Cardio Diagnostics Holdings, Inc.

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Our Common Stock is listed on The Nasdaq Capital Market ("Nasdaq”). In order to maintain that listing, we must satisfy minimum financial and other requirements including, without limitation, a requirement that the closing bid price of our Common Stock be at least $1.00 per share. On June 3, 2024, we received a letter from Nasdaq indicating that, for the previous 30 consecutive business days, the bid price for the Company’s common stock had closed below the minimum $1.00 per share requirement for continued listing on Nasdaq under Nasdaq Listing Rule 5550(a)(2). As reported on our Current Report on Form 8-K dated June 7, 2024, we have an initial period of 180 calendar days, or until December 2, 2024 to regain compliance. Under certain circumstances, we may be granted an additional 180 days, or until May 29, 2025, to regain compliance. We anticipate seeking Nasdaq’s grant of the additional 180-day extension of the compliance deadline before December 2, 2024. If we fail to regain compliance with the minimum bid requirement within the cure period (or extended cure period, if made available) or if we fail to continue to meet all applicable continued listing requirements for Nasdaq in the future, Nasdaq could delist our securities.

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If Nasdaq delists our shares of Common Stock and Public Warrants for failure to meet the listing standards, we and our securityholders could face significant material adverse consequences including:

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Although our financial statements have been prepared on a going concern basis, we must raise additional capital to fund our operations in order to continue as a going concern.

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Prager Metis, our independent registered public accounting firm for the fiscal year ended December 31, 2023, has included an explanatory paragraph in their opinion that accompanied our audited consolidated financial statements as of and for the year ended December 31, 2023, indicating that our current liquidity position raises substantial doubt about our ability to continue as a going concern. Disclosure in Management’s Discussion and Analysis of Financial Condition and Results of Operations – Liquidity and Capital Resources in this Form 10-Q reiterates this risk as of the third quarter of 2024. If we are unable to improve our liquidity position, we may not be able to continue as a going concern. Our 2023 audited consolidated financial statements did not include any adjustments that might result if we are unable to continue as a going concern and, therefore, be required to realize our assets and discharge our liabilities other than in the normal course of business which could cause investors to suffer the loss of all or a substantial portion of their investment. We anticipate that our principal sources of liquidity will only be sufficient to fund our activities over the next 12 months. In order to have sufficient cash to fund our operations beyond the next 12 months, we will need to raise additional equity over the next 12 months in order to continue as a going concern and we cannot provide any assurance that we will be successful in doing so.

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The U.S. Food and Drug Administration’s (“FDA’s”) newly-issued rule for laboratory developed tests (“LDTs”), which will be phased in over a period of four years, will significantly change the regulatory landscape for LDTs. Unless the rule is overturned by a court or Congress, our currently marketed LDTs and those we develop in the future will be subject to new requirements which may include, for some tests, premarket clearance, de novo authorization or premarket approval. We will incur substantial costs and delays associated with complying with the new rule.

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We believe our Epi+Gen CHD™ and PrecisionCHD™ tests are LDTs. The FDA generally considers an LDT to be a test that is designed, manufactured, and used within a single laboratory that is certified under CLIA and meets the regulatory requirements under CLIA to perform high complexity testing

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The FDA has historically taken the position that it has the authority to regulate LDTs as in-vitro diagnostics (“IVDs”) under the Federal Food, Drug, and Cosmetic Act (“FDC Act”), although it has generally exercised enforcement discretion with regard to LDTs. This means that even though the FDA believes it can impose regulatory requirements on LDTs, such as requirements to obtain premarket approval, de novo authorization or clearance of LDTs, it has generally chosen not to enforce those requirements.

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On May 6, 2024, the FDA published a final rule amending the definition of an IVD device to include IVDs manufactured by a clinical laboratory. The final rule also announced the FDA’s intention to phase out its general enforcement discretion policy. On May 29, 2024, the American Clinical Laboratory Association filed a lawsuit against FDA in the Eastern District of Texas challenging the FDA’s agency authority to regulate LDTs. On August 19, 2024, the Association for Molecular Pathology filed a separate lawsuit in challenging FDA’s authority the Southern District of Texas. These lawsuits have been consolidated and briefing is expected to be completed by the end of 2024.The ultimate success of these lawsuits, or any future lawsuits that may be brought against the FDA challenging the LDT rule, is uncertain. It is also unclear whether a court would delay the implementation of the final rule while the litigation is ongoing, which means we may need to initiate steps to comply with the final rule even if it is ultimately overturned. Unless the rule is overturned by a court or Congress, the medical device requirements for most LDTs will be phased in beginning on May 6, 2025.

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The requirements established in the Final Rule include premarket authorization for some LDTs (510(k) clearance, de novo authorization or premarket approval) performed by a laboratory, and postmarket registration and listing, medical device reporting, correction, removal, and recall, complaint handling, labeling, investigational device, and quality system requirements. Certain categories of LDTs will be subject to enforcement discretion with respect to some or all of these requirements. For example, FDA will apply enforcement discretion to currently marketed LDTs that were first offered prior to May 6, 2024, with respect to most quality system requirements and the requirement for premarket authorization if they are not modified or modified in only limited ways. Laboratories performing these tests are subject to other requirements, including the requirement to submit the labeling for the LDT to FDA for review, which could be burdensome and expensive. FDA will similarly exercise enforcement discretion with respect to premarket clearance, de novo classification, or premarket approval requirements for LDTs approved by the New York State Clinical Laboratory Evaluation Program.

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Compliance with these additional regulatory requirements will be time-consuming and expensive. If we are required to obtain premarket notification, de novo authorization or premarket approval for our existing tests, or for any future tests we may develop, we may be required to successfully complete analytical, pre-clinical and/or clinical studies beyond the studies we have already performed or planned to perform for our LDTs. These studies may be extensive and costly and may take a substantial period of time to complete. Any such studies may fail to generate data that meet the FDA’s requirements. The studies may also not be conducted in a manner that meets the FDA’s requirements, and therefore may not support the marketing application. There can be no assurance that the submission of such an application will result in a timely response by the FDA or a favorable outcome that will allow the test to be marketed. In addition, we may be forced to stop selling our tests or we may be required to modify claims for or make other changes to our tests while we work to obtain FDA clearance approval or de novo authorization. Our business may be adversely affected while such review is ongoing and if we are ultimately unable to obtain premarket clearance. de novo authorization or premarket approval.

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Various bills have been introduced in Congress seeking to substantially revamp the regulation of both LDTs and IVDs, but no legislation has been enacted thus far.