CDIO

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How CDIO rewrote its risk factors

10-K ITEM 1A · FY2024 → FY2025

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New in FY2025

These disclosures reflect the Company’s beliefs and opinions as to factors that could materially and adversely affect the Company and its securities in the future.
References to past events are provided by way of example only and are not intended to be a complete listing or a representation as to whether or not such factors have occurred in the past or their likelihood of occurring in the future.
We have generated only nominal revenue in 2024 and 2025, including $34,890 in revenue generated in 2024 and $14,825 in revenue generated in 2025.
Our net losses totaled $8,383,453 and $6,498,167 for the years ended December 31, 2024 and 2025, respectively, and we have an accumulated deficit of $29,250,000 at December 31, 2025.
The healthcare commercialization process is inherently lengthy and subject to regulatory, reimbursement, evidentiary and behavioral factors, which, combined with clinical adoption of novel diagnostic technologies that frequently spans multiple years, results in a lengthy period from initial development to widespread utilization and ultimately to revenue generation, which, in some cases, may span a decade or more.
The commercialization lifecycle for diagnostic tests is lengthy and generally involves multiple stages, including scientific validation, regulatory compliance, the securing of third-party reimbursement, including coverage determination from government programs including the Centers for Medicare & Medicaid Services (“CMS”) and subsequently, from commercial payors, physician adoption and incorporation into clinical guidelines and behavioral and workflow integration as health care providers gain familiarity and comfort with new technologies.
These various stages can each take many years, and the entire process from scientific discovery to broad clinical adoption frequently can extend over a decade.
Despite having two clinically promising diagnostic tests currently available and more tests in the pipeline, we expect that our revenue growth will continue to be negligible until we have obtained third party reimbursement for our tests, the tests are incorporated into the broader health care clinical guidelines and are integrated into medical care workflow by health care providers.
There is no assurance that we will be successful in achieving those milestones and begin growing meaningful revenue.
We also cannot provide assurance that we will ever achieve profitability even as we grow revenue.
We believe our long-term value as a company will be greater if we focus on growth, which has in the past, and may continue to negatively impact our results of operations in the near term.
Our business and the markets in which we operate are new and rapidly evolving, which make it difficult to evaluate our future prospects and the risks and challenges we may encounter.
Our limited operating history makes it difficult to evaluate our future prospects and the risks and challenges we may encounter.
We may not be successful at commercialization, sales and marketing and, as a result, our business may be adversely affected.
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 conflicts between Russia and Ukraine or in Iran; · 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; extraordinary expenses such as litigation or other dispute-related expenses or settlement payments; · 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.
Further, although our revenues currently are only nominal, once we achieve traction, in any future period, our revenue growth could slow or our revenues could decline for a number of reasons, including slowing demand for our tests and services, increasing competition, a decrease in the growth of our overall market, or our failure, for any reason, to continue to capitalize on growth opportunities.
Since 2024, our primary source of capital has been sales of our Common Stock under our at-the-market agreement with Craig-Hallum Capital Group, LLC (the “ATM Agreement”).
If we are unable to raise additional capital under the ATM Agreement or otherwise, we may need to delay the timing of, or scale back, certain aspects of our business plan and operations.
Until such time, if ever, as we can generate sufficient revenues, we expect to finance our cash needs through a combination of equity offerings and debt financings or other sources.
In addition, we may seek additional capital in the event of favorable market conditions or strategic considerations, even if we believe that we have sufficient funds for our current or future operating plans.
Our ML/AI powering our technology and products, there are known risks with the use of ML/AI including accuracy, bias, toxicity, privacy, security and data provenance.
While we have implemented and are continuing to implement procedures and safeguards that are designed to prevent security breaches and cyberattacks, they may not be able to protect against all attempts to breach our systems, and we may not become aware in a timely manner of any such security breach.
Concerns over inflation, energy costs, geopolitical issues, including the ongoing conflict between Russian and Ukraine and the recent commencement of hostilities in Iran, unstable global credit markets and financial conditions, and volatile oil prices could lead to periods of significant economic instability, diminished liquidity and credit availability, declines in consumer confidence and discretionary spending, diminished expectations for the global economy and expectations of slower global economic growth going forward.
Compliance with changing regulation of corporate governance and public disclosure result in significant additional expenses.
Our management needs to invest significant time and financial resources to comply with both existing and evolving requirements for public companies, which leads, among other things, to significantly increased general and administrative expenses and diversion of management time and attention from revenue generating activities to compliance activities.
We are highly dependent upon the talents and services of a number of key employees, specifically Meeshanthini Dogan, PhD, Robert Philibert, MD PhD and Timur Dogan, PhD, and other senior technical and management personnel, including our other executive officers, all of whom would be difficult to replace.
Currently, we have less than 15 full and two part-time employees.
If the FDA were to begin actively regulating our tests or software, we could incur substantial costs and delays associated with trying to obtain premarket 510(k) clearance, de novo classification, or premarket approval and incur costs associated with complying with post-market controls.
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.
Our laboratories are currently regulated under CLIA and must comply with CAP requirements, and we are subject to extensive federal and state laws and regulations.
The FDA issued a final rule in May 2024 that would have subjected many LDTs to regulatory requirements including, in some cases, premarket authorization.
A federal district court vacated the FDA final rule in May 2025, holding that LDTs are not subject to FDA regulation.
The FDA rescinded the final rule in September 2025.
The FDA has not indicated how it will interpret the court ruling or whether it will seek a different regulatory approach with respect to LDTs or components thereof.
In June 2025, Congress re-introduced the Verifying Accurate, Leading-edge IVCT Development Act (“VALID Act”) to establish a new risk-based regulatory framework for in vitro clinical tests (“IVCTs”), including IVDs, LDTs, collection devices and instruments used with such tests.
This legislation was previously introduced in 2021 and 2023.
If the FDA were to develop an alternate approach to regulating LDTs, or if Congress were to enact legislation giving FDA authority to regulate our current or future LDTs, or any components, materials, or software we use in our tests we could be forced to stop selling our tests or be required to modify claims for or make other changes to our tests while we or our suppliers work to comply with FDA requirements including, potentially, premarket authorization.
Our business could be adversely affected while such review was ongoing and if we or our supplier were ultimately unable to obtain such authorization.
Completing such submissions would require the expenditure of time, attention and financial and other resources, and may not yield the desired results, which could delay, limit or prevent regulatory authorization.
We also believe that our Actionable Clinical Intelligence and HeartRisk platform are not subject to regulation by the FDA.In particular, the Actionable Clinical Intelligence platform is offered as a component of the PrecisionCHD LDT which, as noted above, FDA does not have authority to regulate.

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Gone since FY2024

We have generated only nominal revenue in 2023 and 2024, including $17,065 in revenue generated in 2023 and $34,890 in revenue generated in 2024.
Our net losses totaled $8,376,834 and $8,383,453 for the years ended December 31, 2023 and 2024, respectively, and we have an accumulated deficit of $22,751,833 at December 31, 2024.
We believe our long-term value as a company will be greater if we focus on growth, which may negatively impact our results of operations in the near term.
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.
Our limited operating history make it difficult to evaluate our future prospects and the risks and challenges we may encounter.
We are not be successful at commercialization, sales and marketing and, as a result, our business may be adversely affected.
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; extraordinary expenses such as litigation or other dispute-related expenses or settlement payments; · 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.
Further, in any future period, our revenue growth could slow or our revenues could decline for a number of reasons, including slowing demand for our tests and services, increasing competition, a decrease in the growth of our overall market, or our failure, for any reason, to continue to capitalize on growth opportunities.
If we are unable to raise additional capital, we may need to delay the timing of, or scale back, certain aspects of our business plan and operations.
Until such time, if ever, as we can generate sufficient revenues, we may finance our cash needs through a combination of equity offerings and debt financings or other sources.
In addition, we may seek additional capital due to favorable market conditions or strategic considerations, even if we believe that we have sufficient funds for our current or future operating plans.
Our ML/AI powering our technology and products, there are known risks of with the use of ML/AI including accuracy, bias, toxicity, privacy, security and data provenance.
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.
For example, certain proprietary reagents are manufactured under Good Manufacturing Practice (GMP) by a single contract manufacturer located in Michigan; the blood collection tubes included in the sample collection kits are manufactured by a single manufacturer; and the tests are performed in one high complexity CLIA laboratory located in Missouri.
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.
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.
As a public company, the delay of a product launch by a nearly a fiscal quarter could cause our reported results of operations to fail to meet market expectations, which, in turn, and could negatively impact our stock price.
While we have implemented and is continuing to implement procedures and safeguards that are designed to prevent security breaches and cyber attacks, they may not be able to protect against all attempts to breach our systems, and we may not become aware in a timely manner of any such security breach.
Concerns over inflation, energy costs, geopolitical issues, including the ongoing conflict between Russian and Ukraine, unstable global credit markets and financial conditions, and volatile oil prices could lead to periods of significant economic instability, diminished liquidity and credit availability, declines in consumer confidence and discretionary spending, diminished expectations for the global economy and expectations of slower global economic growth going forward.
Consumer Price Index (“CPI”), which measures a wide-ranging basket of goods and services, rose 8.5% from the same month a year ago, which represents the largest CPI increase since December of 1981.
Compliance with changing regulation of corporate governance and public disclosure will result in significant additional expenses.
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.
We are highly dependent upon the talents and services of a number of key employees, specifically Meeshanthini Dogan, PhD and Robert Philibert, MD PhD and other senior technical and management personnel, including our other executive officers, all of whom would be difficult to replace.
Currently, we have less than 16 full and part-time employees.
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.
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 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.
On May 6, 2024, FDA published a final rule amending the definition of an in vitro diagnostic (“IVD”) device to include tests manufactured by a clinical laboratory.
Pursuant to the rule LDTs, i.e., tests designed, manufactured, and used within a single CLIA-certified high complexity laboratory, are medical devices subject to FDA regulation under the Federal Food, Drug, and Cosmetic Act.
The final rule also announced FDA’s intention to apply its medical device requirements to LDTs.
Under the final rule, all LDTs, unless subject to a specific exemption, will be subject to premarket authorization requirements (510(k), de novo classification, or PMA) for each LDT performed by the laboratory, and to postmarket registration and listing, medical device reporting, correction, removal, and recall, complaint handling, labeling, investigational device, and quality system requirements.
FDA intends to phase in these requirements beginning May 6, 2025.
The final rule states that 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.

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Sentence-level comparison of Item 1A in the two most recent 10-Ks (FY2024 ↗, FY2025 ↗). A reworded sentence counts as one dropped and one added, so heavy edits read as low “kept”. Headings and page furniture are stripped; nothing is summarised by a model.

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