Business Context and Reporting Period
This Form 8-K, dated October 25, 2022, reports the consummation of the business combination between Mana Capital Acquisition Corp. ("Mana") and Cardio Diagnostics, Inc. ("Legacy Cardio"). Following the merger, the combined entity operates as Cardio Diagnostics Holdings, Inc. (Ticker: CDIO). The transaction closed on October 25, 2022, resulting in Legacy Cardio becoming a wholly-owned subsidiary of the Company. The Company ceased to be a shell company upon closing.
Key Financial Metrics and Capital Structure
Redemptions and Liquidity: In connection with the special meeting, 6,465,452 shares of Mana common stock were redeemed for cash at approximately $10.10 per share, totaling $65,310,892. These funds were paid from the Investment Management Trust.
Post-Closing Capitalization: Immediately following the closing, the Company had 9,514,743 shares of Common Stock issued and outstanding. The capital structure includes:
- Public Warrants: 3,250,000 warrants exercisable at $11.50 per share.
- Private Warrants: 2,500,000 warrants issued to the Sponsor (exercisable at $11.50) and 2,204,627 Legacy Cardio private warrants (exercise prices ranging from $3.90 to $6.21).
- Options: 1,759,600 options assumed from Legacy Cardio, all vested and exercisable at $3.90 per share.
Ownership Distribution: Legacy Cardio stockholders own approximately 72.80% of the outstanding shares. The Sponsor and former Mana officers/directors own approximately 17.08%. Public rights holders own approximately 9.76%, and remaining Mana public stockholders own approximately 0.36%.
Financial Statements: The filing incorporates by reference unaudited pro forma condensed combined financial information for the six months ended June 30, 2022, and the year ended December 31, 2021. Specific revenue, profit, or cash flow figures for the combined entity are not provided in this text but are referenced in the Proxy Statement/Prospectus.
Material Changes and Transaction Details
Securities Issuance: The Company issued 6,883,306 shares to Legacy Cardio stockholders based on an exchange ratio of 3.427259. Additionally, 928,571 shares were issued to holders of Mana Public Rights, and 43,334 shares were issued upon conversion of $433,334 in Extension Notes.
Delisting and Relisting: Mana Units and Public Rights were delisted from the Nasdaq Global Market. On October 26, 2022, the Company's Common Stock and Public Warrants began trading on the Nasdaq Capital Market under the symbols "CDIO" and "CDIOW," respectively.
Waiver of Escrow: The parties entered into a Waiver Agreement eliminating the requirement for an indemnification escrow and the deposit of 800,000 shares by Legacy Cardio stockholders, waiving the condition that escrowed shares be the sole remedy for indemnified losses.
Outlook, Risks, and Contingencies
Earnout Provisions: Legacy Cardio stockholders are entitled to up to 1,000,000 additional "Earnout Shares" over a four-year period based on the Company's Volume Weighted Average Price (VWAP) hitting specific thresholds ($12.50, $15.00, $17.50, and $20.00) for 30 of any 40 consecutive trading days.
Lock-Up Agreements: 5,240,563 shares held by executives, directors, and their affiliates are subject to a six-month lock-up period following the closing date.
Risk Factors: The filing highlights risks including the ability to recognize anticipated benefits of the combination, competition, potential business disruptions from pandemics, stock price volatility, and the ability to raise future financing. The Company intends to retain earnings for business development and does not intend to pay cash dividends in the foreseeable future.
Investor Verification Checklist
- Verify the pro forma financial statements and historical audited statements of Legacy Cardio referenced in the Proxy Statement/Prospectus (Pages F-38 and F-54) to assess revenue and profitability trends.
- Confirm the specific terms and vesting schedules of the 1,759,600 assumed options and the 2,204,627 private warrants.
- Review the "Risk Factors" section of the Proxy Statement/Prospectus (Page 21) for detailed operational and regulatory risks.
- Monitor the VWAP of CDIO stock to track progress toward the four earnout milestones totaling 1,000,000 shares.
- Check the status of the 5,240,563 shares under lock-up agreements to understand potential future selling pressure after the six-month period.