Business context and reporting period
Important entity distinction: This is Mana Capital Acquisition Corp.’s Form 10-Q for the quarter ended June 30, 2022—not a standalone operating-company filing by Cardio Diagnostics Holdings, Inc. Mana was a shell SPAC seeking to combine with Cardio Diagnostics, Inc. It had not begun operations or generated operating revenue. The proposed merger agreement was signed May 27, 2022; closing remained subject to conditions and was expected in Q3 or Q4 2022, with an outside date of December 23, 2022.
Financial results and position
- Revenue: No operating revenue. No gross margin or operating margin is applicable.
- Net loss: $492,651 for Q2 2022 and $715,314 for the six months ended June 30, 2022. Six-month loss comprised $625,671 in operating costs and $100,000 in franchise tax expense, offset by $10,357 of interest income.
- Cash flow: Operating activities used $481,038 in the first half of 2022. Cash declined from $526,625 at December 31, 2021 to $45,587 at June 30, 2022.
- Liquidity and assets: The trust account held $65,010,733 at June 30, 2022, largely restricted for a business combination or shareholder redemptions. Outside-trust current assets were $186,119, including $45,587 cash and $140,532 prepaid expenses. Current liabilities were $229,434; stockholders’ deficit was $32,582. Trust-account funds should not be treated as ordinary operating cash.
- Debt: No long-term debt or working-capital loans were outstanding at quarter-end. The company reported no long-term lease obligations or off-balance-sheet financing arrangements.
Changes versus prior periods
Compared with December 31, 2021, cash fell by $481,038, prepaid expenses declined by $139,525, and franchise tax payable increased by $100,000. Accumulated deficit rose from $144,837 to $860,151, moving reported stockholders’ equity of $682,732 to a deficit of $32,582. The prior-year income statement comparison is from inception through June 30, 2021, so it is not a comparable operating period; the company reported a $397 loss for that period.
Outlook, risks, and unusual items
- The company expected to use outside-trust cash for transaction and operating costs and said it did not then expect to need additional funds for those expenditures. It cautioned that actual due-diligence costs or lower-than-expected trust interest could leave insufficient working capital; additional financing could be needed to complete a transaction or meet post-combination obligations.
- Management said failure to complete a business combination within the permitted period would require the company to cease operations, redeem public shares, and liquidate, creating substantial doubt about its ability to continue as a going concern if that occurs. The filing describes a nine-month initial period, extendable under specified terms up to 21 months.
- Management reported that disclosure controls and procedures were not effective as of June 30, 2022. It performed additional analysis and believed the financial statements fairly presented the company’s financial position and results. No material change in internal control over financial reporting was reported during the first half.
- Management noted potential adverse effects from COVID-19 but said the impact was not readily determinable. No legal proceedings or material changes to previously disclosed risk factors were reported.
- Public shares were classified outside permanent equity at a $10.00-per-share redemption value. If no business combination is completed, public warrants may expire worthless. The filing also notes possible dilution or financing risks from issuing equity or debt for a transaction.
Important facts for investors to verify
- Confirm the merger’s completion status, final terms, consideration, redemptions, and financing after the filing date; the Q2 report describes a proposed transaction, not a completed combination.
- Verify the actual amount of unrestricted cash available for operations and the company’s working-capital needs through closing.
- Review the Form S-4 and subsequent filings for transaction conditions, shareholder voting and redemption outcomes, dilution, and any revised closing timetable.
- Assess remediation of the ineffective disclosure controls and procedures.
- Reconcile the filing’s differing descriptions of the trust-account balance: the balance sheet reports $65,010,733, while a fair-value table reports $65,010,735.