Cardio Diagnostics posts $1.73M loss in Q3 2026
Epi+Gen CHD assesses three-year coronary heart disease event risk, while PrecisionCHD aids in diagnosing and managing the disease.
Sentiment and the balance of points
Rhea-AI Sentiment reads the wording of the document, how positive or negative its language is on a 1 to 5 scale. The balance of points shown with the takes weighs what the document actually discloses, so the two can disagree, for example when a trial that missed its main goal is described in upbeat language.
Cardio Diagnostics Holdings, Inc. reported third-quarter 2026 revenue of $3,590, compared with $2,855 a year earlier, while net loss was $1,732,331 versus $1,714,536. For the nine months, revenue was $11,630 versus $11,270 and net loss was $5,021,957 versus $5,032,799.
Cash was $3,942,882 at September 30, 2026, and operating activities used $4,420,474 in cash in the first nine months. The company said existing funds and its ATM offering are expected to fund activities over the next 12 months; it expects to need additional equity and/or debt to fund operations beyond that period. As of November 6, 2026, it had sold 2,251,181 shares under the ATM and could sell up to $5,298,889 more through Craig-Hallum.
Cardio said its high-complexity CLIA lab began testing patient samples from all states except New York, pending that state's license. Atlas Healthcare Physicians began covering Epi+Gen CHD and PrecisionCHD in May 2026, subject to prior authorization; Cardio said it secured CMS gapfill payment rates of $854 per test for both. In India, it reported engaging physicians to educate them about PrecisionCHD.
Positive
- Minor pointThird-quarter revenue increased to $3,590 from $2,855.
Negative
- None.
Filing Explained
The SEC has stayed Nasdaq’s new
Key Figures
Key Terms
At-the-Market Issuance financial
gapfill payment rates regulatory
laboratory-developed tests medical
anti-dilutive financial
FAQ
AI-generated questions and answers. How Rhea-AI works. Not financial advice.
What were CDIO's third-quarter 2026 revenue and net loss?
How much ATM capacity remained for CDIO?
What do CDIO's Epi+Gen CHD and PrecisionCHD tests measure?
AI-generated analysis. How Rhea-AI works. Not financial advice.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
(Mark One)
| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period
ended
| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from _____ to _____
Commission File Number:
(Exact name of registrant as specified in its charter)
|
(State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification No.) |
|
|
||
| (Address of principal executive offices) | (Zip Code) |
(
(Registrant’s telephone number, including area code)
(Former name or former address, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) |
Name of each exchange on which registered | ||
| The | ||||
| The |
Indicate
by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days.
Indicate
by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule
405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant
was required to submit such files).
Indicate by check mark whether the registrant is a large, accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| Large accelerated filer | ☐ | Accelerated filer | ☐ |
| ☒ | Smaller reporting company | ||
| Emerging growth company |
If
an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying
with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate
by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐
As of November 6, 2026,
there were
CARDIO DIAGNOSTICS HOLDINGS, INC.
FORM 10-Q
For the Quarter Ended September 30, 2026
TABLE OF CONTENTS
| Introductory Note | ii | |
| Note About Forward-Looking Statements | ii | |
| Part I — Financial Information | ||
| Item 1. | Financial Statements (unaudited) | 1 |
| Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 18 |
| Item 3. | Quantitative and Qualitative Disclosures About Market Risk | 27 |
| Item 4. | Controls and Procedures | 28 |
| Part II — Other Information | ||
| Item 1. | Legal Proceedings | 29 |
| Item 1A. | Risk Factors | 29 |
| Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds | 29 |
| Item 3. | Defaults upon Senior Securities | 29 |
| Item 4. | Mine Safety Disclosures | 29 |
| Item 5. | Other Information | 29 |
| Item 6. | Exhibits | 30 |
i
INTRODUCTORY NOTE
Unless the context dictates otherwise, references in this Quarterly Report on Form 10-Q to the "Company,” "Cardio,” "we,” "us,” "our,” and similar words are references to Cardio Diagnostics Holdings, Inc., a Delaware corporation, and its consolidated subsidiary. "Legacy Cardio” refers to Cardio Diagnostics, Inc. prior to the October 2022 Business Combination with Mana Capital Acquisition Corp (“Mana”). which became our wholly-owned subsidiary as a result of that transaction.
Trade names and trademarks of Cardio referred to herein, and their respective logos, are our property. This Quarterly Report on Form 10-Q may contain additional trade names and/or trademarks of other companies, which are the property of their respective owners. We do not intend our use or display of other companies’ trade names and/or trademarks, if any, to imply an endorsement or sponsorship of us by such companies, or any relationship with any of these companies.
The Company effected a 1-for-30 reverse stock split effective May 12, 2025 (the "Reverse Stock Split”). Unless otherwise indicated, all issued and outstanding stock and per share amounts referred to in this Quarterly Report on Form 10-Q have been adjusted to reflect the Reverse Stock Split for all prior periods presented. Proportionate adjustments for the Reverse Stock Split were made to the exercise prices and number of shares issuable under the Company’s equity incentive plans and outstanding warrants, and the number of shares underlying outstanding equity awards and warrants, as applicable. See Note 1 for information and disclosures relating to adjustments related to the Reverse Stock Split.
SPECIAL NOTE ABOUT FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). All statements other than statements of historical fact are “forward-looking statements” for purposes of federal and state securities laws, including, but not limited to, changes in laws or regulations, any statements about our business (including the impact of a re-emergence of COVID-19 variants or any other pandemic, epidemic or infectious disease outbreak on our business), financial condition, operating results, plans, objectives, expectations and intentions, any guidance on, or projections of, earnings, revenue or other financial items, or otherwise, and our future liquidity, including cash flows; any statements of any plans, strategies, and objectives of management for future operations, such as the material opportunities that we believe exist for our Company; any statements concerning proposed products and services, developments, mergers or acquisitions; or strategic transactions; any statements regarding management’s view of future expectations and prospects for us; any statements about prospective adoption of new accounting standards or effects of changes in accounting standards; any statements regarding the future availability of our access to the Nasdaq Capital Market; any statements regarding future economic conditions or performance; any statements of belief; any statements of assumptions underlying any of the foregoing; and other statements that are not historical facts. Forward-looking statements may be identified by the use of forward-looking terms such as “anticipate,” “could,” “can,” “may,” “might,” “potential,” “predict,” “should,” “estimate,” “expect,” “project,” “believe,” “think,” “plan,” “envision,” “intend,” “continue,” “target,” “seek,” “contemplate,” “budgeted,” “will,” “would,” and the negative of such terms, other variations on such terms or other similar or comparable words, phrases, or terminology. These forward-looking statements present our estimates and assumptions only as of the date of this Quarterly Report on Form 10-Q and are subject to change.
Forward-looking statements involve risks and uncertainties and are based on the current beliefs, expectations, and certain assumptions of management. Some or all of such beliefs, expectations, and assumptions may not materialize or may vary significantly from actual results. Such statements are qualified by important economic, competitive, governmental, and technological factors that could cause our business, strategy, or actual results or events to differ materially from those in our forward-looking statements. Factors that might cause or contribute to such differences include, but are not limited to, the risk factors discussed under the heading “Risk Factors” in Part I, Item IA of our Annual Report on Form 10-K for the year ended December 31, 2025, filed with the Securities and Exchange Commission (“SEC”) on March 13, 2026 (the “2025 Form 10-K”) and in Item 1A of Part II of our Quarterly Report on Form 10-Q for the six months ended June 30, 2026, filed with the SEC on August 7, 2026. Although we believe that the expectations reflected in our forward-looking statements are reasonable, actual results could differ materially from those projected or assumed in any of our forward-looking statements. Our future financial condition and results of operations, as well as any forward-looking statements, are subject to change, and significant risks and uncertainties that could cause actual conditions, outcomes, and results to differ materially from those indicated by such statements. Consequently, all of the forward-looking statements made in this Form 10-Q are qualified by these cautionary statements and there can be no assurance that the actual results or developments anticipated by the Company will be realized or, even if substantially realized, that they will have the expected consequence to or effects on the Company or its business or operations. The Company assumes no obligations to update any such forward-looking statements.
ii
PART I: FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
CARDIO DIAGNOSTICS HOLDINGS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(unaudited)
| SEPTEMBER
30, 2026 | DECEMBER
31, 2025 | |||||||
| ASSETS | ||||||||
| Current assets | ||||||||
| Cash | $ | $ | ||||||
| Accounts receivable | ||||||||
| Prepaid expenses and other current assets | ||||||||
| Total current assets | ||||||||
| Long-term assets | ||||||||
| Property and equipment, net | ||||||||
| Right of use assets, net | ||||||||
| Deposits | ||||||||
| Patent costs, net | ||||||||
| Total assets | $ | $ | ||||||
| LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||
| Current liabilities | ||||||||
| Accounts payable and accrued expenses | $ | $ | ||||||
| Lease liability - current | ||||||||
| Finance agreement payable | ||||||||
| Total current liabilities | ||||||||
| Long-term liabilities | ||||||||
| Lease liability - long term | ||||||||
| Total liabilities | ||||||||
| Stockholders' equity | ||||||||
| Preferred stock, $ and December 31, 2025, respectively | — | — | ||||||
| Common stock, $ as of September 30, 2026 and December 31, 2025, respectively | ||||||||
| Additional paid-in capital | ||||||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Total stockholders' equity | ||||||||
| Total liabilities and stockholders' equity | $ | $ | ||||||
The accompanying notes are an integral part of these unaudited condensed financial statements.
| 1 |
CARDIO DIAGNOSTICS HOLDINGS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
| THREE MONTHS ENDED SEPTEMBER 30, | NINE MONTHS ENDED SEPTEMBER 30, | |||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| Revenue | $ | $ | $ | $ | ||||||||||||
| Operating expenses | ||||||||||||||||
| General and administrative | ||||||||||||||||
| Sales and marketing | ||||||||||||||||
| Research and development | ||||||||||||||||
| Amortization | ||||||||||||||||
| Total operating expenses | ||||||||||||||||
| Loss from operations | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Other income (expenses) | ||||||||||||||||
| Interest income | ||||||||||||||||
| Interest expense | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Total other (expenses) | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Loss before provision for income taxes | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Provision for income taxes | — | — | — | — | ||||||||||||
| Net loss | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Basic and fully diluted income (loss) per common share: | ||||||||||||||||
| Net loss per common share | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Weighted average common shares outstanding - basic and fully diluted | ||||||||||||||||
The accompanying notes are an integral part of these unaudited condensed financial statements.
| 2 |
CARDIO DIAGNOSTICS HOLDINGS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
Nine Months Ended September 30, 2026 and 2025
(unaudited)
| Common stock | Additional Paid-in | Accumulated | ||||||||||||||||||
| Shares | Amount | Capital | Deficit | Totals | ||||||||||||||||
| Balances, December 31, 2025 | $ | $ | $ | ( | ) | $ | ||||||||||||||
| Common stock issued for cash, net of issuance costs | — | |||||||||||||||||||
| Compensation for vested stock options | — | — | — | |||||||||||||||||
| Net loss | — | — | — | ( | ) | ( | ) | |||||||||||||
| Balances, March 31, 2026 | $ | $ | $ | ( | ) | $ | ||||||||||||||
| Compensation for vested stock options | — | — | — | |||||||||||||||||
| Net loss | — | — | — | ( | ) | ( | ) | |||||||||||||
| Balances, June 30, 2026 | $ | $ | $ | ( | ) | $ | ||||||||||||||
| Compensation for vested stock options | — | — | — | |||||||||||||||||
| Net loss | — | — | — | ( | ) | ( | ) | |||||||||||||
| Balances, September 30, 2026 | $ | $ | $ | ( | ) | $ | ||||||||||||||
| Balances, December 31, 2024 | $ | $ | $ | ( | ) | $ | ||||||||||||||
| Common stock issued for cash, net of issuance costs | — | |||||||||||||||||||
| Restricted stock awards vested | — | — | ||||||||||||||||||
| Compensation for vested stock options | — | — | — | |||||||||||||||||
| Net loss | — | — | — | ( | ) | ( | ) | |||||||||||||
| Balances, March 31, 2025 | $ | $ | $ | ( | ) | $ | ||||||||||||||
| Restricted stock awards vested | — | — | ||||||||||||||||||
| Compensation for vested stock options | — | — | — | |||||||||||||||||
| Fractional shares adjustment | — | — | — | — | ||||||||||||||||
| Net loss | — | — | — | ( | ) | ( | ) | |||||||||||||
| Balances, June 30, 2025 | $ | $ | $ | ( | ) | $ | ||||||||||||||
| Common stock issued for cash, net of issuance costs | — | |||||||||||||||||||
| Compensation for vested stock options | — | — | — | |||||||||||||||||
| Net loss | — | — | — | ( | ) | ( | ) | |||||||||||||
| Balances, September 30, 2025 | $ | $ | $ | ( | ) | $ | ||||||||||||||
The accompanying notes are an integral part of these unaudited condensed financial statements.
| 3 |
CARDIO DIAGNOSTICS HOLDINGS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
| Nine Months Ended September 30, | ||||||||
| 2026 | 2025 | |||||||
| CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Adjustments to reconcile net loss to net cash used in operating activities | ||||||||
| Depreciation | ||||||||
| Amortization | ||||||||
| Stock-based compensation expense | ||||||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts receivable | ||||||||
| Prepaid expenses and other current assets | ||||||||
| Accounts payable and accrued expenses | ||||||||
| Lease liability | ( | ) | ( | ) | ||||
| NET CASH USED IN OPERATING ACTIVITIES | ( | ) | ( | ) | ||||
| CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||
| Purchases of property and equipment | ( | ) | ( | ) | ||||
| Patent costs incurred | ( | ) | ( | ) | ||||
| NET CASH USED IN INVESTING ACTIVITIES | ( | ) | ( | ) | ||||
| CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||
| Proceeds from sale of common stock, net of issuance costs | ||||||||
| Payments of finance agreement | ( | ) | ( | ) | ||||
| NET CASH PROVIDED BY FINANCING ACTIVITIES | ||||||||
| NET DECREASE IN CASH | ( | ) | ( | ) | ||||
| CASH - BEGINNING OF PERIOD | ||||||||
| CASH - END OF PERIOD | $ | $ | ||||||
| SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION: | ||||||||
| Cash paid during the period for: | ||||||||
| Interest | $ | $ | ||||||
| Income taxes | $ | — | $ | — | ||||
The accompanying notes are an integral part of these unaudited condensed financial statements.
| 4 |
CARDIO DIAGNOSTICS HOLDINGS, INC.
NOTES TO CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
(UNAUDITED)
Note 1 - Organization and Basis of Presentation
The condensed consolidated financial statements presented are those of Cardio Diagnostics Holdings, Inc., (the “Company”) and its wholly-owned subsidiary, Cardio Diagnostics, Inc. (“Legacy Cardio”). The Company was incorporated as Mana Capital Acquisition Corp. (“Mana”) under the laws of the state of Delaware on May 19, 2021, and Legacy Cardio was formed on January 16, 2017 as an Iowa limited liability company (Cardio Diagnostics, LLC) and was subsequently incorporated as a Delaware C-Corp on September 6, 2019. The Company was formed to develop and commercialize a patent-pending Artificial Intelligence (“AI”)-driven DNA biomarker testing technology (“Core Technology”) for cardiovascular disease invented at the University of Iowa by the Founders, with the goal of becoming one of the leading medical technology companies for enabling precision prevention, early detection and treatment of cardiovascular disease. The Company is transforming the approach to cardiovascular disease from reactive to proactive. The Core Technology is being incorporated into a series of products for major types of cardiovascular disease and associated co-morbidities including coronary heart disease (CHD), stroke, heart failure and diabetes.
Interim Financial Statements
The following (a) consolidated balance sheet as of December 31, 2025, which has been derived from audited financial statements, and (b) the unaudited condensed consolidated interim financial statements of the Company as of September 30, 2026 and for the nine and three months ended September 30, 2026 and 2025 have been prepared in accordance with the instructions to Form 10-Q and Rule 8-03 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the nine and three months ended September 30, 2026 are not necessarily indicative of results that may be expected for the year ending December 31, 2026 or any future periods. These unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto for the year ended December 31, 2025 included in the Company’s Annual Report on Form 10-K, filed with the Securities and Exchange Commission (“SEC”) on March 13, 2026.
Reverse Stock Split
On May 12, 2025, the Company filed a Certificate
of Amendment to the Third Amended and Restated Certificate of Incorporation of the Company with the Delaware Secretary of State to effect
a reverse stock split at a
Unless otherwise indicated, all issued and outstanding
stock and per share amounts contained in the accompanying consolidated financial statements have been adjusted to reflect the
Note 2 – Summary of Significant Accounting Policies
Principles of Consolidation
The condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiary, Legacy Cardio. All intercompany accounts and transactions have been eliminated.
| 5 |
CARDIO DIAGNOSTICS HOLDINGS, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) |
Use of Estimates in the Preparation of Financial Statements
The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the period. Actual results could differ from those estimates.
Segments
The Company uses the “management approach” in determining reportable operating segments. The management approach considers the internal organization and reporting used by the Company’s chief operating decision maker (“CODM”), who is our chief executive officer, for making operating decisions and assessing performance as the source for determining the Company’s reportable segments. Management, including the CODM, reviews operating results solely by monthly revenue and operating results of the Company and, as such, the Company has determined that the Company has one operating segment (product testing) as defined by ASC Topic 280 “Segment Reporting”.
One hundred percent of the Company’s revenues are generated from products, which are tests for major types of cardiovascular disease, and therefore the Company has one operating segment for financial reporting purposes. The Company’s principal products are its Epi+Gen CHD and PrecisionCHD tests. Epi+Gen CHD assesses the risk for a coronary heart disease event, including a heart attack, in the next three years. PrecisionCHD aids in diagnosing and managing coronary heart disease. The tests can be paid for by provider organizations, patients, and/or employers. Customers are generally charged for tests utilized or for the minimum committed test volume and the pricing can vary based on organization type, size and volume.
Reportable segment information is presented below:
| Schedule of segment information | ||||||||
| September 30, | December 31, | |||||||
| 2026 | 2025 | |||||||
| Current Segment assets | ||||||||
| Cash | $ | $ | ||||||
| Accounts receivable | ||||||||
| Prepaid expenses and other current assets | ||||||||
| Total current segment assets | ||||||||
| Long-term segment assets | ||||||||
| Property and equipment, net | ||||||||
| Right of use assets, net | ||||||||
| Deposits | ||||||||
| Patent costs, net | ||||||||
| Total segment assets | $ | $ | ||||||
The accounting policies of the product testing segment are the same as those described in the summary of significant accounting policies. The measure of segment assets is reported on the balance sheet as total consolidated assets.
| 6 |
CARDIO DIAGNOSTICS HOLDINGS, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) |
Reportable segment operating results are presented below:
| Nine Months Ended September 30, | ||||||||
| Revenue | 2026 | 2025 | ||||||
| Product Test sales | $ | $ | ||||||
| Total Segment Revenue | $ | $ | ||||||
| Segment Operating expenses | ||||||||
| Payroll and related costs | $ | $ | ||||||
| Rent and facility expense | ||||||||
| Legal and professional expense | ||||||||
| Consulting and contractor expense | ||||||||
| Insurance expense | ||||||||
| Filing fees expense | ||||||||
| Transfer agent expense | ||||||||
| Software and web computing expense | ||||||||
| Board compensation expense | ||||||||
| Investor relations expense | ||||||||
| Franchise tax | ||||||||
| Other segment items (a) | ||||||||
| Research and development expense | ||||||||
| Sales and marketing expense | ||||||||
| Amortization expense | ||||||||
| Total Segment Operating Expenses | ||||||||
| Interest expense, net | ||||||||
| Total Segment Net (Loss) | $ | ( | ) | $ | ( | ) | ||
| 7 |
CARDIO DIAGNOSTICS HOLDINGS, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) |
| Three Months Ended September 30, | ||||||||
| Revenue | 2026 | 2025 | ||||||
| Product Test sales | $ | $ | ||||||
| Total Segment Revenue | $ | $ | ||||||
| Segment Operating expenses | ||||||||
| Payroll and related costs | $ | $ | ||||||
| Rent and facility expense | ||||||||
| Legal and professional expense | ||||||||
| Consulting and contractor expense | ||||||||
| Insurance expense | ||||||||
| Filing fees expense | ||||||||
| Transfer agent expense | ||||||||
| Software and web computing expense | ||||||||
| Board compensation expense | ||||||||
| Investor relations expense | — | |||||||
| Franchise tax | ||||||||
| Other segment items (a) | ||||||||
| Research and development expense | ||||||||
| Sales and marketing expense | ||||||||
| Amortization expense | ||||||||
| Total Segment Operating Expenses | ||||||||
| Interest expense, net | ||||||||
| Total Segment Net (Loss) | $ | ( | ) | $ | ( | ) | ||
(a) Other segment items included in segment net loss include shipping expense, taxes expense, subscription fees expense, bank fees expense and other overhead expense.
Research and Development
Research and development costs are expensed as
incurred. Research and development costs charged to operations for the nine months ended September 30, 2026 and 2025 were $
Advertising Costs
The Company expenses advertising costs as incurred.
Advertising costs of $
| 8 |
CARDIO DIAGNOSTICS HOLDINGS, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) |
Cash and Cash Equivalents
Cash and cash equivalents are comprised of cash
and highly liquid investments with original maturities of 90 days or less at the date of purchase. The Company does
Reclassification
Certain prior period amounts have been reclassified to conform with the current period presentation. On the consolidated statements of operations, prior period amounts of sales and marketing, research and development, and general and administrative under operating expenses have been reclassified to conform with 2026 fiscal year presentation for better reflecting the function of these expenses.
Recent Accounting Pronouncements
Recently adopted accounting pronouncements
Income Taxes
In December 2023, the FASB issued ASU No. 2023-09, Improvements to Income Tax Disclosures (“ASU 2023-09”). ASU 2023-09 is intended to improve income tax disclosures primarily through enhanced disclosure of income tax rate reconciliation items, and disaggregation of income (loss) from continuing operations, income tax expense (benefit) and income taxes paid, net disclosures by federal, state and foreign jurisdictions, among others. ASU 2023-09 was effective for annual reporting periods beginning after December 15, 2024. We adopted this ASU on a prospective basis effective January 1, 2025.
Financial Instruments – Measurement of Credit Losses for Accounts Receivable and Contract Assets
In July 2025, the FASB issued ASU No. 2025-05, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets. The amendments in this update provide a practical expedient permitting an entity to assume that conditions at the balance sheet date remain unchanged over the life of the asset when estimating expected credit losses for current classified accounts receivable and contract assets. This update is effective for annual periods beginning after December 15, 2025, including interim periods within those fiscal years. Adoption of this ASU can be applied prospectively for reporting periods after its effective date. Early adoption is permitted. We adopted this ASU on a prospective basis effective January 1, 2026 and the adoption did not have a material impact on our consolidated financial statements.
Recently issued accounting pronouncements not yet adopted
Disaggregation of Income Statement Expenses
In November 2024, the FASB issued ASU No. 2024-03, “Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses”, which requires disaggregated disclosure of income statement expenses for public business entities. ASU 2024-03 requires new financial statement disclosures in tabular format, disaggregating information about prescribed categories underlying any relevant income statement expense caption. The prescribed categories include, among other things, purchases of inventory, employee compensation, depreciation, and intangible asset amortization. Additionally, entities must disclose the total amount of selling expenses and, in annual reporting periods, an entity’s definition of selling expenses. ASU 2024-03 is effective for annual reporting periods beginning after December 15, 2026, and for interim reporting periods within fiscal years beginning after December 15, 2027. The guidance can be applied prospectively with an option for retrospective application. Early adoption is also permitted. We are currently evaluating the provisions of this ASU.
| 9 |
CARDIO DIAGNOSTICS HOLDINGS, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) |
Interim Reporting: Narrow-Scope Improvements
In December 2025, the FASB issued ASU No. 2025-11, Interim Reporting (Topic 270): Narrow-Scope Improvements. The ASU clarifies interim disclosure requirements and the applicability of Topic 270. The objective of the amendments is to provide further clarity about the current interim disclosure requirements. The ASU is effective for interim reporting periods within annual reporting periods beginning after December 15, 2027. Adoption of this ASU can be applied either a prospective or a retrospective approach. Early adoption is permitted. We are currently evaluating the provisions of this ASU and do not expect this ASU to have a material impact on our consolidated financial statements.
Codification Improvements
In December 2025, the FASB issued ASU No. 2025-12, Codification Improvements. The ASU addresses thirty-three items, representing the changes to the Codification that (1) clarify, (2) correct errors, or (3) make minor improvements. Generally, the amendments in this Update are not intended to result in significant changes for most entities. The ASU is effective for interim reporting periods within annual reporting periods beginning after December 15, 2026. The adoption method of this ASU may vary, on an issue-by-issue basis. Early adoption is permitted. We are currently evaluating the provisions of this ASU and do not expect this ASU to have a material impact on our consolidated financial statements.
We have reviewed other recent accounting pronouncements and concluded they are either not applicable to the business, or no material effect is expected on the consolidated financial statements as a result of future adoption.
Note 3 – Property and Equipment
Property and equipment are carried at cost and consist of the following at September 30, 2026 and December 31, 2025:
| Schedule of property and equipment | ||||||||
| 2026 | 2025 | |||||||
| Office and computer equipment | $ | $ | ||||||
| Furniture and fixtures | ||||||||
| Lab equipment | ||||||||
| Leasehold improvements | ||||||||
| Less: Accumulated depreciation | ( | ) | ( | ) | ||||
| Total | $ | $ | ||||||
Depreciation expense of $
Note 4 – Patent Costs
As of September 30, 2026, our patent
portfolio includes seven patent families. In the first family of Patents and patent applications owned solely by UIRF and
exclusively licensed by Cardio, there are granted patents in the US (two), EU (subsequently validated in the United Kingdom, France,
Germany, Italy, Switzerland, Ireland and Hong Kong), China, Australia (two), India, and Japan and other pending patent applications.
The Company also has pending patent applications in patent families two, three, four, five, six, and seven. In the third family of
Patents and patent application a patent was granted in Japan. Legal fees associated with the patents totaled $
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CARDIO DIAGNOSTICS HOLDINGS, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) |
Note 5 – Operating Leases
The Company determines if a contract is, or contains, a lease at contract inception. Operating leases are included in operating lease right-of-use (“ROU”) assets, current portion of operating lease liabilities and operating lease liabilities, net of current portion in the Company’s consolidated balance sheets. Finance leases are included in property and equipment, current portion of finance lease obligations and finance lease obligations, net of current portion in the Company’s consolidated balance sheets.
ROU assets represent the right to use an underlying asset for the lease term and lease liabilities represent the obligation to make lease payments arising from the lease. ROU assets and lease liabilities are recognized at the commencement date based on the present value of lease payments over the lease term. In addition, ROU assets include initial direct costs incurred by the lessee as well as any lease payments made at or before the commencement date and exclude lease incentives. The Company used the implicit rate in the lease in determining the present value of lease payments. Lease terms include options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option. Leases with a term of one year or less are generally not included in ROU assets and corresponding operating lease liabilities.
In 2023, the Company entered into a lease agreement for office space in Chicago, Illinois, commencing on August 1, 2023 for a term of three years and four months and expiring on November 30, 2026. The monthly rent for August to November 2023 was abated and the Company started to make monthly rental installments from December 2023 of $12,847. The monthly rental payment increases by approximately 2% every August which started in 2024.
On July 20, 2023, the Company entered into another
lease agreement for laboratory in Iowa City, Iowa, commencing on August 1, 2023 for a term of five years and four months and expiring
on November 30, 2028. The monthly rent for August to November 2023 was abated and the Company agreed to pay a monthly rent of $
During the year ended December 31, 2023, the Company
recorded ROU assets of $
As of September 30, 2026 and December 31, 2025, operating lease ROU assets and operating lease liabilities are recorded on the condensed consolidated balance sheets as follows:
| Schedule of operating lease ROU assets and operating lease liabilities | ||||||||
| September 30, | December 31, | |||||||
| 2026 | 2025 | |||||||
| Operating Leases: | ||||||||
| Operating lease right-of-use assets, net | $ | $ | ||||||
| Current portion of operating lease liabilities | $ | $ | ||||||
| Operating lease liabilities, net of current portion | $ | $ | ||||||
As of September 30, 2026, the weighted-average
remaining lease terms of the two operating leases were
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CARDIO DIAGNOSTICS HOLDINGS, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) |
The following table summarizes maturities of operating lease liabilities based on lease terms as of December 31:
| Schedule of future minimum payments due | ||||||
| 2026 (remaining period) | $ | |||||
| 2027 | ||||||
| 2028 | ||||||
| Total lease payments | ||||||
| Less: Imputed interest | ( | ) | ||||
| Present value of lease liabilities | $ | |||||
At September 30, 2026, the Company had the following future minimum payments due under the non-cancelable lease:
| 2026 (remaining period) | $ | |||||
| 2027 | ||||||
| 2028 | ||||||
| Total minimum lease payments | $ | |||||
Consolidated rental expense for all operating
leases was $
The following table summarizes the cash paid and related right-of-use operating lease recognized for the nine months ended September 30, 2026 and 2025.
| Schedule of cash paid and related right-of-use operating lease | ||||||||
| Nine Months Ended September 30, | ||||||||
| 2026 | 2025 | |||||||
| Cash paid for amounts included in the measurement of lease liabilities: | ||||||||
| Operating cash flows from operating leases | $ | $ | ||||||
| Reduction of lease liabilities: | ||||||||
| Operating leases | $ | $ | ||||||
Note 6 – Finance Agreement Payable
On October 25, 2024, the Company entered into
an agreement with a premium financing company to finance its Directors and Officers insurance premiums for 12-month policies effective
October 25, 2024. The amount financed of $
On October 25, 2025, the Company entered into
an agreement with a premium financing company to finance its Directors and Officers insurance premiums for 12-month policies effective
October 25, 2025. The amount financed of $
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CARDIO DIAGNOSTICS HOLDINGS, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) |
Note 7 - Earnings (Loss) Per Common Share
The Company calculates net income (loss) per common share in accordance with ASC 260 “Earnings Per Share” (“ASC 260”). Basic and diluted net earnings (loss) per common share was determined by dividing net earnings (loss) applicable to common stockholders by the weighted average number of common shares outstanding during the period. The Company’s potentially dilutive shares, which include shares of Common Stock presented below on a post-reverse stock split basis that are exercisable or issuable from outstanding common stock options and common stock warrants, have not been included in the computation of diluted net loss per share for the nine months ended September 30, 2026 and 2025 as the result would be anti-dilutive.
| Schedule of anti dilutive earning per share | ||||||||
| Nine Months Ended | ||||||||
| September 30, | ||||||||
| 2026 | 2025 | |||||||
| Stock warrants | ||||||||
| Stock options | ||||||||
| Total shares excluded from calculation | ||||||||
Note 8 – Stockholders’ Equity
2022 Equity Incentive Plan
On October 25, 2022, the Company’s stockholders approved the Cardio Diagnostics Holdings, Inc. 2022 Equity Incentive Plan (the “2022 Plan”). The purpose of the 2022 Plan is to promote the interests of the Company and its stockholders by providing eligible employees, officers, directors and consultants with additional incentives to remain with the Company and its subsidiaries, to increase their efforts to make the Company more successful, to reward such persons by providing an opportunity to acquire shares of Common Stock on favorable terms and to attract and retain the best available personnel to participate in the ongoing business operations of the Company. The 2022 Plan permits the grant of Incentive Stock Options, Nonstatutory Stock Options, Restricted Stock, Restricted Stock Units, Stock Appreciation Rights, Performance Units and Performance Shares.
The 2022 Plan, as approved, permits the issuance
of up to
As a result, the Company has the ability
to initially issue an aggregate of 239,920 shares (on a post-reverse stock split basis) of Common Stock under the 2022 Equity Incentive
Plan, of which
Common Stock Issued
At-the-Market Issuance
In connection with an At-the-Market Issuance Sales
Agreement (the “Sales Agreement”) that the Company entered into with a placement agent on January 26, 2024, the Company sold
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CARDIO DIAGNOSTICS HOLDINGS, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) |
In connection with an At-the-Market Issuance Sales
Agreement (the “Sales Agreement”) that the Company entered into with a placement agent on January 26, 2024, the Company sold
Other Common Stock Issuance
During the three and nine months ended September
30, 2025, the Company issued
Warrants
Warrant activity during the nine months ended September 30, 2026 and 2025 was as follows:
| Schedule of warrant activity | ||||||||||||
Warrants Outstanding | Weighted Average Exercise Price | Weighted Average Remaining Contractual Life (Years) | ||||||||||
| Warrants outstanding at December 31, 2024 | $ | |||||||||||
| No warrant activity | — | — | ||||||||||
| Warrants outstanding at September 30, 2025 | $ | |||||||||||
| Warrants outstanding at December 31, 2025 | $ | |||||||||||
| No warrant activity | — | — | ||||||||||
| Warrants outstanding at September 30, 2026 | $ | |||||||||||
Options
On March 31, 2025, the Company authorized an additional
On March 31, 2025, the Company granted
On June 30, 2025, the Company granted
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CARDIO DIAGNOSTICS HOLDINGS, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) |
On September 30, 2025, the Company granted
On March 31, 2026, the Company granted
On June 30, 2026, the Company granted
On September 30, 2026, the Company granted
Option activity during the nine months ended September 30, 2026 and 2025 was as follows:
| Schedule of option activity | ||||||||||||
Options Outstanding | Weighted Average Exercise Price | Weighted Average Remaining Contractual Life (Years) | ||||||||||
| Options outstanding at December 31, 2024 | $ | |||||||||||
| Options granted | ||||||||||||
| Options expired or cancelled or forfeited | ( | ) | ||||||||||
| Options outstanding at September 30, 2025 | $ | |||||||||||
| Options vested and exercisable at September 30, 2025 | $ | |||||||||||
| Options outstanding at December 31, 2025 | $ | |||||||||||
| Options granted | ||||||||||||
| Options outstanding at September 30, 2026 | $ | |||||||||||
| Options vested and exercisable at September 30, 2026 | $ | |||||||||||
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CARDIO DIAGNOSTICS HOLDINGS, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) |
Note 9 – Commitments and Contingencies
Prior Relationship of Cardio with Boustead Securities, LLC
At the commencement of efforts to pursue what ultimately ended in a terminated business acquisition, Legacy Cardio entered into a Placement Agent and Advisory Services Agreement (the “Placement Agent Agreement”), dated April 12, 2021, with Boustead Securities, LLC ("Boustead Securities”). This agreement was terminated in April 2022, when Legacy Cardio terminated the underlying agreement and plan of merger and the accompanying escrow agreement relating to that proposed business acquisition after efforts to complete the transaction failed, despite several extensions of the closing deadline.
Under the terminated Placement Agent Agreement, Legacy Cardio agreed to certain future rights in favor of Boustead Securities, including (i) a two-year tail period during which Boustead Securities would be entitled to compensation if Cardio were to close on a transaction (as defined in the Placement Agent Agreement) with any party that was introduced to Legacy Cardio by Boustead Securities; and (ii) a right of first refusal to act as the Company’s exclusive placement agent for 24-months from the end of the term of the Placement Agent Agreement (the “right of first refusal”). Cardio has taken the position that due to Boustead Securities’ failure to perform as contemplated by the Placement Agent Agreement, these provisions purporting to provide future rights are null and void.
Boustead Securities responded to the termination of the Placement Agent Agreement by disputing Legacy Cardio’s contention that it had not performed under the Placement Agent Agreement because, among other things, Boustead Securities had never sought out prospective investors. In its response, Boustead Securities included a list of funds that they had supposedly contacted on Legacy Cardio’s behalf. While Boustead Securities’ contention appears to contradict earlier communications from Boustead Securities in which they indicated that they had not made any such contacts or introductions, Boustead Securities contended that they are due success fees for two years following the termination of the Placement Agent Agreement on any transaction with any person on the list of supposed contacts or introductions. Legacy Cardio strongly disputes this position. Notwithstanding the foregoing, the Company has not consummated any transaction, as defined, with any potential party that purportedly was a contact of Boustead Securities in connection with the Placement Agent Agreement and has no plans to do so at any time during the tail period. No legal proceedings have been instigated by either party.
The Benchmark Company, LLC Right of First Refusal
The Company completed the business combination
on October 25, 2022. In connection with the proposed business combination, by agreement dated May 13, 2022, Mana engaged The Benchmark
Company, LLC (“Benchmark”) as its M&A advisor. Upon closing of the business combination, Legacy Cardio assumed the contractual
engagement entered into by Mana. On November 14, 2022, the Company and Benchmark entered into Amendment No. 1 Engagement Letter (the “Amendment
Engagement”).
Demand Letter and Potential Mootness Fee Claim
On June 25, 2022, a plaintiffs’ securities law firm sent a demand letter to the Company alleging that the Company’s Registration Statement on Form S-4 filed (the “S-4 Registration Statement”) with the Securities and Exchange Commission (“SEC”) on May 31, 2022 omitted material information with respect to the Business Combination and demanding that the Company and its Board of Directors immediately provide corrective disclosures in an amendment or supplement to the Registration Statement. Subsequent thereto, the Company filed amendments to the S-4 Registration Statement on July 27, 2022, August 23, 2022, September 15, 2022, October 4, 2022 and October 5, 2022 in which it responded to various comments of the SEC staff and otherwise updated its disclosure. In October 2022, the SEC completed its review and declared the S-4 registration statement effective on October 6, 2022. On February 23, 2023 and February 27, 2023, plaintiffs’ securities law firm contacted the Company’s counsel asking who will be negotiating a mootness fee relating to the purported claims set forth in the June 25, 2022 demand letter. The Company vigorously denies that the S-4 Registration Statement, as amended and declared effective, is deficient in any respect and that no additional supplemental disclosures are material or required. The Company believes that the claims asserted in the Demand Letter are without merit and that no further disclosure was required to supplement the S-4 Registration Statement under applicable laws. As of the date of filing of this Quarterly Report on Form 10-Q, no lawsuit has been filed against the Company by that firm. The firm has indicated its willingness to litigate the matter if a mutually satisfactory resolution cannot be agreed upon; however, Cardio believes that the final outcome will not have a material adverse impact on its financial condition.
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CARDIO DIAGNOSTICS HOLDINGS, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) |
Northland Securities, Inc.
In January 2024, following the Company’s
termination of its agreement with Yorkville and in connection with the Company’s at the market offering and/or its February 2024
private placement, a managing director of Northland Securities, Inc. (“Northland”) contacted the Company claiming the right
to be paid a fee of approximately $
The Company cannot preclude the possibility that claims or lawsuits brought relating to any alleged securities law violations or breaches of fiduciary duty could potentially require significant time and resources to defend and/or settle and distract its management and board of directors from focusing on its business.
Directors and Officers Insurance
In connection with the Company’s various contractual obligations arising in the ordinary course of business, the Company is required to maintain insurance coverage for claims against its directors and officers.
The University of Iowa Research Foundation Exclusive License Agreement
The Company has a worldwide exclusive license agreement with the University of Iowa Research Foundation (UIRF) relating to its patent and patent-pending technology (the “Exclusive License Agreement”). Under the terms of the Exclusive License Agreement, the Company will have to pay each of: (1) 1% of either: (i) the aggregate consideration (and trailing consideration, if any) for a liquidation event; or (ii) pre-money valuation for an initial public offering, (the “Equity Rights”) (2) 2% of annual net sales, and (3) 15% of non-royalty fees paid to licensee if it enters into one or more sublicensing agreements. Upon the Closing of the Business Combination, the Company issued 3,639 (109,170 prior to the Reverse Stock Split) Shares of Common Stock to UIRF in accordance with the Equity Rights under the Exclusive License Agreement. The Company has had minimal sales of $80,261 to date and has paid 2% or approximately $1,780 in total royalty fees to UIRF under the exclusive license.
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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis provide information that Cardio’s management believes is relevant to an assessment and understanding of Cardio’s results of operations and financial condition. You should read the following discussion and analysis of Cardio’s results of operations and financial condition together with its unaudited condensed consolidated financial statements and related notes to those statements included elsewhere in this Quarterly Report on Form 10-Q, and its audited consolidated financial statements and related notes to those statements included in the Company’s 2025 Annual Report on Form 10-K that was filed on March 13, 2026 (the “2025 Form 10-K”). In addition to historical financial information, this discussion contains forward-looking statements based upon Cardio’s current expectations that involve risks and uncertainties, including those described in the section titled, “Special Note About Forward-Looking Statements,” above. Cardio’s actual results could differ materially from such forward-looking statements as a result of various factors, including those set forth under “Risk Factors” in the 2025 Form 10-K (Item 1A therein), as well as in Item 1A of Part II of the Quarterly Report on Form 10-Q for
the six months ended June 30, 2026, filed with the SEC on August 7, 2026. Our historical results are not necessarily indicative of the results that may be expected for any period in the future.
Unless the context requires otherwise, references to “Cardio,” the “Company,” “we,” “us” and “our” refer to Cardio Diagnostics Holdings, Inc., a Delaware corporation, together with its consolidated subsidiary.
Overview
Cardio was formed to further develop and commercialize a series of products for major types of cardiovascular disease and associated co-morbidities, including coronary heart disease (“CHD”), stroke, heart failure and diabetes, by leveraging our Artificial Intelligence (“AI”)-driven Multi-Omics Engine™. As a company, we aspire to give every American adult insight into their unique risk for various cardiovascular diseases. Cardio aims to become one of the leading medical technology companies for enabling improved prevention, early detection and treatment of cardiovascular disease. Cardio is transforming the approach to cardiovascular disease from reactive to proactive and hope to accelerate the adoption of Precision Medicine for all. We believe that incorporating Cardio’s solutions into routine practice in primary care and prevention efforts can help alter the trajectory that nearly one in two Americans is expected to develop some form of cardiovascular disease by 2035.
Cardio believes that it is the first company to develop and commercialize epigenetics-based clinical tests for cardiovascular disease that have clear value propositions for multiple stakeholders including (1) patients, (2) clinicians, (3) hospitals/health systems, (4) employers, and (5) payers. According to the CDC, epigenetics is the study of how a person’s behaviors and environment can cause changes that affect the way a person’s genes work. Unlike genetic changes, epigenetic changes are reversible and do not change one’s DNA sequence, but they can change how a person’s body reads a DNA sequence.
By leveraging our AI-driven Multi-Omics Engine, Cardio developed and launched two physician-prescribed blood tests, which included conducting rigorous studies and validation. The first test, Epi+Gen CHD™, can predict a patient’s risk for having a CHD event, including a heart attack. The second test, PrecisionCHD™, can detect molecular signals associated with the presence of coronary heart disease. The PrecisionCHD™ test is coupled to Actionable Clinical Intelligence (“ACI”), a platform that offers epigenetic insights to clinicians prescribing the test to help personalize patient management. We believe that our Epi+Gen CHD™ and PrecisionCHD™ tests are categorized as laboratory-developed tests, or “LDTs.” Cardio is actively pursuing payer coverage and reimbursement for these tests, which would be necessary to significantly increase testing volume and revenue growth. Currently, we have secured reimbursement codes from the American Medical Association for both tests, 0439U for Epi+Gen CHD and 0440U for PrecisionCHD. We have also secured gapfill payment rates for both tests from the Centers of Medicare and Medicaid Services (CMS) of $854 per test for both tests. The Company is continuing its efforts related to payer coverage and reimbursement, including pursuing Medicare coverage. The Company has established the ability to submit out-of-network claims to commercial payers, and secured its first coverage by Atlas Healthcare Physicians (AHP), a community-driven, independent physician association (IPA) based in Southern California. AHP started covering Cardio’s tests, Epi+Gen CHD™ and PrecisionCHD™, for their members with prior authorization in May 2026. AHP consists of an expansive network of primary care and specialists, hospitals, and ancillary providers serving managed care populations across Los Angeles and Orange County.
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In parallel, Cardio’s go-to-market strategy is targeted towards segments and stakeholders that do not rely heavily on payer reimbursement. The majority of our current efforts include offering the tests via: 1) telemedicine for patients willing to pay for testing out-of-pocket, 2) smaller and more innovative provider practices such as functional medicine and concierge medicine practices, 3) employer organizations and unions that are interested in reducing costs and risks related to cardiovascular disease, and improving the health of their population, and 4) engaging benefit brokers and consultants to help identify employers invested in or looking to invest in cardiovascular disease prevention and early detection. Despite long partnership and sales cycles, in some instance as long as 24 months, Cardio has been able to increase the number of provider and other organizations offering its tests quarter after quarter, and has continued the development of a more robust sales and partnership pipeline. In the quarter ended September 30, 2026, Cardio increased the number of provider organizations offering our tests to their patients, increased engagement and re-engagement efforts of providers, and continued to showcase our products to employers, unions, and benefit brokers.
In addition to our blood tests, we launched HeartRisk™, a cardiovascular disease risk intelligence platform. This platform provides population level, de-identified, aggregated and compliant data to stakeholders such as employers and benefit brokers, to help inform their benefit design strategies to mitigate costs and risks associated with cardiovascular disease. We also have a research-use-only (“RUO”) solution, CardioInnovate360™, that leverages our AI-driven Multi-Omics Engine to support the discovery, development and validation of novel biopharmaceuticals for the assessment and management of cardiovascular diseases.
To further diversify our go-to-market strategy, the Company continues to explore new market opportunities in the US and internationally. The first such market outside of the US is India via an agreement entered into with Aimil Ltd. and Dr. LalPathLabs, that was announced in early 2026. The Company completed its initial shipment of proprietary reagents to Aimil Ltd and Dr. Lal Path Labs in the first half of 2026. In the quarter ended September 30, 2026, the Company made additional progress in its implementation in India with the engagement of physicians to educate them about its PrecisionCHD test for patients. The Company is also engaged in discussions related to other potential international expansions.
Finally, the Company completed the setup of its new high complexity CLIA lab with the initial CLIA survey conducted by a CLIA compliance manager and found no deficiencies. In addition to the federal certification requirements, the laboratory also received its out-of-state licenses from California, Maryland, Pennsylvania, and Rhode Island. Testing of patient samples has commenced at this facility for samples originating from all states except New York, pending the acquisition of a New York license. As a result of the lab setup, the Company is no longer reliant on a third-party lab for patient sample processing, and the lab setup provides an opportunity to reduce cost of goods sold with scale. In the quarter ended September 30, 2026, the Company made progress in its New York license application.
Cardio expects that sales and partnership cycles will continue to be long. A recurring question from investors is why revenue growth does not immediately follow the development and validation of a clinically promising test. While product development may appear straightforward — develop the test, demonstrate its effectiveness, and launch — the path from scientific discovery to broad clinical adoption is complex, highly regulated and typically extended in duration.
The commercialization lifecycle for diagnostic tests generally involves multiple stages:
| · | Scientific Validation |
The Company must conduct rigorous analytical and clinical validation studies to demonstrate the safety, accuracy and clinical utility of its tests. Publication of supporting data and peer-reviewed evidence is often an important component of this process.
| · | Regulatory Requirements |
Depending on the regulatory pathway, the Company must comply with applicable federal and state regulatory standards. Regulatory processes may involve submissions, inspections, or other oversight requirements that can extend development timelines.
| · | Reimbursement and Coverage |
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Revenue generation depends significantly on securing third-party reimbursement. Following launch, the Company must obtain coverage determinations from government programs, including the Centers for Medicare & Medicaid Services (“CMS”), and subsequently from commercial payors. Coverage decisions often require demonstration of clinical utility, cost-effectiveness, and economic value relative to the current standard of care. The timing and scope of reimbursement approvals can materially impact adoption rates and revenue growth.
| · | Physician Adoption and Clinical Guidelines |
Broad utilization frequently depends on physician awareness, education and confidence in the test. Adoption may accelerate when professional medical societies incorporate a diagnostic test into clinical guidelines; however, guideline inclusion typically follows the accumulation of substantial clinical evidence over time.
| · | Behavioral and Workflow Integration |
Even when a test is validated, reimbursed and supported by clinical data, integration into established clinical workflows and physician practice patterns can be gradual. Changes in medical practice often occur incrementally as providers gain familiarity and comfort with new technologies.
In summary, the healthcare commercialization process is inherently lengthy and subject to regulatory, reimbursement, evidentiary, and behavioral factors. Broad clinical adoption of novel diagnostic technologies frequently spans multiple years and, in some cases, may require a decade or more from initial development to widespread utilization.
Our ongoing strategy and considerations for expanding our business operations and increasing revenue generation include the following:
| · | Develop additional products, including clinical tests for stroke, congestive heart failure and diabetes; | |
| · | Offer laboratory services via our laboratory if viable; | |
| · | Expand clinical and health economics evidence portfolio to continue to demonstrate value of products and increase reach; | |
| · | Leverage our CPT PLA codes and expand reimbursement efforts with both government and commercial payors; | |
| · | Expand the adoption of our products across key channels, including health systems and self-insured employers; | |
| · | Explore additional market opportunities in the US; | |
| · | Explore partner-led international expansions like that in India; | |
| · | Explore opportunities to grow presence in India, including with local manufacturing; | |
| · | Scale our internal operations capabilities with a focus on improving efficiency and reducing our cost of goods sold; and | |
| · | Pursue potential strategic partnership(s) and/or acquisition(s) of one or more synergistic companies. |
Recent Developments
Change in Nasdaq Continued Listing Standards
On July 22, 2026, the SEC adopted a final rule implementing a proposed revision to Nasdaq’s requirements for continued listing on Nasdaq. The rule, implemented through Nasdaq Rules 5450(a)(3) and 5550(a)(6), would require Nasdaq-listed companies to maintain at least $5 million in market value of listed securities (“MVLS”), with an immediate suspension and delisting framework if the requirement is not met for 30 consecutive business days. Unlike most Nasdaq listing standards, the rule provides for no cure period and very limited appeal rights. On July 29, 2026, the SEC temporarily stayed the July 22 order after receiving multiple notices of intention to petition review of the delegated action from parties that would likely be impacted by the new rule. The stay remains in effect until further order of the SEC. The Company is closely monitoring its MVLS and preparing for next steps, should they become necessary. If our securities are delisted from Nasdaq for failure to meeting the continuing MVLS listing standard, our securities will trade on the OTC market and we anticipate that raising needed capital will become more difficult.
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At the Market Sales Agreement
On January 26, 2024, the Company entered into the Sales Agreement with Craig-Hallum. Pursuant to the Sales Agreement, the Company may sell, at its option, shares of its Common Stock through Craig-Hallum, as sales agent. Sales of the Common Stock were made pursuant to the Sales Agreement initially up to an aggregate of $17 million under the Company’s Registration Statement on Form S-3 filed on January 26, 2024 (File No. 333-276725) and declared effective by the SEC on February 1, 2024 (the “Initial Registration Statement”). Additional sales have been, and may continue to be made, pursuant to the Sales Agreement up to an aggregate of $9,476,508 under the Company’s Registration Statement on Form S-3 filed on February 7, 2025 (File No. 333-284775), declared effective by the SEC on February 14, 2025 (the “Additional Registration Statement”) and its accompanying Prospectus Supplement dated February 14, 2025. Subject to the terms and conditions of the Sales Agreement, Craig-Hallum may sell the shares, if any, only by methods deemed to be an “at the market” offering as defined in Rule 415 promulgated under the Securities Act. The Company has agreed to pay Craig-Hallum a sales commission of 2.5% of the gross proceeds for sales under the Sales Agreement and to provide Craig-Hallum with customary indemnification and contribution rights, including for liabilities under the Securities Act. In addition, the Company is required to reimburse Craig-Hallum for certain specified expenses in connection with entering into the Sales Agreement.
In connection with the Sales Agreement, the Company sold 825,268 common shares (24,758,057 prior to the Reverse Stock Split) at various amounts per share to investors for gross proceeds totaling $11,546,949, before deducting sales commissions of $288,921 to placement agent, during the year ended December 31, 2024. The Company also paid the placement agent a fee of $55,000.
During the year ended December 31, 2025, in connection with the Sales Agreement the Company sold 292,495 shares on the post-reverse stock split basis (which includes 206,713 shares that were sold prior to the Reverse Stock Split, originally 6,201,377 shares) of Common Stock at various amounts per share to investors for gross proceeds totaling $3,900,492 before deducting sales commissions of $96,994 to the placement agent. Subsequent to December 31, 2025, the Company sold 1,133,418 shares of Common Stock for net proceeds totaling $3,693,470 after financing charges of $94,705 under the At-the-Market Issuance Sales Agreement as of the date of this report.
As of November 6, 2026, we have sold an aggregate 2,251,181 shares of our Common Stock under the Sales Agreement and may sell up to another $5,298,889 of our Common Stock through Craig-Hallum under the Sales Agreement.
Results of Operations
The results of operations presented below should be reviewed in conjunction with the consolidated financial statements and notes included elsewhere in this Quarterly Report on Form 10-Q. The following table sets forth Cardio’s results of operations data for the periods presented:
Comparisons for the three months ended September 30, 2026 and 2025:
The following table presents summary of consolidated operating results for the three-month periods indicated:
| Three Months Ended September 30, | ||||||||
| 2026 | 2025 | |||||||
| Revenue | ||||||||
| Revenue | $ | 3,590 | $ | 2,855 | ||||
| Operating Expenses | ||||||||
| Sales and marketing | 210,898 | 192,703 | ||||||
| Research and development | 174,250 | 189,049 | ||||||
| General and administrative | 1,342,622 | 1,327,045 | ||||||
| Amortization | 5,979 | 5,655 | ||||||
| Total operating expenses | (1,733,749 | ) | (1,714,452 | ) | ||||
| Other (expense) | (2,172 | ) | (2,939 | ) | ||||
| Net (loss) | $ | (1,732,331 | ) | $ | (1,714,536 | ) | ||
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Comparisons for the nine months ended September 30, 2026 and 2025:
The following table presents summary of consolidated operating results for the nine-month periods indicated:
| Nine Months Ended September 30, | ||||||||
| 2026 | 2025 | |||||||
| Revenue | ||||||||
| Revenue | $ | 11,630 | $ | 11,270 | ||||
| Operating Expenses | ||||||||
| Sales and marketing | 597,793 | 584,530 | ||||||
| Research and development | 466,955 | 486,369 | ||||||
| General and administrative | 3,942,921 | 3,901,649 | ||||||
| Amortization | 17,104 | 59,578 | ||||||
| Total operating expenses | (5,024,773 | ) | (5,032,126 | ) | ||||
| Other (expense) | (8,814 | ) | (11,943 | ) | ||||
| Net (loss) | $ | (5,021,957 | ) | $ | (5,032,799 | ) | ||
Net Loss
Cardio’s net loss for the three months ended September 30, 2026 was $1,732,331 as compared to $1,714,536 for the three months ended September 30, 2025, an increase of $17,795. The increase in net loss was primarily the result of an increase in Selling, and General and Administrative expenses in 2026.
Cardio’s net loss for the nine months ended September 30, 2026 was $5,021,957 as compared to $5,032,799 for the nine months ended September 30, 2025, a decrease of $10,842. The decrease in net loss was primarily the result of a decrease in amortization expense.
Revenue
Cardio had $3,590 and $2,855 in revenue for the three months ended September 30, 2026 and 2025, respectively. The increase in revenue was the result of additional providers onboarded. Cardio had $11,630 and $11,270 in revenue for the nine months ended September 30, 2026 and 2025, respectively.
Sales and Marketing
Expenses related to sales and marketing for the three months ended September 30, 2026, were $210,898 as compared to $192,703 for the three months ended September 30, 2025, an increase of $18,195. The overall increase was due to an increase in sales and marketing efforts in the third quarter of 2026.
Expenses related to sales and marketing for the nine months ended September 30, 2026, were $597,793 as compared to $584,530 for the nine months ended September 30, 2025, increase of $13,263. The overall increase was due to an increase in sales and marketing efforts in the second quarter of 2026. We expect our sales and marketing costs to increase with the ongoing implementation in India, and other planned international expansions.
Research and Development
Research and development expense for the three months ended September 30, 2026 was $174,250 as compared to $189,049 for the three months ended September 30, 2025, a decrease of $14,799 due to the decrease in costs associated with processing patient samples at our internal CLIA lab as opposed to working with a third-party CLIA lab.
Research and development expense for the nine months ended September 30, 2026 was $466,955 as compared to $486,369 for the nine months ended September 30, 2025, a decrease of $19,414. The overall decrease was due to a decrease in lab processing offset by the increase in research and development personnel in the second quarter of 2026. We expect our research and development costs to increase with ongoing and planned studies to generate additional clinical and economic evidence, and to support reimbursement conversations with payers.
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General and Administrative Expenses
General and administrative expenses for the three months ended September 30, 2026, were $1,342,622 as compared to $1,327,045 for the three months ended September 30, 2025, an increase of $15,577. The overall increase is primarily due to an increase in rent and facility expenses, software and web computing fees, and annual franchise taxes expenses, offset by a decrease in legal and professional expense, consulting and contracting expense, and insurance expenses in 2026.
General and administrative expense for the three months ended September 30, 2026 included payroll and related costs of $350,708, rent and other facility costs of $89,565, legal and professional fees of $169,686, consulting and contractor fees of $116,582, insurance expense of $155,546, filing fees of $30,840, transfer agent fees of $22,227, software and web computing expenses of $134,573, board compensation of $49,338, franchise tax of $123,650 and general corporate overhead expenses of $99,907.
General and administrative expense for the three months ended September 30, 2025 included payroll and related costs of $351,238, rent and other facility costs of $67,231, legal and professional fees of $258,796, consulting and contractor fees of $167,012, insurance expense of $158,323, filing fees of $29,410, transfer agent fees of $11,314, software and web computing expenses of $105,620, board compensation of $49,762, investor relations expense of $1,448, franchise tax of $15, and general corporate overhead expenses of $126,876.
General and administrative expenses for the nine months ended September 30, 2026, were $3,942,921 as compared to $3,901,649 for the nine months ended September 30, 2025, an increase of $41,272. The overall increase is primarily due to an increase in rent and facility expenses, software and web computing fees, investor relations expense, and annual franchise taxes expenses, offset by a decrease in legal and professional expense, consulting and contracting expense, and insurance expenses in 2026.
General and administrative expense for the nine months ended September 30, 2026 included payroll and related costs of $1,059,375, rent and other facility costs of $268,849, legal and professional fees of $513,492, consulting and contractor fees of $372,951, insurance expense of $443,514, filing fees of $63,515, transfer agent fees of $38,452, software and web computing expenses of $370,182, board compensation of $148,422, investor relations expense of $38,092, franchise tax expense of $302,117 and general corporate overhead expenses of $323,960.
General and administrative expense for the nine months ended September 30, 2025 included payroll and related costs of $1,041,766, rent and other facility costs of $223,085, legal and professional fees of $770,060, consulting and contractor fees of $424,440, insurance expense of $473,153, filing fees of $71,700, transfer agent fees of $23,250, software and web computing expenses of $355,213, board compensation of $149,152, investor relations expense of $8,948, franchise tax of $240, and general corporate overhead expenses of $360,642.
We expect our general corporate overhead to remain relatively flat. However, we expect an increase in payroll and related costs and other facility costs, including capital expenditure of laboratory equipment, and other laboratory materials, and costs associated with securing a new office lease. Additionally, as a public company, we expect to have to comply with changing legal and exchange requirements, including as to regulations of the SEC and the continued listing requirements of the Nasdaq Capital Market. We incur additional annual expenses related to these matters and, among other things, additional directors’ and officers’ liability insurance, directors’ fees, reporting requirements of the SEC, transfer agent fees, increased auditing and legal fees and similar expenses.
Amortization
Patents are amortized over their estimated useful lives of approximately 14 and 15 years, respectively. Amortization expense related to patents charged to operations was $5,979 and $5,655 for the three months ended September 30, 2026 and 2025, respectively and $17,104 and $54,245 for the nine months ended September 30, 2026 and 2025, respectively. The amortization for the nine months ended September 30, 2025 also included $5,333 amortization for intangible assets, which has been fully amortized during 2025.
Other income (expenses)
Total other expense for the three months ended September 30, 2026, was $(2,172) as compared to $(2,939) for the three months ended September 30, 2025. The total other expense for the three months ended September 30, 2026, consists of interest expense of $2,293 net of interest income of $121. The total other expense for the three months ended September 30, 2025, consists of interest expense of $3,128, net of interest income of $189.
Total other expense for the nine months ended September 30, 2026, was $(8,814) as compared to $(11,943) for the nine months ended September 30, 2025. The total other expense for the nine months ended September 30, 2026, consists of interest expense of $9,172, net of interest income of $358. The total other expense for the nine months ended September 30, 2025, consists of interest expense of $12,509, net of interest income of $566.
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Liquidity and Capital Resources
Liquidity describes the ability of a company to generate sufficient cash flows in the short- and long-term to meet the cash requirements of its business operations, including working capital needs, debt service, acquisitions and investments, and other commitments and contractual obligations. We consider liquidity in terms of cash flows from operations and other sources, and their sufficiency to fund our operations. Historically, our principal sources of liquidity have been proceeds from the issuance of equity.
On January 26, 2024, we entered into the Sales Agreement with Craig-Hallum. Pursuant to the Sales Agreement, we may sell, at our option, shares of our Common Stock through Craig-Hallum, as sales agent. Sales of our Common Stock were made pursuant to the Sales Agreement initially up to an aggregate of $17 million under a shelf registration statement declared effective in February 2024 (File No. 333-276725) and will continue to be made pursuant to the Sales Agreement up to an aggregate of $9,476,508 under a second shelf registration statement declared effective in February 2025 (File No. 333-284775).
As of November 6, 2026, we sold an aggregate 2,251,181 shares of our Common Stock on a Reverse Stock Split-adjusted basis under the Sales Agreement resulting in proceeds to the Company of $18,754,735, net of offering costs. The Company has paid Craig-Hallum $480,890 in sales commissions.
On February 2, 2024 (pre-dating the 1-for-30 reverse stock split effected in May 2025), in accordance with executed subscription agreements with seven accredited investors (the “Subscription Agreements”), we closed on the sale of 561,793 units (the “Units”), with each Unit consisting of (i) one share of the Company’s common stock, $0.00001 par value (the “Common Stock”) and (ii) one six year Common Stock purchase warrant (the “Warrants”), which warrants are exercisable until February 2, 2030 at an exercise price of $1.78 ($53.40 on a post-reverse stock split basis) per share, subject to adjustment for stock splits, reverse stock splits and other similar events of recapitalization, including the 1-for-30 reverse stock split we effected on May 12, 2025. The Units were sold to the investors in a private placement at a sale price of $1.78 ($53.40 on a post-reverse stock split basis) per Unit (the “Private Placement”), resulting in gross proceeds to the Company of $1,000,000, before deducting placement agent fees (10% or $100,000) and other offering expenses. We used the net proceeds from the Private Placement for working capital and general corporate purposes. On a post-reverse stock split basis, the Company issued 18,727 shares and warrants that are exercisable for 18,727 shares, all at an exercise price of $53.40 per share. We have subsequently registered the Private Placement Common Stock and the Common Stock issuable upon the exercise of the Private Placement Warrants on a registration statement on Form S-1 that was declared effective by the SEC on December 3, 2024 and subsequently on September 19, 2025 by way of a post-effective amendment.
We have had, and expect that we will continue to have, an ongoing need to raise additional cash from outside sources to fund our operations and grow our business, given the nominal amount of revenue we have generated since inception, coupled with substantial expenses both for ongoing business operations and to fund expenses incurred as a public company. We expect that our primary cash needs for the remainder of 2026 and for the foreseeable future will be for funding day-to-day operations and working capital requirements, funding our growth strategy and paying expenses incurred in connection with our ongoing FDA submission activities. We explore our financing options on an ongoing basis. However, given recent stock prices and the extreme volatility of our stock, it continues to be challenging to balance cash that could be raised and the dilution that might be required to close a particular transaction. We expect that for the remainder of 2026, we will rely primarily on the ongoing ATM Offering, provided that market conditions are favorable. If our securities are delisted from Nasdaq, raising capital through the sale of securities, by way of the ATM Offering or otherwise, will become much more challenging going forward.
Our long-term future capital requirements will depend on many factors, including revenue growth rate, the timing and the amount of cash received from customers, the expansion of sales and marketing activities, the timing and extent of spending to support investments, including research and development efforts, and the continuing market adoption of our products. In each fiscal year since our inception, we have incurred losses from operations and generated negative cash flows from operating activities. We expect this trend to continue in future periods for the foreseeable future.
Unless we are able to generate significant cash flows from operations, which we do not foresee happening in the near term, we will need to finance our operations through the issuance of additional equity and/or convertible debt securities. Looking forward, we expect we will need to raise additional capital and generate revenues to meet long-term operating requirements. If we raise additional funds through the issuance of equity or convertible debt securities, the percentage ownership of our equity holders could be significantly diluted, particularly at current stock price levels, and these newly-issued securities may have rights, preferences or privileges senior to those of existing equity holders. If we raise additional funds by obtaining loans from third parties, the terms of those financing arrangements may include negative covenants or other restrictions on our business that could impair our operating flexibility and also require us to incur interest expense.
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Working capital requirements are expected to increase in line with the growth of the business. We have no lines of credit or other bank financing arrangements. We anticipate that our principal sources of liquidity, including existing funds and the ATM offering will be sufficient to fund our activities over the next 12 months. In order to have sufficient cash to fund our operations beyond the next 12 months and grow our business, we will need to raise additional funds through the issuance of equity and/or debt. We cannot provide any assurance that we will be successful in doing so.
If we are unable to raise additional capital when desired, our business, financial condition and results of operations would be harmed. Successful transition to attaining profitable operations depends upon achieving a level of revenue adequate to support our business plan, balanced against ongoing expenses. There is no assurance that we will be successful in reaching and sustaining profitability.
The exercise prices of our currently outstanding warrants range from a high of $345 to a low of $53.40 (a high of $11.50 to a low of $1.78 before the Reverse Stock Split) (subject to adjustment) per share of Common Stock. The likelihood that warrant holders will exercise their warrants, and therefore the amount of cash proceeds that we might receive, is dependent upon the trading price of our Common Stock, the last reported sales price for which was $1.645 on November 4, 2026. If the trading price of our Common Stock is less than the respective exercise prices of our outstanding warrants, which has been the case for a substantial period of time, we believe holders of any of our warrants will be unlikely to exercise their warrants. It is unlikely that the warrants will be in the money prior to their respective expiration dates, and as such, the warrants may expire worthless, and we may receive no proceeds from the exercise of warrants. Given the current differential between the trading price of our Common Stock and the Warrant exercise prices and the volatility of our stock price, we are not making strategic business decisions based on an expectation that we will receive any cash from the exercise of warrants. However, we will use any cash proceeds received from the exercise of warrants for general corporate and working capital purposes, which would increase our liquidity. We will continue to evaluate the probability of warrant exercises and the merit of including potential cash proceeds from the exercise of the warrants in our future liquidity projections.
Cash at September 30, 2026 totaled $3,942,882 as compared to $5,110,630 at December 31, 2025, a decrease of $1,167,748. The following table shows Cardio’s cash flows from operating activities, investing activities and financing activities for the stated periods.
| Nine months ended September 30, | ||||||||
| 2026 | 2025 | |||||||
| Net cash used in operating activities | $ | 4,420,474 | $ | 4,364,984 | ||||
| Net cash used in investing activities | 170,954 | 340,951 | ||||||
| Net cash provided by financing activities | 3,423,680 | 3,233,666 | ||||||
Cash Used in Operating Activities
Cash used in operating activities for the nine months ended September 30, 2026 was $4,420,474 as compared to $4,364,984 for the nine months ended September 30, 2025. The cash used in operations during the nine months ended September 30, 2026 is a function of net loss of $5,021,957 adjusted for the following non-cash operating items: depreciation of $132,805, amortization of $153,812, $73,423 in stock-based compensation, a decrease of $4,576 in accounts receivable, a decrease of $394,136 in prepaid expenses and other current assets, an increase of $29,677 in accounts payable and accrued expenses and a decrease in lease liability of $186,946.
The cash used in operations during the nine months ended September 30, 2025 is a function of net loss of $5,032,799 adjusted for the following non-cash operating items: depreciation of $115,843, amortization of $188,208, $86,152 in stock-based compensation, a decrease of $7,391 in accounts receivable, a decrease of $383,650 in prepaid expenses and other current assets, an increase of $63,073 in accounts payable and accrued expenses and a decrease in lease liability of $176,502.
Cash Used in Investing Activities
Cash used in investing activities for the nine months ended September 30, 2026 was $170,954 compared to $340,951 for the nine months ended September 30, 2025. The cash used in investing activities for the nine months ended September 30, 2026 and 2025 was due to purchases of property and equipment and patent costs incurred.
Cash Provided by Financing Activities
Cash provided by financing activities for the nine months ended September 30, 2026 was $3,423,680 as compared to $3,233,666 for the nine months ended September 30, 2025. Cash provided by financing activities for the nine months ended September 30, 2026 was due to $3,693,470 in net proceeds from the sale of common stock offset by $269,790 in payments of finance agreement. Cash provided by financing activities for the nine months ended September 30, 2025 was due to $3,540,430 in net proceeds from the sale of common stock offset by $306,764 in payments of finance agreement.
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Off-Balance Sheet Financing Arrangements
We did not have any off-balance sheet arrangements as of September 30, 2026.
Contractual Obligations
As of September 30, 2026, we do not have any ongoing contractual obligations that would have a negative impact on liquidity and cash flows. However, if one or more of the following potential claims that arise from contracts we have entered into were pursued against us, there is the potential that we could see a negative impact on liquidity and cash flows, depending on the outcome.
Prior Relationships of Cardio with Boustead Securities, LLC
At the commencement of efforts to pursue what ultimately ended in the terminated business acquisition, Legacy Cardio entered into a Placement Agent and Advisory Services Agreement (the “Placement Agent Agreement”), dated April 12, 2021, with Boustead Securities, LLC (“Boustead Securities”). This agreement was terminated in April 2022, when Legacy Cardio terminated the underlying agreement and plan of merger and the accompanying escrow agreement relating to that proposed business acquisition after efforts to complete the transaction failed, despite several extensions of the closing deadline.
Under the terminated Placement Agent Agreement, Legacy Cardio agreed to certain future rights in favor of Boustead Securities, including (i) a two-year tail period during which Boustead Securities would be entitled to compensation if Cardio were to close on a transaction (as defined in the Placement Agent Agreement) with any party that was introduced to Legacy Cardio by Boustead Securities; and (ii) a right of first refusal to act as the Company’s exclusive placement agent for 24-months from the end of the term of the Placement Agent Agreement (the “right of first refusal”). Cardio has taken the position that due to Boustead Securities’ failure to perform as contemplated by the Placement Agent Agreement, these provisions purporting to provide future rights are null and void.
Boustead Securities responded to the termination of the Placement Agent Agreement by disputing Legacy Cardio’s contention that it had not performed under the Placement Agent Agreement because, among other things, Boustead Securities had never sought out prospective investors. In its response, Boustead Securities included a list of funds that they had supposedly contacted on Legacy Cardio’s behalf. While Boustead Securities’ contention appears to contradict earlier communications from Boustead Securities in which they indicated that they had not made any such contacts or introductions, Boustead Securities is currently contending that they are due success fees for two years following the termination of the Placement Agent Agreement on any transaction with any person on the list of supposed contacts or introductions. Legacy Cardio strongly disputes this position. Notwithstanding the foregoing, the Company has not consummated any transaction, as defined, with any potential party that purportedly was a contact of Boustead Securities in connection with the Placement Agent Agreement and has no plans to do so at any time during the tail period. No legal proceedings have been instigated by either party.
The Benchmark Company, LLC Right of First Refusal
The Company completed a business combination with Mana on October 25, 2022. In connection with the proposed business combination, by agreement dated May 13, 2022, Mana engaged The Benchmark Company, LLC (“Benchmark”) as its M&A advisor. Upon closing of the business combination, Legacy Cardio assumed the contractual engagement entered into by Mana. On November 14, 2022, Cardio and Benchmark entered into Amendment No. 1 Engagement Letter (the “Amendment Engagement”). Pursuant to the Amendment Engagement, Benchmark has been granted a right of first refusal to act as lead or joint-lead investment banker, lead or joint-lead book-runner and/or lead or joint-lead placement agent for all future public and private equity and debt offerings through October 25, 2023. Based on the right of first refusal, Benchmark alleges that it is owed damages because the Company entered into the Yorkville Convertible Debenture Transaction without first offering Benchmark the right to serve as the lead or joint-lead placement agent for the transaction. No legal proceedings have been instigated.
Demand Letter and Potential Mootness Fee Claim
On June 25, 2022, a plaintiffs’ securities law firm sent a demand letter to the Company alleging that the Company’s Registration Statement on Form S-4 filed (the “S-4 Registration Statement”) with the Securities and Exchange Commission (“SEC”) on May 31, 2022 omitted material information with respect to the Business Combination and demanding that the Company and its Board of Directors immediately provide corrective disclosures in an amendment or supplement to the Registration Statement. Subsequent thereto, the Company filed amendments to the S- 4 Registration Statement on July 27, 2022, August 23, 2022, September 15, 2022, October 4, 2022 and October 5, 2022 in which it responded to various comments of the SEC staff and otherwise updated its disclosure. In October 2022, the SEC completed its review and declared the S-4 registration statement effective on October 6, 2022. On February 23, 2023 and February 27, 2023, plaintiffs’ securities law firm contacted the Company’s counsel asking who will be negotiating a mootness fee relating to the purported claims set forth in the June 25, 2022 demand letter. The Company vigorously denies that the S-4 Registration Statement, as amended and declared effective, is deficient in any respect and believes that no additional supplemental disclosures are material or required. The Company believes that the claims asserted in the Demand Letter are without merit and that no further disclosure was required to supplement the S-4 Registration Statement under applicable laws. As of the date of filing of this Quarterly Report on Form 10-Q, no lawsuit has been filed against the Company by that firm.
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Northland Securities, Inc.
In January 2024, following the Company’s termination of its agreement with Yorkville and in connection with the Company’s recent at the market offering and/or its February 2024 private placement, a managing director of Northland Securities, Inc. (“Northland”) contacted the Company claiming the right to be paid a fee of approximately $150,000 pursuant to the agreement of March 1, 2023 between the Company and Northland regarding the Yorkville financing. Subsequently, the Company has been advised by another representative of Northland that Northland would not proceed with any such claim. The Company does not believe that it owes Northland any sum based on the termination of the Yorkville Securities Purchase Agreement and the subsequent financing transactions.
The Company cannot preclude the possibility that claims or lawsuits brought relating to any alleged securities law violations or breaches of fiduciary duty could potentially require significant time and resources to defend and/or settle and distract its management and board of directors from focusing on its business.
Directors and Officers Insurance
In connection with the Company’s various contractual obligations arising in the ordinary course of business, the Company is required to maintain insurance coverage for claims against its directors and officers.
The University of Iowa Research Foundation Exclusive License Agreement
The Company has a worldwide exclusive license agreement with the University of Iowa Research Foundation (UIRF) relating to its patent and patent-pending technology (the “Exclusive License Agreement”). Under the terms of the Exclusive License Agreement, the Company will have to pay each of: (1) 1% of either: (i) the aggregate consideration (and trailing consideration, if any) for a liquidation event; or (ii) pre-money valuation for an initial public offering, (the “Equity Rights”) (2) 2% of annual net sales, and (3) 15% of non-royalty fees paid to licensee if it enters into one or more sublicensing agreements. Upon the Closing of the Business Combination, the Company issued 3,639 (109,170 prior to the Reverse Stock Split) Shares of Common Stock to UIRF in accordance with the Equity Rights under the Exclusive License Agreement. The Company has had minimal sales of $80,261 to date and has paid 2% or approximately $1,780 in total royalty fees to UIRF under the exclusive license.
Critical Accounting Policies and Significant Judgments and Estimates
Our consolidated financial statements are prepared in accordance with GAAP in the United States. The preparation of our consolidated financial statements and related disclosures requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenue, costs and expenses and the disclosure of contingent assets and liabilities in our financial statements. We base our estimates on historical experience, known trends and events and various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Management evaluates our estimates and assumptions on an ongoing basis. Our actual results may differ from these estimates under different assumptions or conditions.
Our senior management has reviewed the critical accounting policies and estimates with the Audit Committee of our Board of Directors. For a description of the Company’s critical accounting policies and estimates, refer to “Part II—Item 7—Management’s Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting Policies and Estimates” in our most recent Annual Report on Form 10-K for the year ended December 31, 2025, which was filed with the SEC on March 13, 2026. Critical accounting policies are those that are most important to the portrayal of our financial condition, results of operations and cash flows and require management’s most difficult, subjective and complex judgments, often as a result of the need to make estimates about the effect of matters that are inherently uncertain. If actual results were to differ significantly from estimates made, the reported results could be materially affected. There were no significant changes to our critical accounting policies and estimates during the three and nine months ended September 30, 2026.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Pursuant to Item 305(e) of Regulation S-K, the Company is not required to provide the information required by this Item as it is a “smaller reporting company.”
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ITEM 4. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
Under the supervision and with the participation of our management, including our principal executive officer and principal financial and accounting officer, we conducted an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, as of the end of the period covered by this Quarterly Report. Based on this evaluation, our principal executive officer and principal financial and accounting officer have concluded that during the period covered by this Report, our disclosure controls and procedures were not effective. As a result, we performed additional analysis as deemed necessary to ensure that our financial statements were prepared in accordance with U.S. generally accepted accounting principles. Based on such additional analysis, management believes that the financial statements included in this Form 10-Q present fairly in all material respects our financial position, results of operations and cash flows for the period presented.
Disclosure controls and procedures are designed to ensure that information required to be disclosed by us in our Exchange Act reports is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our principal executive officer and principal financial officer or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.
We do not expect that our disclosure controls and procedures will prevent all errors and all instances of fraud. Disclosure controls and procedures, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the disclosure controls and procedures are met. Further, the design of disclosure controls and procedures must reflect the fact that there are resource constraints, and the benefits must be considered relative to their costs. Because of the inherent limitations in all disclosure controls and procedures, no evaluation of disclosure controls and procedures can provide absolute assurance that we have detected all our control deficiencies and instances of fraud, if any. The design of disclosure controls and procedures also is based partly on certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions.
Management’s Report on Internal Controls Over Financial Reporting
Management identified the following material weakness in our internal control over financial reporting: inadequate segregation of duties within the financial reporting process due to our limited staff resources, which increases the risk of errors or unauthorized transactions. This weakness was identified in our assessment during the nine months ended September 30, 2026.
Inadequate Segregation of Duties. This material weakness did not result in a material misstatement of the Company’s consolidated financial statements for the periods presented.
Remediation Plans. To address the material weakness related to inadequate segregation of duties, we explored the following remediation measures during the nine months ended September 30, 2026:
| • | Implementation of Approval Matrices: We are developing a formalized approval matrix requiring dual authorization for significant transactions, such as payments above a specified threshold or changes to the general ledger, to enhance oversight despite staffing constraints. |
| • | Automation of Key Processes: We are exploring and deploying accounting software with built-in controls to automate certain financial processes, reducing reliance on manual interventions and minimizing error risks. |
These remediation efforts are in progress and have not yet been fully implemented or tested for effectiveness as of September 30, 2026.
While we believe that these efforts will continue to improve our internal control over financial reporting, our remediation efforts are ongoing and will require validation. The actions that we are taking are subject to ongoing senior management review. We will not be able to conclude whether the steps we are taking will fully remediate the remaining material weakness in our internal control over financial reporting until we have completed our remediation efforts and subsequent evaluation of their effectiveness. We may also conclude that additional measures may be required to remediate the material weakness in our internal control over financial reporting.
Changes in Internal Control over Financial Reporting
There has not been any change in our internal control over financial reporting that occurred during the three and nine months ended September 30, 2026 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
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PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
From time-to-time, the Company may be involved in various civil actions as part of its normal course of business. The Company is not a party to any litigation that is material to ongoing operations as defined in Item 103 of Regulation S-K as of the period ended September 30, 2026.
ITEM 1A. RISK FACTORS
There have been no material changes to the risk factors previously described in Item 1A of Part I of our Annual Report on Form 10-K for the fiscal year ended December 31, 2025, filed with the SEC on March 13, 2026, and in Item 1A of Part II of our Quarterly Report on Form 10-Q for the six months ended June 30, 2026, filed with the SEC on August 7, 2026. These risk factors, collectively, describe some of the assumptions, risks, uncertainties and other factors that could adversely affect our business or that could otherwise result in changes that differ materially from our expectations. We may disclose changes to such risk factors or disclose additional risk factors from time to time in our future filings with the SEC, including as set forth below. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition or future results.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. MINE SAFETY DISCLOSURES
None.
ITEM 5. OTHER INFORMATION
None of the Company’s directors or officers
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ITEM 6. EXHIBITS
The following exhibits are filed as part of, or incorporated by reference into, this Quarterly Report on Form 10-Q.
| Incorporation by Reference | ||||||||||
| Exhibit Number | Description | Form | Exhibit | Filing Date | ||||||
| 2.1 | Agreement and Plan of Merger dated as of May 27, 2022 by and among Mana Capital Acquisition Corp., Mana Merger Sub, Inc., Cardio Diagnostics, Inc., and Meeshanthini (Meesha) Dogan, as representatives of the shareholders (included as Annex A to the Proxy Statement/Prospectus) | 8-K | 2.1 | 5/31/2022 | ||||||
| 2.2 | Amendment dated September 15, 2022 to Agreement and Plan of Merger dated as of May 27, 2022 by and among Mana Capital Acquisition Corp., Mana Merger Sub, Inc., Cardio Diagnostics, Inc., and Meeshanthini (Meesha) Dogan, as representatives of the shareholders | 8-K | 2.1 | 9/15/22 | ||||||
| 2.3 | Waiver Agreement dated as of October 25, 2022 with respect to Agreement and Plan of Merger dated as of May 27, 2022, as amended on September 15, 2022 | 8-K | 2.3 | 10/31/22 | ||||||
| 3.1 | Third Amended and Restated Certificate of Incorporation of Cardio Diagnostics Holdings, Inc., dated May 30, 2023 | 8-K | 3.1 | 5/30/23 | ||||||
| 3.2 | By-laws | S-1 | 3.3 | 10/19/21 | ||||||
| 3.3 | Certificate of Amendment to the Third Amended and Restated Certificate of Incorporation of Cardio Diagnostics Holdings, Inc. dated May 12, 2025 | 8-K | 3.1 | 5/13/2025 | ||||||
| 4.1 | Specimen Stock Certificate | S-1/A | 4.2 | 11/10/21 | ||||||
| 4.2 | Specimen Warrant Certificate (contained in Exhibit 4.3) | 8-K | 4.1 | 11/26/21 | ||||||
| 4.3 | Warrant Agreement, dated November 22, 2021, by and between the Company and Continental Stock Transfer & Trust Company, as warrant agent | 8-K | 4.1 | 11/26/21 | ||||||
| 4.4 | Description of Securities | 10-K | 4.5 | 4/1/24 | ||||||
| 31.1* | Certification of Principal Executive Officer Pursuant to Exchange Act Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | |||||||||
| 31.2* | Certification of Principal Financial Officer Pursuant to Exchange Act Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | |||||||||
| 32.1+ | Certification of Principal Executive Officer pursuant to 18 U.S. C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 | |||||||||
| 32.2+ | Certification of Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 | |||||||||
| 101.INS* | Inline XBRL Instance Document (the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document) | |||||||||
| 101.SCH* | XBRL Taxonomy Extension Schema Document. | |||||||||
| 101.CAL* | XBRL Taxonomy Extension Calculation Linkbase Document | |||||||||
| 101.DEF* | XBRL Taxonomy Extension Definition Linkbase Document | |||||||||
| 101.LAB* | XBRL Taxonomy Extension Label Linkbase Document | |||||||||
| 101.PRE* | XBRL Taxonomy Extension Presentation Linkbase Document | |||||||||
| 104* | Cover Page Interactive Date File (embedded with the Inline XBRL document) | |||||||||
| * | Filed herewith. | |
| + |
Furnished herewith. The certifications attached as Exhibit 32.1 and Exhibit 32.2 that accompany this Quarterly Report on Form 10-Q are deemed furnished and not filed with the Securities and Exchange Commission and are not to be incorporated by reference into any filing of Cardio Diagnostics Holdings, Inc. under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, whether made before or after the date of this Quarterly Report on Form 10-Q, irrespective of any general incorporation language contained in such filing.
|
| 30 |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| Cardio Diagnostics Holdings, Inc. | ||
| Date: November 6, 2026 | By: | /s/ Elisa Luqman |
| Elisa Luqman | ||
| Chief Financial Officer | ||
| 31 |