapeutics' business, liquidity, funding needs, and key accounting policies for estimates and financial instruments Basis of Presentation Interim financial statements are unaudited and prepared consistently, with Q1 2024 results not indicative of future periods - Interim financial statements are unaudited and prepared on the same basis as audited annual statements, including only normal recurring adjustments[10][182] - Results for Q1 2024 are not necessarily indicative of results to be expected for the full year 2024 or any future periods[10] Liquidity This section addresses the company's cash position and its need for additional funding for operations and clinical trials - As of May 9, 2024, cash and cash equivalents were approximately $6.1 million, expected to be sufficient for at least the next twelve months[67][183] - Additional funding is required to complete the planned Phase 3 clinical trial and submit the New Drug Application (NDA)[67][183] - Management intends to raise additional funds through equity and debt financings, as well as potential partnering relationships[11][67] Use of Estimates Financial statement preparation involves significant estimates for stock-based awards, deferred tax assets, and accruals - Significant estimates include fair value of stock-based awards, deferred tax assets, valuation allowance, income tax uncertainties, and certain accruals[154][121] - Estimates are based on historical experience and other factors, with actual results potentially differing under different assumptions or conditions[154][121] Emerging Growth Company Status The company is an 'emerging growth company' under the JOBS Act, using the extended transition period for new accounting standards - The company is an "emerging growth company" (EGC) under the JOBS Act[30][184] - The company has elected to take advantage of the extended transition period for the implementation of new or revised accounting standards[184] Concentration of Credit and Other Risks and Uncertainties Cash and cash equivalents are the primary source of credit risk, held at high credit quality financial institutions - Significant concentrations of credit risk primarily consist of cash and cash equivalents[31][185] - Cash balances are maintained at high credit quality financial institutions and may, at times, exceed federally insured limits[185] Segments The company operates in a single operating segment, with the CEO identified as the Chief Operating Decision Maker - The company operates in a single operating segment[32][155] - The Chief Executive Officer is identified as the Chief Operating Decision Maker (CODM)[32] Cash and Cash Equivalents Cash equivalents are highly liquid investments with original maturities of three months or less, including money market funds - Cash equivalents include all highly liquid investments purchased with original maturities of three months or less from the purchase date[14][186] - Cash and cash equivalents include cash and money market funds[14] Derivative Financial Instruments Derivative financial liabilities are initially recorded at fair value and de-recognized upon conversion to common stock - Derivative financial liabilities were initially recorded at fair value, with gains and losses from changes in fair value recognized in other (income) expense[33][122] - Derivative liabilities associated with convertible notes were de-recognized and reclassified to stockholders' equity on January 24, 2023, upon conversion to common stock[33][187][115] Deferred Offering Costs Legal and professional costs for in-process equity financings are capitalized, then expensed if the financing is abandoned - Certain legal, professional, and other third-party costs directly associated with in-process equity financings are capitalized[16][188] - These costs are recorded against the gross proceeds of the offering upon consummation or expensed immediately if the financing is abandoned[16] Acquisitions Asset acquisitions use a cost accumulation model, allocating costs based on relative fair value without recognizing goodwill - For asset acquisitions, a cost accumulation model is used, allocating costs to identifiable assets and liabilities based on relative fair value, without recognizing goodwill[17][189] - In-process research and development (IPR&D) assets are capitalized only if they have an alternative future use; otherwise, they are expensed to research and development[17][192] Stock-Based Compensation Stock-based awards are measured using the Black-Scholes model, with compensation recognized over the requisite service period - Stock-based awards granted to employees, consultants, and directors are measured based on their estimated fair values using the Black-Scholes option-pricing model[34][123][157][204] - Compensation is recognized using the straight-line method over the requisite service period, reduced by forfeitures as they occur[34][123][204] Income Taxes Income taxes use the asset and liability method, with deferred tax assets fully offset by a valuation allowance - Income taxes are accounted for under the asset and liability method, with deferred tax assets and liabilities determined by differences between financial statement and tax bases[36][159] - A valuation allowance fully offsets net deferred tax assets due to the company's historical operating performance and net losses[36] Net Loss Per Common Share Basic and diluted net loss per common share are identical due to the anti-dilutive effect of potential securities - Basic net loss per common share is calculated by dividing the net loss by the weighted-average number of common shares outstanding[37][160] - Diluted net loss per common share is the same as basic net loss per common share because the effects of potentially dilutive securities are anti-dilutive due to the company's loss position[37][208] Research and Development Expenses Research and development costs, including third-party fees and acquired intangible assets, are expensed as incurred - Research and development costs are expensed as incurred, including fees paid to other entities that conduct R&D activities on the company's behalf[38][192] - Acquired intangible assets are expensed as R&D costs if the technology is under development, not FDA approved, or has no foreseeable alternative future use[17][192] Patents Patent costs, including legal and filing fees, are expensed as incurred and recognized as general and administrative expenses - Patent costs, including external legal fees, filing fees, and periodic renewal fees, are expensed as incurred[39][162] - These costs are recognized as a component of general and administrative expenses[39] Comprehensive Loss Comprehensive loss is the change in equity from non-owner sources, identical to net loss for the periods presented - Comprehensive loss is defined as the change in equity during a period from transactions and other events or circumstances from non-owner sources[18][161] - Net loss and comprehensive loss were the same for the periods presented in the accompanying financial statements[161] Note 2. Recent Accounting Guidance Recently issued accounting standards are not expected to materially impact the company's financial statements upon adoption - Accounting standards issued by FASB or other standards-setting bodies that do not require adoption until a future date are not expected to have a material impact on the company's financial statements upon adoption[20][162] Note 3. Fair Value Measurements Fair value measurements are categorized into a three-tier hierarchy based on input observability for financial instrument valuation - Fair value measurements are categorized into a three-tier hierarchy: Level 1 (observable inputs like quoted prices), Level 2 (observable inputs other than Level 1 quoted prices), and Level 3 (unobservable inputs)[20][41][163][193] | Financial Assets/Liabilities | March 31, 2024 (Level 1) ($) | December 31, 2023 (Level 1) ($) | | :--------------------------- | :--------------------------- | :------------------------------ | | Money market funds | $6,488,507 | $8,287,843 | - Derivative liabilities were classified as Level 3 financial instruments and were de-recognized on January 24, 2023, upon conversion of convertible notes[194][165] Note 4. Accrued Liabilities This note breaks down accrued liabilities, including consulting fees and compensation, showing a decrease from prior year-end | Accrued Liabilities | 2024 ($) | 2023 ($) | | :------------------------ | :---------- | :---------- | | Accrued consulting fees | $79,881 | $4,000 | | Accrued compensation | $209,901 | $596,131 | | Other | $150,993 | $38,075 | | Total accrued liabilities | $440,775 | $638,206 | - Total accrued liabilities decreased by $197,431 from December 31, 2023, to March 31, 2024[166] Note 5. Leases, Commitments, and Contingencies This note details lease accounting, recognizing ROU assets and liabilities, and outlines indemnification policies - The company recognizes ROU assets and lease liabilities for leases over 12 months, classifying them as operating or finance leases[71][197] | Lease Metric | March 31, 2024 ($) | December 31, 2023 ($) | | :---------------------------- | :----------------- | :-------------------- | | Right of use assets | $14,920 | $20,998 | | Operating lease liabilities | $15,167 | $21,350 | - Operating lease expenses were $6,555 for Q1 2024, with a remaining lease term of 7 months and an operating lease discount rate of 12% as of March 31, 2024[45] Leases Leases are classified as operating or finance, with ROU assets and liabilities recorded for terms over 12 months - Leases are classified as operating or finance leases at commencement, with ROU assets and liabilities recorded for terms greater than 12 months[71][197] - Operating lease payments are expensed using the straight-line method as an operating expense over the lease term[23][45] Indemnification The company indemnifies officers and directors for certain events, supported by D&O liability insurance - The company indemnifies its officers and directors for certain events, subject to limits, and has D&O liability insurance[46][169][199] - A liability for indemnification matters is accrued when future expenditures are probable and can be reasonably estimated[169] Note 6. Stockholders' Equity and Warrants This note details authorized and outstanding common and preferred stock and warrant activity, including pre-funded warrant exercises - The company is authorized to issue a total of 75,000,000 shares of common stock and 7,500,000 shares of preferred stock[47][170] - As of March 31, 2024, 16,008,469 shares of common stock were issued and outstanding[4] - All 2,985,715 Pre-Funded Warrants were exercised during the three months ended March 31, 2024, resulting in the issuance of common stock and no remaining Pre-Funded Warrants outstanding[75] Common Stock This section describes common stock holder rights, the January 2023 IPO, and the July 2023 private placement - Holders of common stock are entitled to one vote per share and to receive dividends as declared by the Board[200] - The company consummated its IPO on January 24, 2023, selling 1,400,000 shares at $5.00 per share, generating $7.0 million in gross proceeds[26][61] - A private placement closed on July 14, 2023, involving the sale of 1,300,000 common shares, 2,985,715 pre-funded warrants, and 4,285,715 common warrants, generating approximately $7.5 million in gross proceeds[48][61][86][171] Warrant Summary This section summarizes warrant activity, highlighting pre-funded investor warrant exercises and remaining outstanding warrants | Warrant Type | Outstanding as of Dec 31, 2023 | Exercised | Outstanding as of Mar 31, 2024 | Exercise Price ($) | Expiration Date | | :--------------------------- | :----------------------------- | :---------- | :----------------------------- | :----------------- | :-------------- | | Placement agent warrants | 11,500 | - | 11,500 | $3.00 | Jul-Sep 2027 | | Placement agent warrants | 15,000 | - | 15,000 | $1.00 | Nov 2027 | | Representative warrants | 84,000 | - | 84,000 | $6.00 | Jan 2028 | | Pre-funded investor warrants | 2,985,715 | (2,985,715) | - | $0.0001 | Once exercised | | Common warrants | 4,285,715 | - | 4,285,715 | $1.75 | Jan 2029 | | Placement agent warrants | 278,571 | - | 278,571 | $2.1875 | Jan 2029 | | Total Warrants | 7,660,501 | (2,985,715) | 4,674,786 | | | - The exercise of 2,985,715 pre-funded investor warrants reduced the total outstanding warrants from 7,660,501 to 4,674,786 during Q1 2024[50][75] Note 7. Equity-Based Compensation This note details equity-based compensation, using the Black-Scholes model for stock option fair value, with 2,195,000 options outstanding - The Black-Scholes option-pricing model is used to estimate the fair value of stock option awards[34][123][204] | Black-Scholes Assumption | Three Months Ended March 31, 2024 | | :----------------------- | :-------------------------------- | | Risk-free interest rate | 4.09% - 4.83% | | Dividend yield | - | | Expected term (years) | 5.27 - 5.31 | | Volatility | 76.4% - 77.7% | | Stock Option Activity | Number Outstanding (Dec 31, 2023) | Granted | Outstanding (Mar 31, 2024) | Weighted-Average Exercise Price ($) | | :----------------------------- | :-------------------------------- | :---------- | :------------------------- | :---------------------------------- | | Outstanding | 1,175,000 | 1,020,000 | 2,195,000 | $0.90 | | Options vested and exercisable | - | - | 713,058 | $0.80 | - Total stock-based compensation expense was $162,731 for Q1 2024, down from $286,396 in Q1 2023[54][78] Note 8. Net Loss Per Common Share Basic and diluted net loss per common share were identical at $(0.10) for Q1 2024 due to anti-dilutive securities | Metric | Three Months Ended March 31, 2024 | Three Months Ended March 31, 2023 | | :----------------------------------- | :-------------------------------- | :-------------------------------- | | Net loss ($) | $(1,663,288) | $(5,173,574) | | Weighted average common shares outstanding | 16,008,469 | 10,772,493 | | Net loss per share, basic and diluted ($) | $(0.10) | $(0.48) | | Anti-dilutive Common Stock Equivalents | As of March 31, 2024 | As of March 31, 2023 | | :------------------------------------- | :------------------- | :------------------- | | Stock options to purchase common stock | 2,195,000 | 1,100,000 | | Warrants to purchase common stock | 4,674,786 | 276,500 | | Total anti-dilutive common stock equivalents | 6,869,786 | 1,376,500 | - The company's loss position for the periods presented resulted in basic and diluted net loss per share being the same, as potential dilutive securities had an anti-dilutive effect[37][208] Note 9. Subsequent Events No events requiring adjustments or disclosures occurred between the reporting period and the financial statement issuance date - The company evaluated events through May 9, 2024, the date the financial statements were issued, and determined that no events occurred requiring adjustments or disclosures[79][209] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management analyzes Q1 2024 financial condition and results, highlighting tecarfarin development, financing, and future funding - The company is developing tecarfarin, a novel oral anticoagulant with orphan drug and Fast Track designations, for rare cardiovascular conditions[57][81] - Net loss significantly decreased from $5,173,574 in Q1 2023 to $1,663,288 in Q1 2024, primarily due to an 81% reduction in R&D expenses[64][65] - The company's cash and cash equivalents of approximately $6.6 million as of March 31, 2024, are sufficient for the next twelve months, but additional funding is needed for Phase 3 clinical trials and NDA submission[67] Special Note Regarding Forward-Looking Statements Forward-looking statements involve risks and uncertainties, and the company undertakes no obligation to update them - This report contains forward-looking statements, identified by words such as "anticipate," "believe," and "expect," that involve risks and uncertainties[56][211] - Actual results could differ materially from those discussed in the forward-looking statements, and the company undertakes no obligation to update them[211] Company Overview Cadrenal Therapeutics develops tecarfarin for rare cardiovascular conditions, holding orphan drug and Fast Track designations - Cadrenal Therapeutics is developing tecarfarin, a late-stage novel oral and reversible anticoagulant, for patients with rare medical conditions requiring chronic anticoagulation, including ESKD, AFib, VADs, and APS[57][81][151] - Tecarfarin has orphan drug and Fast Track designations from the FDA and is designed to target a different metabolic pathway (non-CYP450) than most commonly prescribed drugs, potentially minimizing drug interactions[57][58][59][82][83] - Tecarfarin has been evaluated in 11 human clinical trials in over 1,000 individuals, showing good tolerability and a low major bleeding rate (1.6%) with no thrombotic events in the EMBRACE-AC trial[82] Initial Public Offering The company's IPO on January 24, 2023, generated $7.0 million gross proceeds from 1.4 million shares at $5.00 per share - The company consummated its initial public offering (IPO) on January 24, 2023, selling 1,400,000 shares of common stock at $5.00 per share[26][61][85] - The IPO generated gross proceeds of $7,000,000 and net proceeds of $5,408,575[26][70] - The company's common stock commenced trading on the Nasdaq Capital Market on January 20, 2023, under the symbol "CVKD"[26][61] Private Placement The July 14, 2023, private placement generated approximately $7.5 million gross proceeds from common stock and warrants - The Private Placement closed on July 14, 2023, generating aggregate gross proceeds of approximately $7.5 million[48][86] - The placement included the sale of 1,300,000 shares of common stock, 2,985,715 pre-funded warrants, and 4,285,715 common warrants[61][171] - The net proceeds from the Private Placement are intended for working capital purposes[86] Results of Operations Q1 2024 net loss was $1,663,288, a significant improvement from Q1 2023, driven by reduced R&D expenses | Metric | Three Months Ended March 31, 2024 ($) | Three Months Ended March 31, 2023 ($) | | :----------------------------------- | :------------------------------------ | :------------------------------------ | | Total operating expenses | $1,755,615 | $4,200,239 | | Loss from operations | $(1,755,615) | $(4,200,239) | | Total other (income) expense | $(92,327) | $973,335 | | Net loss and comprehensive loss | $(1,663,288) | $(5,173,574) | - Net loss decreased by 67.9% year-over-year, from $5,173,574 in Q1 2023 to $1,663,288 in Q1 2024[64] - Total operating expenses decreased by 58.2% year-over-year, from $4,200,239 in Q1 2023 to $1,755,615 in Q1 2024[64] General and administrative expenses General and administrative expenses increased by 17% year-over-year, driven by personnel and public company costs | Expense Category | Three Months Ended March 31, 2024 ($) | Three Months Ended March 31, 2023 ($) | Change ($) | Change (%) | | :--------------------------------- | :------------------------------------ | :------------------------------------ | :----------- | :--------- | | General and administrative expenses | $1,125,993 | $964,732 | $161,261 | 17% | - The increase was primarily driven by a $115,977 increase in personnel-related expenses (due to a new Chief Operating Officer), a $105,376 increase in public company expenses, and a $41,175 increase in consulting fees[88] - These increases were partially offset by a $127,110 decrease in stock-based compensation due to the timing of vesting[88] Research and development expenses Research and development expenses decreased by 81% year-over-year, primarily due to a $3.0 million asset purchase | Expense Category | Three Months Ended March 31, 2024 ($) | Three Months Ended March 31, 2023 ($) | Change ($) | Change (%) | | :------------------------------- | :------------------------------------ | :------------------------------------ | :----------- | :--------- | | Research and development expenses | $629,025 | $3,235,317 | $(2,606,292)$ | (81%) | - The primary driver for the decrease was the issuance of 600,000 shares of common stock (valued at $3.0 million) in January 2023 to HESP LLC for an asset purchase agreement[19][65] - This decrease was partially offset by a $48,568 increase in personnel-related expenses, a $165,077 increase in consulting fees, and a $129,263 increase in chemistry, manufacturing and controls (CMC) expenses[65] Interest and dividend income The company recognized $92,327 in interest and dividend income in Q1 2024 from money market investments | Income Category | Three Months Ended March 31, 2024 ($) | Three Months Ended March 31, 2023 ($) | | :--------------------------- | :------------------------------------ | :------------------------------------ | | Interest and dividend income | $(92,327) | $- | - This income was earned from investments in money market funds, utilizing proceeds from the IPO and July 2023 PIPE financing[90] Change in fair value of derivative liabilities No change in fair value of derivative liabilities was recorded in Q1 2024, as liabilities were de-recognized in January 2023 | Expense Category | Three Months Ended March 31, 2024 ($) | Three Months Ended March 31, 2023 ($) | | :--------------------------------------- | :------------------------------------ | :------------------------------------ | | Change in fair value of derivative liabilities | $- | $216,095 | - The derivative liabilities were considered a Level 3 fair value financial instrument and were de-recognized on January 24, 2023, when note holders converted debt into common stock[91][115] Loss on extinguishment of debt No loss on extinguishment of debt was recorded in Q1 2024, as the $740,139 loss in Q1 2023 was from unamortized debt | Expense Category | Three Months Ended March 31, 2024 ($) | Three Months Ended March 31, 2023 ($) | | :--------------------------- | :------------------------------------ | :------------------------------------ | | Loss on extinguishment of debt | $- | $740,139 | - This loss represented the unamortized debt discount associated with convertible notes and November promissory notes, which were settled concurrent with the IPO[116] Liquidity and Capital Resources Cash and cash equivalents decreased to $6.6 million by March 31, 2024, requiring additional funding for Phase 3 trials - As of March 31, 2024, cash and cash equivalents were $6,566,418, with net working capital of $6,171,714 and an accumulated deficit of $16,734,703[29][67] - The company expects to require additional funding to complete its planned Phase 3 clinical trial and submit its New Drug Application (NDA)[67] - Management intends to raise additional funds through equity and debt financings, as well as potential partnering relationships[67] Operating activities Net cash used in operating activities increased to $(1,836,380) in Q1 2024, driven by net loss and operating asset changes | Cash Flow Item | Three Months Ended March 31, 2024 ($) | Three Months Ended March 31, 2023 ($) | | :------------------------------ | :------------------------------------ | :------------------------------------ | | Net cash used in operating activities | $(1,836,380) | $(1,412,794) | - Cash used in operating activities in Q1 2024 was primarily due to net loss adjusted for non-cash items ($1,500,065) and changes in operating assets and liabilities ($336,315)[69] - Key changes in operating assets and liabilities included a $197,431 decrease in accrued liabilities, a $204,094 increase in prepaid expenses, and a $167,844 increase in deferred offering costs, partially offset by a $233,054 increase in accounts payable[69] Financing activities Net cash from financing activities decreased to $298 in Q1 2024 from $5.4 million in Q1 2023, due to prior IPO proceeds | Cash Flow Item | Three Months Ended March 31, 2024 ($) | Three Months Ended March 31, 2023 ($) | | :---------------------------------- | :------------------------------------ | :------------------------------------ | | Net cash provided by financing activities | $298 | $5,408,575 | - In Q1 2024, net cash provided by financing activities totaled $298 from the exercise of Pre-Funded Warrants[120] - In Q1 2023, net cash provided by financing activities totaled $5,408,575, primarily from the IPO proceeds and $250,000 from warrant exercises[70] Critical Accounting Estimates Financial statement preparation requires significant estimates for financial instruments, stock-based awards, and deferred tax assets - Significant estimates and assumptions are made for the fair value of financial instruments, stock-based awards, deferred tax assets and valuation allowance, and income tax uncertainties[96][121] - Estimates are based on historical experience and other factors, and actual results may differ from these estimates under different assumptions or conditions[121] Derivative Financial Instruments The company evaluates all agreements for derivatives, accounting for convertible note redemption features as fair value liabilities - The company evaluates all agreements for derivatives or embedded derivatives, accounting for certain redemption features of convertible notes as fair value liabilities[97][122] - Derivative financial liabilities are initially recorded at fair value, with gains and losses from changes in fair value recognized in other income (expense)[122] Stock-Based Compensation Stock-based awards are measured at estimated fair value using the Black-Scholes model, with compensation recognized over the service period - Stock-based awards granted to employees, consultants, and directors are measured based on the estimated fair values of the awards using the Black-Scholes option-pricing model[98][123] - Compensation is recognized using the straight-line method over the requisite service period, reduced by forfeitures as they occur[123] OFF-BALANCE SHEET ARRANGEMENTS The company did not have any off-balance sheet arrangements as defined under SEC rules during the reporting period - The company did not have, and does not currently have, any off-balance sheet arrangements as defined under SEC rules[100][124] Item 3. Quantitative and Qualitative Disclosures about Market Risk As a smaller reporting company, the company is not required to provide quantitative and qualitative disclosures about market risk - As a smaller reporting company, the company is not required to provide quantitative and qualitative disclosures about market risk[101][124] Item 4. Controls and Procedures Management, including the CEO and CFO, evaluated disclosure controls and procedures as of March 31, 2024, concluding effectiveness - Management, with the participation of the CEO and CFO, evaluated the effectiveness of disclosure controls and procedures as of March 31, 2024[102][124] - The disclosure controls and procedures were concluded to be effective at the reasonable assurance level[124] Evaluation of Disclosure Controls and Procedures Disclosure controls ensure timely and accurate reporting in SEC filings, deemed effective as of March 31, 2024 - Disclosure controls and procedures are designed to ensure that information required to be disclosed in SEC reports is collected, recorded, processed, summarized, and reported within specified time periods[124] - As of March 31, 2024, the Chief Executive Officer and Chief Financial Officer concluded that the company's disclosure controls and procedures were effective at the reasonable assurance level[124] Changes in Internal Control over Financial Reporting No material changes in internal control over financial reporting occurred during Q1 2024 - During the quarter ended March 31, 2024, there were no changes in internal control over financial reporting that materially affected, or are reasonably likely to materially affect, the company's internal control over financial reporting[103][125] PART II. OTHER INFORMATION Item 1. Legal Proceedings The company is not currently involved in any material legal proceedings - The company is not currently subject to any material legal proceedings[104][127] Item 1A. Risk Factors Investing in the company's securities involves a high degree of risk, with no material changes to previously disclosed risk factors - Investing in the company's securities involves a high degree of risk[104][127] - There have been no material changes from the risk factors disclosed in the Annual Report on Form 10-K as of the filing date of this Quarterly Report[127] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds The company did not engage in unregistered sales of equity securities during Q1 2024, and use of proceeds is not applicable - The company did not sell any equity securities during the quarter ended March 31, 2024, in transactions that were not registered under the Securities Act, other than as previously disclosed[104][105][128] Unregistered Sales of Equity Securities No unregistered sales of equity securities occurred during Q1 2024, other than those previously disclosed - No unregistered sales of equity securities occurred during the quarter ended March 31, 2024, other than those previously disclosed in SEC filings[105] Use of Proceeds This section is not applicable for the current reporting period - This section is not applicable for the current reporting period[106][128] Issuer Purchases of Equity Securities This section is not applicable for the current reporting period - This section is not applicable for the current reporting period[107][128] Item 3. Defaults Upon Senior Securities This item is not applicable for the current reporting period - This section is not applicable for the current reporting period[108][128] Item 4. Mine Safety Disclosures This item is not applicable for the current reporting period - This section is not applicable for the current reporting period[109][129] Item 5. Other Information No director or officer adopted or terminated a Rule 10b5-1 trading arrangement during Q1 2024 - During the three months ended March 31, 2024, no director or officer of the company adopted or terminated a "Rule 10b5-1 trading arrangement" or "non-Rule 10b5-1 trading arrangement"[110][130] Item 6. Exhibits This section lists all exhibits filed or furnished as part of this Quarterly Report on Form 10-Q, including agreements, certifications, and XBRL data - The exhibit index lists all exhibits filed or furnished as part of this Quarterly Report on Form 10-Q[111][132][135] - Exhibits include certifications from the Principal Executive Officer and Principal Financial Officer (31.1, 31.2, 32.1, 32.2) and Inline XBRL Instance, Schema, Calculation, Definition, Labeled, and Presentation files[132] SIGNATURES The report is duly signed by Cadrenal Therapeutics, Inc.'s CEO and CFO on May 9, 2024 - The report is signed by Quang Pham, Chief Executive Officer, and Matthew Szot, Chief Financial Officer, on May 9, 2024[113][133][134]