CDIO 10-Q — Smart Summary

• Business description: Cardio Diagnostics Holdings, Inc. and its wholly-owned subsidiary Cardio Diagnostics, Inc. (Legacy Cardio) develop and commercialize a patent-pending AI-driven DNA biomarker testing technology (Core Technology) for cardiovascular disease invented at the University of Iowa, targeting coronary heart disease (CHD), stroke, heart failure, and diabetes.
• Reverse stock split: On May 12, 2025, the Company effected a 1-for-30 reverse stock split, reducing shares of Common Stock outstanding from 52,160,487 to 1,738,683 (exclusive of 27 whole shares issued for rounding), with authorized shares remaining at 300 million; all prior-period share and per-share amounts in the financial statements have been retroactively adjusted to reflect the split.
• Interim basis: The unaudited condensed consolidated financial statements cover the three months ended March 31, 2026 and 2025, prepared under Form 10-Q and Rule 8-03 of Regulation S-X; the Annual Report on Form 10-K for the year ended December 31, 2025 was filed with the SEC on March 13, 2026.

• Single segment: The Company has one operating segment (product testing); 100% of revenues are generated from cardiovascular disease product testing, principally the Epi+Gen CHD and PrecisionCHD tests, with the CODM reviewing results solely by monthly revenue and operating results.
• R&D and advertising costs: R&D costs expensed as incurred were $129,776 and $118,784 for the three months ended March 31, 2026 and 2025, respectively; advertising costs expensed as incurred were $18,920 and $41,820 for the same periods.
• FDIC exposure: The Company had no cash equivalents as of March 31, 2026 or December 31, 2025; cash balances in excess of the $250,000 FDIC insurance limit were approximately $6.7M and $4.8M as of March 31, 2026 and December 31, 2025, respectively.
• Reclassification: Prior period amounts for sales and marketing, R&D, and general and administrative under operating expenses on the consolidated statements of operations were reclassified to conform with the 2026 fiscal year presentation.

Depreciation expense: $44.2M was charged to operations for the three months ended March 31, 2026, compared to $37.7M for the three months ended March 31, 2025.

• Patent portfolio: As of March 31, 2026, the portfolio includes 7 patent families; the first family is owned solely by UIRF and exclusively licensed by Cardio, with granted patents in the US (2), EU (validated in the United Kingdom, France, Germany, Italy, Switzerland, Ireland and Hong Kong), China, Australia, India, and Japan, plus other pending applications; patent families two through seven consist of pending applications only.
• Capitalized patent costs: Legal fees associated with the patents totaled $929,586 and $873,182, net of accumulated amortization of $72,352 and $66,820, as of March 31, 2026 and December 31, 2025, respectively, and are carried as patent costs on the consolidated balance sheets; patents are amortized over estimated useful lives of approximately 14 and 15 years, respectively.
• Amortization expense: Amortization charged to operations was $5,532 for the three months ended March 31, 2026, compared to $41,438 for the three months ended March 31, 2025.

• Lease portfolio: The Company holds 2 operating leases — office space in Chicago, Illinois (commenced August 1, 2023, expiring November 30, 2026, initial monthly rent of $12,847 increasing ~2% every August starting 2024) and a laboratory in Iowa City, Iowa (commenced August 1, 2023, expiring November 30, 2028, monthly rent of $8,505 or $102,060 annually commencing December 1, 2023); rent was abated August–November 2023 on both leases.
• Tenant Improvement Allowance: The Iowa City landlord provided a one-time TIA of up to $50 per rentable square foot, capped at $253,000, which the Company received in full on January 16, 2024 and accounted for as a lease incentive under ASC Topic 842.
• Balance sheet: As of March 31, 2026, operating lease ROU assets, net were $214,685; current portion of operating lease liabilities was $199,854; and operating lease liabilities, net of current portion were $164,529 (vs. $259,565, $237,607, and $188,222, respectively, at December 31, 2025); weighted-average remaining lease terms were 0.67 years and 2.67 years as of March 31, 2026.
• Cash flows and rental expense: Consolidated rental expense was $60,831 and $57,586 for the three months ended March 31, 2026 and 2025, respectively; operating cash flows from operating leases were $65,610 (2026) and $64,827 (2025); reduction of operating lease liabilities was $61,446 (2026) and $58,010 (2025).

• Prior agreement (FY2024): On October 25, 2024, the Company financed Directors and Officers insurance premiums of $451,124 (recorded in prepaid expenses) by borrowing $383,455 payable in 10 monthly installments at 8.80% interest through August 25, 2025; as of October 31, 2025, this agreement was paid in full and premiums were fully amortized.
• Current agreement (FY2025): On October 25, 2025, the Company entered a new premium financing arrangement for $337,238, payable in 10 monthly installments at 7.35% through August 25, 2026, with total premiums of $396,750 recorded in prepaid expenses and amortized over the policy life through October 25, 2026.
• Outstanding balances: The finance agreement payable was $168,619 at March 31, 2026 and $269,790 at December 31, 2025; the unamortized balance of Directors and Officers insurance premiums was $226,093 at March 31, 2026 and $323,922 at December 31, 2025.

Anti-dilutive treatment: All potentially dilutive shares have been excluded from the diluted net loss per share calculation for both the three months ended March 31, 2026 and 2025, as inclusion would be anti-dilutive; share counts are presented on a post-reverse stock split basis.

• 2022 Plan capacity: The 2022 Equity Incentive Plan has an aggregate post-reverse-split issuance capacity of 239,920 shares; after 157,140 options granted and exercisable and 14,972 shares settled in RSUs to independent directors and advisors in 2023–2025, 67,808 shares remained available at March 31, 2026.
• ATM equity issuances: During the three months ended March 31, 2026, the Company sold 1,133,418 shares under its At-the-Market Issuance Sales Agreement for gross proceeds of $3,788,175 before sales commissions of $94,705; in the comparable prior-year period it sold 206,713 shares for gross proceeds of $3,511,040 before commissions of $87,256.
• Options granted: On March 31, 2026, 12,820 options were granted to the board of directors at an exercise price of $1.95 per share, expiring March 31, 2036, immediately vested and valued at $24,733 using Black-Scholes (risk-free rate 4.3601%, volatility 157%); on March 31, 2025, 2,525 options were granted at $9.90 per share, valued at $24,612 (risk-free rate 4.3908%, volatility 148%).
• Warrants unchanged: 284,292 warrants remain outstanding at March 31, 2026 with a weighted average exercise price of $272.26 and weighted average remaining contractual life of 1.66 years; no warrant activity occurred in either the Q1 2026 or Q1 2025 periods.

Commitments

• UIRF Exclusive License Agreement (ongoing): Worldwide exclusive license requires payment of 2% of annual net sales, 1% equity rights on liquidation/IPO, and 15% of non-royalty sublicensing fees; $1.4M paid in total royalties to date on $71.3M in sales.
• Benchmark right of first refusal ($665,000 paid): Company paid Benchmark $230,000 and $435,000 per Amendment Engagement; Benchmark alleges additional damages over Yorkville transaction exclusion, no legal proceedings filed.

Legal Proceedings

• Boustead Securities dispute (terminated April 2022): Boustead claims success fees for two-year tail period on contacts made under terminated Placement Agent Agreement dated April 12, 2021; Company disputes liability, no legal proceedings instigated.
• Demand Letter / mootness fee claim (June 25, 2022): Plaintiffs' firm alleged S-4 Registration Statement omitted material information and sought mootness fee; Company denies deficiency, no lawsuit filed as of filing date.
• Northland Securities (~$150,000 claim, January 2024): Managing director claimed ~$150,000 fee under March 1, 2023 agreement related to Yorkville financing; subsequently advised by another Northland representative that no claim would be pursued, no legal proceedings instituted.

• Business overview: Cardio develops and commercializes AI-driven, epigenetics-based clinical tests for cardiovascular disease, including coronary heart disease (CHD), stroke, heart failure, and diabetes, using its Multi-Omics Engine™; it believes it is the first company to commercialize epigenetics-based clinical tests for cardiovascular disease.
• Product portfolio: Launched Epi+Gen CHD™ (2021), PrecisionCHD™ (March 2023), CardioInnovate360™ (May 2023, RUO), and HeartRisk™ (February 2024); Epi+Gen CHD™ and PrecisionCHD™ are categorized as laboratory-developed tests (LDTs).
• Q1 2026 operational progress: In the quarter ended March 31, 2026, the Company completed scheduled Heart Health Fairs at YMCA of East Tennessee and Southdale YMCA, advanced India implementation with Aimil Ltd and Dr. Lal Path Labs, completed setup of a new high-complexity CLIA lab (no deficiencies found), received out-of-state licenses from California, Maryland, Pennsylvania, and Rhode Island, commenced patient sample testing at the new facility, and is no longer reliant on a third-party lab for patient sample processing.
• Commercialization timeline: Sales and partnership cycles can be as long as 24 months; the Company notes that broad clinical adoption of novel diagnostics typically spans multiple years and in some cases may require a decade or more from initial development to widespread utilization, driven by regulatory requirements, reimbursement/coverage determinations from CMS and commercial payors, physician adoption, and workflow integration.
• Strategic priorities: Include developing additional tests for stroke, congestive heart failure, and diabetes; expanding reimbursement via CPT PLA codes with government and commercial payors; growing adoption in health systems and self-insured employers; exploring international expansions including potential local manufacturing in India; and pursuing potential strategic partnerships and/or acquisitions of synergistic companies.

• ATM structure: On January 26, 2024, the Company entered into an at-the-market Sales Agreement with Craig-Hallum (2.5% sales commission on gross proceeds), initially authorizing up to $17M under Registration Statement No. 333-276725 (effective February 1, 2024), with additional capacity of $9,476,508 under Registration Statement No. 333-284775 (effective February 14, 2025).
• 2024 issuances: During the year ended December 31, 2024, the Company sold 825,268 common shares (24,758,057 pre-Reverse Stock Split) for gross proceeds of $11,546,949, before deducting sales commissions of $288,921 and a placement agent fee of $55,000.
• 2025 and subsequent issuances: During the year ended December 31, 2025, the Company sold 292,495 shares for gross proceeds of $3,900,492 before deducting sales commissions of $96,994; subsequent to December 31, 2025 and as of the filing date, an additional 1,133,418 shares were sold for net proceeds of $3,693,470 after financing charges of $94,705.
• Remaining capacity: As of May 15, 2026, the Company has sold an aggregate 2,251,181 shares under the Sales Agreement and may sell up to another $5,298,889 of Common Stock through Craig-Hallum.

• FDA final rule (May 2024): FDA published a final rule on May 6, 2024 amending the definition of an IVD device to include LDTs, subjecting them to full medical device requirements under the Federal Food, Drug, and Cosmetic Act — including premarket authorization (510(k), de novo, or PMA), postmarket registration, medical device reporting, quality system requirements, and labeling — with phased enforcement beginning May 6, 2025; enforcement discretion was to apply to currently marketed LDTs first offered prior to May 6, 2024 (for most quality system and premarket authorization requirements if unmodified or only limitedly modified) and to LDTs approved by NYS-CLEP.
• Rule rescinded (September 2025): On September 19, 2025, FDA formally rescinded the May 2024 final rule following a March 31, 2025 federal court ruling in the U.S. District Court for the Eastern District of Texas, which found FDA exceeded its authority; LDT oversight reverted to CLIA, and the filing notes there has been no further pursuit by the current administration.

• Net loss: Net loss for the three months ended March 31, 2026 was $1,788,158 versus $1,635,064 for the three months ended March 31, 2025, an increase of $153,094, driven primarily by higher General and Administrative expenses mostly related to annual franchise taxes.
• Revenue: Revenue was $2,680 for the three months ended March 31, 2026 versus $940 for the three months ended March 31, 2025, with the increase attributed to new providers onboarding and additional usage of tests by current provider and employer clients; management notes a one to three quarter lag from onboarding to ramping up test usage.
• G&A detail: G&A of $1,455,497 for Q1 2026 included payroll and related costs of $353,955, legal and professional fees of $229,255, consulting and contractor fees of $144,835, insurance expense of $146,354, franchise tax of $178,467, software and web computing expenses of $90,025, rent and other facility costs of $85,557, board compensation of $49,733, investor relations expense of $38,092, filing fees of $17,250, transfer agent fees of $10,110, and general corporate overhead of $111,864.
• Amortization and other expense: Amortization fell sharply to $5,532 from $45,438, as the $4,000 intangible asset component was fully amortized during 2025; total other expense improved to $(3,321) from $(4,504), consisting of interest expense of $3,439 net of interest income of $118 in the current period.

• Cash position: Cash at March 31, 2026 totaled $7,077,021 compared to $5,110,630 at December 31, 2025, an increase of $1,966,391, driven primarily by financing activity.
• ATM offering — primary liquidity source: As of May 15, 2026, the company sold an aggregate 2,251,181 shares (Reverse Stock Split-adjusted) under the Sales Agreement with Craig-Hallum, generating net proceeds of $18,754,735 and paying $480,890 in sales commissions; remaining capacity under the Additional Registration Statement is $9,476,508. Management anticipates relying primarily on the ongoing ATM offering for the remainder of 2026, subject to favorable market conditions.
• Warrant proceeds — not relied upon: Outstanding warrant exercise prices range from a high of $345 to a low of $53.40 per share versus a last reported Common Stock price of $1.68 on May 14, 2026; management states it is not making strategic business decisions based on an expectation of receiving any cash from warrant exercises.
• Going-concern outlook: The company has incurred losses from operations and negative operating cash flows since inception and expects this trend to continue; management anticipates existing funds and the ATM offering will be sufficient for the next 12 months but states additional equity and/or debt financing will be required to fund operations beyond that period, with no assurance such financing will be available.

• No ongoing obligations: As of March 31, 2026, the Company states it has no ongoing contractual obligations that would negatively impact liquidity and cash flows, but identifies several potential contingent claims from prior contracts that could affect liquidity depending on outcome.
• Boustead Securities dispute: Legacy Cardio terminated a Placement Agent Agreement with Boustead Securities in April 2022; Boustead contends it is owed success fees for a two-year tail period on transactions with any party it purportedly contacted, a position the Company strongly disputes; no legal proceedings have been instigated by either party, and the Company states it has consummated no transaction with any party on Boustead's list and has no plans to do so during the tail period.
• Benchmark and mootness fee claims: Benchmark Company, LLC alleges damages because the Company entered the Yorkville Convertible Debenture Transaction without first offering Benchmark its contractual right of first refusal as lead placement agent (through October 25, 2023); separately, a plaintiffs' securities law firm sent a demand letter on June 25, 2022 alleging omissions in the S-4 Registration Statement and subsequently sought negotiation of a mootness fee, which the Company vigorously denies is owed; no lawsuit has been filed in either matter.
• UIRF license and Northland fee: Under its exclusive license with the University of Iowa Research Foundation, the Company owes 2% of annual net sales and 15% of non-royalty sublicensing fees, and has paid approximately $1,400 in total royalty fees on minimal cumulative sales of $71,311; Northland Securities claimed a fee of approximately $150,000 related to the Yorkville financing, but a Northland representative subsequently advised the Company that Northland would not proceed with the claim.