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What changed in Cardio Diagnostics Holdings, Inc.'s 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of Cardio Diagnostics Holdings, Inc.'s 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+474 added−508 removedSource: 10-K (2024-04-01) vs 10-K (2023-03-31)

Top changes in Cardio Diagnostics Holdings, Inc.'s 2023 10-K

474 paragraphs added · 508 removed · 305 edited across 5 sections

Item 1. Business

Business — how the company describes what it does

130 edited+65 added−52 removed170 unchanged
Biggest changeA key defining characteristic of PrecisionCHD™ is its accompanying provider-only Actionable Clinical Intelligence ™ platform, which maps a patient’s unique biomarker profile onto modifiable risk factors such as diabetes, hypertension, hypercholesterolemia, and smoking, known to be critical drivers of coronary heart disease. 12 Cardio intends to accelerate the adoption of Epi+Gen CHD™ and PrecisionCHD™ by: · developing strategic clinical partnerships to reach as many patients as possible; · leveraging industry organizations to engage and educate providers; · launching a piloting program to for innovative providers and key strategic partners; and · developing a customized customer portal to reduce transaction friction.
Biggest changeBoth Epi+Gen CHD and PrecisionCHD are accompanied by our provider-only Actionable Clinical Intelligence™ platform, which maps a patient’s unique biomarker profile and other information onto modifiable factors such as diabetes, hypertension, hypercholesterolemia and smoking, known to be critical drivers of coronary heart disease.
We protect our proprietary information, which includes, but is not limited to, trade secrets, know-how, trademarks and copyrights. Our future success depends on protecting that knowledge, obtaining trademarks on our products, copyright on key materials, and avoiding infringing on the IP rights of others.
We protect our proprietary information, which includes, but is not limited to, trade secrets, know-how, and copyrights. Our future success depends on protecting that knowledge, obtaining trademarks on our products, copyright on key materials, and avoiding infringing on the IP rights of others.
Similarly, with PrecisionCHD ™ , innovative health systems are able to help test their patients detect CHD early with a simple blood test, potentially leading to better patient outcomes. · Physician-Directed Channels, Including Concierge Practices Early adoption is driven by practices committed to innovation in medicine for patients who are more focused on preventive health and wellness and have the financial means to pay out-of-pocket for concierge subscription services.
Similarly, with PrecisionCHD™, innovative health systems are able to help test their patients detect CHD earlier with a simple blood test, potentially leading to better patient outcomes. · Physician-Directed Channels, Including Concierge Practices Early adoption is driven by practices committed to innovation in medicine for patients who are more focused on preventive health and wellness and have the financial means to pay out-of-pocket for concierge subscription services.
Failure to comply with regulations could lead to adverse judicial or administrative action against us and/or the telemedicine providers we work with, civil or criminal penalties, receipt of cease-and-desist orders from state regulators, loss of provider licenses, the need to make changes to the terms of engagement with any telemedicine company we contract with that interfere with our business and other materially adverse consequences.
Failure to comply with regulations could lead to adverse judicial or administrative action against us and/or the providers we work with, civil or criminal penalties, receipt of cease-and-desist orders from state regulators, loss of provider licenses, the need to make changes to the terms of engagement with any telemedicine company or provider organization we contract with that interfere with our business and other materially adverse consequences.
The test for prevalent coronary heart disease, whose basis was published in 2018, is well underway, and we expect this test to become a strong competitor for other methods of establishing current CHD, such as exercise treadmill testing, and for monitoring response to CHD treatment. 19 In summary, the cardiovascular diagnostic space is extremely competitive and fast moving.
The test for prevalent coronary heart disease, whose basis was published in 2018, is well underway, and we expect this test to become a strong competitor for other methods of establishing current CHD, such as exercise treadmill testing, and for monitoring response to CHD treatment. In summary, the cardiovascular diagnostic space is extremely competitive and fast moving.
The issued claims in the EP patent are directed to compositions ( e.g ., a kit) for determining the methylation status of at least one CpG dinucleotide and a genotype of at least one SNP that includes at least one primer that detects the presence or absence of methylation in a particular region of the genome (referred to as cg26910465) and at least one primer that detects a first SNP in a particular region of the genome (referred to as rs10275666) or another SNP in linkage disequilibrium with the first SNP.
The issued claims in the EP patent are similarly directed to compositions (e.g., a kit) for determining the methylation status of at least one CpG dinucleotide and a genotype of at least one SNP that includes at least one primer that detects the presence or absence of methylation in a particular region of the genome (referred to as cg26910465) and at least one primer that detects a SNP in a particular region of the genome (referred to as rs10275666) or another SNP in linkage disequilibrium with the first SNP.
In light of the HIPAA Omnibus Final Rule, recent enforcement activity, and statements from HHS, we expect increased federal and state HIPAA privacy and security enforcement efforts. 29 HIPAA also required HHS to adopt national standards establishing electronic transaction standards that all healthcare providers must use when submitting or receiving certain healthcare transactions electronically.
In light of the HIPAA Omnibus Final Rule, recent enforcement activity, and statements from HHS, we expect increased federal and state HIPAA privacy and security enforcement efforts. HIPAA also required HHS to adopt national standards establishing electronic transaction standards that all healthcare providers must use when submitting or receiving certain healthcare transactions electronically.
According to the AHA, the risk for CVD at age 24 is about 20% and more than doubles to 50% by age 45, with 90% of those over the age of 80 having some form of CVD. · The rise of chronic diseases: Chronic diseases such as heart disease, cancer, and diabetes are rising in the United States.
According to the AHA, the risk for CVD at age 24 is about 20% and more than doubles to 50% by age 45, with 90% of those over the age of 80 having some form of CVD. 4 · The rise of chronic diseases: Chronic diseases such as heart disease, cancer, and diabetes are rising in the United States.
This could attract customers away from our solutions and reduce our market share. To compete effectively, we must scale our organization and infrastructure appropriately and demonstrate that our products have superior value propositions, cost savings, and clinical performance. 18 The clinical cardiovascular diagnostic space is perhaps the most intensely competitive market space in clinical medicine.
This could attract customers away from our solutions and reduce our market share. To compete effectively, we must scale our organization and infrastructure appropriately and demonstrate that our products have superior value propositions, cost savings, and clinical performance. The clinical cardiovascular diagnostic space is perhaps the most intensely competitive market space in clinical medicine.
De novo pathway. If no predicate device can be identified, a device is automatically classified as Class III, requiring a PMA application. However, the FDA can reclassify, either on its own initiative or in response to a request for de novo classification, for a device for which there was no predicate device if the device is low- or moderate-risk.
If no predicate device can be identified, a device is automatically classified as Class III, requiring a PMA application. However, the FDA can reclassify, either on its own initiative or in response to a request for de novo classification, for a device for which there was no predicate device if the device is low- or moderate-risk.
Many states in which we operate and in which our patients reside also have laws that protect the privacy and security of sensitive and personal information, including health information. These laws may be similar to or even more protective than HIPAA and other federal privacy laws.
Many states in which we operate and in which patients reside also have laws that protect the privacy and security of sensitive and personal information, including health information. These laws may be similar to or even more protective than HIPAA and other federal privacy laws.
Our expertise in processing billions of clinical genotypic, epigenetic and phenotypic data points to generate critical insights allows us to continue to develop innovative products. 17 • Proprietary cutting-edge AI-driven Integrated Genetic-Epigenetic Engine™ accelerates product development.
Our expertise in processing billions of clinical genotypic, epigenetic and phenotypic data points to generate critical insights allows us to continue to develop innovative products. · Proprietary cutting-edge AI-driven Integrated Genetic-Epigenetic Engine™ accelerates product development.
Any revocation of a CLIA certificate or exclusion from participation in Medicare or Medicaid programs may result in suspension of the California state laboratory license. 23 New York Laboratory Licensing We currently do not conduct tests on specimens originating from New York State.
Any revocation of a CLIA certificate or exclusion from participation in Medicare or Medicaid programs may result in suspension of the California state laboratory license. New York Laboratory Licensing We currently do not conduct tests on specimens originating from New York State.
These include: the QSR, labeling regulations, registration and listing, the Medical Device Reporting regulation (which requires that manufacturers report to the FDA if their device may have caused or contributed to a death or serious injury or malfunctioned in a way that would likely cause or contribute to a death or serious injury if it were to recur), and the Reports of Corrections and Removals regulation (which requires manufacturers to report to the FDA corrective actions made to products in the field, or removal of products once in the field if such actions were initiated to reduce a risk to health posed by the device or to remedy a violation of the FDC Act).
These include: the QSR, labeling regulations, registration and listing, the Medical Device Reporting regulation (which requires that manufacturers report to the FDA if their device may have caused or contributed to a death or serious injury or malfunctioned in a way that would likely cause or contribute to a death or serious injury if it were to recur), and the Reports of Corrections and Removals regulation (which requires manufacturers to report to the FDA corrective actions made to, or removal of, products in the field, if such actions were initiated to reduce a risk to health posed by the device or to remedy a violation of the FDC Act which may present a health risk).
Depending on the severity of the legal violation that led to correction or removal, the FDA may classify the manufacturer’s action as a recall. 26 The FDA enforces compliance with its requirements through inspection and market surveillance.
Depending on the severity of the legal violation that led to correction or removal, the FDA may classify the manufacturer’s action as a recall. The FDA enforces compliance with its requirements through inspection and market surveillance.
We expect that it will take six to twelve months to engage additional payors. · Evaluating FDA pathway. Cardio is evaluating an FDA regulatory pathway to enable broader access to our tests. · Targeting multiple revenue channels.
We expect that it will take six to twelve months to engage additional payors. · Evaluating FDA pathway. Cardio is evaluating an FDA regulatory pathway to enable broader access to our tests. 5 · Targeting multiple revenue channels.
There are several key revenue and strategy benefits to developing a robust channel partnership strategy, including: · Defensibility and Displacement Strategic channel partners would have exclusivity agreements for Epi+Gen CHD™ and PrecisionCHD™, which forecloses distribution channels to potential competitors. · Distribution and Network Effects Channel partners under consideration for Epi+Gen CHD™ and PrecisionCHD™ strategic partnerships have large, related healthcare and life science networks that we expect to leverage as part of the relationship. · Bi-Directional Value The cardiovascular disease space is of paramount concern to stakeholders across the healthcare continuum; the scale of the disease across the population and the associated costs ensures that addressing cardiovascular disease from a payment, cost, patient outcome, and prevention standpoint for stakeholders across the spectrum. · Pricing Differentiation The economics of each channel partnership can be crafted independently to offer each strategic partner a per-unit cost relevant to the size of their network. · Complementary Goods Bundling Epi+Gen CHD™, PrecisionCHD™ and future Cardio solutions alongside complementary clinical, analytics, treatment pathways, and services-consulting for primary prevention optimization with key partners expands the ROI of the investment in our solutions.
There are several key revenue and strategy benefits to developing a robust channel partnership strategy, including: · Defensibility and Displacement Strategic channel partners may have exclusivity agreements for Epi+Gen CHD™ and PrecisionCHD™, which forecloses distribution channels to potential competitors. 13 · Distribution and Network Effects Channel partners under consideration for Epi+Gen CHD™ and PrecisionCHD™ strategic partnerships have large, related healthcare and life science networks that we expect to leverage as part of the relationship. · Bi-Directional Value The cardiovascular disease space is of paramount concern to stakeholders across the healthcare continuum; the scale of the disease across the population and the associated costs ensures that addressing cardiovascular disease from a payment, cost, patient outcome, and prevention standpoint for stakeholders across the spectrum. · Pricing Differentiation The economics of each channel partnership can be crafted independently to offer each strategic partner a per-unit cost relevant to the size of their network. · Complementary Goods Bundling Epi+Gen CHD™, PrecisionCHD™, HeartRisk™ and future Cardio solutions alongside complementary clinical, analytics, treatment pathways, and services-consulting for primary prevention optimization with key partners expands the ROI of the investment in our solutions.
Item 1. Business References in this report to “Cardio,” “we,” “us” or the “Company” refer to Cardio Diagnostics Holdings, Inc. References to our “management” or our “management team” refer to the officers and directors of Cardio Diagnostics Holdings, Inc.
Item 1. Business References in this report to “Cardio,” “we,” “us” or the “Company” refer to Cardio Diagnostics Holdings, Inc. References to our “management” or our “management team” refer to the officers and directors of Cardio Diagnostics Holdings, Inc. Our Company Cardio Diagnostics, Inc.
As such, we believe that the Epi+Gen CHD™ and PrecisionCHD™ tests do not require FDA premarket evaluation of our performance claims or marketing authorization, and such premarket review and authorization has not been obtained.
As such, we believe that the Epi+Gen CHD™ and PrecisionCHD™ tests do not require FDA premarket evaluation of our performance claims or marketing authorization, and such premarket authorization has not been obtained.
These provisions are intended to punish some of the same conduct in the submission of claims to private payors as the federal False Claims Act covers in connection with governmental health programs. 27 In addition, the Civil Monetary Penalties Law imposes civil administrative sanctions for, among other violations, inappropriate billing of services to federally funded healthcare programs and employing or contracting with individuals or entities who are excluded from participation in federally funded healthcare programs.
These provisions are intended to punish some of the same conduct in the submission of claims to private payors as the federal False Claims Act covers in connection with governmental health programs. 22 In addition, the Civil Monetary Penalties Law imposes civil administrative sanctions for, among other violations, inappropriate billing of services to federally funded healthcare programs and employing or contracting with individuals or entities who are excluded from participation in federally funded healthcare programs.
If a clinical laboratory is found to be out of compliance with California laboratory standards, the California Department of Public Health, or CDPH , may suspend, restrict or revoke the California state laboratory license to operate the clinical laboratory (and exclude persons or entities from owning, operating, or directing a laboratory for two years following license revocation), assess civil money penalties, and/or impose specific corrective action plans, among other sanctions.
If a clinical laboratory is found to be out of compliance with California laboratory standards, the California Department of Public Health (“CDPH”), may suspend, restrict or revoke the California state laboratory license to operate the clinical laboratory (and exclude persons or entities from owning, operating, or directing a laboratory for two years following license revocation), assess civil money penalties, and/or impose specific corrective action plans, among other sanctions.
The licenses under the license agreement could terminate prior to the expiration of the licensed patent rights if we materially breach our obligations under the license agreement, including failing to pay the applicable license fees and any interest on such fees, and failing to fully remedy such breach within the period specified in the license agreement, or if we enter liquidation, have a receiver or administrator appointed over any assets related to the license agreement, or cease to carry on business, or file for bankruptcy or if an involuntary bankruptcy petition is filed against the Cardio. 21 Additionally, we have considerable IP in the form of trade secrets, including bioinformatics and high-performance computing techniques and machine learning algorithms used to identify genetic and epigenetic biomarkers for various products and to interpret genetic and epigenetic data from patient samples to generate clinically actionable information, as well as the methods to develop new methylation sensitive assays.
The licenses under the license agreement could terminate prior to the expiration of the licensed patent rights if we materially breach our obligations under the license agreement, including failing to pay the applicable license fees and any interest on such fees, and failing to fully remedy such breach within the period specified in the license agreement, or if we enter liquidation, have a receiver or administrator appointed over any assets related to the license agreement, or if we cease to carry on business, file for bankruptcy or if an involuntary bankruptcy petition is filed against the Cardio 18 Additionally, we have considerable IP in the form of trade secrets, including bioinformatics and high-performance computing techniques and artificial intelligence and machine learning algorithms used to identify genetic and epigenetic biomarkers for various products and to interpret genetic and epigenetic data from patient samples to generate clinically actionable information, as well as the methods to develop new methylation sensitive assays.
However, conduct and business arrangements that do not fully satisfy each applicable safe harbor may result in increased scrutiny by government enforcement authorities, such as the OIG. 28 False Claims Act Both federal and state government agencies have continued civil and criminal enforcement efforts as part of numerous ongoing investigations of healthcare companies and their executives and managers.
However, conduct and business arrangements that do not fully satisfy each applicable safe harbor may result in increased scrutiny by government enforcement authorities, such as the OIG. 23 False Claims Act Both federal and state government agencies have continued civil and criminal enforcement efforts as part of numerous ongoing investigations of healthcare companies and their executives and managers.
The pillar of our strategy has been innovation, from the onset with our technology development and intellectual property that account for future growth, to our commercialization and partnership efforts that bring together key healthcare. We believe that, among other reasons, the future belongs to Cardio based on the following competitive strengths: • Technology and products are strongly backed by science.
The pillar of our strategy has been innovation, from the onset with our technology development and intellectual property that account for future growth, to our commercialization and partnership efforts that bring together key healthcare stakeholders. 14 We believe that, among other reasons, the future belongs to Cardio based on the following competitive strengths: · Technology and products are strongly backed by science.
If the device is reclassified as Class II, the FDA will identify special controls that the manufacturer must implement, which may include labeling, performance standards, or other requirements. Subsequent applicants can rely upon the de novo product as a predicate for a 510(k) clearance, unless the FDA exempts subsequent devices from the need for a 510(k).
If the device is reclassified as Class II, the FDA will identify special controls that the manufacturer must implement, which may include labeling, testing, performance standards, or other requirements. Subsequent applicants can rely upon the de novo device as a predicate for a 510(k) clearance, unless the FDA exempts subsequent devices from the need for a 510(k).
The Exclusive License Agreement entered into with UIRF and those licenses granted under that license agreement terminate on the expiration of the patent rights licensed under the license agreement, unless certain proprietary, non-patented technical information is still being used by us, in which case the license agreement will not terminate until the date of termination of such use.
The Exclusive License Agreement entered into with UIRF and those licenses granted under that license agreement terminate on the expiration of the patent rights licensed under the license agreement, unless certain proprietary, non-patented technical information is still being used by Cardio, in which case the license agreement will not terminate until the date of termination of such use.
Intellectual Property We have made broad pending intellectual property (“IP”) claims with respect to the use of epigenetic and gene-methylation interactions for the assessment and monitoring of cardiovascular disease, specifically coronary heart disease, congestive heart failure and stroke, as well as diabetes. Our portfolio falls into three patent families.
Intellectual Property We have made broad pending intellectual property (“IP”) claims with respect to the use of epigenetic and gene-methylation interactions for the assessment and monitoring of cardiovascular disease, specifically coronary heart disease, congestive heart failure and stroke, as well as diabetes. Our portfolio falls into five patent families.
As to federal certifications, in 1988, Congress passed the Clinical Laboratory Improvement Amendments of 1988, or CLIA, establishing more rigorous quality standards for all commercial laboratories that perform testing on human specimens for the purpose of providing information for the diagnosis, prevention, or treatment of disease or the assessment of the health of human beings.
As to federal certifications, in 1988, Congress passed the Clinical Laboratory Improvement Amendments of 1988, or (“CLIA”), establishing more rigorous quality standards for all commercial laboratories that perform testing on human specimens for the purpose of providing information for the diagnosis, prevention, or treatment of disease or the assessment of the health of human beings.
Despite being largely preventable, the American Heart Association projects that by 2035, nearly 45% of Americans will have some form of CVD. One of the key ways to address the prevalence of CVD is to shift the approach for CVD from reactive treatment to proactive prevention and early detection.
Despite being largely preventable, the American Heart Association projects that by 2035, nearly 45% of Americans will have some form of CVD. One of the key ways to address the prevalence of CVD is to shift the approach for CVD from reactive treatment to proactive prevention and earlier detection.
As discussed below, legislation has been introduced in Congress that would substantially alter federal regulation of diagnostic tests, including LDTs. As the applicable laws and rules change, we are likely to make conforming modifications in our business processes from time to time.
As discussed below, legislation has been introduced in Congress that, if enacted, would substantially alter federal regulation of diagnostic tests, including LDTs. As the applicable laws and rules change, we are likely to make conforming modifications in our business processes from time to time.
The combination of biomarkers and predictive machine learning model is unique to each clinical test we develop. 9 Our Products and Services We have and will continue to leverage our AI-driven Integrated Genetic-Epigenetic Engine™ to develop a series of clinical tests for cardiovascular disease.
The combination of biomarkers and predictive machine learning model is unique to each clinical test we develop. 6 Our Products and Services We have and will continue to leverage our AI-driven Integrated Genetic-Epigenetic Engine™ to develop a series of clinical tests for cardiovascular disease.
If the FDA finds a violation, it can institute a wide variety of actions, ranging from an untitled or public warning letter to enforcement actions such as fines, injunctions, and civil penalties; recall or seizure of products; operating restrictions, partial suspension or total shutdown of production; refusing requests for 510(k) clearance or PMA approval of new products; withdrawal of PMAs already granted; and criminal prosecution.
If the FDA finds a violation, it can institute a wide variety of actions, ranging from an untitled or warning letter sent to manufacturers to enforcement actions such as fines, injunctions, and civil penalties; recall or seizure of products; operating restrictions, partial suspension or total shutdown of production; refusing requests for 510(k) clearance or PMA approval of new products; withdrawal of PMAs already granted; and criminal prosecution.
Our second product, PrecisionCHD™, is a highly sensitive and accessible clinical test for the early detection of CHD.
Our second product, PrecisionCHD™, is a highly sensitive and accessible clinical test for the detection of CHD.
Follow-on work on our core technology also is derived from work done by our founders while at the University of Iowa but was furthered by our founders and Cardio’s Chief Technology Officer independent of the University of Iowa. The follow-on work is described in the second and third families of patent applications.
Follow-on work on our core technology also is derived from work done by our founders while at the University of Iowa but was furthered by our founders and Cardio’s Chief Technology Officer independent of the University of Iowa. The follow-on work is described in our second, third, fourth and fifth families of patent applications.
We believe that our Epi+Gen CHD™ and PrecisionCHD™ tests are categorized as laboratory-developed tests, or “LDTs.” Under current FDA policy, an LDT does not require premarket authorization or other FDA clearance or approval.
We believe that our Epi+Gen CHD™ and PrecisionCHD™ tests are categorized as laboratory-developed tests, or “LDTs.” Under current FDA enforcement discretion policy, an LDT does not require FDA premarket authorization, or other FDA clearance or approval.
Food and Drug Administration Should the FDA decide not to exercise enforcement discretion for LDTs, LDTs would be subject to extensive regulation as medical devices under the FDC Act and its implementing regulations, which govern, among other things, medical device development, testing, labeling, storage, premarket clearance or approval, advertising and promotion and product sales and distribution.
Food and Drug Administration Should the FDA decide to no longer exercise enforcement discretion for LDTs, LDTs would be subject to extensive regulation as medical devices under the FDC Act and its implementing regulations, which govern, among other things, medical device development, testing, labeling, storage, premarket clearance or approval, advertising and promotion and product sales and distribution.
Devices that are exempt from FDA premarket review requirements must nonetheless comply with post-market general controls as described below, unless the FDA has chosen otherwise. 510(k) clearance pathway.
Devices that are exempt from FDA premarket review requirements must nonetheless comply with post-market general controls as described below, unless the FDA has indicated otherwise. 510(k) clearance pathway.
In addition, we note that our test assesses risk over a three-year window rather than a 10-year window which it believes is a more relevant period of time for patient management. Imaging modalities coupled to machine learning are also used to assess risk for and detect CHD.
In addition, we note that our test assesses risk over a three-year window rather than a 10-year window which it believes is a more relevant period of time for patient management. Imaging modalities are also used to assess risk for and detect CHD.
We believe that incorporating our 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.
We believe that incorporating our solutions into routine clinical practice in 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.
A highly accessible, personalized and precise solution for CHD prevention is not currently available. Furthermore, with the ongoing COVID-19 pandemic, preventable illnesses such as CHD are expected to spike.
We believe that a highly accessible, personalized and precise solution for CHD prevention is not currently available. Furthermore, with the ongoing COVID-19 pandemic, preventable illnesses such as CHD are expected to spike.
The laboratory director(s) must maintain a Certificate of Qualification issued by the New York State Department of Health, or NYS DOH, in the permitted test categories. A clinical laboratory conducting tests on specimens originating in New York is subject to proficiency testing and on-site survey inspections conducted by the Clinical Laboratory Evaluation Program, or CLEP, under the NYS DOH.
The laboratory director(s) must maintain a Certificate of Qualification issued by the New York State Department of Health (“NYS DOH”) in the permitted test categories. A clinical laboratory conducting tests on specimens originating in New York is subject to proficiency testing and on-site survey inspections conducted by the Clinical Laboratory Evaluation Program (“CLEP”) under the NYS DOH.
In addition, these requirements are subject to broad powers of interpretation and enforcement by state regulators. Some of these requirements may apply to any telemedicine company we contract with.
In addition, these requirements are subject to broad powers of interpretation and enforcement by state regulators. Some of these requirements may apply to any telemedicine company or provider organization we contract with.
The first family of patents and patent applications is owned solely by UIRF and is exclusively licensed by Cardio. As of March 2023, this family includes seven granted patents, one soon-to-be issued patent (received notice of allowance), and six pending patent applications.
The first family of patents and patent applications is owned solely by UIRF and is exclusively licensed by Cardio. As of March 2024, this family includes eleven granted patents, one soon-to-be issued patent (received notice of allowance), and seven pending patent applications.
We intend to focus on the following key channels: · Innovative Health Systems As innovative health systems diversify their business models and care delivery pathways, there is a renewed emphasis on using precision medical technologies to better manage expensive and chronic conditions, including CHD.
We intend to focus on the following key channels as part of our GTM strategy: · Innovative Health Systems As innovative health systems diversify their business models and care delivery pathways, there is a renewed emphasis on using precision medical technologies to better manage expensive and chronic conditions, including CHD.
Those laws and rules continue to evolve, and therefore we devote significant resources to monitoring relevant developments in FDA, CLIA, healthcare and medical practice regulation. Those laws and rules include, but are not limited to, ones that govern the regulation of clinical laboratories in general and the regulation of laboratory-developed tests ("LDTs”) in particular.
Those laws and rules continue to evolve, and therefore we devote significant resources to monitoring relevant developments in FDA, CLIA, healthcare and medical practice regulation. Those laws and rules include, but are not limited to, ones that govern the regulation of clinical laboratories in general and the regulation of LDTs in particular.
The initial work is described in the first family of patents and patent applications and is generally directed to a number of single nucleotide polymorphism (“SNP”) biomarkers and a number of methylation site biomarkers that are highly associated, at a statistically significant level, with the presence or the early onset of a number of cardiovascular diseases.
The initial work is described in the first family of patents and patent applications and is generally directed to a number of single nucleotide polymorphism (“SNP”) biomarkers and a number of methylation site biomarkers that are associated with the presence or the early onset of a number of 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 hopes to accelerate the adoption of Precision Medicine for all.
Cardio aims to become one of the leading medical technology companies for enabling improved prevention, detection, treatment and management of cardiovascular disease and associated co-morbidities. Cardio is transforming the approach to cardiovascular medicine from reactive to proactive and hopes to accelerate the adoption of Precision Medicine for all.
We will remain an emerging growth company until the earlier of (1) the last day of the fiscal year (a) following the fifth anniversary of the completion of the IPO, (b) in which we have total annual gross revenue of at least $1.07 billion, or (c) in which we are deemed to be a large accelerated filer, which means the market value of our Common Stock held by non-affiliates equaled or exceeded $700 million as of the prior June 30, and (2) the date on which we have issued more than $1.0 billion in non-convertible debt securities during the prior three-year period.
We will remain an emerging growth company until the earlier of (1) the last day of the fiscal year (a) following the fifth anniversary of the completion of the IPO, (b) in which we have total annual gross revenue of at least $1.07 billion, or (c) in which we are deemed to be a large accelerated filer, which means the market value of our Common Stock held by non-affiliates equaled or exceeded $700 million as of the prior June 30, and (2) the date on which we have issued more than $1.0 billion in non-convertible debt securities during the prior three-year period. 25 Additionally, we are a “smaller reporting company” as defined in Item 10(f)(1) of Regulation S-K.
Utilizing and developing such strategic channel partnerships, we believe, will generate revenue in a myriad of ways including larger contracts for our Epi+Gen CHD ™ and PrecisionCHD™ tests, and bundling our solutions alongside other synergistic technologies, services, and products.
Utilizing and developing such strategic channel partnerships, we believe, will generate revenue in a myriad of ways including larger contracts for our Epi+Gen CHD ™ and PrecisionCHD™ clinical blood tests, and bundling our solutions alongside other synergistic technologies, services, and products. Strategic channel partnerships are key for the growth of our solutions.
As of March 2023, we have leveraged this Engine to develop two products: Epi+Gen CHD™ and PrecisionCHD™ .
As of March 2024, we have leveraged this Engine to develop two clinical products: Epi+Gen CHD™ and PrecisionCHD™.
The PCT application also includes claims to methods of determining the presence of biomarkers associated with three-year incidence of cardiovascular disease, claims to a computer-readable medium for performing such methods, and claims to a system for determining the methylation status of at least one CpG dinucleotide and the genotype of a SNP.
The pending applications also include claims to methods of determining the presence of biomarkers associated with three-year incidence of cardiovascular disease, claims to a computer-readable medium for performing such methods, and claims to a system for determining the methylation status of at least one CpG dinucleotide and the genotype of a SNP.
The PCT application also includes claims to methods of determining the presence of biomarkers associated with diabetes, claims to a computer-readable medium for performing such methods, and claims to a system for determining the methylation status of at least one CpG dinucleotide and the genotype of at least one SNP.
The pending application also includes claims to methods of determining the presence of biomarkers associated with detecting cardiovascular disease, claims to a computer-readable medium for performing such methods, and claims to a system for determining the methylation status of at least one CpG dinucleotide and the genotype of a SNP.
Machine learning, which is a type of AI, is instrumental to our cutting-edge solutions, powering their clinical performance and differentiating them from other technologies for CVD. · The rise of patient engagement: Thanks to technology, patients are becoming more engaged in their healthcare.
AI has the potential to improve the quality of care while reducing costs. Machine learning, which is a type of AI, is instrumental to our cutting-edge solutions, powering their clinical performance and differentiating them from other technologies for CVD. · The rise of patient engagement: Thanks to technology, patients are becoming more engaged in their healthcare.
The pricing of each of our tests may vary, but assuming $350 per test, the US addressable market equates to $51 billion for Epi+Gen CHD™, $55 billion for PrecisionCHD™, $53 billion for congestive heart failure, $53 billion for stroke and $49 billion for diabetes for a total US addressable market of $261 billion.
The pricing of each of our tests may vary, but the US addressable market equates to $51 billion for Epi+Gen CHD™, assuming a pricing of $350/test, $134 billion for PrecisionCHD™, assuming a price of $850/test, $53 billion for congestive heart failure, assuming a pricing of $350/test, $53 billion for stroke, assuming a pricing of $350/test and $49 billion for diabetes, assuming a pricing of $350/test for a total US addressable market of $340 billion.
Several reasons for this failure include (i) the current in-person risk screening approach is incompatible with busy everyday life as demonstrated by the COVID-19 associated decrease in primary care visits for preventive screening; (ii) even if the current risk screening tests are taken, they only identify 44% and 32% of men and women at high risk, respectively; and (iii) the lack of patient care plan personalization.
Several reasons for this failure include (i) the current in-person risk screening approach is incompatible with busy everyday life; (ii) even if the current risk screening tests are taken, they only identify 44% and 32% of men and women at high risk, respectively; and (iii) the lack of patient care plan personalization.
IVDs can be used to detect the presence of certain chemicals, genetic information or other biomarkers related to health or disease. IVDs include tests for disease prediction, prognosis, diagnosis, and screening.
IVDs may be used to detect the presence of certain chemicals, genetic information or other biomarkers related to diagnosis or detection of diseases or conditions. IVDs may include tests for disease prediction, prognosis, diagnosis, and screening.
This family includes a pending PCT International application, with claims directed to compositions ( e.g ., a kit) that include at least one primer for determining the methylation status of at least one CpG dinucleotide from a group of five different methylation sites, or a different CpG dinucleotide in linkage disequilibrium with one of the listed CpG dinucleotides, and at least one primer for determining the genotype of at least one SNP from a group of five different SNPs, or a different SNP in linkage disequilibrium with one of the listed SNPs.
The pending claims are directed to compositions (e.g., a kit) that include at least one primer for determining the methylation status of at least one CpG dinucleotide from a group of six different methylation sites, or a different CpG dinucleotide in linkage disequilibrium with one of the listed CpG dinucleotides, and at least one primer for determining the genotype of at least one SNP from a group of ten different SNPs, or a different SNP in linkage disequilibrium with one of the listed SNPs.
Employees and Human Capital Resources As of March 27, 2023, we had seven full-time employees and one part-time employee. Three of our employees hold Ph.D. or M.D. degrees. We also engage consultants from time to time. None of our employees are represented by a labor union or covered under a collective bargaining agreement.
Employees and Human Capital Resources As of April 1, 2024, we had seven full-time employees and two part-time employees. Three of our employees hold Ph.D. or M.D. degrees. We also engage contractors and consultants from time to time. None of our employees are represented by a labor union or covered under a collective bargaining agreement.
The SEC maintains an Internet website that contains reports, proxy and information statements and other information regarding issuers that file electronically with the SEC. The SEC’s Internet website is located at www.sec.gov. In addition, the Company will provide copies of these documents without charge upon request from us in writing at 400 N. Aberdeen St., Suite 900, Chicago IL 60642.
The SEC maintains an Internet website that contains reports, proxy and information statements and other information regarding issuers that file electronically with the SEC. The SEC’s Internet website is located at www.sec.gov. In addition, the Company will provide copies of these documents without charge upon request from us in writing at 311 West Superior Street, Suite 444, Chicago IL 60654.
The FDA has historically taken the position that it has the authority to regulate LDTs as in vitro diagnostic, or IVD medical devices under the Federal Food, Drug and Cosmetic Act, or FDC Act, but it has generally exercised enforcement discretion with regard to LDTs.
The FDA has historically taken the position that it has the authority to regulate LDTs as medical devices under the Federal Food, Drug and Cosmetic Act (“FDC Act”), but it has generally exercised enforcement discretion with regard to LDTs.
As part of its PMA review process, the FDA will typically inspect the manufacturer’s facilities for compliance with QSR requirements, which impose extensive testing, control, documentation, and other quality assurance procedures. The PMA review process typically takes one to three years from submission but can take longer, including, as noted above, due to delays resulting from the COVID-19 pandemic.
As part of its PMA review process, the FDA will typically inspect the manufacturer’s facilities for compliance with QSR requirements, which impose extensive testing, control, documentation, and other quality assurance procedures. The PMA review process typically takes one to three years from submission but can take longer. De novo pathway.
These are commonly used supplies that are and can be sourced from multiple distributors. Upon sourcing these contents, they are assembled into lancet-based and vacutainer-based sample collection kits internally and fulfilled. We intend to maintain an inventory of fully assembled kits to meet expected demand for at least six months.
Upon sourcing these contents, they are assembled into lancet-based and vacutainer-based sample collection kits internally and fulfilled. We intend to maintain an inventory of fully assembled kits to meet expected demand for at least six months.
If a clinical laboratory is found not to comply with CLIA standards , the government may impose sanctions, limit or revoke the laboratory’s CLIA certificate (and prohibit the owner, operator or laboratory director from owning, operating, or directing a laboratory for two years following license revocation), subject the laboratory to a directed plan of correction, on-site monitoring, civil monetary penalties, civil actions for injunctive relief, criminal penalties, or suspension or exclusion from the Medicare and Medicaid programs.
If a clinical laboratory is found not to comply with CLIA standards, the government may impose sanctions, limit or revoke the laboratory’s CLIA certificate (and prohibit the owner, operator or laboratory director from owning, operating, or directing a laboratory for two years following license revocation), subject the laboratory to a directed plan of correction, on-site monitoring, civil monetary penalties, civil actions for injunctive relief, criminal penalties, or suspension or exclusion from the Medicare and Medicaid programs. 19 CLIA provides that a state may adopt laboratory licensure requirements and regulations that are more stringent than those under federal law and requires compliance with such laws and regulations.
The VITAL Act In March 2020, the Verified Innovative Testing in American Laboratories, or VITAL, Act was introduced in the Senate, and would expressly shift the regulation of LDTs from the FDA to CMS. The VITAL Act was reintroduced in May 2021.
In March 2020, the Verified Innovative Testing in American Laboratories (“VITAL”) Act of 2020 was introduced in the Senate, which would expressly shift the regulation of LDTs from FDA to CMS. The VITAL Act was reintroduced in May 2021, and has not since been reintroduced. Neither statute has been enacted.
Any and all patents issuing in this family will be solely owned by UIRF and, barring any changes to the UIRF exclusive license agreement, will fall under the exclusive license to Cardio.
Any and all patents issuing in this family will be solely owned by UIRF and, barring any changes to the UIRF exclusive license agreement, will fall under the exclusive license to Cardio. The first family is generally directed to biomarkers associated with cardiovascular disease.
In addition to HIPAA, state health information privacy and state health information privacy laws, we may be subject to other state and federal privacy laws, including laws that prohibit unfair privacy and security practices and deceptive statements about privacy and security and laws that place specific requirements on certain types of activities, such as data security and texting.
In addition, state laws are changing rapidly, and there is discussion of a new federal privacy law or federal breach notification law, to which we may be subject. 24 In addition to HIPAA, state health information privacy and state health information privacy laws, we may be subject to other state and federal privacy laws, including laws that prohibit unfair privacy and security practices and deceptive statements about privacy and security and laws that place specific requirements on certain types of activities, such as data security and texting.
We have obtained licenses in the states that we believe require us to do so and believe we are in compliance with applicable state laboratory licensing laws, including Maryland and Pennsylvania.
We have obtained licenses in the states that we believe require us to do so and believe we are in compliance with applicable state laboratory licensing laws, including Maryland and Pennsylvania. We currently do not conduct tests on specimens originating from Rhode Island.
PrecisionCHD™ is the Only Epigenetics-based Clinical Test for the Early Detection of Coronary Heart Disease PrecisionCHD™ is a scientifically backed clinical test that is based on an individual’s objective genetic and epigenetic DNA biomarkers for the early detection of coronary heart disease.
The pricing for this platform will be customized based on the organization type and size. 9 PrecisionCHD™ is the Only Epigenetics-based Clinical Test for the Early Detection of Coronary Heart Disease PrecisionCHD™ is a scientifically backed clinical blood test that is based on an individual’s objective genetic and epigenetic DNA biomarkers for the detection of coronary heart disease.
This family includes one pending PCT International application and a pending U.S. application, with claims directed to compositions (e.g., a kit) that include at least one primer for determining the methylation status of at least one CpG dinucleotide from a group of three different methylation sites, or a different CpG dinucleotide in linkage disequilibrium with one of the listed CpG dinucleotides, and at least one primer for determining the genotype of at least one SNP from a group of five different SNPs, or a different SNP in linkage disequilibrium with one of the listed SNPs.
This family includes applications pending in the U.S., Australia, United Arab Emirates, Canada, China, Europe, Hong Kong, India, Japan, Saudi Arabia, and Singapore, with claims directed to compositions (e.g., a kit) that include at least one primer for determining the methylation status of at least one CpG dinucleotide from a group of three different methylation sites, or a different CpG dinucleotide in linkage disequilibrium with one of the listed CpG dinucleotides, and at least one primer for determining the genotype of at least one SNP from a group of five different SNPs, or a different SNP in linkage disequilibrium with one of the listed SNPs.
The initial work on our AI-driven Integrated Genetic-Epigenetic Engine™ is derived from work done by our founders while at the University of Iowa, around which there is currently a family of patent and patent applications.
The initial work on our AI-driven Integrated Genetic-Epigenetic Engine™ is derived from work done by our founders while at the University of Iowa.
Although people doubtlessly use these and similar methods derived from wearable devices to assess risk, their exact clinical market penetrance is currently low, and whether they would pose as a direct competitor for our test remains uncertain.
Although people doubtlessly use these and similar methods derived from wearable devices to assess risk, their exact clinical market penetrance is currently low, and whether they would pose as a direct competitor for our test remains uncertain. 16 However, the aforementioned is only a snapshot of the current market space in which we currently compete and which we intend to compete in the future.
According to the Global Wellness Institute, Americans spend more than $275 billion annually on out-of-pocket wellness and health initiatives. 15 Sales and Marketing for Epi+Gen CHD™ and PrecisionCHD™ with a Focus on Strategic Channel Partnerships While our overall sales and marketing initiatives will span the gamut across traditional, print, and digital media, our primary sales and marketing strategy consists of the branding, collaboration, co-marketing, and co-sales opportunities involved in strategic channel partnerships.
Sales and Marketing for Epi+Gen CHD™ and PrecisionCHD™ with a Focus on Strategic Channel Partnerships While our overall sales and marketing initiatives will span the gamut across traditional, print, and digital media, our primary sales and marketing strategy consists of the branding, collaboration, co-marketing, and co-sales opportunities involved in strategic channel partnerships.
CLIA certification is also a prerequisite to be eligible to bill state and federal healthcare programs, as well as many commercial third-party payers, for laboratory testing services. Laboratories must comply with all applicable CLIA requirements.
CLIA certification is also a prerequisite to be eligible to bill state and federal healthcare programs, as well as many commercial third-party payers, for laboratory testing services. The Centers for Medicare & Medicaid Services (“CMS”) regulates laboratories that perform testing on individuals in the U.S. through CLIA. Laboratories must comply with all applicable CLIA requirements.
By combining best-in-class revenue operations technologies with seasoned healthcare sales and marketing experts, we believe we can quickly scale the selling approaches we have outlined and validated to transform the cardiovascular healthcare experience, driving revenue and increased margins.
By combining best-in-class revenue operations technologies with seasoned healthcare sales and marketing experts, we believe we can quickly scale the selling approaches we have outlined and validated to transform the cardiovascular healthcare experience, driving revenue and increased margins. New hires will be targeting the entire continuum of revenue needs, including opportunity identification, campaign design, and execution.
Employers leveraging innovative diagnostic solutions can connect better health for employees to drive overall business objectives and have a competitive advantage in attracting and retaining talent. · Telemedicine and Marketplaces Many Americans are concerned about being proactive with their health needs. Understanding their personalized risk with tests at the forefront of medicine is crucial for those with financial resources.
Employers leveraging innovative diagnostic solutions can connect better health for employees to drive overall business objectives and have a competitive advantage in managing business risks while attracting and retaining talent. · Telemedicine and Marketplaces Many Americans are concerned about being proactive with their health needs.
California Laboratory Licensing In addition to federal certification requirements for laboratories under CLIA, the laboratory is required under California law to maintai n a California state license and comply with California state laboratory laws and regulations.
For more information on state licensing requirements, see "— California Laboratory Licensing,” "— New York Laboratory Licensing” and "— Other State Laboratory Licensing Laws.” California Laboratory Licensing In addition to federal certification requirements for laboratories under CLIA, the laboratory is required under California law to maintain a California state license and comply with California state laboratory laws and regulations.
We believe the two reasons for this are replacing in-office amenities and acknowledging that health is top of mind for most employees in a post-pandemic world. Health equity is top-of-mind for many employers to ensure that their employees are healthy and productive. Employers view healthcare investments as another investment in the business.
In a post-pandemic world, the health and wellbeing of employees are also top-of-mind for many employers to ensure that their employees are healthy and productive. Employers view healthcare investments as another investment in the business.
Potential sanctions for violation of state statutes and regulations can include significant monetary fines, the rejection of license applications, the suspension or loss of various licenses, certificates and authorizations, and in some cases criminal penalties, which could harm our business. CLIA does not preempt state laws that have established laboratory quality standards that are more stringent than federal law.
Potential sanctions for violation of state statutes and regulations can include significant monetary fines, the rejection of license applications, the suspension or loss of various licenses, certificates and authorizations, and in some cases criminal penalties, which could harm our business.
A similar study was performed for PrecisionCHD™ that demonstrates its high sensitivity and is undergoing the process to be peer-reviewed and published. · The fasting requirement for current tests could be cumbersome for patients to comply, and the lack of fasting could affect test results. · The patient care plan that results from these tests generally lack personalization. · Lipid-based risk assessment tests depend on self-reported, subjective information such as smoking status from patients, and inaccurate information could affect the accuracy of test results. · Undergoing these tests requires an in-person clinic visit to collect blood samples and other necessary data points such as blood pressure, which may delay or prevent access to primary prevention, e.g., for those who are unable to make time for the visit, have transportation issues or live in rural areas are likely to delay primary prevention altogether.
DOI: 10.1161/JAHA.123.030934), we found that the overall average area under the curve, sensitivity, and specificity in three independent test cohorts for detecting coronary heart disease were 82%, 79%, and 76%, respectively. · The fasting requirement for current tests could be cumbersome for patients to comply, and the lack of fasting could affect test results. · The patient care plan that results from these tests generally lack personalization. · Lipid-based risk assessment tests depend on self-reported, subjective information such as smoking status from patients, and inaccurate information could affect the accuracy of test results. · Undergoing these tests requires an in-person clinic visit to collect blood samples and other necessary data points such as blood pressure, which may delay or prevent access to primary prevention, e.g., for those who are unable to make time for the visit, have transportation issues or live in rural areas are likely to delay primary prevention altogether.
Currently, among the various types of CVD, the medical costs of CHD are the highest at $89 billion and are expected to rise to $215 billion by 2035 as depicted in the figure below from the Cardiovascular Disease: A Costly Burden For America, Projections Through 2035 report by the AHA. 6 To address this expected significant rise in human health and economic burdens, the United States healthcare market is seeking more efficient and effective methods to better prevent CVD.
Currently, among the various types of CVD, the medical costs of CHD are the highest at $89 billion and are expected to rise to $215 billion by 2035 as depicted in the figure below from the Cardiovascular Disease: A Costly Burden For America, Projections Through 2035 report by the AHA.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeIn the case of an investment, alliance, joint venture, or other partnership: • Our ability to cooperate with our co-venturer; • Our co-venturer having economic, business, or legal interests or goals that are inconsistent with ours; and • The potential that our co-venturer may be unable to meet is economic or other obligations, which may require us to fulfill those obligations alone or find a suitable replacement. 36 Any such transaction may involve the risk that our senior management’s attention will be excessively diverted from our other operations, the risk that our industry does not evolve as anticipate, and that any intellectual property or personnel skills acquired do not prove to be those needed for our future success, and the risk that our strategic objectives, cost savings or other anticipate benefits are otherwise not achieved.
Biggest changeAny such transaction may involve the risk that our senior management’s attention will be excessively diverted from our other operations, the risk that our industry does not evolve as anticipate, and that any intellectual property or personnel skills acquired do not prove to be those needed for our future success, and the risk that our strategic objectives, cost savings or other anticipate benefits are otherwise not achieved.
We may not be able to develop an alternate source without incurring material additional costs and substantial delays. For example, during 2021, the Coronavirus pandemic impacted the ability to conduct in-person training of personnel at the laboratory, which delayed launch of Epi+Gen CHD™ by approximately two and a half months.
We may not be able to develop an alternate source without incurring material additional costs and substantial delays. For example, during 2021, the Coronavirus pandemic impacted the ability to conduct in-person training of personnel at the laboratory, which delayed the launch of Epi+Gen CHD™ by approximately two and a half months.
The use of our solutions involves the storage, transmission and processing of our customers’ private data, and this data may contain confidential and proprietary information of our customers or their customers’ patients, employees, business partners or other persons (“customer personnel”) or other personal or identifying information regarding our customers and customer personnel.
The use of our solutions involves the storage, transmission and processing of our customers’ private data, and this data may contain confidential and proprietary information of our customers or their customers, patients, employees, business partners or other persons (“customer personnel”) or other personal or identifying information regarding our customers and customer personnel.
Privacy and data security laws and regulations could require we to make changes to our business, impose additional costs on us and reduce the demand for our tests and services. Our business model contemplates that we will store, process and transmit both public data and our customers’ and customer personnel’s private data.
Privacy and data security laws and regulations could require us to make changes to our business, impose additional costs on us and reduce the demand for our tests and services. Our business model contemplates that we will store, process and transmit both public data and our customers’ and customer personnel’s private data.
Our issuance of additional shares of Common Stock or other equity securities of equal or senior rank would have the following effects: • our existing stockholders’ proportionate ownership interest in the Company will decrease; • the amount of cash available per share, including for payment of dividends (if any) in the future, may decrease; • the relative voting strength of each previously outstanding share of Common Stock may be diminished; and • the market price of our shares of Common Stock may decline.
The issuance of additional shares of Common Stock or other equity securities of equal or senior rank would have the following effects: · our existing stockholders’ proportionate ownership interest in the Company will decrease; · the amount of cash available per share, including for payment of dividends (if any) in the future, may decrease; · the relative voting strength of each previously outstanding share of Common Stock may be diminished; and · the market price of our shares of Common Stock may decline.
If we need additional capital and cannot raise it on acceptable terms, or at all, we may not be able to, among other things: • invest in our business and continue to grow our brand and expand our customer and patient bases; • hire and retain employees, including scientists and medical professionals, operations personnel, financial and accounting staff, and sales and marketing staff; • respond to competitive pressures or unanticipated working capital requirements; or • pursue opportunities for acquisitions of, investments in, or strategic alliances and joint ventures with complementary businesses.
If we need additional capital and cannot raise it on acceptable terms, or at all, we may not be able to, among other things: 28 · invest in our business and continue to grow our brand and expand our customer and patient bases; · hire and retain employees, including scientists and medical professionals, operations personnel, financial and accounting staff, and sales and marketing staff; · respond to competitive pressures or unanticipated working capital requirements; or · pursue opportunities for acquisitions of, investments in, or strategic alliances and joint ventures with complementary businesses.
Future growth would impose significant added responsibilities on members of management, including: 62 • identifying, recruiting, compensating, integrating, maintaining and motivating additional employees; • coping with demands on Management related to the increased size of its business; • assimilating different corporate cultures and business practices; • converting other entities’ books and records and conforming their practices to ours; • integrating operating, accounting and information technology systems of other entities with ours and in maintaining uniform procedures, policies and standards, such as internal accounting controls; and • improving our operational, financial and management controls, reporting systems and procedures.
Future growth would impose significant added responsibilities on members of management, including: · identifying, recruiting, compensating, integrating, maintaining and motivating additional employees; · coping with demands on Management related to the increased size of its business; · assimilating different corporate cultures and business practices; · converting other entities’ books and records and conforming their practices to ours; · integrating operating, accounting and information technology systems of other entities with ours and in maintaining uniform procedures, policies and standards, such as internal accounting controls; and · improving our operational, financial and management controls, reporting systems and procedures.
Unauthorized access to or security breaches of its platform, network or computer systems, or those of our technology service providers, could result in the loss of business, reputational damage, regulatory investigations and orders, litigation, indemnity obligations, damages for contract breach, civil and criminal penalties for violation of applicable laws, regulations or contractual obligations, and significant costs, fees and other monetary payments for remediation.
Unauthorized access to or security breaches of our platform, network or computer systems, or those of our technology service providers, could result in the loss of business, reputational damage, regulatory investigations and orders, litigation, indemnity obligations, damages for contract breach, civil and criminal penalties for violation of applicable laws, regulations or contractual obligations, and significant costs, fees and other monetary payments for remediation.
Changes to our policies with regards to the foregoing could materially adversely affect our financial condition, results of operations, and cash flow. 44 Our business is subject to the risks of earthquakes, fire, floods, pandemics and other natural catastrophic events, and to interruption by man-made problems, such as power disruptions, computer viruses, data security breaches or terrorism.
Changes to our policies with regards to the foregoing could materially adversely affect our financial condition, results of operations, and cash flow. Our business is subject to the risks of earthquakes, fire, floods, pandemics and other natural catastrophic events, and to interruption by man-made problems, such as power disruptions, computer viruses, data security breaches or terrorism.
The healthcare industry is heavily regulated and closely scrutinized by federal, state and local governments. Comprehensive statutes and regulations govern the manner in which we provide and bill for services and collect reimbursement from governmental programs and private payors, our contractual relationships with our providers, vendors and customers, our marketing activities and other aspects of our operations.
The healthcare industry is heavily regulated and closely scrutinized by federal, state and local governments. Comprehensive statutes and regulations govern the manner in which we provide and bill for our products services and collect reimbursement from governmental programs and private payors, our contractual relationships with providers, vendors and customers, our marketing activities and other aspects of our operations.
As a result, stockholders must rely on sales of their Common Stock after price appreciation as the only way to realize any future gains on their investment. We may issue additional shares of our Common Stock or other equity securities without your approval, which would dilute your ownership interests and may depress the market price of our Common Stock.
As a result, stockholders must rely on sales of their Common Stock after price appreciation as the only way to realize any future gains on their investment. 45 We may issue additional shares of our Common Stock or other equity securities without your approval, which would dilute your ownership interests and may depress the market price of our Common Stock.
If a court were to find the exclusive-forum provision contained in the Bylaws to be inapplicable or unenforceable in an action, we may incur additional costs associated with resolving such action in other jurisdictions, which could harm our business. 59 We do not intend to pay dividends for the foreseeable future.
If a court were to find the exclusive-forum provision contained in the Bylaws to be inapplicable or unenforceable in an action, we may incur additional costs associated with resolving such action in other jurisdictions, which could harm our business. We do not intend to pay dividends for the foreseeable future.
In addition, the costs of compliance with, and other burdens imposed by, such laws, regulations and industry standards may adversely affect our customers’ ability or desire to collect, use, process and store personal information using our software solutions, which could reduce overall demand for them.
In addition, the costs of compliance with, and other burdens imposed by, such laws, regulations and industry standards may adversely affect our customers’ ability or desire to collect, use, process and store personal information using our solutions, which could reduce overall demand for them.
Even the perception of privacy and data security concerns, whether or not valid, may inhibit market acceptance of our software solutions in certain verticals. Furthermore, privacy and data security concerns may cause our customers’ customers, vendors, employees and other industry participants to resist providing the personal information necessary to allow our customers to use our applications effectively.
Even the perception of privacy and data security concerns, whether or not valid, may inhibit market acceptance of our solutions in certain verticals. Furthermore, privacy and data security concerns may cause our customers’ customers, vendors, employees and other industry participants to resist providing the personal information necessary to allow our customers to use our applications effectively.
There can be no assurance that the registration statement will still be effective at the time that we would like to exercise our redemption rights. 60 In the event we have determined to redeem the Public Warrants and the Sponsor Warrants, holders would be notified of such redemption as described in the Warrant Agreement.
There can be no assurance that the registration statement will still be effective at the time that we would like to exercise our redemption rights. In the event we have determined to redeem the Public Warrants and the Sponsor Warrants, holders would be notified of such redemption as described in the Warrant Agreement.
Any failure to preserve our culture could negatively affect our future success, including our ability to retain and recruit personnel and effectively focus on and pursue our corporate objectives. We may be unable to manage our growth. Currently, we have less than 10 full and part-time employees.
Any failure to preserve our culture could negatively affect our future success, including our ability to retain and recruit personnel and effectively focus on and pursue our corporate objectives. 34 We may be unable to manage our growth. Currently, we have less than 10 full and part-time employees.
If we fail to meaningfully protect our intellectual property and proprietary rights, our business, results of operations and financial condition could be adversely affected. Assertions by third parties of infringement or other violations by us of its intellectual property rights could result in significant costs and harm our business and operating results.
If we fail to meaningfully protect our intellectual property and proprietary rights, our business, results of operations and financial condition could be adversely affected. 36 Assertions by third parties of infringement or other violations by us of its intellectual property rights could result in significant costs and harm our business and operating results.
Factors that may cause these fluctuations include, without limitation: 33 • the level of demand for our tests and services, which may vary significantly from period to period; • our ability to attract new customers, whether patients or strategic channel partners; • the timing of recognition of revenues; • the amount and timing of operating expenses; • general economic, industry and market conditions, both domestically and internationally, including any economic downturns and adverse impacts resulting from the COVID-19 pandemic and/or the military conflict between Russia and Ukraine; • the timing of our billing and collections; • adoption rates by participants in our key channels; • increases or decreases in the number of patients that use our tests or pricing changes upon any signing and renewals of agreements with healthcare sub-vertical channel participants; • changes in our pricing policies or those of our competitors; • the timing and success of new offerings by us or our competitors or any other change in the competitive dynamics of our industry, including consolidation among competitors, practitioners, clinics or outsourcing facilities; • extraordinary expenses such as litigation or other dispute-related expenses or settlement payments; • sales tax and other tax determinations by authorities in the jurisdictions in which we conduct business; • the impact of new accounting pronouncements and the adoption thereof; • fluctuations in stock-based compensation expenses; • expenses in connection with mergers, acquisitions or other strategic transactions; • changes in regulatory and licensing requirements; • the amount and timing of expenses related to our expansion to markets outside the United States; and • the timing of expenses related to the development or acquisition of technologies or businesses and potential future charges for impairment of goodwill or intangibles from acquired companies.
Factors that may cause these fluctuations include, without limitation: · the level of demand for our tests and services, which may vary significantly from period to period; · our ability to attract new customers, whether patients or strategic channel partners or other customers; · the timing of recognition of revenues; · the amount and timing of operating expenses; · general economic, industry and market conditions, both domestically and internationally, including any economic downturns and adverse impacts resulting from the COVID-19 pandemic and/or the military conflict between Russia and Ukraine; · the timing of our billing and collections; · adoption rates by participants in our key channels; · increases or decreases in the number of patients, providers and organizations that use our tests or pricing changes upon any signing and renewals of agreements with healthcare sub-vertical channel partners; · changes in our pricing policies or those of our competitors; · the timing and success of new offerings by us or our competitors or any other change in the competitive dynamics of our industry, including consolidation among competitors, practitioners, clinics or outsourcing facilities; 27 · extraordinary expenses such as litigation or other dispute-related expenses or settlement payments; · sales tax and other tax determinations by authorities in the jurisdictions in which we conduct business; · the impact of new accounting pronouncements and the adoption thereof; · fluctuations in stock-based compensation expenses; · expenses in connection with mergers, acquisitions or other strategic transactions; · changes in regulatory and licensing requirements; · the amount and timing of expenses related to our expansion to markets outside the United States; and · the timing of expenses related to the development or acquisition of technologies or businesses and potential future charges for impairment of goodwill or intangibles from acquired companies.
In addition, follow-on work on our core technology also is derived from work done by our founders while at the University of Iowa but was furthered by our founders. Therefore, the follow-on work is co-owned by UIRF and us, and exclusively licensed to us under the license agreement with UIRF.
In addition, certain follow-on work on our core technology also is derived from work done by our founders while at the University of Iowa but was furthered by our founders. Therefore, certain follow-on work is co-owned by UIRF and us, and exclusively licensed to us under the license agreement with UIRF.
HIPAA also implemented the use of standard transaction code sets and standard identifiers that covered entities must use when submitting or receiving certain electronic healthcare transactions, including activities associated with the billing and collection of healthcare claims. 52 HIPAA imposes mandatory penalties for certain violations.
HIPAA also implemented the use of standard transaction code sets and standard identifiers that covered entities must use when submitting or receiving certain electronic healthcare transactions, including activities associated with the billing and collection of healthcare claims. HIPAA imposes mandatory penalties for certain violations.
Enhancements and new products that we develop may not be introduced in a timely or cost-effective manner, may contain defects, may have interoperability difficulties with our solutions, or may not achieve the market acceptance necessary to generate significant revenue.
Enhancements and new products that we develop may not be introduced in a timely or cost-effective manner, may contain defects, may have interoperability difficulties with our solutions, or may not achieve the market acceptance necessary to generate significant or any revenue.
The limitations of liability set forth in any contracts we may enter into now or in the future may not be enforceable or may not otherwise protect us from liability for damages. Additionally, we may be subject to claims that are not explicitly covered by contract.
The limitations of liability set forth in any contracts we may enter into now or in the future may not be enforceable or may not otherwise protect us from liability for damages. Additionally, we may be subject to claims that are not explicitly covered by a contract.
Any of these outcomes could adversely affect our business and operating results. 54 General Risks Affecting Our Company A pandemic, epidemic or outbreak of an infectious disease in the United States or worldwide, including the outbreak of the novel strain of coronavirus disease, COVID-19, could adversely affect our business.
Any of these outcomes could adversely affect our business and operating results. General Risks Affecting Our Company A pandemic, epidemic or outbreak of an infectious disease in the United States or worldwide, including the outbreak of the novel strain of coronavirus disease, COVID-19, could adversely affect our business.
The success of our business depends on our ability to expand into new vertical markets and attract new customers in a cost-effective manner. In order to grow our business, we plan to drive greater awareness and adoption of our tests and services from enterprises across new vertical markets.
The success of our business depends on our ability to expand into new vertical markets and attract new customers in a cost-effective manner. In order to grow our business, we plan to drive greater awareness and adoption of our tests and services from customers across new vertical markets.
A successful claim not fully covered by our insurance could have a material adverse impact on our liquidity, financial condition, and results of operations. 43 Our future growth could be harmed if we lose the services of our key personnel.
A successful claim not fully covered by our insurance could have a material adverse impact on our liquidity, financial condition, and results of operations. Our future growth could be harmed if we lose the services of our key personnel.
Our customers may store and/or transmit a significant amount of personal or identifying information through our platform. Privacy and data security have become significant issues in the United States and in other jurisdictions where we may offer our software solutions.
Our customers may store and/or transmit a significant amount of personal or identifying information through our platform. Privacy and data security have become significant issues in the United States and in other jurisdictions where we may offer our solutions.
Any of the foregoing could adversely affect our business, financial condition, and results of operations. 45 Risks Related to our Intellectual Property Our license agreement with the University of Iowa Research Foundation includes a non-exclusive license of “technical information” that potentially could grant unaffiliated third parties access to materials and information considered derivative work made by us, which could be used by such licensees to develop competitive products.
Any of the foregoing could adversely affect our business, financial condition, and results of operations. 35 Risks Related to our Intellectual Property Our license agreement with the University of Iowa Research Foundation includes a non-exclusive license of “technical information” that potentially could grant unaffiliated third parties access to materials and information considered derivative work made by us, which could be used by such licensees to develop competitive products.
The security of our solutions, networks or computer systems may be breached, and any unauthorized access to our customer data will have an adverse effect on its business and reputation.
The security of our solutions, networks or computer systems may be breached, and any unauthorized access to our customer data will have an adverse effect on our business and reputation.
These sales also could cause the trading price of our Common Stock to fall and make it more difficult for investors to sell shares of our Common Stock at a time and price that they deem appropriate. 58 If securities or industry analysts either do not publish research about us or publish inaccurate or unfavorable research about us, our business, or our market, or if they change their recommendations regarding our Common Stock adversely, the trading price or trading volume of our Common Stock could decline.
These sales also could cause the trading price of our Common Stock to fall and make it more difficult for investors to sell shares of our Common Stock at a time and price that they deem appropriate. 44 If securities or industry analysts either do not publish research about us or publish inaccurate or unfavorable research about us, our business, or our market, or if they change their recommendations regarding our Common Stock adversely, the trading price or trading volume of our Common Stock could decline.
In addition, our services may be subject to computer malware, viruses and computer hacking, fraudulent use attempts and phishing attacks, all of which have become more prevalent in our industry.
In addition, our platform and services may be subject to computer malware, viruses and computer hacking, fraudulent use attempts and phishing attacks, all of which have become more prevalent in our industry.
Our ability to attract new customers and increase revenue from existing customers depends in part on our ability to enhance and improve its solutions, increase adoption and usage of its products and introduce new products and features.
Our ability to attract new customers and increase revenue from existing customers depends in part on our ability to enhance and improve our solutions, increase adoption and usage of our products and introduce new products and features.
Our current and future customers depend on its customer support team to assist them in utilizing our tests and services effectively and to help them to resolve issues quickly and to provide ongoing support.
Our current and future customers depend on our customer support team to assist them in utilizing our tests and services effectively and to help them to resolve issues quickly and to provide ongoing support.
The ability of UIRF to grant non-exclusive licenses to third parties in and to this broad definition of Technical Information raises the possibility that unaffiliated third parties could use such Technical Information, including Technical Information developed by the Company, to make, use, sell, offer to sell and import products and/or processes that compete with the Company’s exclusively-licensed products and/or processes or are positioned in markets that the Company may enter in the future.
The ability of UIRF to grant non-exclusive licenses to third parties in and to this broad definition of Technical Information raises the possibility that unaffiliated third parties could use such Technical Information, including Technical Information used by the Company, to make, use, sell, offer to sell and import products and/or processes that compete with the Company’s exclusively-licensed products and/or processes or are positioned in markets that the Company may enter in the future.
For example, the regulatory premarket clearance, approval or de novo authorization process may involve, among other things, successfully completing analytical, pre-clinical and/or clinical studies beyond the studies we have already performed or plans to perform for our LDT. These studies may be extensive and costly and may take a substantial period of time to complete.
For example, the regulatory premarket clearance, approval or de novo authorization process may involve, among other things, successfully completing analytical, pre-clinical and/or clinical studies beyond the studies we have already performed or plan to perform for our LDT. These studies may be extensive and costly and may take a substantial period of time to complete.
Any action against us for violation of these laws or regulations, even if we successfully defend against it, could cause us to incur significant legal expenses, divert management’s attention from the operation of our business and result in adverse publicity. To enforce compliance with the federal laws, the U.S.
Any action against us for violation of these laws or regulations, even if we successfully defend against it, could cause us to incur significant legal expenses, divert management’s attention from the operation of our business and result in loss of customers and adverse publicity. To enforce compliance with the federal laws, the U.S.
Significant expenditures on marketing efforts, potential acquisitions and other expansion efforts may not ultimately grow our business or lead to expected long-term results. 32 Our business and the markets in which we operate are new and rapidly evolving, which makes it difficult to evaluate our future prospects and the risks and challenges we may encounter.
Significant expenditures on marketing efforts, potential acquisitions and other expansion efforts may not ultimately grow our business or lead to expected long-term results. 26 Our business and the markets in which we operate are new and rapidly evolving, which makes it difficult to evaluate our future prospects and the risks and challenges we may encounter.
Furthermore, the FDA or the Federal Trade Commission (“FTC”), as well as state consumer protection agencies and competitors, may object to the materials and methods we use to promote the use of our current tests or other LDTs we may develop in the future, including with respect to the product claims in our promotional materials, and may initiate enforcement actions against us.
Furthermore, the FDA or the Federal Trade Commission (“FTC”), as well as state consumer protection agencies, may object to the materials and methods we use to promote the use of our current tests or other tests we may develop in the future, including with respect to the product claims in our promotional materials, and may initiate enforcement actions against us.
If our security measures, some of which are managed by third parties, are breached or fail, unauthorized persons may be able to obtain access to sensitive client and patient data, including HIPAA-regulated PHI. As a result, our reputation could be severely damaged, adversely affecting client and patient confidence.
If our security measures, some of which are managed by third parties, are breached or fail, unauthorized persons may be able to obtain access to sensitive customer and patient data, including HIPAA-regulated PHI. As a result, our reputation could be severely damaged, adversely affecting customer and patient confidence.
The reliance on a limited number of suppliers and a sole contract manufacturer, fulfillment center and laboratory present various risks. These include the risk that in the event of an interruption from any part of our supply chain for any reason, such as a natural catastrophe, labor dispute, or system interruption.
The reliance on a limited number of suppliers and a sole contract manufacturer and laboratory present various risks. These include the risk that in the event of an interruption from any part of our supply chain for any reason, such as a natural catastrophe, labor dispute, or system interruption.
If we are unable to successfully enhance our existing solutions and capabilities to meet evolving customer requirements, increase adoption and usage of our solutions, develop new products, or if our efforts to increase the usage of our products are more expensive than we expects, then our business, results of operations and financial condition could be harmed.
If we are unable to successfully enhance our existing solutions and capabilities to meet evolving customer requirements, increase adoption and usage of our solutions, develop new products, or if our efforts to increase the usage of our products are more expensive than we expect, then our business, results of operations and financial condition could be harmed.
We rely on a limited number of suppliers, contract manufacturers, and logistics providers, and our test is performed by a single contract high complexity Clinical Laboratory Improvement Amendments (CLIA) laboratory. For our Epi+Gen CHD™ test, we and our vendors rely on a limited number of suppliers for laboratory reagents and sampling kit supplies, contract manufacturers, and logistics providers.
We rely on a limited number of suppliers, contract manufacturers, and logistics providers, and our test is performed by a single contract high complexity Clinical Laboratory Improvement Amendments (CLIA) laboratory. For our Epi+Gen CHD™ and PrecisionCHD™ tests, we and our vendors rely on a limited number of suppliers for laboratory reagents and sampling kit supplies, contract manufacturers, and logistics providers.
If customers or customer personnel assert liability claims against us, any ensuing litigation, regardless of outcome, could result in a substantial cost to the Company, divert management’s attention from operations, and decrease market acceptance of our toolsets.
If customers or customer personnel assert liability claims against us, any ensuing litigation, regardless of outcome, could result in a substantial cost to the Company, divert management’s attention from operations, and decrease market acceptance of our solutions.
To the extent we take advantage of such reduced disclosure obligations, it may also make comparison of our financial statements with other public companies difficult or impossible. 56 Our stock price may be volatile and may decline regardless of our operating performance.
To the extent we take advantage of such reduced disclosure obligations, it may also make comparison of our financial statements with other public companies difficult or impossible. 43 Our stock price may be volatile and may decline regardless of our operating performance.
Though it is difficult to determine what, if any, harm may directly result from any specific interruption or attack, they may include the theft or destruction of data owned by Cardio or our customers or customer personnel, and/or damage to our platform.
Though it is difficult to determine what, if any, harm may directly result from any specific interruption or attack, they may include the theft or destruction of data owned by us or our customers or customer personnel, and/or damage to our platform.
If Nasdaq delists our shares or Public Warrants from trading on its exchange for failure to meet the listing standards, we and our securityholders could face significant material adverse consequences including: • a limited availability of market quotations for our securities; • reduced liquidity for our securities; • a determination that our common stock is a “penny stock,” which will require brokers trading in our common stock to adhere to more stringent rules, possibly resulting in a reduced level of trading activity in the secondary trading market for shares of our common stock; • a limited amount of analyst coverage; and • a decreased ability to issue additional securities or obtain additional financing in the future.
If Nasdaq delists our shares of Common Stock or Public Warrants for failure to meet the listing standards, we and our securityholders could face significant material adverse consequences including: · a limited availability of market quotations for our securities; · reduced liquidity for our securities; · a determination that our common stock is a “penny stock,” which will require brokers trading in our common stock to adhere to more stringent rules, possibly resulting in a reduced level of trading activity in the secondary trading market for shares of our common stock; · a limited amount of analyst coverage; and · a decreased ability to issue additional securities or obtain additional financing in the future.
The penalties for failure to comply with these and other requirements may include Warning Letters, product seizure, injunctions, civil penalties, criminal penalties, mandatory customer notification, and recalls, any of which may adversely impact our business and results of operations.
The penalties for failure to comply with these FDA requirements may include Warning Letters, product seizure, injunctions, civil penalties, criminal penalties, mandatory customer notification, and recalls, any of which may adversely impact our business and results of operations.
In addition, as health care providers consolidate to create larger and more integrated health care delivery systems with greater market power, these providers may try to use their market power to negotiate fee reductions for our products and services.
In addition, as health care providers consolidate to create larger and more integrated health care delivery systems with greater market power, these providers may try to use their market power to negotiate price reductions for our products and services.
Enforcement actions by these agencies may include, among others, injunctions, civil penalties, and equitable monetary relief. 50 If our products do not receive adequate coverage and reimbursement from third-party payors, our ability to expand access to our tests beyond the initial sales channels will be limited and our overall commercial success will be limited.
Enforcement actions by these agencies may include, among others, injunctions, civil penalties, fines, and equitable monetary relief. 39 If our products do not receive adequate coverage and reimbursement from third-party payors, our ability to expand access to our tests beyond the initial sales channels will be limited and our overall commercial success will be limited.
If we are unable to maintain effective marketing programs, then our ability to attract new customers or enter into new vertical markets could be adversely affected. 38 Consolidation in the health care industry could have a material adverse effect on our business, financial condition and results of operations.
If we are unable to maintain effective sales and marketing programs, then our ability to attract new customers or enter into new vertical markets could be adversely affected. 30 Consolidation in the health care industry could have a material adverse effect on our business, financial condition and results of operations.
While the clinical epigenetics market is still fairly new, we face competition from various sources, including large, well-capitalized technology companies such as Exact Sciences and Prevencio. These competitors may have better brand name recognition, greater financial and engineering resources and larger sales teams than we have.
While the clinical epigenetics market is still fairly new, we face competition from various sources, including large, well-capitalized technology companies such as Cleerly and Prevencio. These competitors may have better brand name recognition, greater financial and engineering resources and larger sales teams than we have.
Refer to Note 2, “Summary of Significant Accounting Policies” to the Audited Financial Statements included elsewhere in this Annual Report on Form 10-K for a description of recent accounting pronouncements.
Refer to Note 3, “Summary of Significant Accounting Policies” to the Audited Financial Statements included elsewhere in this Annual Report on Form 10-K for a description of recent accounting pronouncements.
Any such studies may fail to generate data that meets the FDA’s requirements . The studies may also not be conducted in a manner that meets the FDA’s requirements, and therefore could not be used in support of the marketing application.
Any such studies may fail to generate data that meets the FDA’s requirements . The studies may also not be conducted in a manner that meets the FDA’s requirements, and therefore could not support the marketing application.
Coverage and reimbursement by third-party payors, including managed care organizations, private health insurers, and government healthcare programs, such as Medicare and Medicaid in the United States and similar programs in other countries, for the types of early detection tests we perform can be limited and uncertain .
Coverage and reimbursement by third-party payors, including managed care organizations, private health insurers, and government healthcare programs, such as Medicare and Medicaid in the United States and similar programs in other countries, for the types of risk assessment and detection tests we perform can be limited and uncertain .
In particular, we expect that, because there will be a substantial number of shares registered pursuant to various registration statements, the applicable selling securityholders will continue to offer such covered securities for a significant period of time, the precise duration of which cannot be predicted.
In particular, we expect that, because there are a substantial number of shares registered pursuant to various registration statements, the applicable selling securityholders can continue to offer such covered securities for a significant period of time, the precise duration of which cannot be predicted.
These risks and challenges include our ability to: · attract new users of our tests through patient awareness as well as through key channel participants; · gain market acceptance of our initial and future tests and services with key constituencies and maintain and expand such relationships; · comply with existing and new laws and regulations applicable to our business and in our industry; · anticipate and respond to changes in payor reimbursement rates and the markets in which we operate; · react to challenges from existing and new competitors · maintain and enhance our reputation and brand; · effectively manage our growth and business operations, including new geographies; · accurately forecast our revenue and budget for, and manage, our expenses, including capital expenditures; and · hire and retain talented individuals at all levels of our organization; If we fail to understand fully or adequately address the challenges that we are currently encountering or that we may encounter in the future, including those challenges described here and elsewhere in this “Risk Factors” section, our business, financial condition and results of operations could be adversely affected.
These risks and challenges include our ability to: · attract new customers for our tests through patient awareness, sales and marketing campaigns, as well as through key channel partners; · gain market acceptance of our current and future tests and services with key constituencies and maintain and expand such relationships; · comply with existing and new laws and regulations applicable to our business and in our industry; · anticipate and respond to changes in payor reimbursement rates and the markets in which we operate; · react to challenges from existing and new competitors; · maintain and enhance our reputation and brand; · effectively manage our growth and business operations, including new geographies; · accurately forecast our revenue and budget for, and manage, our expenses, including capital expenditures; and · hire and retain talented individuals at all levels of our organization; If we fail to understand fully or adequately address the challenges that we are currently encountering or that we may encounter in the future, including those challenges described here and elsewhere in this “Risk Factors” section, our business, financial condition and results of operations could be adversely affected.
In addition, from time-to-time, Cardio or its vendors may experience limited periods of equipment downtime, server downtime due to server failure or other technical difficulties (as well as maintenance requirements). It may become increasingly difficult to maintain and improve our performance, especially during high volume times and as its solution becomes more complex and its customer traffic increases.
In addition, from time-to-time, we or our vendors may experience limited periods of equipment downtime, server downtime due to server failure or other technical difficulties (as well as maintenance requirements). It may become increasingly difficult to maintain and improve our performance, especially during high volume times and as our solution becomes more complex and our customer demand and traffic increases.
Members may curtail their use of or stop using our services or our customer base could decrease, which would cause our business to suffer.
Customers may curtail their use of or stop using our services or our customer base could decrease, which would cause our business to suffer.
Further, if a natural disaster, health epidemics or pandemic, or man-made problem were to affect our network service providers or Internet service providers, this could adversely affect the ability of our customers to use our products and platform.
Further, if a natural disaster or man-made problem were to affect our network service providers or Internet service providers, this could adversely affect the ability of our customers to use our products and platform.
Our new management following the Business Combination will need to invest significant time and financial resources to comply with both existing and evolving requirements for public companies, which will lead, among other things, to significantly increased general and administrative expenses and a certain diversion of management time and attention from revenue generating activities to compliance activities.
Our management will need to invest significant time and financial resources to comply with both existing and evolving requirements for public companies, which will lead, among other things, to significantly increased general and administrative expenses and a certain diversion of management time and attention from revenue generating activities to compliance activities.
Accordingly, the adverse market and price pressures resulting from an offering pursuant to a registration statement may continue for an extended period of time.
Accordingly, the adverse market and price pressures resulting from an offering pursuant to a registration statement or Rule 144 may continue for an extended period of time.
Cardio may in the future experience, disruptions, outages and other performance problems due to a variety of factors, including infrastructure changes, introductions of new applications and functionality, software errors and defects, capacity constraints due to an increasing number of customers or security related incidents.
We may in the future experience disruptions, outages and other performance problems due to a variety of factors, including challenges with suppliers, infrastructure changes, introductions of new applications and functionality, software errors and defects, capacity constraints due to an increasing number of customers or security related incidents.
To the extent that Cardio does not effectively address capacity constraints, upgrade its systems, as needed, and continually develop our technology and network architecture to accommodate actual and anticipated changes in technology, customers may cease to use our solutions and our business and operating results may be adversely affected.
To the extent that we do not effectively address capacity constraints, upgrade our systems, as needed, and continually develop our technology and network architecture to accommodate actual and anticipated changes in technology, customers may cease to use our solutions and our business and operating results may be adversely affected.
Although we have published a study showing the Epi+Gen CHD™ test is associated with cost saving, it is not yet, and may never be, listed in any such guidelines.
Although we have published a study showing the Epi+Gen CHD™ and PrecisionCHD™ tests are associated with cost saving, it is not yet, and may never be, listed in any such guidelines.
Ongoing compliance with FDA regulations, such as the Quality System Regulation, labeling requirements, Medical Device Reports, and recall reporting, would increase the cost of conducting our business and subject us to heightened regulation by the FDA. We will be subject to periodic inspection by the FDA to ascertain whether our facility does comply with applicable requirements.
Ongoing compliance with FDA regulations, such as the QSR, labeling requirements, Medical Device Reports, and recall reporting, would increase the cost of conducting our business. We will be subject to periodic inspection by the FDA to ascertain whether our facility does comply with applicable requirements.
If some investors find our Common Stock less attractive, there may be a less active trading market for our Common Stock and our stock price may be more volatile. There can be no assurance that we will be able to comply with the continued listing standards of Nasdaq.
If some investors find our Common Stock less attractive, there may be a less active trading market for our Common Stock and our stock price may be more volatile. 48 There can be no assurance that we will be able to comply with the continued listing standards of Nasdaq. Our common stock is listed on The Nasdaq Capital Market ("Nasdaq”).
The FDA sometimes determines that a test that is being offered by a laboratory as an LDT is not an LDT under the FDA’s interpretation of that term but is an in vitro diagnostic (“IVD”) medical device in commercial distribution, and therefore must comply with the regulations that apply to IVDs, including the need for successfully completing the FDA review process.
The FDA sometimes determines that a test that is being offered by a laboratory as an LDT is not an LDT under the FDA’s interpretation of that term but is an in IVD product in commercial distribution, and therefore must comply with the regulations that apply to IVDs, including the need for successfully completing the FDA review process.
This estimate and our expectation regarding the sufficiency of funds are based on assumptions that may prove to be wrong, and we could use our available capital resources sooner than we currently expect.
The estimate and our expectation regarding the sufficiency of funds to continue our business plan and operations are based on assumptions that may prove to be wrong, and we could use our available capital resources sooner than we currently expect.
Moreover, even for tests that are deemed to be LDTs, the FDA has historically taken the position that it has the authority to regulate such tests as IVDs under the Federal Food, Drug, and Cosmetic Act, or FDC Act, although it has generally exercised enforcement discretion with regard to LDTs.
For tests that are deemed to be LDTs, the FDA has historically taken the position that it has the authority to regulate such tests as IVDs under the Federal Food, Drug, and Cosmetic Act (“FDC Act”), although it has generally exercised enforcement discretion with regard to LDTs.
In addition, if a test has been cleared, approved or authorized, certain kinds of changes that we may make, e.g. , to improve the test, or because of issues with suppliers of the components of the test or modification by a supplier to a component upon which our test approval relies, may result in the need for the test to obtain new clearance, approval or authorization from the FDA before we can implement them, which could increase the time and expense involved in implementing such changes commercially.
In addition, if a test has been cleared, approved or authorized, certain kinds of changes that we may make, e.g. , to improve the test, or because of issues with suppliers of the components of the test or modification by a supplier to a component upon which our test approval relies, may result in the need for the test to obtain new clearance, approval or authorization from the FDA before we can implement them.
Some types of SaMD are subject to premarket authorization requirements. If the FDA were to conclude that Cardio or our licensee is required to obtain premarket authorization for the software used in Epi+Gen CHD™ or PrecisionCHD™, our ability to offer the tests as an LDT could be delayed or prevented, which would adversely affect our business.
If the FDA were to conclude that Cardio or our licensee is required to obtain premarket authorization for the software used in Epi+Gen CHD™ or PrecisionCHD™, our ability to offer the tests as an LDT could be delayed or prevented, which would adversely affect our business.
Achieving and sustaining compliance with these laws may prove costly. Failure to comply with these laws and other laws can result in civil and criminal penalties such as fines, damages, overpayment recoupment loss of enrollment status and exclusion from the Medicare and Medicaid programs.
Failure to comply with these laws and other laws can result in civil and criminal penalties such as fines, damages, overpayment recoupment loss of enrollment status and exclusion from the Medicare and Medicaid programs.
We believe the likelihood that warrant holders will exercise the Warrants, and therefore, the amount of cash proceeds that we would receive, is dependent upon the trading price of our Common Stock, the last reported sales price for which was $4.25 per share on March 27, 2023.
We believe the likelihood that warrant holders will exercise the Warrants, and therefore, the amount of cash proceeds that we would receive, is dependent upon the trading price of our Common Stock, the last reported sales price for which was $1.42 per share on March 28, 2024.
Food and Drug Administration (the “FDA”) were to begin actively regulating our tests, we could incur substantial costs and delays associated with trying to obtain premarket clearance or approval and incur costs associated with complying with post-market controls.
Food and Drug Administration (the “FDA”) were to begin actively regulating our tests, we could incur substantial costs and delays associated with trying to obtain premarket clearance or approval and incur costs associated with complying with post-market controls. We believe our Epi+Gen CHD™ and PrecisionCHD™ tests are LDTs.
We expect to spend significant amounts to expand our existing operations, including expansion into new geographies, to make additional key hires, to expand our sales channels and constituencies and to develop new tests and services.
We expect to need to raise additional capital to fund our existing operations or develop and commercialize new services or expand our operations. We expect to spend significant amounts to expand our existing operations, including expansion into new geographies, to make additional key hires, to expand our sales channels and constituencies and to develop new tests and services.
We also may not achieve the anticipated benefits from the acquired business due to a number of factors, including: • inability to integrate or benefit from acquired technologies or services in a profitable manner; • unanticipated costs or liabilities associated with the acquisition; • difficulty integrating the accounting systems, operations, and personnel of the acquired • difficulties and additional expenses associated with supporting legacy products and hosting infrastructure of the acquired business; • difficulty converting the customers of the acquired business onto the Platform and contract terms, including disparities in the revenue, licensing, support, or professional services model of the acquired company; • diversion of management’s attention from other business concerns; • adverse effects to our existing business relationships with business partners and customers as a result of the acquisition; • the potential loss of key employees; • use of resources that are needed in other parts of our business; and • use of substantial portions of our available cash to consummate the acquisition. 68 In addition, a significant portion of the purchase price of companies we acquire may be allocated to acquired goodwill and other intangible assets, which must be assessed for impairment at least annually.
We also may not achieve the anticipated benefits from the acquired business due to a number of factors, including: · inability to integrate or benefit from acquired technologies or services in a profitable manner; · unanticipated costs or liabilities associated with the acquisition; · difficulty integrating the accounting systems, operations, and personnel of the acquired · difficulties and additional expenses associated with supporting legacy products and hosting infrastructure of the acquired business; · difficulty converting the customers of the acquired business onto the Platform and contract terms, including disparities in the revenue, licensing, support, or professional services model of the acquired company; · diversion of management’s attention from other business concerns; · adverse effects to our existing business relationships with business partners and customers as a result of the acquisition; · the potential loss of key employees; · use of resources that are needed in other parts of our business; and · use of substantial portions of our available cash to consummate the acquisition.
Our quarterly results may fluctuate significantly and may not fully reflect the underlying performance of our business. Our results of operations and key metrics discussed elsewhere in this registration statement may vary significantly in the future and period-to-period comparisons of our operating results and key metrics may not provide a full picture of our performance.
Our quarterly results may fluctuate significantly and may not fully reflect the underlying performance of our business. Our results of operations and key metrics discussed elsewhere in this Annual Report on Form 10-K may vary significantly in the future and period-to-period comparisons of our operating results and key metrics may not provide a full picture of our performance.
If any action, the subject matter of which is within the scope the forum provisions of the Warrant Agreement, is filed in a court other than a court of the State of New York or the United States District Court for the Southern District of New York (a “foreign action”) in the name of any holder of Warrants, such holder shall be deemed to have consented to: (x) the personal jurisdiction of the state and federal courts located in the State of New York in connection with any action brought in any such court to enforce the forum provisions (an “enforcement action”), and (y) having service of process made upon such warrant holder in any such enforcement action by service upon such warrant holder’s counsel in the foreign action as agent for such warrant holder. 61 This choice-of-forum provision may limit a warrant holder’s ability to bring a claim in a judicial forum that it finds favorable for disputes with us, which may discourage such lawsuits.
If any action, the subject matter of which is within the scope the forum provisions of the Warrant Agreement, is filed in a court other than a court of the State of New York or the United States District Court for the Southern District of New York (a “foreign action”) in the name of any holder of Warrants, such holder shall be deemed to have consented to: (x) the personal jurisdiction of the state and federal courts located in the State of New York in connection with any action brought in any such court to enforce the forum provisions (an “enforcement action”), and (y) having service of process made upon such warrant holder in any such enforcement action by service upon such warrant holder’s counsel in the foreign action as agent for such warrant holder.
In addition, there is a risk that one or more of our current and future service providers, manufacturers, suppliers, other partners could be negatively affected by such difficult economic factors, which could adversely affect our ability to attain our operating goals on schedule and on budget or meet our business and financial objectives.
In addition, there is a risk that one or more of our current and future service providers, manufacturers, suppliers, other partners could be negatively affected by such difficult economic factors, which could adversely affect our ability to attain our operating goals on schedule and on budget or meet our business and financial objectives. 33 Our success depends upon our ability to adapt to a changing market and our continued development of additional tests and services.
In addition, as a business with a limited operating history, we may encounter unforeseen expenses, difficulties, complications, delays and other known and unknown challenges. We are transitioning to a company capable of supporting commercialization, sales and marketing. We may not be successful in such a transition and, as a result, our business may be adversely affected.
In addition, as a business with a limited operating history, we may encounter unforeseen expenses, difficulties, complications, delays and other known and unknown challenges. We are not be successful at commercialization, sales and marketing and, as a result, our business may be adversely affected.
We may not be able to implement improvements in an efficient or timely manner and may discover deficiencies in existing controls, programs, systems and procedures, which could have an adverse effect on our business, reputation and financial results. Additionally, rapid growth in our business may place a strain on our human and capital resources.
We may not be able to implement improvements in an efficient or timely manner and may discover deficiencies in existing controls, programs, systems and procedures, which could have an adverse effect on our business, reputation and financial results.

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Item 2. Properties

Properties — owned and leased real estate

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Biggest changeThe cost for this space is approximately $8,550 per month with an unaffiliated third party and the third party commencing on May 12, 2022 and is on a twelve month term. We consider our current office space, combined with the other office space otherwise available to our executive officers, adequate for our current operations.
Biggest changeThe cost for this space is approximately $8,505 per month with an unaffiliated third party commencing on December 1, 2023 and is on a five year term. We consider our current office space, combined with the other office space otherwise available to our executive officers, adequate for our current operations.
Item 2. Properties We do not own any real estate or other physical properties materially important to our operations. We currently maintain our principal executive offices at 400 N Aberdeen St, Suite 900, Chicago, Illinois 60642 pursuant to a Membership Agreement.
Item 2. Properties We do not own any real estate or other physical properties materially important to our operations. We currently maintain our principal executive offices at 311 W. Superior St, Ste 444, Chicago, IL 60654 pursuant to a Lease Agreement.
Added
The cost for this space is approximately $13,000 per month with an unaffiliated third party commencing on December 1, 2023 and is on a three year term. We also maintain a lab at 2565 N. Dodge, Suite D, Iowa City, IA 52245 pursuant to a Lease Agreement.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

3 edited+2 added−2 removed4 unchanged
Biggest changeRefer to Note7 to the consolidated financial statements included in this Annual Report on Form 10-K for additional information relating to outstanding warrants. Securities Authorized for Issuance Under Equity Compensation Plans See Part III, Item 11, “Executive Compensation,” for information about securities authorized for issuance under the Company’s equity compensation plan. Sales of Unregistered Securities None.
Biggest changeRefer to Note 10 to the consolidated financial statements included in this Annual Report on Form 10-K for additional information relating to outstanding warrants. Securities Authorized for Issuance Under Equity Compensation Plans See Part III, Item 11, “Executive Compensation,” for information about securities authorized for issuance under the Company’s equity compensation plan.
Payment of cash dividends in the future will be at the discretion of our Board of Directors and will depend upon our earnings levels, capital requirements, any restrictive loan covenants and other factors the Board considers relevant. 70 Warrants At March 27, 2022, there were 7,854,620 warrants outstanding for the purchase of Company Common Stock.
Payment of cash dividends in the future will be at the discretion of our Board of Directors and will depend upon our earnings levels, capital requirements, any restrictive loan covenants and other factors the Board considers relevant. Warrants As of April 1, 2024, there were 8,528,766 warrants outstanding for the purchase of Company Common Stock.
Holders As of March 27, 2023, there were 91 holders of record of our common stock and ten holders of record of our Public Warrants and Sponsor Warrants.
Holders As of April 1, 2024, there were 37 holders of record of our common stock and six holders of record of our Public Warrants and Sponsor Warrants.
Removed
Prior to the consummation of the Business Combination on October 25, 2022, Mana’s units, Common Stock, public warrants and rights were listed on the Nasdaq Global Select Market under the symbols “MAAQU,” “MAAQ,” “MAAQW” and “MAAQR,” respectively. There was no public trading market for Legacy Cardio’s equity.
Added
Sales of Unregistered Securities We did not sell any equity securities that were not registered under the Securities Act during the fiscal year ended December 31, 2023 that were not otherwise disclosed in our Quarterly Reports on Form 10-Q or our Current Reports on Form 8-K.
Removed
Issuer Purchases of Equity Securities None. Item 6. [Reserved]
Added
Issuer Purchases of Equity Securities We do not currently have any plans under which the Company is able to repurchase shares of our equity securities from our stockholders. 51

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

32 edited+54 added−40 removed45 unchanged
Biggest changeCardio’s ongoing strategy for expanding its business operations includes the following: • Develop blood-based and saliva-based products for stroke, congestive heart failure and diabetes; • Build out clinical and health economics evidence in order to obtain payer reimbursement for Cardio’s tests; • Expand its testing process outside of a single high complexity CLIA laboratory to multiple laboratories, including hospital laboratories; • Introduce the test across several additional key channels, including health systems and self-insured employers; and • Pursue the potential acquisition of one or more laboratories and/or synergistic companies in the telemedicine, AI or remote patient monitoring space.
Biggest changeOur ongoing strategy 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; · Expand clinical and health economics evidence portfolio to continue to demonstrate value of products and increase reach; · Leverage our newly awarded CPT PLA codes; · Expand the adoption of our products across key channels, including health systems and self-insured employers, including for HeartRisk, Cardio’s new SaaS product; · 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 acquisition(s) of one or more synergistic companies.
In October 2023, 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.
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 estimated fair value of certain financial instruments, including cash and cash equivalents, accounts payable and accrued expenses are carried at historical cost basis, which approximates their fair values because of the short-term nature of these instruments.
The estimated fair value of certain financial instruments, including cash and cash equivalents, accounts receivable, accounts payable and accrued expenses are carried at historical cost basis, which approximates their fair values because of the short-term nature of these instruments.
We consider liquidity in terms of cash flows from operations and other sources, and their sufficiency to fund our operating and investing activities. Our principal sources of liquidity have been proceeds from the issuance of equity and warrant exercises.
We consider liquidity in terms of cash flows from operations and other sources, and their sufficiency to fund our operating and investing activities. Historically, our principal sources of liquidity have been proceeds from the issuance of equity and warrant exercises.
No legal proceedings have been instigated by either party, and Cardio believes that the final outcome will not have a material adverse impact on its financial condition. 77 The Benchmark Company, LLC Right of First Refusal As noted in Note 1, the Company completed a business combination with Mana on October 25, 2022.
No legal proceedings have been instigated by either party, and Cardio believes that the final outcome will not have a material adverse impact on its financial condition. 55 The Benchmark Company, LLC Right of First Refusal As noted in Note 1, the Company completed a business combination with Mana on October 25, 2022.
You should read the following discussion and analysis of our financial condition and results of operations together with our audited consolidated financial statements as of December 31, 2022 and 2021 and for each of the two years in the period ended December 31, 2022 and the related notes included in Part II, Item 8 of this Annual Report.
You should read the following discussion and analysis of our financial condition and results of operations together with our audited consolidated financial statements as of December 31, 2023 and 2022 and for each of the two years in the period ended December 31, 2023 and the related notes included in Part II, Item 8 of this Annual Report.
The Company vigorously denies that the S-4 Registration Statement, as amended and declared effective, is deficient in any respect. The Company believes that the claims asserted in the Demand Letter are without merit and that no further disclosure is required to supplement the S-4 Registration Statement under applicable laws.
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 is required to supplement the S-4 Registration Statement under applicable laws.
More recently, upon signing the YA Securities Purchase Agreement on March 8, 2023, we issued and sold to YA II PN, Ltd. (“Yorkville”) a Convertible Debenture in the principal amount of $5.0million for a purchase price of $4.5 million (the “First YA Convertible Debenture”) to provide additional liquidity.
More recently, upon signing the YA Securities Purchase Agreement on March 8, 2023 (the “Securities Purchase Agreement”), we issued and sold to YA II PN, Ltd. (“Yorkville”) a Convertible Debenture in the principal amount of $5,000,000 for a purchase price of $4,500,000 to provide additional liquidity.
We believe 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 $4.25 on March 27, 2023.
We believe 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 $1.42 on March 28, 2024.
Cash Used in Investing Activities Cash used in investing activities for the year ended December 31, 2022, was $368,001 compared to $364,029 for the year ended December 31, 2021.
Cash Used in Investing Activities Cash used in investing activities for the year ended December 31, 2023, was $794,291 compared to $368,001 for the year ended December 31, 2022.
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 Annual Report on Form 10-K.
The Company has paid Craig-Hallum $ 21,947 in sales commissions. 52 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 Annual Report on Form 10-K.
The following table shows Cardio’s cash flows from operating activities, investing activities and financing activities for the stated periods: 2022 2021 Net cash used in operating activities $ 5,090,968 $ 585,291 Net cash used in investing activities 368,001 364,029 Net cash provided by financing activities 9,063,723 1,225,000 Cash Used in Operating Activities Cash used in operating activities for the year ended December 31, 2022 was $5,090,968, as compared to $585,291 for the year ended December 31, 2021.
The following table shows our cash flows from operating activities, investing activities and financing activities for the stated periods: 2023 2022 Net cash used in operating activities $ 5,672,175 $ 5,090,968 Net cash used in investing activities 794,291 368,001 Net cash provided by financing activities 3,632,468 9,063,723 Cash Used in Operating Activities Cash used in operating activities for the year ended December 31, 2023, was $5,672,175, as compared to $5,090,968 for the year ended December 31, 2022.
Cash Provided by Financing Activities Cash provided by financing activities for the year ended December 31, 2022 was $9,063,723 as compared to $1,225,000 for the year ended December 31, 2021.
Cash Provided by Financing Activities Cash provided by financing activities for the year ended December 31, 2023, was $3,632,468 as compared to $9,063,723 for the year ended December 31, 2022.
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. 75 The exercise prices of our currently outstanding warrants range from a high of $11.50 to a low of $3.90 per share of Common Stock.
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.
ASC 820 describes three levels of inputs that may be used to measure fair value: Level 1 – quoted prices in active markets for identical assets or liabilities Level 2 – quoted prices for similar assets and liabilities in active markets or inputs that are observable Level 3 – inputs that are unobservable (for example cash flow modeling inputs based on assumptions) Revenue Recognition The Company hosts its product, Epi+Gen CHD™ on InTeleLab’s Elicity platform (the “Lab”).
ASC 820 describes three levels of inputs that may be used to measure fair value: Level 1 – quoted prices in active markets for identical assets or liabilities Level 2 – quoted prices for similar assets and liabilities in active markets or inputs that are observable Level 3 – inputs that are unobservable (for example cash flow modeling inputs based on assumptions) Revenue Recognition The Company offers its products, Epi+Gen CHD and PrecisionCHD, via telemedicine providers, provider organizations such as concierge practices, longevity clinics, and risk-bearing provider organizations, and employer organizations.
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.
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.
This change was due to $11,986,037 in proceeds from the sale of common stock, offset by $188,674 in payments of finance agreement, $1,535,035 in payments of recapitalization transaction costs and $1,198,604 in placement agent fees, during the year ended December 31, 2022. 76 Off-Balance Sheet Financing Arrangements We did not have any off-balance sheet arrangements as of December 31, 2022.
Cash provided by financing activities for the year ended December 31, 2022 was due to $11,986,036 in proceeds from the sale of common stock, offset by $188,674 in payments of finance agreement, $1,535,035 in payments of recapitalization transaction costs and $1,198,604 in payments of placement agent fees, during the year ended December 31, 2022.
Revenue Cardio has earned only nominal revenue since inception. Revenue for the year ended December 31, 2022 was $950 compared to $901 for the year ended December 31, 2021. Revenue was generated through the Elicity telemedicine platform.
Revenue Cardio has earned only nominal revenue since inception. Revenue for the year ended December 31, 2023, was $17,065 compared to $950 for the year ended December 31, 2022. Revenue was generated through multiple revenue channels, including, telemedicine platform, provider organizations, and employers.
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.
The total amortization expense for the year ended December 31, 2023 includes the amortization of intangible assets of $16,000 and patent costs of $3,182, respectively. 53 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.
Research and Development Research and development expense for year ended December 31, 2022, was $40,448 as compared to $31,468 for year ended December 31, 2021, an increase of $8,980. The increase was attributable to laboratory runs performed in the 2022 period, whereas less laboratory runs were performed in the corresponding period in 2021.
Research and Development Research and development expense for the year ended December 31, 2023, was $145,182 as compared to $40,448 for year ended December 31, 2022, an increase of $104,734. The increase was attributable to increased laboratory runs performed in the 2023, as compared to laboratory runs performed in 2022.
The following table sets forth Cardio’s results of operations data for the periods presented: Comparisons for the years ended December 31, 2022 and 2021: Years Ended December 31, 2022 2021 Revenue Revenue $ 950 $ 901 Operating Expenses Sales and marketing 92,700 103,318 Research and development 40,448 31,468 General and administrative expenses 4,400,253 470,563 Amortization 16,000 16,000 Total operating expenses (4,549,401 ) (621,349 ) Other (expense) income (112,534 ) — Net (loss) (4,660,985 ) $ (620,448 ) 73 Net Loss Attributable to Legacy Cardio Cardio’s net loss attributable for the year ended December 31, 2022, was $4,660,985 as compared to $620,448 for the year ended December 31, 2021, an increase of $4,040,537 primarily as a result of an increase in General and Administrative expenses.
The following table sets forth Cardio’s results of operations data for the periods presented: Comparisons for the years ended December 31, 2023 and 2022: Years Ended December 31, 2023 2022 Revenue Revenue $ 17,065 $ 950 Operating Expenses Sales and marketing 158,514 92,700 Research and development 145,182 40,448 General and administrative expenses 6,936,646 4,400,253 Amortization 19,182 16,000 Total operating expenses (7,259,524 ) (4,549,401 ) Other (expense) income (1,134,375 ) (112,534 ) Net (loss) $ (8,376,834 ) $ (4,660,985 ) Net Loss Cardio’s net loss for the year ended December 31, 2023, was $8,376,834 as compared to $4,660,985 for the year ended December 31, 2022, an increase of $3,715,849 primarily as a result of an increase in General and Administrative expenses.
Our principal uses of cash in recent periods have been funding operations and paying expenses associated with the Business Combination.
Accordingly, as of the date of this report, the Company has paid in full all of the liabilities it assumed in the Business Combination. Our principal uses of cash in recent periods have been funding operations and paying expenses associated with the Business Combination.
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. 71 Cardio believes 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) payors.
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) payors.
However, on March 25, 2023, Ladenburg offered us a 15% early pay discount on the balance due. On March 27, 2023, we accepted the early pay discount and paid Ladenburg the net balance due and payable of $419,475.
On March 22, 2023, Ladenburg, one of Mana’s investment bankers, offered us a 15% early pay discount on the balance due. On March 27, 2023, we accepted Ladenburg’s early pay discount offer and paid Ladenburg the net balance due and payable of $419,475. The remaining assumed liabilities balance of $435,000 was paid in full in October 2023.
Determining the transaction price; 4. Allocating the transaction price to the performance obligations in the contract; and 5. Recognizing revenue when (or as) the Company satisfies its performance obligations. Patent Costs Cardio accounts for patents in accordance with ASC 350-30, General Intangibles Other than Goodwill .
Recognizing revenue when (or as) the Company satisfies its performance obligations. Patent Costs Cardio accounts for patents in accordance with ASC 350-30, General Intangibles Other than Goodwill . The Company capitalizes patent costs representing legal fees associated with filing patent applications and amortize them on a straight-line basis.
Cardio’s actual results may differ from these estimates under different assumptions or conditions. 78 While Cardio’s significant accounting policies are described in more detail in Note 2 to its consolidated financial statements, Cardio believes that the following accounting policies are those most critical to the judgments and estimates used in the preparation of its consolidated financial statements.
While Cardio’s significant accounting policies are described in more detail in Note 3 to its consolidated financial statements, Cardio believes that the following accounting policies are those most critical to the judgments and estimates used in the preparation of its consolidated financial statements. 56 Principles of Consolidation The consolidated financial statements include the accounts of the Company and its wholly owned-subsidiary, Legacy Cardio.
The modified retrospective adoption used by the Company did not result in a material cumulative effect adjustment to the opening balance of accumulated deficit. The Company determines the measurement of revenue and the timing of revenue recognition utilizing the following core principles: 1. Identifying the contract with a customer; 2. Identifying the performance obligations in the contract; 3.
The Company determines the measurement of revenue and the timing of revenue recognition utilizing the following core principles: 1. Identifying the contract with a customer; 2. Identifying the performance obligations in the contract; 3. Determining the transaction price; 4. Allocating the transaction price to the performance obligations in the contract; and 5.
Upon receipt of the raw biomarker data from MOgene, the Company performs all quality control, analytical assessments and report generation and shares test reports with the Elicity healthcare provider via the Elicity platform.
Upon ordering a test, a patient’s sample is sent to the lab for biomarker assessments. The Company performs all quality control, analytical assessments and report generation and shares test reports with the ordering healthcare provider. Revenue is recognized upon invoicing the provider organization.
Sales and Marketing Expenses related to sales and marketing for the year ended December 31, 2 022 were $92,700 as compared to $103,318 for the year ended December 31, 2021, a decrease of $10,618.
Sales and Marketing Expenses related to sales and marketing for the year ended December 31, 2 023, were $158,514 as compared to $92,700 for the year ended December 31, 2022, an increase of $65,814. The overall increase was due to an increase in sales and marketing campaign efforts in 2023.
General and Administrative Expenses General and administrative expenses for the year ended December 31,2022 were $4,400,253 as compared to $470,563 for the year ended December 31, 2021, an increase of $3,929,690. The overall increase is primarily due to an increase in personnel and legal and accounting expenses related to financing and merger transactional activity .
General and Administrative Expenses General and administrative expenses for the year ended December 31, 2023, were $6,936,646 as compared to $4,400,253 for the year ended December 31, 2022, an increase of $2,536,393.
In each fiscal year since our inception, we have incurred losses from operations and generated negative cash flows from operating activities. We also have negative working capital and stockholders’ deficit as of December 31, 2022. Our total current liabilities as of December 31, 2022 are $1,947,770.
In each fiscal year since our inception, we have incurred losses from operations and generated negative cash flows from operating activities. We continue to explore our financing options, such as equity private placement transactions.
Revenue is recognized upon receipt of payments from the Lab for each test at the end of each month. 79 The Company accounts for revenue under (“ASU”) 2014-09, “Revenue from Contracts with Customers (Topic 606)”, using the modified retrospective method.
The Company accounts for revenue under (“ASU”) 2014-09, “Revenue from Contracts with Customers (Topic 606)”, using the modified retrospective method. The modified retrospective adoption used by the Company did not result in a material cumulative effect adjustment to the opening balance of accumulated deficit.
Removed
Recent Developments The Business Combination On October 25, 2022, we consummated the Business Combination. Pursuant to the Business Combination Agreement, Merger Sub merged with and into Legacy Cardio, with Legacy Cardio surviving the merger and becoming a wholly-owned direct subsidiary of Mana. Thereafter, Merger Sub ceased to exist, and Mana was renamed Cardio Diagnostics Holdings, Inc.
Added
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.
Removed
The Business Combination was accounted for as a reverse recapitalization, in accordance with GAAP. Under the guidance in ASC 805, Mana was treated as the “acquired” company for financial reporting purposes.
Added
Cardio launched its first clinical test, Epi+Gen CHD, in 2021 during the Covid-19 pandemic. As a result, the initial strategy for commercialization involved launching the test via telemedicine and in smaller provider practices such as concierge medicine practices.
Removed
Legacy Cardio was deemed the accounting predecessor of the combined business, and Cardio Diagnostics Holdings, Inc., as the parent company of the combined business, was the successor SEC registrant, meaning that our financial statements for previous periods will be disclosed in the registrant’s periodic reports filed with the SEC.
Added
The volume of tests through these channels were minimal, and as the circumstances around Covid-19 pandemic improved, management re-vamped the Company’s go-to-market strategy to include other healthcare verticals and stakeholders beyond patients and small providers, including larger provider organizations, group purchasing organizations, employers, payors and life insurers.
Removed
The Business Combination had a significant impact on the Company’s reported financial position and results as a consequence of the reverse recapitalization.
Added
This new approach allowed Cardio to expand the reach of our solutions beyond the initial focus areas. Despite long partnership and sales cycles, in some instance as long as 14 months, Cardio in 2023 generated revenue from patient(s), small provider(s), larger provider(s) and employer(s) and has developed a more robust sales and partnership pipeline.
Removed
As noted in Note 1 to the Company’s consolidated financial statements, the Company’s financial position reflects current liabilities that include existing, deferred liabilities originally incurred by Mana that are payable by the Company to Ladenburg Thalmann & Co., Inc. (“Ladenburg”) and I-Bankers Securities, Inc.
Added
In addition to revenue, other key developments since our last Form 10-Q filing as of September 30, 2023, include: · Planned launch of a new lab and fulfillment center to expand testing capacity, reduce costs, reduce turnaround time and improved margins. · Entering into a Supply and Distribution Agreement with one of India’s premier organizations, Aimil Ltd, to lay the pre-marketing groundwork via Aimil’s extensive healthcare network. · Receiving an Innovative Technology Contract from Vizient, the largest group purchasing organization with a customer base encompassing 60% of hospitals and 97% of academic medical centers in the US. · Publication of a key peer-reviewed study on PrecisionCHD development and validation for the detection of coronary heart disease in the Journal of American Heart Association. · An agreement with Family Medicine Specialists to test at least 1,200 of their BlueCross BlueShield and other health plan patients across four locations. · Obtained two Current Procedural Terminology (CPT) Proprietary Laboratory Analysis (PLA) codes from the American Medical Association, 0440U for PrecisionCHD and 0439U for Epi+Gen CHD. · The launch of HeartRisk, a cardiovascular risk intelligence platform, initially for employers to provide insights that combine HIPAA-compliant anonymized and aggregated clinical cardiovascular risk data with industry and geographic data, with the aim of helping employers understand the cardiovascular risks in their workforce compared to population and industry benchmarks.
Removed
(“I-Bankers”), the underwriters of Mana’s initial public offering, and The Benchmark Company, LLC (“Benchmark”), the M&A advisor Mana retained in connection with the Business Combination. The aggregate amount of the liabilities owed to these investment bankers, as assumed by the Company in connection with the Business Combination, totals $928,500.
Added
Cardio expects that sales and partnership cycles will continue to be long.
Removed
This sum reflects a decrease in the amount of the original liabilities incurred by Mana, including a 30% decrease in the liability owed to Ladenburg and I-Bankers and a 46% decrease in the original liability incurred by Mana to Benchmark . The $928,500 is due and payable to the investment bankers on October 25, 2023.
Added
Recent Developments At the Market Sales Agreement On January 26, 2024, the Company entered into an At-the-Market Issuance Sales Agreement (the “Sales Agreement”) with Craig-Hallum Capital Group LLC (“Craig-Hallum”). Pursuant to the Sales Agreement, the Company may sell, at its option, up to an aggregate of $17 million in shares of its Common Stock through Craig-Hallum, as sales agent.
Removed
The balance of $435,000 owed to Benchmark remains due and payable on October 25, 2023. 72 In addition, the Company acquired only $4,021 in cash after the payment of transaction costs and outstanding accounts payable, primarily as a result of a redemption rate of over 99% by the holders of Mana’s publicly-traded Common Stock, which shares had a redemption right in connection with the Business Combination.
Added
Sales of the Common Stock made pursuant to the Sales Agreement have been or will be made under the Company’s Registration Statement on Form S-3 filed on January 26, 2024 (File No. 333-276725) (the “Registration Statement”), which was declared effective by the Securities and Exchange Commission on February 1, 2024.
Removed
Specifically, Mana’s public stockholders exercised their right to redeem 6,465,452 shares of Common Stock, which constituted approximately 99.5% of the shares with redemption rights, for cash at a redemption price of approximately $10.10 per share, for an aggregate redemption amount of $65,310,892 .
Added
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.
Removed
In accounting for the reverse recapitalization, Legacy Cardio’s 1,976,749 issued and outstanding common shares were reversed, and the Mana common shares totaling 9,514,743 were recorded, as described in Note 7.
Added
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.
Removed
As additional consideration for the transaction, Cardio will issue to each holder who was entitled to merger consideration at the Closing, its pro rata proportion of up to 1,000,000 shares of our authorized but unissued common stock (the “Earnout Shares” or “Contingently Issuable Common Stock”), if on or prior to the fourth anniversary of the Closing Date (the “Earnout Period”), the VWAP of the Company’s Common Stock equals or exceeds four different price triggers for 30 of any 40 consecutive trading days, as follows: (i) one-quarter of the Earnout Shares will be issued if the VWAP equals or exceeds $12.50 per share for the stated period; (ii) one-quarter of the Earnout Shares will be issued if the VWAP equals or exceeds $15.00 per share for the stated period; (iii) one-quarter of the Earnout Shares will be issued if the VWAP equals or exceeds $17.50 for the stated period; and (iv) one-quarter of the Earnout Shares will be issued if the VWAP equals or exceeds $20.00 for the stated period.
Added
As of April 1, 2024, the Company has sold 487,083 shares of its common stock under the Sales Agreement resulting in proceeds to the Company of $855,922, net of offering costs.
Removed
As an SEC-registered and Nasdaq-listed company, post-merger, the Company will need to hire additional personnel and implement procedures and processes to address public company regulatory requirements and customary practices.
Added
The overall increase is primarily due to a stock compensation of $1,035,273, an increase in rent, personnel, and office and software expenses related to new offices and the new internal lab setup. Amortization Amortization expense for the year ended December 31, 2023, was $19,182, as compared to $16,000 for the year ended December 31, 2022.
Removed
The Company expects to incur additional annual expenses as a public company for, among other things, directors’ and officers’ liability insurance, director fees, and additional internal and external accounting, legal and administrative resources. COVID-19 Impact The global COVID-19 pandemic continues to evolve.
Added
Yorkville fully converted the $5,000,000 Convertible Debenture into an aggregate of 10,622,119 common shares during the year ended December 31, 2023. The Securities Purchase Agreement contemplated the issuance of a second convertible debenture in the amount of $6,200,000.
Removed
The extent of the impact of the COVID-19 pandemic on Cardio’s business, operations and development timelines and plans remains uncertain and will depend on certain developments, including the duration and spread of the outbreak and its impact on Cardio’s development activities, third-party manufacturers, and other third parties with whom Cardio does business, as well as its impact on regulatory authorities and Cardio’s key scientific and management personnel.
Added
However, prior to the issuance of the second convertible debenture, the Company and Yorkville terminated the Securities Purchase Agreement by the mutual consent of the parties, effective as of January 4, 2024.
Removed
The ultimate impact of the COVID-19 pandemic is highly uncertain and subject to change. To the extent possible, Cardio is conducting business as usual, with necessary or advisable modifications to employee travel and with certain of its employees working remotely all or part of the time.
Added
On February 2, 2024, we closed a private placement with seven accredited investors, whereby we issued a total of 561,793 units (“Units”), with each Unit consisting of (i) one share of our Common Stock and (ii) one six-year Common Stock purchase warrant having an exercise price of $1.78 per share, subject to adjustment (the “Private Placement”).
Removed
Cardio will continue to actively monitor the evolving situation related to COVID-19 and may take further actions that alter our operations, including those that federal, state or local authorities may require, or that we determine in the best interests of our employees and other third parties with whom we do business.
Added
The Private Placement resulted in the issuance to investors of 561,793 shares of Common Stock and 561,793 warrants in an unregistered offering of securities. The purchase price of the securities was $1.78 per Unit, resulting in gross proceeds to the Company of $1,000,000, before deducting placement agent fees (10% or $100,000) and other offering expenses.
Removed
At this point, the extent to which the COVID-19pandemic may affect our future business, operations and development timelines and plans, including the resulting impact on Cardio’s expenditures and capital needs, remains uncertain.
Added
We intend to use the net proceeds from the Private Placement for working capital and general corporate purposes. As noted in Recent Developments, above, we entered into an At-the Market Sales Agreement with Craig-Hallum on January 26, 2024.
Removed
The overall decrease was due to a decrease in outsourced sales and marketing contracting related to the launching of our first product, Epi+Gen CHD™ in January 2021 as opposed to an increase in 2022 of hiring of staff utilized for sale and marketing efforts.
Added
As of April 1, 2024, we have received $877,869 in gross proceeds from the ATM sales, and we have available up to $16.1 million in future sales of our Common Stock that we may elect to make under the Sales Agreement.
Removed
Amortization Amortization expense for year ended December 31, 2022 was $16,000 as compared to $16,000 for the year ended December 31, 2021. The total amortization expense includes the amortization of intangible assets.
Added
We expect that our primary cash needs in 2024 will be for day-to-day operations, funding working capital requirements, funding our growth strategy, paying the setup expenses of our internal laboratory and paying expenses incurred in connection with our ongoing FDA submission activities.
Removed
Pursuant to the YA Securities Purchase Agreement, the parties further agreed that we will issue and sell to Yorkville, and Yorkville will purchase from us, a second YA Convertible Debenture in the principal amount of $6.2 million for a purchase price of $5.58 million, subject to the satisfaction or waiver of the conditions set forth in the YA Securities Purchase Agreement.
Added
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 2024, we will rely on the ongoing ATM offering, provided that market conditions are favorable.
Removed
The conditions include, but are not limited to: (i) the SEC shall have declared effective a resale registration statement covering shares of Common Stock issuable upon conversion of the First YA Convertible Debenture; and (ii) we shall have obtained stockholder approval for the issuance of the shares of Common Stock issuable upon conversion of the YA Convertible Debentures that would be in excess of the “Exchange Cap” (as defined in the YA Securities Purchase Agreement). 74 Our primary cash needs are for day-to-day operations, to fund working capital requirements, to fund our growth strategy, including investments and acquisitions, and to pay $435,000 of deferred contractual obligations originally incurred by Mana to one of its investment bankers, which is payable on October 25, 2023, as well as other accounts payable.
Added
The exercise prices of our currently outstanding warrants range from a high of $11.50 to a low of $1.78 per share of Common Stock.
Removed
As noted above, on March 8, 2023, we issued and sold the First YA Convertible Debenture, thereby increasing our current liabilities by $5.0 million, with the expectation that we will issue and sell the Second YA Convertible Debenture in the principal amount of $6.2 million in the second quarter of 2023.
Added
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. 54 Cash at December 31, 2023 totaled $1,283,523 as compared to $4,117,521 at December 31, 2022, a decrease of $2,833,998.
Removed
We received less proceeds from the Business Combination than we initially expected. The projections that we prepared in June 2022 in connection with the Business Combination assumed that we would receive at least an aggregate of $15 million in capital from the Business Combination and the Legacy Cardio private placements conducted in 2022 prior to the Business Combination.
Added
The cash used in operations during the year ended December 31, 2023, is a function of net loss of $8,376,834, adjusted for the following non-cash operating items: depreciation of $3,790, amortization of $107,830, stock based compensation of $1,279,273, and non-cash interest expense of $6,704,522, offset by a change in fair value of derivative liability of $5,406,220, a gain on extinguishment of debt of $193,350, an increase in accounts receivable of $4,960, a decrease of $758,669 in prepaid expenses and other current assets, an increase in deposits of $7,900, a decrease of $781,500 in accounts payable and accrued expenses and an increase in lease liability of $244,505.
Removed
This base amount anticipated at least $5.0 million in proceeds remaining in the Trust Account following payment of the requested redemptions. At Closing, we received only $4,021 in cash from the Trust Account due to higher than expected redemptions by Mana public stockholders and higher than expected expenses in connection with the Business Combination and residual Mana expenses.
Added
The cash used in investing activities for the year ended December 31, 2023, was due to $575,663 for purchase of property and equipment, $21,352 payments for lease and $197,276 in patent and trademark costs incurred.

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