IONI I ON Digital Corporation (PK)

On behalf of the Board of Directors of I-On Digital Corp. (the “Company”), I cordially invite you to attend a Special Meeting of Stockholders to be held on January 27, 2022, at 7:00 p.m., Eastern Daylight Time, at the offices of McCarter & English, LLP, Two Tower Center Boulevard, East Brunswick, NJ 08816.

On April 27, 2021, the Company, entered into an Agreement and Plan of Merger and Reorganization (the “Merger Agreement”) with CDI Acquisition Corp., a Delaware corporation and a wholly-owned subsidiary of the Company (“Acquisition”), Cardio Diagnostics, Inc., a Delaware corporation (“CDI”), and the shareholders of CDI (the “CDI Shareholders”). Pursuant to the terms of the Agreement, Acquisition will merge with and into CDI (the “Merger”) with CDI becoming the surviving entity and a wholly-owned subsidiary of the Company . In consideration for the Merger, the CDI Shareholders shall receive 25,000,000 newly issued shares of common stock of the Company, par value $0.0001 (“I-On Common Stock”) to be issued to the CDI Shareholders in accordance with their pro rata ownership of CDI prior to the Merger. Simultaneously with the Merger, pursuant to an Equity Transfer Agreement (the “Transfer Agreement”), the Company will assign all of the equity interests in I-On Communications, Ltd., a company organized under the laws of the Republic of South Korea and the Company’s wholly-owned subsidiary (“Communications”), in exchange for the return of 20,000,000 shares of the I-On Common Stock held by the Communications Shareholders and the assumption of any and all of Communications’ liabilities (the “Spinoff”). The Merger is contingent upon the approval by a majority of the Company’s shareholders of the Spinoff and an amendment to the Company’s Certificate of Incorporation to change the name of the Company to “Cardio Diagnostics Holdings, Inc.” and effectuate the reverse split of the number of outstanding I-On shares on the basis of one share for a range of per every ten (10) to fifteen (15) shares of I-On Common Stock outstanding (the “Charter Amendment”).

After careful consideration, the Company’s Board of Directors has unanimously approved the Merger Agreement which is attached as Annex A to this proxy statement and incorporated by reference into this proxy statement and the proposals referred to above, and has determined that they are advisable, fair and in the best interests of the Company’s stockholders. Accordingly, the Board unanimously recommends that stockholders vote “FOR” to approve and adopt the Transfer Agreement and the transactions contemplated therein, and “FOR” the Charter Amendment and “FOR” the adjournment of the special meeting if necessary to solicit additional proxies if there are not sufficient votes to approve the Merger , the Spinoff and/ or the Charter Amendment at the time of the special meeting.

At the special meeting you will be asked to: (i) to approve and adopt an equity transfer agreement pursuant to which the Company will transfer all of the issued and outstanding capital stock of I-On Communications Ltd., a wholly-owned subsidiary of the Company, in exchange for the transfer of 20,000,000 shares of the Company’s stock and the assumption of all liabilities, (ii) to approve an amendment to the Company’s amended and restated certificate of incorporation to (A) change the name of the Company from “I-On Digital Corp.” to “Cardio Diagnostics Holdings, Inc.,” and (B) to approve the reverse split of the number of the Company’s outstanding shares of common stock on the basis of one share for every ten (10) to fifteen (15) outstanding shares, and (iv) to consider and vote upon an adjournment of the special meeting, if necessary, to solicit additional proxies if there are not sufficient votes in favor of Proposals 1 and 2. The accompanying Notice of Meeting and Proxy Statement describe these matters. We urge you to read this information carefully.

Our Board of Directors unanimously recommends that you vote “FOR” all proposals.

Please read carefully the enclosed Proxy Statement, which explains the proposals to be considered by you and acted upon at the Special Meeting.

The Company’s Board of Directors (the “Board of Directors”) has fixed the close of business on December 10, 2021, as the record date for the determination of holders of record of the Company’s common stock entitled to notice of, and to vote at, the Special Meeting. A list of shareholders of record of the Company as of the record date will remain open for inspection during the Special Meeting until the closing of the polls thereat.

Whether or not you plan to attend the Special Meeting, we hope you will vote as soon as possible. You may vote over the Internet, as well as by telephone or, if you requested to receive printed proxy materials, by mailing a proxy or voting instruction card. Please review the instructions on each of your voting options described in this proxy statement as well as in the Notice you received in the mail.

Stockholders are requested to complete, sign, date and promptly return the enclosed Proxy Card in the enclosed envelope. Proxy Cards which are not revoked will be voted at the Special Meeting in accordance with instructions contained therein. If a Proxy Card is signed and returned without instruction, the Shares will be voted against each of the proposals contained therein.

Most beneficial owners whose stock is held in street name do not receive the Proxy Card. Instead, they receive voting instruction forms or proxy ballots from their bank, broker or other agent. Beneficial owners should follow the instructions on the voter instruction form or proxy ballot they receive from their bank, broker or other agent.

Our Board of Directors has selected Jae Cheol Oh to serve as “Proxyholder” for the Special Meeting. Proxy Cards which are not revoked will be voted at the Special Meeting in accordance with instructions contained therein.

A stockholder who so desires may revoke its previously submitted Proxy Card at any time before it is voted at the Meeting by: (i) delivering written notice to us at I-On Digital Corp., 15, Tehran-ro 10-gil, Gangam-gu, Seoul, Korea, c/o Secretary; (ii) duly executing and delivering a Proxy Card bearing a later date; or (iii) casting a ballot at the Special Meeting. Attendance at the Special Meeting will not in and of itself constitute a revocation of a proxy.

Only stockholders as of the close of business on December 10, 2021 (the “Record Date”) are entitled to notice of and to vote at the Special Meeting. As of December 10, 2021, there were 35,030,339 shares of our common stock outstanding and each entitled to one vote, per each share entitled to vote. See “Beneficial Ownership of Company Common Stock By Directors, Officers and Principal Stockholders” for information regarding the beneficial ownership of our common stock by our directors, executive officers and stockholders known to us to beneficially own 5% or more of our common stock.

The presence at the Special Meeting, in person or by duly authorized proxy, of the holders of a majority of the outstanding votes entitled to vote constitutes a quorum for this Meeting.

Abstentions and “broker non-votes” are counted as present for purposes of determining whether a quorum exists. A “broker non-vote” occurs when a nominee such as a bank, broker or other agent holding shares for a beneficial owner does not vote on a particular proposal because the nominee does not have discretionary voting power with respect to that proposal and has not received voting instructions from the beneficial owner.

Nominees may have such discretion to vote absent instructions with respect to certain “routine” matters, but not with respect to matters that are considered “non-routine,” such as the amendment of a charter to increase the number of authorized shares or a proposal considered to be related to a non-routine matter. Accordingly, without voting instructions from you, your broker will not be able to vote your shares on any of the proposals brought before this Meeting.

Each share of I-On Digital Corp. common stock entitles the holder to one vote. The affirmative vote of a majority vote of the shares cast affirmatively or negatively for this proposal is required to approve the adjournment of the Special Meeting, if necessary, to solicit additional proxies in favor of each of the proposals.

The affirmative vote of holders of a majority of the outstanding shares of Common Stock as of the record date for the special meeting is required for approval of Proposals 1, 2, and 3. A failure to submit a proxy card or vote at the special meeting, or an abstention or “broker non-vote” will have the same effect as a vote against the approval of these proposals.

An inspector of elections appointed by I-On Digital will tabulate votes at the Special Meeting.

I-On Digital will bear the costs of the solicitation of proxies for the Special Meeting. Our directors, officers and employees may solicit proxies from stockholders by mail, telephone, telegram, e-mail, personal interview or otherwise. Such directors, officers and employees will not receive additional compensation but may be reimbursed for out-of-pocket expenses in connection with such solicitation. Brokers, nominees, fiduciaries and other custodians have been requested to forward soliciting material to the beneficial owners of our common stock held of record by them and such parties will be reimbursed for their reasonable expenses.

Proxy Cards, ballots and voting tabulations are handled on a confidential basis to protect your voting privacy. This information will not be disclosed to unrelated third parties except as required by law.

Stockholders will have no rights of appraisal under the Delaware general corporate law in connection with the proposals to be considered at the Special Meeting.

The following tables present summary historical financial data for each of I-On and CDI, summary unaudited pro forma condensed combined financial data for I-On and CDI and comparative historical and unaudited pro forma per share data for I-On and CDI.

The following tables set forth selected historical financial information derived from I-On Digital Corp.’s (“I-On”) audited consolidated financial statements as of December 31, 2020, and 2019 and for the two years in the period ended December 31, 2020, which are included elsewhere in this proxy statement from I-On’s audited consolidated financial statements and related notes, included in I-On’s Annual Report on Form 10-K for the year ended December 31, 2020 and incorporated by reference herein. Historical results are not necessarily indicative of the results to be expected for future periods.

The information is only a summary and should be read in conjunction with CDI’s consolidated financial statements and related notes, and “Management’s Discussion and Analysis of Financial Condition and Results of Operations of CDI.” contained elsewhere herein. The historical results included below and elsewhere in this proxy statement are not indicative of the future performance of CDI.

The following tables set forth selected historical financial information derived from Cardio Diagnostics, Inc.’s (“CDI”) audited consolidated financial statements as of December 31, 2020, and 2019 and for the two years in the period ended December 31, 2020, which are included elsewhere in this proxy statement. Historical results are not necessarily indicative of the results to be expected for future periods.

The information is only a summary and should be read in conjunction with CDI’s consolidated financial statements and related notes, and “Management’s Discussion and Analysis of Financial Condition and Results of Operations of CDI.” contained elsewhere herein. The historical results included below and elsewhere in this proxy statement are not indicative of the future performance of CDI.

The following selected unaudited pro forma combined financial data presents the pro forma financial position and results of operations of the combined business based on the historical financial statements of I-On and CDI, after giving effect to the merger. The unaudited pro forma combined balance sheet data as of December 31, 2020 gives effect to the merger as if it took place on December 31, 2020. The unaudited pro forma combined statement of operations data for the year ended December 31, 2020 gives effect to the merger as if it took place on January 1, 2020.

The unaudited pro forma combined financial statements were prepared in accordance with Article 11 of SEC Regulation S-X. Accordingly, the historical consolidated financial data of I-On and CDI has been adjusted to give pro forma effect to events that are (i) directly attributable to the merger, (ii) factually supportable, and (iii) with respect to the unaudited pro forma combined statement of operations, expected to have a continuing impact on the results of operations of the combined company. In addition, the pro forma adjustments reflecting the completion of the merger are based upon the application of the asset acquisition method of accounting in accordance with GAAP and upon the assumptions set forth in the unaudited pro forma combined financial statements.

The unaudited pro forma combined financial information has been prepared for illustrative purposes only and is not necessarily indicative of the financial position or results of operations in future periods or the results that actually would have been realized had I-On and CDI been a combined company during the specified periods.

The following information does not give effect to the proposed reverse stock split of I-On common stock described in the section entitled “Proposal 2—Adoption Of An Amendment To The Company’s Certificate Of Incorporation” beginning on page 55 of this proxy statement.

The following unaudited pro forma condensed combined financial statements are presented to illustrate the estimated effects of the Merger. The unaudited pro forma combined financial statements were prepared using the historical financial statements of I-ON and CDI.

The unaudited pro forma condensed combined balance sheet as of September 30, 2021 gives effect to these transactions as if they had occurred on September 30, 2021. The unaudited pro forma condensed combined statement of operations for the quarter ended September 30, 2021 and the year ended December 31, 2020 gives effect to these transactions as if they had occurred on January 1, 2020.

The information presented in the unaudited pro forma condensed combined financial statements does not purport to represent what our financial position or results of operations would have been had the Merger occurred as of the dates indicated, nor is it indicative of our future financial position or results of operations for any period. You should not rely on this information as being indicative of the historical results that would have been achieved had the companies always been combined or the future results that the combined company will experience after the Exchange.

The unaudited pro forma adjustments are based upon available information and certain assumptions that we believe are reasonable under the circumstances.

I-On common stock first became quoted on the OTC Markets under the trading symbol “EVBW” on March 27, 2014. CDI is a private company and its common stock is not publicly traded. There has never been, nor is there expected to be in the future, a public market for CDI common stock.

On April 26, 2021, the last full trading day prior to the public announcement of the proposed merger, the closing price per share of I-On common stock as reported on the OTC Markets was $0.31 per share. On January 4, 2022, the last practicable date before the printing of this proxy statement, the closing price per share of I-On common stock as reported on the OTC Markets was $0.14, per share.

As of the record date, I-On had approximately 300 stockholders of record.

I-On has never declared or paid cash dividends on I-On common stock. I-On currently anticipates that all of its earnings in the foreseeable future will be used for the operation and growth of its business, and does not expect to pay any cash dividends to I-On stockholders. Payment of future dividends, if any, will be at the discretion of the I-On Board.

Our business, financial condition, operating results and prospects are subject to the following risks. Additional risks and uncertainties not presently foreseeable to us may also impair our business operations. If any of the following risks actually occurs, our business, financial condition or operating results could be materially adversely affected. In such case, the trading price of our common stock could decline, and our stockholders may lose all or part of their investment in the shares of our common stock.

This Proxy Statement contains forward-looking statements that involve risks and uncertainties. These forward-looking statements can be identified by the use of words such as “believes,” “estimates,” “intends”, “plans”, “could,” “possibly,” “probably,” anticipates,” “projects,” “expects,” “may,” “will,” or “should,” “designed to,” “designed for,” or other variations or similar words or language. Actual results could differ materially from those discussed in the forward-looking statements as a result of certain factors, including those set forth below and elsewhere in this Form 10-K.

While the impact on our business from the recent outbreak of the COVID-19 coronavirus is unknown at this time and difficult to predict, various aspects of our business could be adversely affected by it.

As of the date of this Annual Report, COVID-19 coronavirus has been declared a pandemic by the World Health Organization, has been declared a National Emergency by the United States Government and has resulted in several states being designated disaster zones. COVID-19 coronavirus caused significant volatility in global markets, including the market price of our securities. The spread of COVID-19 coronavirus has caused public health officials to recommend precautions to mitigate the spread of the virus, especially as to travel and congregating in large numbers. In addition, certain states and municipalities have enacted, and additional cities are considering, quarantining and “shelter-in-place” regulations which severely limit the ability of people to move and travel, and require non-essential businesses and organizations to close.

It is unclear how such restrictions, which will contribute to a general slowdown in the global economy, will affect our business, results of operations, financial condition and our future strategic plans.

Shelter-in-place and essential-only travel regulations have negatively impacted many of our customers. In addition, while our digesters are manufactured in the United States, we still could experience significant supply chain disruptions due to interruptions in operations at any or all of our suppliers’ facilities. If we experience significant delays in receiving our products we will experience delays in fulfilling orders and ultimately receiving payment, which could result in loss of sales and a loss of customers, and adversely impact our financial condition and results of operations.

In addition, our headquarters are located in Seoul, South Korea which was also subject to large COVID-19 outbreak requiring its government to enact travel and work restrictions. While these restrictions were lessened as of the date of this Annual Report, it is unclear at this time how these restrictions will affect our operations and revenues.

We may encounter human or technical obstacles that prevent our proprietary applications from operating properly. If our applications do not function reliably or fail to achieve customer expectations in terms of performance, customers could assert liability claims against us or attempt to cancel their contracts with us. This could damage our reputation and impair our ability to attract or maintain customers. We provide a limited warranty, have not paid warranty claims in the past, and do not have a reserve for warranty claims.

Moreover, information services as complex as those we offer have in the past contained, and may in the future develop or contain, undetected defects or errors. We cannot assure you that material performance problems or defects in our products or services will not arise in the future. Errors may result from receipt, entry, or interpretation of customer information or from interface of our services with legacy systems and data that we did not develop and the function of which is outside of our control. Despite testing, defects or errors may arise in our existing or new software or service processes. These defects and errors and any failure by us to identify and address them could result in loss of revenue or market share, liability to customers or others, failure to achieve market acceptance or expansion, diversion of development resources, injury to our reputation, and increased service and maintenance costs. Defects or errors in our software might discourage existing or potential customers from purchasing our products and services. Correction of defects or errors could prove to be impossible or impracticable. The costs incurred in correcting any defects or errors or in responding to resulting claims or liability may be substantial and could adversely affect our operating results.

Our services involve the web-based storage and transmission of customers’ proprietary information. We rely on proprietary and commercially available systems, software, tools and monitoring, as well as other processes, to provide security for processing, transmission and storage of such information. Because of the sensitivity of this information and due to requirements under applicable laws and regulations, the effectiveness of our security efforts is very important. If our security measures are breached or fail as a result of third-party action, acts of terror, social unrest, employee error, malfeasance or for any other reasons, someone may be able to obtain unauthorized access to customer data. Improper activities by third-parties, advances in computer and software capabilities and encryption technology, new tools and discoveries and other events or developments may facilitate or result in a compromise or breach of our security systems. Our security measures may not be effective in preventing unauthorized access to the customer data stored on our servers. If a breach of our security occurs, we could face damages for contract breach, penalties for violation of applicable laws or regulations, possible lawsuits by individuals affected by the breach and significant remediation costs and efforts to prevent future occurrences. In addition, whether there is an actual or a perceived breach of our security, the market perception of the effectiveness of our security measures could be harmed and we could lose current or potential customers.

Our information technologies and systems are vulnerable to damage or interruption from various causes, including acts of God and other natural disasters, war and acts of terrorism and power losses, computer systems failures, internet and teleDigital or data network failures, operator error, losses of and corruption of data and similar events. Data regarding our business and our customers’ insurance claims and encounters resides on computer hardware located domestically and abroad. Although we conduct business continuity planning to protect against fires, floods, other natural disasters and general business interruptions to mitigate the adverse effects of a disruption, relocation or change in operating environment at our data centers, the situations we plan for and the amount of insurance coverage we maintain may not be adequate in any particular case. In addition, the occurrence of any of these events could result in interruptions, delays or cessations in service to our customers. Any of these events could impair or prohibit our ability to provide our services, reduce the attractiveness of our services to current or potential customers and adversely impact our financial condition and results of operations.

In addition, despite the implementation of security measures, our infrastructure, data centers, or systems that we interface with or utilize, including the internet and related systems, may be vulnerable to physical break-ins, hackers, improper employee or contractor access, computer viruses, programming errors, denial-of-service attacks or other attacks by third-parties seeking to disrupt operations or misappropriate information or similar physical or electronic breaches of security. Any of these can cause system failure, including network, software or hardware failure, which can result in service disruptions. As a result, we may be required to expend significant capital and other resources to protect against security breaches and hackers or to alleviate problems caused by such breaches.

We depend on key information systems to accurately and efficiently transact our business. These systems and services are vulnerable to interruptions or other failures resulting from, among other things, natural disasters, terrorist

attacks, software, equipment or teleDigital failures, processing errors, computer viruses, other security issues or supplier defaults. Security, backup and disaster recovery measures may not be adequate or implemented properly to avoid such disruptions or failures. Any disruption or failure of these systems or services could cause substantial errors, processing inefficiencies, security breaches, inability to use the systems or process transactions, loss of customers or other business disruptions, all of which could negatively affect our business and financial performance.

As cybersecurity attacks continue to evolve and increase, our information systems could also be penetrated or compromised by internal and external parties’ intent on extracting confidential information, disrupting business processes or corrupting information. These risks could arise from external parties or from acts or omissions of internal or service provider personnel. Such unauthorized access could disrupt our business and could result in the loss of assets, litigation, remediation costs, damage to our reputation and failure to retain or attract customers following such an event, which could adversely affect our business.

Our success depends in part upon our ability to establish, protect and enforce our intellectual property and other proprietary rights. If we fail to establish, protect or enforce our intellectual property rights, we may lose an important advantage in the market in which we compete. We rely on a combination of trademark, copyright and trade secret law and contractual obligations to protect our key intellectual property rights, all of which provide only limited protection. Our intellectual property rights may not be sufficient to help us maintain our position in the market and our competitive advantages.

We hold several patents and also rely on trade secrets to protect certain of our proprietary technology. However, trade secrets may not be protectable if not properly kept confidential. We strive to enter into non-disclosure agreements with our employees, customers, contractors and business partners to limit access to and disclosure of our proprietary information. However, the steps we have taken may not be sufficient to prevent unauthorized use of our technology, and adequate remedies may not be available in the event of unauthorized use or disclosure of our trade secrets and proprietary technology. Moreover, others may reverse engineer or independently develop technologies that are competitive to ours or infringe our intellectual property.

Accordingly, despite our efforts, we may be unable to prevent third-parties from using our intellectual property for their competitive advantage. Any such use could have a material adverse effect on our business, results of operations and financial condition. Monitoring unauthorized uses of and enforcing our intellectual property rights can be difficult and costly. Legal intellectual property actions are inherently uncertain and may not be successful, and may require a substantial amount of resources and divert our management’s attention.

Our competitors protect their proprietary rights by means of patents, trade secrets, copyrights, trademarks and other intellectual property. We have not conducted an independent review of patents and other intellectual property issued to third-parties, who may have patents or patent applications relating to our proprietary technology. We may receive letters from third parties alleging, or inquiring about, possible infringement, misappropriation or violation of their intellectual property rights. Any party asserting that we infringe, misappropriate or violate proprietary rights may force us to defend ourselves, and potentially our customers, against the alleged claim. These claims and any resulting lawsuit, if successful, could subject us to significant liability for damages and/or invalidation of our proprietary rights or interruption or cessation of our operations. Any such claims or lawsuit could:

Furthermore, during the course of litigation, confidential information may be disclosed in the form of documents or testimony in connection with discovery requests, depositions or trial testimony. Disclosure of our confidential information and our involvement in intellectual property litigation could materially adversely affect our business. Some of our competitors may be able to sustain the costs of intellectual property litigation more effectively than we can because they have substantially greater resources. In addition, any litigation could significantly harm our relationships with current and prospective customers. Any of the foregoing could disrupt our business and have a material adverse effect on our business, operating results and financial condition.

The majority of our operations, including the development and maintenance of our Web-based platform and our customer support services, are performed by our highly educated workforce of approximately 120 employees in South Korea which may experience unrest due to the threats posed by North Korea. The performance of our operations in South Korea, and our ability to maintain our offshore offices, is an essential element of our business model, as South Korea is a tech hub for Enterprise CMS/Digital marketing as well as all of our senior leadership are located in South Korea. Our competitive advantage will be greatly diminished and may disappear altogether if our operations in South Korea are negatively impacted.

The risks and challenges associated with our operations outside the United States include laws and business practices favoring local competitors; compliance with multiple, conflicting and changing governmental laws and regulations, including employment and tax laws and regulations; and fluctuations in foreign currency exchange rates. Foreign operations subject us to numerous stringent U.S. and foreign laws, including the Foreign Corrupt Practices Act, or FCPA, and comparable foreign laws and regulations that prohibit improper payments or offers of payments to foreign governments and their officials and political parties by U.S. and other business entities for the purpose of obtaining or retaining business. Safeguards we implement to discourage these practices may prove to be less than effective and violations of the FCPA and other laws may result in severe criminal or civil sanctions, or other liabilities or proceedings against us, including class action lawsuits and enforcement actions from the SEC, Department of Justice and overseas regulators.

Certain of our software products contain components developed and maintained by third party software vendors. We expect that we may have to incorporate software from third party vendors in our future products. We also incorporate open source software in certain of our software products. We may not be able to replace the functionality provided by the third party or open source software currently offered with our products if that software becomes obsolete, defective, non-compliant with third party patent restrictions or incompatible with future versions of our products or is not adequately maintained or updated, or if our relationship with the third party vendor terminates. In addition, we must carefully monitor and manage our use of, and compliance with the licensing requirements of, open source software. Any significant interruption in the availability of these third party software products on commercially acceptable terms, defects in these products, non-compliance with third party patent restrictions or our inability to comply with the licensing terms of either third party commercial software or open source software could delay development of future products or enhancement of future products and could have a material adverse effect on our business, financial condition, operating results and cash flows.

In order to remain competitive, we must continue to develop new products and enhancements to our existing products. This is particularly true as we further expand our cloud and SaaS offerings and capabilities. Maintaining adequate research and development resources to meet the demands of the market is essential, and failure to do so

could present an advantage to our competitors. If we are unable to develop products due to certain constraints, such as high employee turnover, lack of management ability or a lack of other development resources, including through third party outsourcing firms, our competitiveness could be harmed.

The software products we offer are inherently complex. Despite testing and quality control, we cannot be certain that errors will not be found in current versions, new versions or enhancements of our products after commencement of commercial delivery. If new or existing customers have difficulty deploying our products or require significant amounts of customer support, our operating margins could be harmed. Moreover, we could face possible claims and higher development costs if our software contains undetected errors or if we fail to meet our customers’ expectations. With our BSM strategy, these risks increase because we are combining already complex products to create solutions that are even more complicated than the aggregation of their product components. Significant technical challenges could also arise with our products because our customers purchase and deploy our products across a variety of computer platforms and integrate them with a number of third party software applications and databases. These combinations increase our risk further because in the event of a system-wide failure, it may be difficult to determine which product is at fault; thus, we may be harmed by the failure of another supplier’s products.

As a result of the foregoing, we could experience loss of or delay in revenue and loss of market share; loss of customers; damage to our reputation; failure to achieve market acceptance; diversion of development resources; increased service and warranty costs; legal actions by customers against us which could, whether or not successful, increase costs and distract our management; and increased insurance costs.

Since the outset of the pandemic the US and worldwide national securities markets have undergone unprecedented stress due to the uncertainties of the pandemic and the resulting reactions and outcomes of government, business and the general population. These uncertainties have resulted in declines in all market sectors, increases in volumes due to flight to safety and governmental actions to support the markets. As a result, until the pandemic has stabilized, the markets may not be available to I-On for purposes of raising required capital. Should we not be able to obtain financing when required, in the amounts necessary to execute on our plans in full, or on terms which are economically feasible we may be unable to sustain the necessary capital to pursue our strategic plan and may have to reduce the planned future growth and scope of our operations.

Our current executive officers, directors and largest stockholders of I-On, hold approximately 37% of the voting power of the outstanding shares as of December 31, 2020. These officers, directors and certain stockholders have a controlling influence in determining the outcome of any corporate transaction or other matters submitted to our stockholders for approval, including mergers, consolidations and the sale of all or substantially all of our assets, election of directors, and other significant corporate actions. The interests of our executive officers and certain shareholders may give rise to a conflict of interest with I-On and its stockholders. For additional details concerning voting power please refer to the section below entitled “Description of Securities.”

Our common stock is quoted on OTC Markets under the symbol “IONI”. The liquidity of our common stock is very limited and is affected by our limited trading market. The OTC Markets is an inter-dealer market much less regulated than the major exchanges, and is subject to abuses, volatilities and shorting. There is currently no broadly followed and established trading market for our common stock. An established trading market may never develop or be maintained. Active trading markets generally result in lower price volatility and more efficient execution of buy and sell orders. Absence of an active trading market reduces the liquidity of the shares traded.

The trading volume of our common stock may be limited and sporadic. This situation is attributable to a number of factors, including the fact that we are a small company that is relatively unknown to stock analysts, stock brokers, institutional investors and others in the investment community that generate or influence sales volume, and that even

if we came to the attention of such persons, they may tend to be risk-averse and would be reluctant to follow an unproven company such as ours or purchase or recommend the purchase of our shares until such time as we became more seasoned and viable. As a consequence, there may be periods of several days or more when trading activity in our shares is minimal, as compared to a seasoned issuer that has a large and steady volume of trading activity that will generally support continuous sales without an adverse effect on share price. We cannot give any assurance that a broader or more active public trading market for our common stock will develop or be sustained, or that current trading levels will be sustained. As a result of such trading activity, the quoted price for our common stock while on the OTC Markets may not necessarily be a reliable indicator of its fair market value.

There may be risks associated with us becoming public through a “reverse business combination.” Securities analysts of major brokerage firms and securities institutions may not provide coverage of us because there were no broker-dealers who sold our stock in a public offering that would be incentivized to follow or recommend the purchase of our common stock. The absence of such research coverage could limit investor interest in our common stock, resulting in decreased liquidity. No assurance can be given that established brokerage firms will, in the future, want to cover our securities or conduct any secondary offerings or other financings on our behalf.

The market price of our common stock is likely to be highly volatile and could fluctuate widely in price in response to various factors, many of which are beyond our control, including the following:

Many of these factors are beyond our control and may decrease the market price of our common stock, regardless of our operating performance. We cannot make any predictions or projections as to what the prevailing market price for our common stock will be at any time, including as to whether our common stock will sustain current market prices, or as to what effect that the sale of shares or the availability of common stock for sale at any time will have on the prevailing market price.

In addition, the securities markets have from time to time experienced significant price and volume fluctuations that are unrelated to the operating performance of particular companies. These market fluctuations may also materially and adversely affect the market price of our common stock.

The market price of our common stock could fluctuate substantially due to a variety of factors, including market perception of our ability to achieve our planned growth, quarterly operating results of other companies in the same industry, trading volume in our common stock, changes in general conditions in the economy and the financial markets or other developments affecting I-On’s competitors or I-On itself.

A prolonged decline in the price of our common stock could result in a reduction in the liquidity of our common stock and a reduction in our ability to raise capital. A decline in the price of our common stock could be especially detrimental to our liquidity, our operations and strategic plans. Such reductions may force us to reallocate funds from other planned uses and may have a significant negative effect on our business plan and operations, including our ability to develop new services and continue our current operations. If our common stock price declines, we can offer no assurance that we will be able to raise additional capital or generate funds from operations sufficient to meet our obligations. If we are unable to raise sufficient capital in the future, we may not be able to have the resources to continue our normal operations.

The sale by any shareholder of a significant portion of their holdings could have a material adverse effect on the market price of our common stock.

A substantial majority of the outstanding shares of Common Stock are “restricted securities” within the meaning of Rule 144 under the Securities Act of 1933, as amended (the “Securities Act”) (“Rule 144”). As restricted shares, these shares may be resold only pursuant to an effective registration statement or under the requirements of Rule 144 or other applicable exemptions from registration under the Securities Act and as required under applicable state securities laws. Rule 144 provides in essence that a non-affiliate who has held restricted securities for a period of at least six months may sell their shares of common stock. Under Rule 144, affiliates who have held restricted securities for a period of at least six months may, under certain conditions, sell every three months, in brokerage transactions, a number of shares that does not exceed the greater of 1% of a company’s outstanding shares of common stock or the average weekly trading volume during the four calendar weeks prior to the sale. A sale under Rule 144 or under any other exemption from the Securities Act, if available, or pursuant to subsequent registrations of our shares of common stock, may have a depressive effect upon the price of our shares of common stock in any active market that may develop.

We have not declared any dividends in the past, and we do not intend to distribute dividends in the near future. The declaration, payment and amount of any future dividends will be made at the discretion of the board of directors and will depend upon, among other things, the results of operations, cash flows and financial condition, operating and capital requirements, and other factors as the board of directors considers relevant. There is no assurance that future dividends will be paid, and if dividends are paid, there is no assurance with respect to the amount of any such dividend.

As a public company, we are subject to the reporting requirements of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), the Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act”), and the Securities Act. These rules, regulations and requirements are extensive. We may incur significant costs associated with our public company corporate governance and reporting requirements. This may divert management’s attention from other business concerns, which could have a material adverse effect on our business, financial condition and results of operations. We also expect that these applicable rules and regulations may make it more difficult and more expensive for us to obtain director and officer liability insurance and we may be required to accept reduced policy limits and coverage or incur substantially higher costs to obtain the same or similar coverage. As a result, it may be more difficult for us to attract and retain qualified individuals to serve on our board of directors or as executive officers.

A change in accounting standards or practices can have a significant effect on our reported results and may even affect our reporting of transactions completed before the change is effective. New accounting pronouncements and varying interpretations of accounting pronouncements have occurred and may occur in the future. Changes to existing rules or the questioning of current practices may adversely affect our reported financial results or the way we conduct business.

Trading in our common stock has previously been subject to the “penny stock” rules. The SEC has adopted regulations that generally define a penny stock to be any equity security that has a market price of less than $5.00 per share, subject to certain exceptions. These rules require that any broker-dealer that recommends our common stock to persons other than prior customers and accredited investors, must, prior to the sale, make a special written suitability determination for the purchaser and receive the purchaser’s written agreement to execute the transaction. Unless an exception is available, the regulations require the delivery, prior to any transaction involving a penny stock, of a disclosure schedule explaining the penny stock market and the risks associated with trading in the penny stock market. In addition, broker-dealers must disclose commissions payable to both the broker-dealer and the registered representative and current quotations for the securities they offer. The additional burdens imposed upon broker-dealers by such requirements may discourage broker-dealers from effecting transactions in our common stock, which could severely limit the market price and liquidity of our common stock.

The consummation of the proposed merger with CDI is subject to a number of closing conditions, including the approval by I-On’s stockholders, and other customary closing conditions.

If the proposed merger is not consummated, I-On may be subject to a number of material risks, and its business and stock price could be adversely affected, as follows:

In addition, if the merger agreement is terminated and I-On’s Board of Directors determines to seek another business combination, it may not be able to find a third party willing to provide equivalent or more attractive consideration than the consideration to be provided by each party in the merger. In such circumstances, the I-On Board may elect to, among other things, divest all or a portion of I-On’s business, or take the steps necessary to liquidate all of I-On’s business and assets, and in either such case, the consideration that I-On receives may be less attractive than the consideration to be received by I-On pursuant to the merger agreement.

There can be no assurance that the merger with CDI will be completed. If the merger is not completed, the I-On Board may decide to pursue a dissolution and liquidation of I-On. In such an event, the amount of cash available for distribution to I-On’s stockholders will depend heavily on the timing of such decision and, as with the passage of time the amount of cash available for distribution will be reduced as I-On continues to fund its operations. In addition, if the I-On Board were to approve and recommend, and I-On’s stockholders were to approve, a dissolution and liquidation of I-On, I-On would be required under Delaware corporate law to pay its outstanding obligations, as well as to make reasonable provision for contingent and unknown obligations, prior to making any distributions in liquidation to I-On’s stockholders. As a result of this requirement, a portion of I-On’s assets may need to be reserved pending the resolution of such obligations. In addition, I-On may be subject to litigation or other claims related to a dissolution and liquidation of I-On. If a dissolution and liquidation were pursued, the I-On Board, in consultation with its advisors, would need to evaluate these matters and make a determination about a reasonable amount to reserve. Accordingly, holders of I-On common stock could lose all or a significant portion of their investment in the event of a liquidation, dissolution or winding up of I-On.

In general, either party can refuse to complete the merger if there is a material adverse change affecting the other party between April 27, 2021, the date of the merger agreement, and the closing. However, some types of changes do not permit either party to refuse to complete the merger, even if such changes would have a material adverse effect on I-On or CDI, to the extent they resulted from the following and do not have a materially disproportionate effect on I-On or CDI, as the case may be:

If adverse changes occur but I-On and CDI must still complete the merger, the combined company’s stock price may suffer.

The market price of the combined company’s common stock may decline as a result of the merger for a number of reasons including if:

Covenants in the merger agreement impede the ability of I-On or CDI to make acquisitions or complete other transactions that are not in the ordinary course of business pending completion of the merger. As a result, if the merger is not completed, the parties may be at a disadvantage to their competitors. In addition, while the merger agreement is in effect and subject to limited exceptions, each party is prohibited from soliciting, initiating, encouraging or taking actions designed to facilitate any inquiries or the making of any proposal or offer that could lead to the entering into certain extraordinary transactions with any third party, such as a sale of assets, an acquisition of I-On common stock, a tender offer for I-On common stock, a merger or other business combination outside the ordinary course of business. Any such transactions could be favorable to such party’s stockholders.

The outstanding share capital of CDI is privately held and is not traded in any public market. The lack of a public market makes it extremely difficult to determine the fair market value of CDI. Since the percentage of I-On’s equity to be issued to CDI’s stockholders was determined based on negotiations between the parties, it is possible that the value of the I-On common stock to be issued in connection with the merger will be greater than the fair market value of CDI. Alternatively, it is possible that the value of the shares of I-On common stock to be issued in connection with the merger will be less than the fair market value of CDI.

The combined company will incur significant transaction costs as a result of the merger, including investment banking, legal and accounting fees. In addition, the combined company will incur significant consolidation and integration expenses which cannot be accurately estimated at this time. Actual transaction costs may substantially exceed CDI’s estimates and may have an adverse effect on the combined company’s financial condition and operating results.

The parties intend for the merger to qualify as a reorganization within the meaning of Section 368(a) of the Code, as amended. For a full description of the tax consequences of the merger, see “The Merger—Material U.S. Federal Income Tax Consequences of the Merger” beginning on page 4 of this proxy statement. To comply with the requirements for a Section 368(a) reorganization, certain structural and other requirements for the transaction must be met; if not satisfied, the CDI stockholders could be subject to tax liability.

Securities litigation or stockholder derivative litigation frequently follows the announcement of certain significant business transactions, such as the sale of a business division or announcement of a business combination transaction. I-On and CDI may become involved in this type of litigation in connection with the merger, and the combined company may become involved in this type of litigation in the future. Litigation often is expensive and diverts management’s attention and resources, which could adversely affect the business of I-On, CDI and the combined company.

The merger agreement has set the number of merger shares to be issued to CDI common stock. Any changes in the market price of I-On common stock before the completion of the merger will not affect the number of shares of I-On common stock issuable to CDI’s stockholders pursuant to the merger agreement. Therefore, if before the

completion of the merger the market price of I-On common stock declines from the market price on the date of the merger agreement, then CDI’s stockholders could receive merger consideration with substantially lower value than the value of such merger consideration on the date of the merger agreement. Similarly, if before the completion of the merger the market price of I-On common stock increases from the market price of I-On common stock on the date of the merger agreement, then CDI’s stockholders could receive merger consideration with substantially greater value than the value of such merger consideration on the date of the merger agreement. The merger agreement does not include a price-based termination right.

The terms of the merger agreement prohibit each of I-On and CDI from soliciting alternative takeover proposals or cooperating with persons making unsolicited takeover proposals, except in limited circumstances when I-On’s Board determines in good faith that an unsolicited alternative takeover proposal is or is reasonably likely to lead to a superior takeover proposal and that failure to cooperate with the proponent of the proposal would be reasonably likely to be inconsistent with I-On’s Board fiduciary duties.

Even if the merger is approved by the stockholders of I-On and CDI, specified conditions must be satisfied or waived to complete the merger. These conditions are set forth in the merger agreement and described in the section entitled “The Merger Agreement—Conditions to the Completion of the Merger”. I-On cannot assure you that all of the conditions will be satisfied or waived. If the conditions are not satisfied or waived, the merger will not occur or will be delayed, and I-On and CDI each may lose some or all of the intended benefits of the merger.

The principal purpose of the reverse stock split is to reduce the number of shares of common stock outstanding following the merger. It cannot be assured that the reverse stock split will increase I-On’s stock price for any meaningful period of time. While it is expected that the reduction in the number of outstanding shares of common stock will proportionally increase the market price of I-On common stock, it cannot be assured that the reverse stock split will increase the market price of its common stock by a multiple of the reverse stock split ratio chosen by its board of directors, or result in any permanent or sustained increase in the market price of I-On common stock, which is dependent upon many factors, including I-On’s business and financial performance, general market conditions, and prospects for future success.

Although the board of directors believes that the anticipated increase in the market price of I-On common stock could encourage interest in its common stock and possibly promote greater liquidity for its stockholders, such liquidity could also be adversely affected by the reduced number of shares outstanding after the reverse stock split. The reduction in the number of outstanding shares may lead to reduced trading and a smaller number of market makers for I-On common stock.

Should the market price of I-On common stock decline after the reverse stock split, the percentage decline may be greater, due to the smaller number of shares outstanding, than it would have been prior to the reverse stock split. A reverse stock split is often viewed negatively by the market and, consequently, can lead to a decrease in I-On’s overall market capitalization. If the per share market price does not increase in proportion to the reverse stock split ratio, then the value of the combined company, as measured by its stock capitalization, will be reduced. In some cases, the per-share stock price of companies that have effected reverse stock splits subsequently declined back to pre-reverse split levels, and accordingly, it cannot be assured that the total market value of I-On common stock will remain the same after the reverse stock split is effected, or that the reverse stock split will not have an adverse effect on I-On’s stock price due to the reduced number of shares outstanding after the reverse stock split.

CDI was incorporated as an Iowa LLC in January 2017 with all assets of the LLC being subsumed into a Delaware C-Corp in September 2019. Accordingly, CDI has a limited operating history upon which you can evaluate its business prospects, which makes it difficult to forecast CDI’s future operating results. The evolving nature of the medical diagnostics industry increases these uncertainties. You must consider CDI’s business prospects in light of the risks, uncertainties, and problems frequently encountered by companies with limited operating histories.

The current business model is unproven and the profit potential, if any, is unknown at this time. CDI is subject to all of the risks inherent in the creation of a new business. CDI’s ability to achieve profitability is dependent, among other things, on its initial marketing to generate sufficient operating cash flow to fund future expansion. There can be no assurance that CDI’s results of operations or business strategy will achieve significant revenue or profitability.

CDI has only generated nominal revenue since launching Epi+Gen CHD in January 2021. There is no assurance that CDI will generate sufficient revenue or ever be profitable. The Company believes that its ability to generate revenues will be hampered without raising additional funds to be able to fulfill its expansion of operations. If planned operating levels are changed, higher operating costs encountered, lower sales revenue received, more time is needed to implement the plan, or less funding is received, more funds than currently anticipated may be required. Additional difficulties may be encountered during this stage of development. If additional capital is not available when required, if at all, or is not available on acceptable terms, CDI may be forced to modify or abandon its business plan.

The market for epigenetic tests is relatively new, and evaluating the size and scope of the market is subject to a number of risks and uncertainties. We believe that our future success will depend in large part on the growth of this market. The utilization of our products is still relatively new, and customers may not recognize the need for, or benefits of, our tests and services, which may prompt them to cease use of our tests and services or decide to adopt alternative products and services to satisfy their healthcare requirements. In order to expand our business and extend our market position, we intend to focus our marketing and sales efforts on educating customers about the benefits and technological capabilities of our tests and services and the application of our tests and services to specific needs of customers in different market verticals. Our ability to access and expand the market that our tests and services are designed to address depends upon a number of factors, including the cost, performance and perceived value of our tests and services. Market opportunity estimates are subject to significant uncertainty and are based on assumptions and estimates. Assessing the market for our solutions in each of the vertical markets we are competing in, or planning to compete in, is particularly difficult due to a number of factors, including limited available information and rapid evolution of the market. The market for our tests and services may fail to grow significantly or be unable to meet the level of growth we expect. As a result, we may experience lower-than-expected demand for our products and services due to lack of customer acceptance, technological challenges, competing products and services, decreases in spending by current and prospective customers, weakening economic conditions and other causes. If our market does not experience significant growth, or if demand for our products does not increase, then our business, results of operations and financial condition will be adversely affected.

CDI’s performance depends primarily on the success of its testing products. A majority of these are in the early reformulation development stage and have not yet received FDA approval or the other approvals that may be required before they may be commercially launched.

CDI conducts business in a heavily regulated industry and if CDI fails to comply with these and other laws and government regulations, CDI could incur penalties or be required to make significant changes to its operations or experience adverse publicity, which could have a material adverse effect on its business, financial condition, and results of 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 tests and services, and collect reimbursement from governmental programs and private payors, our contractual relationships with our providers, vendors and clients, our marketing activities and other aspects of our operations. Of particular importance are:

Because of the breadth of these laws and the narrowness of the statutory exceptions and safe harbors available, it is possible that some of our business activities could be subject to challenge under one or more of such laws. 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. The risk of CDI being found in violation of these laws and regulations is increased by the fact that many of them have not been fully interpreted by the regulatory authorities or the courts, and their provisions are sometimes open to a variety of interpretations. CDI’s failure to accurately anticipate the application of these laws and regulations to our business or any other failure to comply with regulatory requirements could create liability for us and negatively affect its business. Any action against CDI for violation of these laws or regulations, even if CDI successfully defends against it, could cause us to incur significant legal expenses, divert its management’s attention from the operation of its business and result in adverse publicity.

To enforce compliance with the federal laws, the U.S. Department of Justice and the Office of the Inspector General (OIG), have recently increased their scrutiny of healthcare providers, which has led to a number of investigations, prosecutions, convictions and settlements in the healthcare industry. Dealing with investigations can be time- and resource-consuming and can divert management’s attention from the business. Any such investigation or settlement could increase our costs or otherwise have an adverse effect on our business. In addition, because of the potential for large monetary exposure under the federal False Claims Act, which provides for treble damages and mandatory minimum penalties of $5,500 to $11,000 per false claim or statement, healthcare providers often resolve allegations without admissions of liability for significant and material amounts to avoid the uncertainty of treble damages that may be awarded in litigation proceedings. Such settlements often contain additional compliance and reporting requirements as part of a consent decree, settlement agreement or corporate integrity agreement. Given the significant size of actual and potential settlements, it is expected that the government will continue to devote substantial resources to investigating healthcare providers’ compliance with the healthcare reimbursement rules and fraud and abuse laws.

The laws, regulations and standards governing the provision of healthcare services may change significantly in the future. There can be no assurance that any new or changed healthcare laws, regulations or standards will not materially adversely affect CDI’s business. There can be no assurance that a review of our business by judicial, law enforcement, regulatory or accreditation authorities will not result in a determination that could adversely affect CDI’s operations.

Market opportunity estimates and growth forecasts are subject to significant uncertainty and are based on assumptions and estimates that may not prove to be accurate. The estimates and forecasts relating to the size and expected growth of the medical epigenetics and diagnostics market may prove to be inaccurate. Even if the market in which we compete meets our size estimates and forecasted growth, our business could fail to grow at similar rates, if at all.

CDI may become subject, from time to time, to legal proceedings and claims that arise in the ordinary course of business such as claims brought by CDI’s clients in connection with commercial disputes or employment claims made by our current or former associates.

Litigation may result in substantial costs and may divert management’s attention and resources, which may substantially harm our business, financial condition and results of operations. Insurance may not cover such claims, may not provide sufficient payments to cover all of the costs to resolve one or more such claims and may not continue to be available on terms acceptable to CDI. A claim brought against us that is uninsured or underinsured could result in unanticipated costs, thereby reducing our revenue and potential profits.

Numerous state and federal laws and regulations govern the collection, dissemination, use, privacy, confidentiality, security, availability and integrity of Personally Identifiable Information (PII), including protected health information. These laws and regulations include the Health Insurance Portability and Accountability Act of 1996 (HIPAA).

HIPAA establishes a set of basic national privacy and security standards for the protection of protected health information, or PHI, by health plans, healthcare clearinghouses and certain healthcare providers, referred to as covered entities, and the business associates with whom such covered entities contract for services, which includes CDI.

HIPAA requires healthcare companies like CDI to develop and maintain policies and procedures with respect to PHI that is used or disclosed, including the adoption of administrative, physical and technical safeguards to protect such information. 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. Penalties for violations of HIPAA and its implementing regulations start at $100 per violation and are not to exceed $50,000 per violation, subject to a cap of $1.5 million for violations of the same standard in a single calendar year. However, a single breach incident can result in violations of multiple standards. HIPAA also authorizes state attorneys general to file suit on behalf of their residents. Courts will be able to award damages, costs and attorneys’ fees related to violations of HIPAA in such cases. While HIPAA does not create a private right of action allowing individuals to sue us in civil court for violations of HIPAA, its standards have been used as the basis for duty of care in state civil suits such as those for negligence or recklessness in the misuse or breach of PHI.

In addition, HIPAA mandates that the Secretary of Health and Human Services, or HHS conduct periodic compliance audits of HIPAA covered entities or business associates for compliance with the HIPAA Privacy and Security Standards. It also tasks HHS with establishing a methodology whereby harmed individuals who were the victims of breaches of unsecured PHI may receive a percentage of the Civil Monetary Penalty fine paid by the violator.

HIPAA further requires that patients be notified of any unauthorized acquisition, access, use or disclosure of their unsecured PHI that compromises the privacy or security of such information, with certain exceptions related to unintentional or inadvertent use or disclosure by employees or authorized individuals. HIPAA specifies that such

notifications must be made “without unreasonable delay and in no case later than 60 calendar days after discovery of the breach.” If a breach affects 500 patients or more, it must be reported to HHS without unreasonable delay, and HHS will post the name of the breaching entity on its public web site. Breaches affecting 500 patients or more in the same state or jurisdiction must also be reported to the local media. If a breach involves fewer than 500 people, the covered entity must record it in a log and notify HHS at least annually.

Numerous other federal and state laws protect the confidentiality, privacy, availability, integrity and security of personally identifiable information, or PII, including PHI. These laws in many cases are more restrictive than, and may not be preempted by, the HIPAA rules and may be subject to varying interpretations by courts and government agencies, creating complex compliance issues for CDI and its clients and potentially exposing CDI to additional expense, adverse publicity and liability.

New health information standards, whether implemented pursuant to HIPAA, congressional action or otherwise, could have a significant effect on the manner in which we must handle healthcare related data, and the cost of complying with standards could be significant. If CDI does not comply with existing or new laws and regulations related to PHI, it could be subject to criminal or civil sanctions.

Because of the extreme sensitivity of the PII we store and transmit, the security features of our data analytics and storage platform are very important. If CDI’s 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, CDI’s reputation could be severely damaged, adversely affecting client and patient confidence. Members may curtail their use of or stop using CDI’s tests and services or CDI’s client base could decrease, which would cause its business to suffer. In addition, CDI could face litigation, damages for contract breach, penalties and regulatory actions for violation of HIPAA and other applicable laws or regulations and significant costs for remediation, notification to individuals and for measures to prevent future occurrences. Any potential security breach could also result in increased costs associated with liability for stolen assets or information, repairing system damage that may have been caused by such breaches, incentives offered to clients or other business partners in an effort to maintain CDI’s business relationships after a breach and implementing measures to prevent future occurrences, including organizational changes, deploying additional personnel and protection technologies, training employees and engaging third-party experts and consultants. While we maintain insurance, we may not carry insurance or maintain coverage sufficient to compensate for all liability and in any event, insurance coverage would not address the reputational damage that could result from a security incident.

We outsource important aspects of the storage and transmission of client and patient information and thus rely on third parties to manage functions that have material cyber-security risks. CDI attempts to address these risks by requiring partners who handle patient information to sign agreements contractually requiring them to adequately safeguard personal health data to the same extent that applies to us. In addition, we intend to periodically hire third-party security experts to assess and test our security posture. However, we cannot assure you that these contractual measures and other safeguards will adequately protect us from the risks associated with the storage and transmission of client and patient’s proprietary and protected health information.

In addition, various states have enacted laws governing the privacy of personal information collected and used by businesses online. For example, California has recently adopted the California Consumer Privacy Act of 2018, which went into effect on January 1, 2020. This law, in part, requires that companies make certain disclosures to consumers via their privacy policies, or otherwise at the time the personal data is collected. CDI will have to determine what personal data it is collecting from individuals and for what purposes, and to update its privacy policy every 12 months to make the required disclosures, among other things. Since this law is newly enacted and has not yet gone into effect, it is unclear whether it will have any material impact on CDI’s business and operations.

CDI’s ability to attract new customers and increase revenue from existing customers depends in part on its ability to enhance and improve our products, increase adoption and usage of our products and introduce new products and features. The success of any enhancements or new products depends on several factors, including timely completion, adequate quality testing, actual performance quality, market-accepted pricing levels and overall market acceptance and demand. Enhancements and new products that CDI develops may not be introduced in a timely or cost-effective manner, may contain defects, may have interoperability difficulties with its products, or may not achieve the market acceptance necessary to generate significant revenue. If CDI is unable to successfully enhance its

existing products and capabilities to meet evolving customer requirements, increase adoption and usage of CDI’s products, develop new products, or if CDI’s 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.

In order to grow our business, CDI plans to drive greater awareness and adoption of our tests and services from customers and enterprises across new vertical markets. CDI intends to increase its investment in sales and marketing, as well as in technological development, to meet evolving customer needs in these and other markets. There is no guarantee, however, that CDI will be successful in gaining new customers from any or all of these markets. CDI has limited experience in marketing and selling its products and services generally, and in particular in these new markets, which may present unique and unexpected challenges and difficulties. Furthermore, CDI may incur additional costs to modify our current products to conform to regulatory requirements, and we may not be able to generate sufficient revenue to offset these costs. If CDI is unable to comply with those regulations effectively and in a cost-effective manner, its financial results could be adversely affected.

If the costs of the new marketing channels CDI uses increase dramatically, then CDI may choose to use alternative and less expensive channels, which may not be as effective as the channels CDI currently uses. As CDI adds to or change the mix of its marketing strategies, it may need to expand into more expensive channels than those CDI is currently in, which could adversely affect CDI’s business, results of operations and financial condition. In addition, CDI has limited experience marketing our products and CDI may not be successful in selecting the marketing channels that will provide it with exposure to customers in a cost-effective manner. As part of CDI’s strategy to penetrate the new vertical markets, CDI will incur marketing expenses before it is able to recognize any revenue in such markets, and these expenses may not result in increased revenue or brand awareness. CDI has made in the past, and may make in the future, significant expenditures and investments in new marketing campaigns, and these investments may not lead to the cost-effective acquisition of additional customers. If CDI is unable to maintain effective marketing programs, then its ability to attract new customers or enter into new vertical markets could be adversely affected.

Many health care industry participants and payers are consolidating to create larger and more integrated health care delivery systems with greater market power. We expect regulatory and economic conditions to result in additional consolidation in the health care industry in the future. As consolidation accelerates, the economies of scale of our partners’ organizations may grow. If a partner experiences sizable growth following consolidation, it may determine that it no longer needs to rely on us and may reduce its demand 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 fee reductions for our products and services. Finally, consolidation may also result in the acquisition or future development by our partners of products and services that compete with our products and services. Any of these potential results of consolidation could have a material adverse effect on our business, financial condition and results of operations.

The market for CDI’s products is fragmented, competitive and characterized by rapidly evolving technology standards, customer needs and the frequent introduction of new products. CDI’s competitors range from smaller niche companies to large, well-financed and technologically-sophisticated entities.

CDI competes on the basis of several factors, including the utility and quality of product and service offerings, ability to deliver clinical and financial performance improvement to patients and organizations through the use of products and services, quality and reliability of services, ease of use and convenience, brand recognition and the ability to integrate products and services with existing technology. Some of CDI’s competitors and their technologies, such as conventional lipid testing, are more established, benefit from greater recognition, have larger client bases and have substantially greater financial, technical and marketing resources. Other competitors have proprietary technology that differentiates their product and service offerings from ours. CDI’s competitors are constantly

developing products and services that may become more efficient or appealing to our existing partners and potential partners. Some of CDI’s competitors’ products and services are reimbursed by payers. As a result of these competitive advantages, CDI’s competitors and potential competitors may be able to respond more quickly to market forces, undertake more extensive marketing campaigns for their brands, products and services and make more attractive offers to CDI’s existing customers, partners, potential customers and potential partners.

CDI also competes on the basis of price. CDI may be subject to pricing pressures as a result of, among other things, competition within the industry, consolidation of health care industry participants, practices of managed care organizations, government action, delay or inability to secure payer reimbursement, and financial stress experienced by our customers or partners. If CDI’s pricing experiences significant downward pressure, its business will be less profitable, and its results of operations will be adversely affected.

CDI cannot be certain that we will be able to retain its current customers and partners or expand its customer and partner base in this competitive environment. If CDI does not retain current customers and partners or expand its customer and partner base, or if it has to renegotiate existing contracts, CDI’s business, financial condition and results of operations will be harmed. Moreover, CDI expects that competition will continue to increase as a result of consolidation in both the health care information technology and health care industries. If one or more of CDI’s competitors or potential competitors were to merge or partner with another of its competitors, the change in the competitive landscape could also adversely affect its ability to compete effectively and could harm CDI’s business, financial condition and results of operations.

CDI may use open source software in connection with its products and services. Companies that incorporate open-source software into their products have, from time to time, faced claims challenging the use of open source software and/or compliance with open source license terms. As a result, CDI could be subject to suits by parties claiming ownership of what may be open source software or claiming noncompliance with open source licensing terms. Some open source software licenses require users who distribute software containing open source software to publicly disclose all or part of the source code to such software and/or make available any derivative works of the open source code, which could include valuable proprietary code of the user, on unfavorable terms or at no cost. While CDI monitors the use of open source software and tries to ensure that none is used in a manner that would require CDI to disclose its proprietary source code or that would otherwise breach the terms of an open source agreement, such use could inadvertently occur, in part because open source license terms are often ambiguous. Any requirement to disclose CDI’s proprietary source code or pay damages for breach of contract could have a material adverse effect on its business, financial condition and results of operations and could help CDI’s competitors develop products and services that are similar to or better than CDI’s.

CDI’s ability to grow and generate revenue depends, in part, on its ability to maintain and grow relationships with existing customers and convince them to increase their usage of CDI’s tests and services. If CDI’s customers do not increase their use of its tests and services, then CDI’s revenue may not grow, and our results of operations may be harmed. It is difficult to accurately predict customers’ usage levels and the loss of customers or reductions in their usage levels may have a negative impact on CDI’s business, results of operations and financial condition. If a significant number of customers cease using, or reduce their usage of, our tests and services, then we may be required to spend significantly more on sales and marketing than CDI currently plans to spend in order to maintain or increase revenue from customers. These additional expenditures could adversely affect CDI’s business, results of operations and financial condition.

CDI’s continued growth depends in part on the ability of customers to access its tests and services at any time and within an acceptable amount of time. CDI 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, lab and analytical processing capacity constraints due to an increase

in demand from customers and partners simultaneously, or security related incidents. In addition, from time to time CDI may experience limited periods of laboratory equipment or server downtime due to equipment or server failure, or other technical difficulties (as well as maintenance requirements). It may become increasingly difficult to maintain and improve our performance, especially during peak testing as samples arrive in the lab for testing simultaneously. If our testing turnaround is not performed at a reasonable amount of time, our business would be adversely affected, and our brand could be harmed. In the event of any of the factors described above, or certain other failures of our infrastructure, customer or consumer data may be permanently lost. 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 and consumers may cease to use our products and our business and operating results may be adversely affected.

For CDI’s Epi+Gen CHD test, CDI relies on a limited number of suppliers for laboratory reagents and sampling kit supplies, contract manufacturers, and logistics providers. In particular, we use one Good Manufacturing Practice (GMP) contract manufacturer located in Michigan to bottle laboratory reagents, the at-home sampling kit is kitted and fulfilled by one fulfillment center located in Iowa, and the Epi+Gen CHD test is performed in one high complexity CLIA laboratory located in Missouri. CDI’s 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 CDI’s supply chain for any reason, such as a natural catastrophe, labor dispute, or system interruption, CDI may not be able to develop an alternate source without incurring material additional costs and substantial delays. For example, the recent outbreak of the Coronavirus has impacted the ability to conduct in-person training of personnel at the laboratory, which delayed launch of Epi+Gen CHD by 2.5 months.

The use of CDI’s products involves the storage, transmission and processing of CDI’s customers’ private data, and this data may contain confidential and proprietary information of CDI’s customers or other personal or identifying information regarding our customers. Individuals or entities may attempt to penetrate our network security, or that of our third-party hosting and storage providers, and could gain access to our customers’ private data, which could result in the destruction, disclosure or misappropriation of proprietary or confidential information of CDI’s customers’ and business partners. If any of CDI’s customers’ private data is leaked, obtained by others or destroyed without authorization, it could harm CDI’s reputation, CDI could be exposed to civil and criminal liability, and it may lose its ability to acquire customers or partners.

In addition, CDI’s 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 CDI’s industry. 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 CDI or its customers. Any failure to maintain the performance, reliability, security and availability of CDI’s products and technical infrastructure to the satisfaction of our customers may harm CDI’s reputation and our ability to retain existing customers and attract new customers.

While CDI has implemented 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 CDI’s systems, and CDI may not become aware in a timely manner of any such security breach. Unauthorized access to or security breaches of CDI’s 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. If customers believe that CDI’s product does not provide adequate security for the storage of sensitive information or its transmission over the Internet, CDI’s business will be harmed. Customers’ concerns about security or privacy may deter them from using our products.

While the clinical epigenetics market is still fairly new, CDI faces competition from various sources, including large, well-capitalized technology companies. These competitors may have better brand name recognition, greater financial and engineering resources and larger sales teams than CDI. As a result, these competitors may be able to

develop and introduce competing solutions and technologies that may have greater capabilities than CDI or that are able to achieve greater customer acceptance, and they may be able to respond more quickly and effectively than CDI can to new or changing opportunities, technologies, standards or customer requirements. In addition, CDI may also compete with smaller companies, who may develop their own products that perform similar services as CDI’s products. CDI expects that competition will increase and intensify as it continues to expand our serviceable markets and improve its tests and services. Increased competition may result in pricing pressures and require CDI to incur additional sales and marketing expenses, which could negatively impact CDI’s sales, profitability and market share.

CDI’s business model contemplates that it will store, process and transmit both public data and our clients’ private data. CDI’s customers may store and/or transmit a significant amount of personal or identifying information through its products. Privacy and data security have become significant issues in the United States and in other jurisdictions where CDI may offer its software solutions. The regulatory framework relating to privacy and data security issues worldwide is evolving rapidly and is likely to remain uncertain for the foreseeable future. Federal, state and foreign government bodies and agencies have in the past adopted, or may in the future adopt, laws and regulations regarding the collection, use, processing, storage and disclosure of personal or identifying information obtained from customers and other individuals. In addition to government regulation, privacy advocates and industry groups may propose various self-regulatory standards that may legally or contractually apply to CDI’s business. Because the interpretation and application of many privacy and data security laws, regulations and applicable industry standards are uncertain, it is possible that these laws, regulations and standards may be interpreted and applied in a manner inconsistent with CDI’s existing privacy and data management practices. As CDI expands into new jurisdictions or verticals it will need to understand and comply with various new requirements applicable in those jurisdictions or verticals.

To the extent applicable to CDI’s business, its customers or the businesses of CDI’s customers, these laws, regulations and industry standards could have negative effects on CDI’s business, including by increasing its costs and operating expenses, and delaying or impeding CDI’s deployment of new core functionality and products. Compliance with these laws, regulations and industry standards requires significant management time and attention, and failure to comply could result in negative publicity, subject us to fines or penalties or result in demands that CDI modify or cease existing business practices. In addition, the costs of compliance with, and other burdens imposed by, such laws, regulations and industry standards may adversely affect CDI’s customers’ ability or desire to collect, use, process and store personal information using CDI’s software 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 products in certain verticals. Any of these outcomes could adversely affect CDI’s business and operating results.

CDI’s ability to retain existing customers and attract new customers depends in part on its ability to maintain a consistently high level of customer service and technical support.

CDI’s customers depend on CDI’s customer support team to assist them in utilizing its tests and services effectively and to help them to resolve issues quickly and to provide ongoing support. If CDI is unable to hire and train sufficient support resources or are otherwise unsuccessful in assisting its customers effectively, it could adversely affect CDI’s ability to retain existing customers and could prevent prospective customers from adopting its products. CDI may be unable to respond quickly enough to accommodate short-term increases in demand for customer support. CDI also may be unable to modify the nature, scope and delivery of our customer support to compete with changes in the support services provided by CDI’s competitors. Increased demand for customer support, without corresponding revenue, could increase CDI’s costs and adversely affect our business, results of operations and financial condition. CDI’s sales are highly dependent on its business reputation and on positive recommendations from customers. Any failure to maintain high-quality customer support, or a market perception that CDI does not maintain high- quality customer support, could adversely affect CDI’s reputation, business, results of operations and financial condition.

CDI’s success depends, in part, on our ability to protect CDI’s brand and the proprietary methods and technologies that it develops under patent and other intellectual property laws of the United States and foreign jurisdictions so that we can prevent others from using our inventions and proprietary information. Any patents that have been issued or that may be issued in the future may not provide significant protection for our intellectual property. If CDI fails to protect its intellectual property rights adequately, CDI’s competitors might gain access to CDI’s technology and our business, results of operations and financial condition may be adversely affected.

The particular forms of intellectual property protection that CDI seeks, or CDI’s business decisions about when to file patent applications and trademark applications, may not be adequate to protect our business. CDI could be required to spend significant resources to monitor and protect CDI’s intellectual property rights. Litigation may be necessary in the future to enforce its intellectual property rights, determine the validity and scope of CDI’s proprietary rights or those of others, or defend against claims of infringement or invalidity. Such litigation could be costly, time-consuming and distracting to management, result in a diversion of significant resources, lead to the narrowing or invalidation of portions of CDI’s intellectual property and have an adverse effect on our business, results of operations and financial condition. CDI’s efforts to enforce its intellectual property rights may be met with defenses, counterclaims and countersuits attacking the validity and enforceability of CDI’s intellectual property rights or alleging that CDI infringes the counterclaimant’s own intellectual property. Any of CDI’s patents, copyrights, trademarks or other intellectual property rights could be challenged by others or invalidated through administrative process or litigation.

CDI also relies, in part, on confidentiality agreements with its business partners, employees, consultants, advisors, customers and others in our efforts to protect our proprietary technology, processes and methods. These agreements may not effectively prevent disclosure of CDI’s confidential information, and it may be possible for unauthorized parties to copy CDI’s software or other proprietary technology or information, or to develop similar technology independently without our having an adequate remedy for unauthorized use or disclosure of our confidential information. In addition, others may independently discover CDI’s trade secrets and proprietary information, and in these cases we would not be able to assert any trade secret rights against those parties. Costly and time-consuming litigation could be necessary to enforce and determine the scope of CDI’s proprietary rights, and the failure to obtain or maintain trade secret protection could adversely affect CDI’s competitive business position.

In addition, the laws of some countries do not protect intellectual property and other proprietary rights to the same extent as the laws of the United States. To the extent CDI expands its international activities, CDI’s exposure to unauthorized copying, transfer and use of CDI’s proprietary technology or information may increase.

CDI’s means of protecting its intellectual property and proprietary rights may not be adequate or CDI’s competitors could independently develop similar technology. If we fail to meaningfully protect our intellectual property and proprietary rights, CDI’s business, results of operations and financial condition could be adversely affected.

CDI’s success depends upon its ability to refrain from infringing upon the intellectual property rights of others. Some companies, including some of CDI’s competitors, own large numbers of patents, copyrights and trademarks, which they may use to assert claims against us. As CDI grows and enters new markets, CDI will face a growing number of competitors. As the number of competitors in our industry grows and the functionality of products in different industry segments overlaps, CDI expects that software and other solutions in its industry may be subject to such claims by third parties. Third parties may in the future assert claims of infringement, misappropriation or other violations of intellectual property rights against us. CDI cannot assure you that infringement claims will not be asserted against it in the future, or that, if asserted, any infringement claim will be successfully defended. A successful claim against CDI could require that it pay substantial damages or ongoing royalty payments, prevent it from offering its products and services, or require that CDI comply with other unfavorable terms. CDI may also be obligated to indemnify its customers or business partners or pay substantial settlement costs, including royalty payments, in

connection with any such claim or litigation and to obtain licenses, modify applications or refund fees, which could be costly. Even if CDI were to prevail in such a dispute, any litigation regarding CDI’s intellectual property could be costly and time-consuming, and divert the attention of its management and key personnel from CDI’s business operations.

CDI profiles, aggregates, processes, and analyzes molecular, clinical and health-related data and information for use by healthcare providers, partners and customers. Because laboratory or testing errors can occur, data obtained from customers can be incomplete or inaccurate, and data in the healthcare industry is fragmented in origin, inconsistent in format, and often incomplete, the overall quality of data received or accessed in the healthcare industry is often poor, the degree or amount of data which is knowingly or unknowingly absent or omitted can be material. If the test results that we provide to CDI’s clients are based on incorrect or incomplete data or if CDI makes mistakes in the capture, input, or analysis of these data, CDI’s reputation may suffer and its ability to attract and retain clients may be materially harmed.

In addition, in the future, CDI may submit data to governmental entities, including FDA and CMS. These processes and submissions are governed by complex data processing and validation policies and regulations. If CDI fails to abide by such policies or submit incorrect or incomplete data, it may be exposed to liability to a customer, partner, court, or government agency that concludes that CDI’s processing, storage, handling, submission, delivery, or display of health information or other data was wrongful or erroneous.

Patented and/or proprietary product and software development is time-consuming, expensive, and complex, and may involve unforeseen difficulties. We may encounter technical obstacles, and it is possible that CDI discovers additional problems that prevent CDI’s patented and/or proprietary products and applications from operating properly. If CDI’s products and applications do not function reliably or fail to achieve customer or partner expectations in terms of performance, customers could assert liability claims against us and our partners could attempt to cancel their contracts with us. Moreover, material performance problems, defects, or errors in our existing or new products and applications may arise in the future and may result from, among other things, the lack of sufficient validation, interoperability of our applications with systems and data that CDI did not develop and the function of which is outside of CDI’s control or undetected in its testing. Defects or errors in CDI’s products and applications might discourage existing or potential customers and partners from purchasing products from us. Correction of defects or errors could prove to be time consuming, costly, impossible, or impracticable. The existence of errors or defects in CDI’s products and applications, and the correction of such errors could divert CDI’s resources from other matters relating to CDI’s business, damage our reputation, increase CDI’s costs, and have a material adverse effect on CDI’s business, financial condition, and results of operations.

CDI’s business exposes it to risks that are inherent in the provision of testing services that assist clinical decision-making. If customers or partners assert liability claims against CDI, any ensuing litigation, regardless of outcome, could result in a substantial cost to CDI, divert management’s attention from operations, and decrease market acceptance of CDI’s toolsets. CDI attempts to limit its liability to customers by disclosing limitations and disclaimers of products and to partners by contract; however, the limitations of liability set forth in the disclosures and contracts may not be enforceable or may not otherwise protect CDI from liability for damages. Additionally, CDI may be subject to claims that are not explicitly covered by disclosures and contract. CDI also maintain general liability coverage; however, this coverage may not continue to be available on acceptable terms, may not be available in sufficient amounts to cover one or more large claims against CDI, and may include larger self-insured retentions or exclusions for certain products. In addition, the insurer might disclaim coverage as to any future claim. A successful claim not fully covered by our insurance could have a material adverse impact on our liquidity, financial condition, and results of operations.

CDI’s future success depends, in part, on CDI’s ability to continue to attract and retain highly skilled personnel. CDI believes that there is, and will continue to be, intense competition for highly skilled management, medical,

engineering, data science, sales and other personnel with experience in CDI’s industry. CDI must provide competitive compensation packages and a high-quality work environment to hire, retain and motivate employees. If CDI is to retain and motivate its existing employees and attract qualified personnel to fill key positions, we may be unable to manage our business effectively, including the development, marketing and sale of CDI’s products, which could adversely affect CDI’s business, results of operations and financial condition. To the extent CDI hires personnel from competitors, CDI also may be subject to allegations that it has been improperly solicited or that they have divulged proprietary or other confidential information. If CDI is unable to retain its employees, CDI’s business, results of operations and financial condition could be adversely affected.

CDI’s investment, financing, leverage, and dividend policies, and policies with respect to all other activities, including growth, capitalization, and operations, are determined exclusively by CDI’s board of directors, and may be amended or revised at any time by CDI’s board of directors without notice to or a vote of CDI’s stockholders. This could result in us conducting operational matters, making investments, or pursuing different business or growth strategies. Further, CDI’s charter and bylaws do not limit the amount or percentage of indebtedness, funded or otherwise, that CDI may incur. Higher leverage also increases the risk of default on CDI’s obligations. In addition, a change in CDI’s investment policies, including the manner in which we allocate our resources across our portfolio or the types of assets in which we seek to invest, may increase CDI’s exposure to interest rate risk and liquidity risk. Changes to CDI’s policies with regards to the foregoing could materially adversely affect CDI’s financial condition, results of operations, and cash flow.

The COVID-19 pandemic has resulted in social distancing, travel bans and quarantine, and this has limited access to CDI’s facilities, customers, management, support staff and professional advisors. These factors, in turn, may have an impact on CDI’s operations, financial condition and demand for CDI’s goods and services as well as CDI’s overall ability to react timely to mitigate the impact of this event. While CDI has learned from the COVID-19 pandemic and its result on its operations and financial condition, because of the nature of these events, there can be no assurance that we will be well-prepared for similar unforeseen and uncontrollable events that may occur in the future.

A significant natural disaster, such as a tornado, hurricane or a flood, occurring at CDI’s headquarters, at one of CDI’s other facilities or where a business partner is located could adversely affect CDI’s business, results of operations and financial condition. Further, if a natural disaster, health epidemics or pandemic, or man-made problem were to affect CDI’s network service providers, Internet service providers or the network of CDI’s partners, this could adversely affect the ability of our customers to use CDI’s products. In addition, natural disasters and acts of terrorism could cause disruptions in CDI’s business, or the businesses of CDI’s partners or service providers. CDI also relies on its network and third-party infrastructure and enterprise applications and internal technology systems for its engineering, sales and marketing and operations activities. Although CDI maintains incident management and disaster response plans, in the event of a major disruption caused by a health epidemic or pandemic, natural disaster or man-made problem, CDI may be unable to continue CDI’s operations and may endure system interruptions, reputational harm, delays in CDI’s development activities, lengthy interruptions in service, breaches of data security and loss of critical data, any of which could adversely affect CDI’s business, results of operations and financial condition.

The market for CDI’s tests and services is increasingly competitive, rapidly evolving and fragmented, and is subject to changing technology and shifting customer needs. Although CDI believes that its products and the solutions that it offers are unique, many vendors develop and market products and services that compete to varying extents with CDI’s offerings, and CDI expect competition in its market to continue to intensify. Moreover, industry consolidation may increase competition.

Many of CDI’s existing competitors, as well as a number of potential new competitors, have longer operating histories, greater name recognition, more established customer bases and significantly greater financial, technical, marketing and other resources than CDI does. As a result, CDI’s competitors may be able to respond more quickly and effectively than CDI can to new or changing opportunities, technologies, standards or customer requirements. CDI could lose customers if CDI’s competitors introduce new competitive products and technologies, add new features, acquire competitive products, reduce prices, form strategic alliances with other companies or are acquired by third parties with greater available resources. In addition, if a prospective customer is currently using a competing solution, the customer may be unwilling to switch to our tests and services without access to setup support services. If CDI is unable to provide those tests and services on terms attractive to the customer, the prospective customer may be unwilling to utilize CDI’s solutions. If CDI’s competitors’ products, services or technologies become more accepted than CDI’s solutions, if they are successful in bringing their products or services to market earlier than CDI’s, or if their products or services are more technologically capable than CDI’s, then CDI’s revenue could be adversely affected. In addition, some of CDI’s competitors may offer their products and services at a lower price.

The clinical epigenetic testing and diagnostic markets are undergoing rapid technological change, frequent product and service innovation and evolving industry standards. If CDI is unable to provide enhancements and new features for CDI’s existing tests and services or additional tests and services that achieve market acceptance or that keep pace with these technological developments, CDI’s business could be adversely affected. The success of enhancements, new tests and services depends on several factors, including the timely completion, introduction and market acceptance of the innovations. Failure in this regard may significantly impair our revenue growth. In addition, because CDI’s solutions are designed to operate on existing testing technologies and cloud software and technologies, we will need to continuously modify and enhance CDI’s solutions to keep pace with changes in testing technologies, and internet-related hardware, software, communication, browser and database technologies. CDI may not be successful in either developing these modifications and enhancements or in bringing them to market in a timely fashion. Furthermore, uncertainties about the timing and nature of new products or technologies, or modifications to existing products or technologies, could increase CDI’s research and development expenses. Any failure of our solutions to keep pace with technological changes or operate effectively with future products and technologies could reduce the demand for CDI’s solutions, result in customer dissatisfaction and adversely affect CDI’s business.

CDI believes its corporate culture is a critical component to its success. CDI has invested substantial time and resources in building its team. As CDI grows and develop the infrastructure of a public company, CDI may find it difficult to maintain its corporate culture. Any failure to preserve CDI’s culture could negatively affect CDI’s future success, including CDI’s ability to retain and recruit personnel and effectively focus on and pursue CDI’s corporate objectives.

CDI’s strategy includes rapidly growing by acquiring new individual customers through direct-to-consumer advertising and forming partnerships to gain customers and strategic partners. There can be no assurance that CDI will be successful in acquiring customers and partners through these and other strategies.

CDI’s success depends upon the services of a number of key employees, specifically Meeshanthini Dogan PhD and Robert Philibert MD PhD. CDI is planning on entering into employment agreements with and acquiring key man life insurance for Meeshanthini Dogan PhD and Robert Philibert MD PhD and other key executives hired in the future. The loss of the services of one or more of these key employees could harm CDI’s business. CDI’s success also depends upon its ability to attract highly skilled new employees. Competition for such employees is intense in the industries and geographic areas in which it operates.

CDI may rely on its ability to grant stock options as one mechanism for recruiting and retaining highly skilled talent. Recently proposed accounting regulations requiring the expensing of stock options may impair CDI’s future

ability to provide these incentives without incurring significant compensation costs. If CDI is unable to compete successfully for key employees, its results of operations, financial condition, business and prospects could be adversely affected.

Following the merger, CDI’s CEO and co-founder, Meeshanthini Dogan PhD, and the other co-founder, Robert Philibert MD PhD, together will own approximately 47% of the outstanding shares of I-On’s common stock. Therefore, they could be in a position to elect or change the members of the board of directors and to control I-On’s business and affairs including certain significant corporate actions, including but not limited to acquisitions, the sale or purchase of assets and the issuance and sale of CDI’s shares. CDI also may be prevented from entering into transactions that could be beneficial to the other holders of the shares without their consent. Their interests might differ from the interests of other stockholders.

A downturn in economic conditions in one or more of its markets could have a material adverse effect on the results of operations, financial condition, business and prospects. Although CDI attempts to stay informed of customer preferences, any sustained failure to identify and respond to trends could have a material adverse effect on its results of operations, financial condition, business and prospects.

CDI’s growth strategy will place significant demands on management and its financial, administrative and other resources. Operating results will depend substantially on the ability of its officers and key employees to manage changing business conditions and to implement and improve its financial, administrative and other resources. If CDI is unable to respond to and manage changing business conditions, or the scale of its operations, then the quality of its services, its ability to retain key personnel, and its business could be harmed.

CDI’s ability to manage its growth effectively will require it to continue to improve its operational, financial and management controls and information systems to accurately forecast sales demand, to manage its operating costs, manage its marketing programs in conjunction with an emerging market, and attract, train, motivate and manage its employees effectively. If management fails to manage the expected growth, CDI’s results of operations, financial condition, business and prospects could be adversely affected. In addition, CDI’s growth strategy may depend on effectively integrating future entities, which requires cooperative efforts from the managers and employees of the respective business entities. If CDI’s management is unable to effectively integrate its various business entities, its results of operations, financial condition, business and prospects could be adversely affected.

Although CDI believes that it will provide a competitive range of tests and services, there can be no assurance of acceptance by the marketplace. The procurement of new contracts by CDI may be dependent upon the continuing results achieved with current clients, upon pricing and operational considerations, as well as the potential need for continuing improvement to existing services. Moreover, the markets for such services may not develop as expected nor can there be any assurance that CDI will be successful in its marketing of any such services.

From time to time, CDI may be involved in disputes or regulatory inquiries that arise in the ordinary course of business. CDI expects that the number and significance of these potential disputes may increase as CDI’s business expands and CDI grow larger.

While our product limitation disclosures limit our liability for damages arising from our tests and services, there can be no assurance that these limitations will protect CDI from liability for damages in the event it is sued. Although CDI may carry general liability insurance coverage, CDI’s insurance may not cover all potential claims to which CDI is exposed or may not be adequate to indemnify us for all liability that may be imposed.

Any claims against us, whether meritorious or not, could be time consuming, result in costly litigation, require significant amounts of management time, and result in the diversion of significant operational resources. Because litigation is inherently unpredictable, we cannot assure you that the results of any of these actions will not have a material adverse effect on our business, financial condition, results of operations and prospects.

Although there is no current pending litigation against CDI, in the future, customer, partners or competitors may threaten lawsuits for what they believe to be infractions against themselves.

Our operations are subject to numerous US laws and regulations. Liability under these laws involves inherent uncertainties. Violations of these laws and regulations are subject to civil, and, in some cases, criminal sanctions. Although CDI is not aware of any compliance related issues, CDI may not have been, or may not be, at all times, in complete compliance with all requirements, and we may incur costs or liabilities in connection with such requirements. CDI may also incur unexpected interruptions to our operations, administrative injunctions requiring operation stoppages, fines and other penalties.

There can also be no assurance that any insurance coverage CDI takes will be adequate or that CDI will prevail in any future cases. There can be no assurance that CDI will be able to obtain liability insurance that would protect it from any such lawsuits. CDI is not currently subject to any claims from o CDI’s employees, partners or customers; however, CDI may be subject to such claims in the future. In the event that CDI is not covered by insurance, CDI’s management could expend significant time addressing any such issues.

Changing laws, regulations, and standards relating to corporate governance and public disclosure for public companies, including the Sarbanes-Oxley Act of 2002 and various rules and regulations adopted by the Securities and Exchange Commission (the “SEC”), are creating uncertainty for public companies. CDI’s 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.

This proxy statement, and the documents incorporated by reference into this proxy statement, contains “forward-looking” statements within the meaning of Section 21E of the U.S. Securities Exchange Act of 1934, as amended, and the Private Securities Litigation Reform Act of 1995, known as the PSLRA. These statements, as they relate to I-On or CDI, the management of either such company or the proposed transaction between I-On and CDI, involve risks and uncertainties that may cause results to differ materially from those set forth in the statements. These statements are based on current plans, estimates and projections, and therefore, you are cautioned not to place undue reliance on them. These statements may discuss goals, intentions and expectations as to future plans, trends, events, results of operations or financial condition, or otherwise, based on current beliefs of the management of I-On, as well as assumptions made by, and information currently available to management. No forward-looking statement can be guaranteed, and actual results may differ materially from those projected. I-On and CDI undertake no obligation to publicly update any forward-looking statement, whether as a result of new information, future events or otherwise, except to the extent required by law. Forward-looking statements are not historical facts, but rather are based on current expectations, estimates, assumptions and projections about the business and future financial results of the pharmaceutical industry, and other legal, regulatory and economic developments. We use words such as “anticipates,” “believes,” “plans,” “expects,” “projects,” “future,” “intends,” “may,” “will,” “should,” “could,” “estimates,” “predicts,” “potential,” “continue,” “guidance,” and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words. Actual results could differ materially from the results contemplated by these forward-looking statements due to a number of factors, including, but not limited to, those described in the documents I-On has filed with the SEC as well as the possibility that (1) the parties may be unable to obtain stockholder or regulatory approvals required for the proposed transaction or may be required to accept conditions that could reduce the anticipated benefits of the merger as a condition to obtaining regulatory approvals; (2) the length of time necessary to consummate the proposed transaction may be longer than anticipated; (3) the parties may not be able to satisfy the conditions precedent to consummate the proposed transaction; (4) the proposed transaction may divert management’s attention from I-On’s ongoing business operations; (5) the anticipated benefits of the proposed transaction might not be achieved; (6) the proposed transaction may involve unexpected costs; (7) the parties may be subject to risks related to the proposed transaction, including any legal proceedings related to the proposed transaction and the general risks associated with the respective businesses of I-On and CDI, including the general volatility of the capital markets, terms and deployment of capital, volatility of I-On share prices, changes in the biotechnology industry, interest rates or the general economy; or (8) activist investors might not approve of the proposed transaction. Additionally, forward-looking statements related to CDI’s future expectations are subject to numerous risks and uncertainties, including risks that planned development milestones and timelines will not be met. Neither I-On nor CDI gives any assurance that either I-On or CDI will achieve its expectations.

The foregoing list of factors is not exhaustive. You should carefully consider the foregoing factors and the other risks and uncertainties that affect the businesses of I-On described in the “Risk Factors” section of this proxy statement, I-On’s Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and other documents filed by I-On from time to time with the SEC. All forward-looking statements included in this proxy statement are based upon information available to I-On and CDI the date hereof, and neither I-On nor CDI assumes any obligation to update or revise any such forward-looking statements.

A special meeting of I-On’s stockholders will be held at 7:00 PM EST time, on January 27, 2022, 2021 at the offices of McCarter & English, LLP, Two Tower Center Boulevard, East Brunswick, NJ 08816.

The purpose of the special meeting is to consider and vote on the following proposals:

If I-On is to complete the merger with CDI and the exchange, stockholders must approve Proposals 1 and 2.

The board of directors has fixed December 10, 2021 as the record date for the determination of stockholders entitled to notice of, and to vote at, the special meeting and any adjournment or postponement thereof. Only holders of record of shares of I-On common stock at the close of business on the record date are entitled to notice of, and to vote at, the special meeting. At the close of business on the record date, I-On had 35,030,339 shares of common stock outstanding and entitled to vote at the special meeting. Each holder of record of shares of common stock on the record date will be entitled to one vote for each share held on all matters to be voted upon at the special meeting.

If you hold your shares in your own name, you may submit a proxy by telephone, or by mail or vote by attending the special meeting and voting in person.

By casting your vote in any of the ways listed above, you are authorizing the individuals listed on the proxy to vote your shares in accordance with your instructions.

If your shares are held in the name of a bank, broker or other nominee, you will receive instructions from the holder of record that you must follow for your shares to be voted. Please follow the instructions from the holder of record carefully. Also, please note that if the holder of record of your shares is a broker, bank or other nominee and you wish to vote in person at the special meeting, you must request a proxy from your bank, broker or other nominee that holds your shares and present that proxy and proof of identification at the special meeting.

Any I-On stockholder of record voting by proxy, other than those I-On stockholders who have executed a voting agreement and irrevocable proxy, has the right to revoke the proxy at any time before the polls close at the special meeting by:

If a stockholder of I-On has instructed a broker to vote its shares of I-On common stock that are held in “street name,” the stockholder must follow directions received from its broker to change those instructions.

A majority of the shares entitled to vote, present in person or represented by proxy constitute a quorum at the special meeting. Stockholders shall have one vote for each share of common stock entitled to vote owned by them as of the record date. Assuming the presence of a quorum at the meeting:

Holders of I-On common stock are not entitled to appraisal rights in connection with the merger or the Spinoff. If the merger is completed, CDI’s stockholders are entitled to appraisal rights under the Delaware General Corporation Law.

Certain I-On stockholders, directors and officers of I-On, owners of approximately 50% of I-On’s fully-diluted common stock, including Jae Cheol Oh and Hong Rae Kim, have financial interests in the merger transaction that are different from, or in addition to, their interests as I-On stockholders generally. In connection with the merger, Jae Cheol Oh shall sell to CDI 500,000 shares of I-On Common Stock for a purchase price of $250,000, which is a condition to the closing of the Merger and the Spinoff.

I-On will bear the cost of soliciting proxies, including the printing, mailing and filing of this proxy statement, the proxy card and any additional information furnished to I-On’s stockholders. You will need to obtain your own internet access if you choose to access the proxy materials and/or vote over the internet. I-On and CDI may use the services of its directors, officers and other employees to solicit proxies from I-On’s stockholders without additional compensation. Arrangements may be made with banks, brokers, nominees, custodians and fiduciaries who are record holders of I-On common stock for the forwarding of solicitation materials to the beneficial owners of I-On common stock. I-On will reimburse these banks, brokers, nominees, custodians and fiduciaries for the reasonable out-of-pocket expenses they incur in connection with the forwarding of solicitation materials.

Cardio Diagnostics was founded in 2017 in Coralville, Iowa, by Meeshanthini (Meesha) Dogan PhD, and Robert (Rob) Philibert MD PhD. It was incorporated in January 2017 as an Iowa LLC and was subsequently incorporated as a Delaware C-Corp in September 2019. Cardio Diagnostics, LLC (“CD LLC”) is a wholly-owned subsidiary of Cardio Diagnostics, Inc (“CDI” or the “Company”).

The Company was formed to further develop and commercialize a patent-pending Artificial Intelligence (AI)-driven DNA biomarker testing technology (“Core Technology”) for cardiovascular disease invented at the University of Iowa by the Founders, with the aim of becoming one of the leading medical technology companies for enabling precision prevention, early detection and treatment of cardiovascular disease.

CDI is transforming the approach to cardiovascular disease from reactive to proactive. The Core Technology is being incorporated into a series of products for major types of cardiovascular disease and associated co-morbidities including coronary heart disease (CHD), stroke, heart failure and diabetes.

CDI 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, and (4) payors. The Company’s first product, Epi+Gen CHD^TM, launched in Q1 2021, is a three-year symptomatic CHD (i.e. heart attack) risk assessment test. Revenue for this product will be generated through the recurring sale of this test and through licensing agreements.

An estimated 80% of cardiovascular disease (CVD) is preventable, yet, it is responsible for one is every four deaths and remains the number one killer in the United States for both men and women. Coronary heart disease (CHD) is the most common type of CVD and the major cause of heart attacks. The enormous and unnecessary heart attacks and deaths associated with CHD is attributable to the failure of current primary prevention approaches in clinical practice to effectively detect, reduce and monitor risk for CHD prior to life altering and costly health complications. Several reasons for this failure include (1) the current in-person risk screening approach is incompatible with busy everyday life as demonstrated by the 24% decrease in primary care visits, (2) even if the current risk screening tests are taken, in a peer-reviewed published study performed by CDI, they only identify 44% and 32% of men and women at high risk, respectively, and (3) the lack of patient care plan personalization. A highly accessible, personalized and precise solution for CHD prevention is not available.

Furthermore, with the ongoing COVID-19 pandemic, preventable illnesses such as CHD are expected to spike. Therefore, now more than ever, there is an urgent need for a highly sensitive, scalable, at-home clinical risk screening tool that can help physicians better direct care and allow patients to receive the help they need sooner.

CDI’s products incorporate its patent-pending AI-driven DNA biomarker testing technology, which consists of two components. The first is a laboratory component, which involves the use of CDI’s proprietary laboratory testing assays to profile genetic and epigenetic DNA biomarkers. Genetic biomarkers represent an individual’s inherited risk for the disease, while their epigenetic biomarkers represent their acquired risk influenced by lifestyle and

environment. The second is an analytical component, which involves implementing CDI’s proprietary machine learning/AI risk calculator to provide a risk score and personalized insights physicians can utilize to tailor a prevention plan. The combination of biomarkers and risk calculator is unique to each product.

CDI’s first product, Epi+Gen CHD^TM, is the first at-home, epigenetics-based clinical test for heart disease that is capable of assessing near-term (three-year) risk for CHD.

Epi+Gen CHD^TM is a Laboratory Developed Test (LDT), and this clinical test needs to be ordered by and reported back to a physician. Epi+Gen CHD^TM is highly accessible as this clinical test can be prescribed and completed remotely. CDI has partnered with InTeleLabs to offer this test through their elicity telemedicine physician platform. This will allow patients to undergo screening and consultation from the comfort and privacy of their own home. Once the test is ordered by an elicity healthcare provider, CDI’s fulfillment partner, IBI Scientific, will dispatch an at-home sampling kit. This at-home sampling kit allows a patient to collect their blood sample using the finger prick method and mail it to the laboratory for processing. Patient samples are processed at a CLIA-certified high complexity laboratory. The proprietary laboratory assays are kitted by Empirical Bioscience using GMP compliant manufacturing practices. Upon completion of laboratory profiling of the Epi+Gen CHD^TM biomarker panel that consists of three DNA methylation (epigenetic) and five SNP (genetic) biomarkers, the data is interpreted using an ML/AI risk calculator and the patient report is generated.

Epi+Gen CHD^TM was independently validated in collaboration with Intermountain Healthcare and has been shown to be about twice more sensitive than the current gold standard clinical risk estimators in men and women. It can also be administered in a traditional healthcare setting. The blood-based version of this test was launched in Q1 2021. This test is being sold for $350 and can be paid for either out-of-pocket or via HSA/FSA. The saliva version of the test is under development.

With Epi+Gen CHD^TM, CDI empowers patients to prevent CHD with actionable information about their near-term heart attack risk. We enable clinicians to identify patients in need of immediate attention and proactively manage them. CDI enables healthcare organizations and payors to reduce the cost of care.

According to the Centers for Disease Control and Prevention, 90% of the $3.5 trillion the United States spends annually are for people with chronic and mental health conditions. Every year, one in six United States healthcare dollars is spent on CVD.

Heart disease and stroke costs the United States healthcare system $214 billion per year and is associated with $138 billion in lost productivity. By 2030, the annual direct medical costs associated with CVD is expected to increase to over $818 billion, while the lost productivity costs are expected to rise to more than $275 billion.

 

Currently, among the various types of CVD, the medical costs of CHD are the highest at $89 billion and expected to rise to $215 billion by 2035. To address this expected significant rise in healthcare and lost productivity costs, the United States healthcare market is seeking more efficient and effective methods to prevent CVD. This same trend is playing out across modernized nations around the globe as the burden of CVD continues to grow due to rise in major risk factors such as obesity, poor diet and type 2 diabetes.

The healthcare industry is undergoing a significant transformation, driven by the COVID-19 pandemic from traditional in-person delivery of care to remote telemedicine-based care. This is both beneficial and necessary for patients and key stakeholders in the healthcare industry.

Remote, telemedicine-based preventative programs and tests can serve those who are already undergoing routine screening, but more importantly, expand reach to most Americans who currently are missing out on preventative healthcare. In response, both the public and private sectors have expanded coverage and offerings of evidence-based tests and services that can be administered safely and remotely.

This demand is expected to further drive adoption by patients and clinicians of evidence-based tests such as Epi+Gen CHD^TM that is highly accessible and have been shown to perform better than the current gold standard prevention risk estimators. Furthermore, epigenetics-based tests are now increasingly being considered in other segments of the healthcare industry, including pharmaceutical companies for drug development and understanding drug response.

We believe that our market opportunity is significant. Heart disease is the leading cause of death in the United States and the American Heart Association recommends taking steps towards preventing heart disease as early as 20 years old. The ability to provide accessible, personalized and precise risk insights is crucial for patients, clinicians, healthcare organizations and payors. It is especially necessary with the ongoing COVID-19 pandemic as (1) many adults have deferred in-person risk screening due to fear of contracting COVID-19, and (2) adoption of telemedicine and at-home testing has skyrocketed, and is here to stay.

Adults between 35 and 75 years old are a good fit for the Epi+Gen CHD^TM test. According to the US Census Bureau, there are 157M adults between the ages of 35 and 75 in the United States. That accounts for a $55B total addressable market in the United States.

We believe that the epigenetics diagnostics market within the healthcare landscape will continue to expand. According to a third-party report, the epigenetic diagnostics market will reach over $19 billion by 2026, growing at a CAGR of more than 13%. We expect this market opportunity to grow further with the growth of AI in healthcare, which according to Accenture is expected to have a compound annual growth rate of 40 percent.

You should read the following discussion and analysis of CDI’s financial condition and results of operations together with its consolidated financial statements and the related notes. Some of the information contained in this discussion and analysis or set forth elsewhere, including information with respect to its plans and strategy for its business and related financing, includes forward-looking statements that involve risks, uncertainties and assumptions. You should read the “Special Note Regarding Forward-Looking Statements” and “Risk Factors” for a discussion of important factors that could cause actual results to differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis.

The following discussion refers to the financial results of Cardio Diagnostics, Inc., (the “Company”) and its wholly-owned subsidiary, Cardio Diagnostics, LLC (“Cardio LLC”), (collectively “CDI”), for the nine months ended September 30, 2021. For purposes of this following discussion the terms “we”, ‘our” or “us” and similar references refers to CDI and its affiliates.

Cardio Diagnostics was founded in 2017 in Coralville, Iowa, by Meeshanthini (Meesha) Dogan PhD, and Robert (Rob) Philibert MD PhD. It was incorporated in January 2017 as an Iowa LLC and was subsequently incorporated as a Delaware C-Corp in September 2019. Cardio Diagnostics, LLC (“CD LLC”) is a wholly owned subsidiary of Cardio Diagnostics, Inc (“CDI” or the “Company”). Our principal website address is cardiodiagnosticsinc.com. The information provided on, or accessible through, our website is not part of this proxy, nor is such information incorporated by reference, and such information should not be relied upon in determining whether to make an investment decision in the Securities

The Company was formed to further develop and commercialize a patent-pending Artificial Intelligence (AI)-driven DNA biomarker testing technology (“Core Technology”) for cardiovascular disease invented at the University of Iowa by the Founders, with the aim of becoming one of the leading medical technology companies for enabling precision prevention, early detection and treatment of cardiovascular disease. CD Inc is transforming the approach to cardiovascular disease from reactive to proactive. The Core Technology is being incorporated into a series of products for major types of cardiovascular disease and associated co-morbidities including coronary heart disease (CHD), stroke, heart failure and diabetes.

CDI 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, and (4) payors. The Company’s first product, Epi+Gen CHD^TM, launched in January 2021, is a three-year symptomatic CHD (i.e. heart attack) risk assessment test. Revenue for this product is generated through the recurring sale of this test and through licensing agreements.

The following table summarizes CDI’s consolidated results of operations for the nine months ended September 30, 2021, and 2020, respectively:

Our net loss attributable to CDI for the nine months ended September 31, 2021, was $429,477, as compared to $588,433 for the nine months ended September 31, 2020, a decrease of $158,956.

Expenses related to sales and marketing for the nine months ended September 31, 2021, were $65,099, as compared to $2,931 for the nine months ended September 31, 2020, an increase of $62,168. The overall increase was due to the sales and marketing related to the launching of our first product, Epi+Gen CHD^TM in January 2021.

Research and Development expense for nine months ended September 31, 2021, was $87,451 as compared to $1,500 for the nine months ended September 31, 2020, an increase of $85,951 due to laboratory runs performed.

General and administrative expenses for the nine months ended September 31, 2021, were $264,927, as compared to $587,502 for the nine months ended September 31, 2020, a decrease of $322,575. The overall decrease is primarily due to decreased expenses related to operations associated with our product, Epi+Gen CHD^TM .

Amortization expense for the nine months ended September 31, 2021, was $12,000 as compared to $0 for the nine months ended September 31, 2020, and includes the amortization of intangible assets.

Cash at September 30, 2021 totalled $929,794 as compared to $237,087 at December 31, 2020, an increase of $697,707.

Cash used in operating activities for the nine months ended September 31, 2021, was $373,545, as compared to cash provided by operating activities of $66,931 for nine months ended September 31, 2020. The cash used in operations during the nine months ended September 31, 2021, is a function of net loss of $429,477, adjusted for the following non-cash operating items: amortization of $12,000, stock based compensation of $60,000, offset by an adjustment to patent deposits contributed by shareholders, an increase of $8,799 in prepaid expenses and other current assets, and a decrease of $3,990 in accounts payable and accrued expenses.

Cash used in investing activities for the nine months ended September 31, 2021, was $68,748 due to an increase in deposits.

Cash provided by financing activities for the nine months ended September 31, 2021, was $1,135,000 as compared to $165,000 for the nine months ended September 31, 2020. This change was due to $1,230,000 in proceeds from the sale of common stock offset by $95,000 in financing costs related to the capital raise.

As of September 30, 2021, the Company had cash balance of $929,794 and an accumulated stockholders’ deficit of $1,139,590. These factors, among others, raise substantial doubt about the ability of the Company to continue as a going concern for the next twelve months from the date that the financial statements are issued. Management’s plans and assessment of the probability that such plans will mitigate and alleviate any substantial doubt about the

Company’s ability to continue as a going concern, is dependent upon the ability to attain funding to secure additional resources to generate sufficient revenues and increased margin, which without these represent the principal conditions that raise substantial doubt about our ability to continue as a going concern.

As a result of the spread of the COVID-19 coronavirus, economic uncertainties have arisen which are likely to negatively impact operations. Other financial impact could occur though such potential impact is unknown at this time. A pandemic typically results in social distancing, travel bans and quarantine, and this may limit access to our facilities, customers, management, support staff and professional advisors. These factors, in turn, may not only impact our operations, financial condition and demand for our goods and services but our overall ability to react timely to mitigate the impact of this event.

The Company expects that working capital requirements will continue to be funded through a combination of its existing funds and further issuances of securities. Working capital requirements are expected to increase in line with the growth of the business. Existing working capital, further advances and debt instruments, and anticipated cash flow are expected to be adequate to fund operations over the next twelve months. The Company has no lines of credit or other bank financing arrangements. The Company has financed operations to date through the proceeds of a private placement of equity and debt instruments. In connection with the Company’s business plan, management anticipates additional increases in operating expenses and capital expenditures relating to: (i) developmental expenses associated with a start-up business and (ii) marketing expenses. The Company intends to finance these expenses with further issuances of securities, and debt issuances. Thereafter, the Company expects it will need to raise additional capital and generate revenues to meet long-term operating requirements. Additional issuances of equity or convertible debt securities will result in dilution to current stockholders. Further, such securities might have rights, preferences or privileges senior to common stock. Additional financing may not be available upon acceptable terms, or at all. If adequate funds are not available or are not available on acceptable terms, the Company may not be able to take advantage of prospective new business endeavours or opportunities, which could significantly and materially restrict business operations.

The consolidated financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.

The following summarizes CDI’s contractual obligations as of September 30, 2021 and the effects that such obligations are expected to have on CDIs liquidity and cash flows in future periods:

Stock to be issued consists of Simple Agreements for Future Equity (“SAFE”) issued to accredited investors with balances of $451,471 and $346,471 at September 30, 2021 and December 31, 2020, respectively. Each SAFE is convertible upon the occurrence of certain events as follows:

Equity Financing: If there is an equity financing before the termination of the SAFE, on the initial closing of such equity financing, the SAFE will automatically convert into the number of SAFE preferred stock equal to the purchase amount divided by the discount price. The discount price is the lowest price per share of the standard preferred stock sold in the equity financing multiplied by the discount rate of 85%.

Liquidity Event: If a liquidity event occurs before the termination of the SAFE, the SAFE will automatically be entitled to receive a portion of the proceeds due and payable to the investor immediately prior to, or concurrent with the consummation of such liquidity event, equal to the greater of (i) the purchase amount (the “Cash-out Amount”) or (ii) the amount payable on the number of shares of common stock equal to the purchase amount divided by the liquidity price (“the Conversion Amount”).

Dissolution Event: If there is a dissolution event before the termination of the SAFE, the investor will automatically be entitled to receive a portion of proceeds equal to the Cash-out Amount, due and payable to the investor immediately prior to the consummation of the dissolution event.

Each SAFE will automatically terminate immediately following the earliest of (i) the issuance of capital stock to the investor pursuant to the automatic conversion of the SAFE pursuant to an equity financing, or (ii) the payment, or setting aside for payment of amounts due the investor pursuant to a liquidity event or dissolution event.

Included in stock to be issued (Note 7) are SAFE agreements from related parties of $271,471 and $221,471 as of September 30, 2021 and December 31, 2020, respectively.

The Company reimburses Behavioral Diagnostic, LLC (“BDLLC”), a company owned by its Chief Medical Officer for salaries of the Company’s CEO and its senior data scientist, who is the husband of the CEO. Payments to BDLLC for salaries totaled $79,920 and $70,490 for the nine months ended September 30, 2021 and 2020, respectively.

Research and development laboratory runs are performed on a fee-for-service basis at the Chief Medical Officer’s academic laboratory at the University of Iowa. Payments for these services totaled $0 and $1,500 for the nine months ended September 30, 2021 and 2020, respectively.

CDI’s consolidated financial statements are prepared in accordance with GAAP in the United States. The preparation of CDI’s consolidated financial statements and related disclosures requires it to make estimates and judgments that affect the reported amounts of assets, liabilities, revenue, costs and expenses, and the disclosure of contingent assets and liabilities in CDI’s financial statements. CDI bases its estimates on historical experience, known trends and events and various other factors that it believes are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. CDI evaluates its estimates and assumptions on an ongoing basis. CDI’s actual results may differ from these estimates under different assumptions or conditions.

While CDI’s significant accounting policies are described in more detail in Note 2 to CDI’s consolidated financial statements, CDI believes that the following accounting policies are those most critical to the judgments and estimates used in the preparation of its consolidated financial statements.

The following table summarizes CDI’s consolidated results of operations for the year ended December 31, 2020, and 2019, respectively:

Our net loss attributable to CDI for the year ended December 31, 2020, was $605,164, as compared to $313 for the year ended December 31, 2019, an increase of $ 604,851.

Research and Development expense for the year ended December 31, 2020, was $1,500 as compared to $0 for the year ended December 31, 2019, due to laboratory runs performed.

Expenses related to sales and marketing for the year ended December 31, 2020, were $5,476, as compared to $1,004 for the year ended December 31, 2019, an increase of $4,472. The overall increase was due to the sales and marketing related to the launching of our first product, Epi+Gen CHD^TM in January 2021.

General and administrative expenses for the year ended December 31, 2020, were $591,521, as compared to $(691) for the year ended December 31, 2019, an increase of $822,751. The overall increase is primarily due to increased expenses related to operations associated with our product, Epi+Gen CHD^TM .

Amortization expense for the year ended December 31, 2020, was $10,667 as compared to $0 for the year ended December 31, 2019, and includes the amortization of intangible assets.

Cash at December 31, 2020 totalled $237,087 as compared to $1,138 at December 31, 2019, an increase of $235,949.

Cash provided by operating activities for the year ended December 31, 2020 was $25,859, as compared to cash used in operating activities of $697 for the year ended December 31, 2019. The cash provided by operations during the year ended December 31, 2020 is a function of net loss of $605,164, adjusted for the following non-cash operating items: amortization of $10,667, stock based compensation of $589,263, offset by an increase of $8,067 in prepaid expenses and other current assets, and an increase of $39,160 in accounts payable and accrued expenses.

Cash used in investing activities was $29,910 for the year for the year ended December 31, 2020 due to an increase in deposits.

Cash provided by financing activities for the year ended December 31, 2020 was $240,000 as compared to $964 for the year ended December 31, 2019. This change was primarily due to $300,000 in proceeds from the issuance of convertible notes payable offset by $60,000 in payments of convertible notes payable.

The Company has an accumulated deficit of $710,113, and a working capital deficit of $140,093 at December 31, 2020. In addition, the Company has a stockholders’ equity of approximately $60,365. These factors, among others, raise substantial doubt about the ability of the Company to continue as a going concern for the next twelve months from the date that the financial statements are issued. Management’s plans and assessment of the probability that such plans will mitigate and alleviate any substantial doubt about the Company’s ability to continue as a going concern, is dependent upon the ability to attain funding to secure additional resources to generate sufficient revenues and increased margin, which without these represent the principal conditions that raise substantial doubt about our ability to continue as a going concern.

As a result of the spread of the COVID-19 coronavirus, economic uncertainties have arisen which are likely to negatively impact operations. Other financial impact could occur though such potential impact is unknown at this time. A pandemic typically results in social distancing, travel bans and quarantine, and this may limit access to our facilities, customers, management, support staff and professional advisors. These factors, in turn, may not only impact our operations, financial condition and demand for our goods and services but our overall ability to react timely to mitigate the impact of this event.

The Company expects that working capital requirements will continue to be funded through a combination of its existing funds and further issuances of securities. Working capital requirements are expected to increase in line with the growth of the business. Existing working capital, further advances and debt instruments, and anticipated cash flow are expected to be adequate to fund operations over the next twelve months. The Company has no lines of credit or other bank financing arrangements. The Company has financed operations to date through the proceeds of a private placement of equity and debt instruments. In connection with the Company’s business plan, management anticipates additional increases in operating expenses and capital expenditures relating to: (i) developmental expenses associated with a start-up business and (ii) marketing expenses. The Company intends to finance these expenses with further

issuances of securities, and debt issuances. Thereafter, the Company expects it will need to raise additional capital and generate revenues to meet long-term operating requirements. Additional issuances of equity or convertible debt securities will result in dilution to current stockholders. Further, such securities might have rights, preferences or privileges senior to common stock. Additional financing may not be available upon acceptable terms, or at all. If adequate funds are not available or are not available on acceptable terms, the Company may not be able to take advantage of prospective new business endeavours or opportunities, which could significantly and materially restrict business operations.

The consolidated financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.

The following summarizes CDI’s contractual obligations as of December 31, 2020 and the effects that such obligations are expected to have on CDIs liquidity and cash flows in future periods:

Convertible notes payable consists of Simple Agreements for Future Equity (“SAFE”) issued to accredited investors with balances of $346,471 and $106,471 at December 31, 2020 and 2019, respectively. Each SAFE is convertible upon the occurrence of certain events as follows:

Equity Financing: If there is an equity financing before the termination of the SAFE, on the initial closing of such equity financing, the SAFE will automatically convert into the number of SAFE preferred stock equal to the purchase amount divided by the discount price. The discount price is the lowest price per share of the standard preferred stock sold in the equity financing multiplied by the discount rate of 85%.

Liquidity Event: If a liquidity event occurs before the termination of the SAFE, the SAFE will automatically be entitled to receive a portion of the proceeds due and payable to the investor immediately prior to, or concurrent with the consummation of such liquidity event, equal to the greater of (i) the purchase amount (the “Cash-out Amount”) or (ii) the amount payable on the number of shares of common stock equal to the purchase amount divided by the liquidity price (“the Conversion Amount”).

Dissolution Event: If there is a dissolution event before the termination of the SAFE, the investor will automatically be entitled to receive a portion of proceeds equal to the Cash-out Amount, due and payable to the investor immediately prior to the consummation of the dissolution event.

Each SAFE will automatically terminate immediately following the earliest of (i) the issuance of capital stock to the investor pursuant to the automatic conversion of the SAFE pursuant to an equity financing, or (ii) the payment, or setting aside for payment of amounts due the investor pursuant to a liquidity event or dissolution event..

Included in convertible notes payable are notes payable due to related parties of $221,471 and $106,471 as of December 31, 2020 and 2019, respectively.

The Company reimburses Behavioral Diagnostic, LLC (“BDLLC”), a company owned by its Chief Medical Officer for salaries of the Company’s CEO and its senior data scientist, who is the husband of the CEO. Payments to BDLLC for salaries totaled $116,105 and $18,882 for the years ended December 31, 2020 and 2019, respectively.

Research and development laboratory runs are performed on a fee-for-service basis at the Chief Medical Officer’s academic laboratory at the University of Iowa. Payments for these services totaled $1,500 and $0 for the years ended December 31, 2020 and 2019, respectively.

CDI’s consolidated financial statements are prepared in accordance with GAAP in the United States. The preparation of CDI’s consolidated financial statements and related disclosures requires it to make estimates and judgments that affect the reported amounts of assets, liabilities, revenue, costs and expenses, and the disclosure of contingent assets and liabilities in CDI’s financial statements. CDI bases its estimates on historical experience, known

trends and events and various other factors that it believes are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. CDI evaluates its estimates and assumptions on an ongoing basis. CDI’s actual results may differ from these estimates under different assumptions or conditions.

While CDI’s significant accounting policies are described in more detail in Note 2 to CDI’s consolidated financial statements, CDI believes that the following accounting policies are those most critical to the judgments and estimates used in the preparation of its consolidated financial statements.

As of December 31, 2020, CDI had cash and cash equivalents of $245,917, which consisted of cash and short-term bank deposits.

CDI did not have, during the periods presented, and it does not currently have, any off-balance sheet arrangements, as defined in the rules and regulations of the Securities and Exchange Commission.

Based on its analysis of the periods presented, CDI believes that inflation has not had a material effect on its operating results. There can be no assurance that future inflation will not have an adverse impact on Option Care’s operating results and financial condition

A description of recently issued accounting pronouncements that may potentially impact CDIs financial position and results of operations is disclosed in Note 2 to CDI’s audited consolidated financial statements.

None

The following tables set forth, as of the date of this Record Date, the beneficial ownership of Common Stock for: (1) each director currently serving on our Board of Directors; (2) each of our named executive officers; (3) our directors and executive officers as a group; and (3) each person known to the Company to beneficially own more than 5% of the outstanding shares of Common Stock. As of the Record Date, there were 35,030,339 shares of Common Stock outstanding. Except as otherwise noted, each stockholder has sole voting and investment power with respect to the shares beneficially owned. Beneficial ownership consists of a direct interest in the shares of common stock, except as otherwise indicated.

The Company will host its product, Epi+Gen CHD on InTeleLab’s Elicity platform (“the Lab”). The Lab collects payments from patients upon completion of eligibility screening. Patients then send their samples to MOgene, a high complexity CLIA lab, which perform the biomarker assessments. 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. Revenue is recognized upon receipt of payments from the Lab for each test at the end of each month.

On January 1, 2019, the Company adopted the new revenue recognition standard Accounting Standards Update (“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.

The Company determines the measurement of revenue and the timing of revenue recognition utilizing the following core principles:

The Company expenses advertising costs as incurred. Advertising costs of $5,476 and $1,004 were charged to operations for the years ended December 31, 2020 and 2019, respectively.

Cash and cash equivalents are comprised of cash and highly liquid investments with original maturities of 90 days or less at the date of purchase. The Company does not have any cash equivalents as of December 31, 2020 and 2019. The Company is exposed to credit risk in the event of default by the financial institutions or the issuers of these investments to the extent the amounts on deposit or invested are in excess of amounts that are insured.

Intangible assets are amortized using the straight line method over the estimated lives of the respective assets as follows:

The Company assesses the valuation of components of its property and equipment and other long-lived assets whenever events or circumstances dictate that the carrying value might not be recoverable. The Company bases its evaluation on indicators such as the nature of the assets, the future economic benefit of the assets, any historical or future profitability measurements and other external market conditions or factors that may be present. If such factors indicate that the carrying amount of an asset or asset group may not be recoverable, the Company determines whether an impairment has occurred by analyzing an estimate of undiscounted future cash flows at the lowest level for which identifiable cash flows exist. If the estimate of undiscounted cash flows during the estimated useful life of the asset is less than the carrying value of the asset, the Company recognizes a loss for the difference between the carrying value of the asset and its estimated fair value, generally measured by the present value of the estimated cash flows.

The Company accounts for its stock-based awards granted under its employee compensation plan in accordance with ASC Topic No. 718-20, Awards Classified as Equity, which requires the measurement of compensation expense for all share-based compensation granted to employees and non-employee directors at fair value on the date of grant and recognition of compensation expense over the related service period for awards expected to vest. The Company uses the Black-Scholes option pricing model to estimate the fair value of its stock options and warrants. The Black-Scholes option pricing model requires the input of highly subjective assumptions including the expected stock price volatility of the Company’s common stock, the risk free interest rate at the date of grant, the expected vesting term of the grant, expected dividends, and an assumption related to forfeitures of such grants. Changes in these subjective input assumptions can materially affect the fair value estimate of the Company’s stock options and warrants.

The Company accounts for income taxes using the asset and liability method in accordance with ASC Topic No. 740, Income Taxes. Under this method, deferred tax assets and liabilities are determined based on differences between financial reporting and tax bases of assets and liabilities, and are measured using the enacted tax rates and laws that are expected to be in effect when the differences are expected to reverse.

The Company applies the provisions of ASC Topic No. 740 for the financial statement recognition, measurement and disclosure of uncertain tax positions recognized in the Company’s financial statements. In accordance with this provision, tax positions must meet a more-likely-than-not recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position.

We have reviewed other recent accounting pronouncements and concluded they are either not applicable to the business, or no material effect is expected on the condensed consolidated financial statements as a result of future adoption.

The accompanying consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The Company has an accumulated deficit of $710,113, and a working capital deficit of $140,093 at December 31, 2020. These factors, among others, raise substantial doubt about the ability of the Company to continue as a going concern for the next twelve months from the date that the financial statements are issued. Management’s plans and assessment of the probability that such plans will mitigate and alleviate any substantial doubt about the Company’s ability to continue as a going concern, is dependent upon the ability to attain funding to secure additional resources to generate sufficient revenues and increased margin, which without these represent the principal conditions that raise substantial doubt about our ability to continue as a going concern.

As a result of the spread of the COVID-19 coronavirus, economic uncertainties have arisen which are likely to negatively impact operations. Other financial impact could occur though such potential impact is unknown at this time. A pandemic typically results in social distancing, travel bans and quarantine, and this may limit access to our facilities, customers, management, support staff and professional advisors. These factors, in turn, may not only impact our operations, financial condition and demand for our goods and services but our overall ability to react timely to mitigate the impact of this event.

The Company expects that working capital requirements will continue to be funded through a combination of its existing funds and further issuances of securities. Working capital requirements are expected to increase in line with the growth of the business. Existing working capital, further advances and debt instruments, and anticipated cash flow are expected to be adequate to fund operations over the next twelve months. The Company has no lines of credit or other bank financing arrangements. The Company has financed operations to date through the proceeds of a private placement of equity and debt instruments. In connection with the Company’s business plan, management anticipates additional increases in operating expenses and capital expenditures relating to: (i) developmental expenses associated with a start-up business and (ii) marketing expenses. The Company intends to finance these expenses with further issuances of securities, and debt issuances. Thereafter, the Company expects it will need to raise additional capital

and generate revenues to meet long-term operating requirements. Additional issuances of equity or convertible debt securities will result in dilution to current stockholders. Further, such securities might have rights, preferences or privileges senior to common stock. Additional financing may not be available upon acceptable terms, or at all. If adequate funds are not available or are not available on acceptable terms, the Company may not be able to take advantage of prospective new business endeavors or opportunities, which could significantly and materially restrict business operations.

The consolidated financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.

The following tables provide detail associated with the Company’s acquired identifiable intangible assets:

As of December 31, 2020, the Company has three pending patent applications. The initial patent applications consist of a US patent and international patents filed in six countries. The EU patent was granted on March 31, 2021. Legal fees associated with the patents totaled $131,125 as of December 31, 2020 and are presented in the balance sheet as deposits.

The Company calculates net income (loss) per common share in accordance with ASC 260 “Earnings Per Share” (“ASC 260”). Basic and diluted net earnings (loss) per common share was determined by dividing net earnings (loss) applicable to common stockholders by the weighted average number of common shares outstanding during the period. The Company’s potentially dilutive shares, which include outstanding common stock options, common stock warrants, and convertible debt have not been included in the computation of diluted net loss per share for the years ended December 31, 2020 and 2019 as the result would be anti-dilutive.

On October 1, 2019, the Company issued warrants to a seed funding firm equivalent to 2% of the fully-diluted equity of the Company, or 21,450 common shares at the time of issuance. The warrant is exercisable on the earlier of the closing date of the next Qualified Equity Financing occurring after the issuance of the warrant, and immediately before a Change of Control. The exercise price is the price per share of the shares sold to investors in the next Qualified Equity Financing, or if the warrant becomes exercisable in connection with a Change in Control before the next Qualified Equity Financing, the greater of the quotient obtained by dividing $150,000 by the Pre-financing Capitalization, and the price per share paid by investors in the then-most recent Qualified Equity Financing, if any. The warrant will expire upon the earlier of the consummation of any Change of Control, or 15 years after the issuance of the warrant.

Stock to be issued consists of Simple Agreements for Future Equity (“SAFE”) issued to accredited investors with balances of $346,471 and $106,471 at December 31, 2020 and 2019, respectively. Each SAFE is convertible upon the occurrence of certain events as follows:

Equity Financing: If there is an equity financing before the termination of the SAFE, on the initial closing of such equity financing, the SAFE will automatically convert into the number of SAFE preferred stock equal to the purchase amount divided by the discount price. The discount price is the lowest price per share of the standard preferred stock sold in the equity financing multiplied by the discount rate of 85%.

Liquidity Event: If a liquidity event occurs before the termination of the SAFE, the SAFE will automatically be entitled to receive a portion of the proceeds due and payable to the investor immediately prior to, or concurrent with the consummation of such liquidity event, equal to the greater of (i) the purchase amount (the “Cash-out Amount”) or (ii) the amount payable on the number of shares of common stock equal to the purchase amount divided by the liquidity price (“the Conversion Amount”).

Dissolution Event: If there is a dissolution event before the termination of the SAFE, the investor will automatically be entitled to receive a portion of proceeds equal to the Cash-out Amount, due and payable to the investor immediately prior to the consummation of the dissolution event.

Each SAFE will automatically terminate immediately following the earliest of (i) the issuance of capital stock to the investor pursuant to the automatic conversion of the SAFE pursuant to an equity financing, or (ii) the payment, or setting aside for payment of amounts due the investor pursuant to a liquidity event or dissolution event.

In connection with the acquisition of Cardio LLC the Company issued 1,000,000 common shares valued at $.001 per share to the members of Cardio LLC on January 1, 2020 (See Note 1).

During the year ended December 31, 2020, the Company issued 12,831 common shares to various consultants for services, valued at $111,027.

The Company issued 31,922 common shares to an employee in connection with an employment agreement during the year ended December 31, 2020, valued at $477,236.

The Company issued 5,565 common shares to the Mayo Clinic for a know-how license on May 1, 2020, valued at $80,000.

Prior to January 1, 2020, the Company operated as a Limited Liability Company (“LLC”). Taxable income and losses of an LLC are passed through to its members and there is no entity level tax.

The reconciliation between income tax expense computed by applying the federal statutory corporate tax rate and actual income tax expense (benefit) for the year ended December 31, 2020 is as follows:

At December 31, the significant components of the deferred tax assets (liabilities) are summarized below:

In assessing the realization of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income and tax planning strategies in making this assessment. Based on the assessment, management has established a full valuation allowance against all of the deferred tax assets for every period because it is more likely than not that all of the deferred tax assets will not be realized.

In accordance with ASC 740, a valuation allowance must be established if it is more likely than not that the deferred tax assets will not be realized. This assessment is based upon consideration of available positive and negative evidence, which includes, among other things, the Company’s most recent results of operations and expected future profitability. Based on the Company’s cumulative losses in recent years, a full valuation allowance against the Company’s deferred tax assets as of December 31, 2020 has been established as Management believes that the Company will not more likely than not realize the benefit of those deferred tax assets. Therefore, no tax provision has been recorded for the year ended December 31, 2020.

The Company complies with the provisions of ASC 740-10 in accounting for its uncertain tax positions. ASC 740-10 addresses the determination of whether tax benefits claimed or expected to be claimed on a tax return should be recorded in the financial statements. Under ASC 740-10, the Company may recognize the tax benefit from an uncertain tax position only if it is more likely that not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. Management has determined that the Company has no significant uncertain tax positions requiring recognition under ASC 740-10.

The Company is subject to income tax in the U.S., and certain state jurisdictions. The Company has not been audited by the U.S. Internal Revenue Service, or any states in connection with income taxes. The Company’s tax years generally remain open to examination for all federal and state income tax matters until its net operating loss carryforwards are utilized and the applicable statutes of limitation have expired. The federal and state tax authorities can generally reduce a net operating loss (but not create taxable income) for a period outside the statute of limitations in order to determine the correct amount of net operating loss which may be allowed as a deduction against income for a period within the statute of limitations.

The Company recognizes interest and penalties related to unrecognized tax benefits, if incurred, as a component of income tax expense. No interest or penalties have been recorded for the years ended December 31, 2020 and 2019, respectively.

On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) was enacted in response to the COVID-19 pandemic. The CARES Act, among other things, permits NOL carryovers and carrybacks to offset 100% of taxable income for taxable years beginning before 2021. In addition, the CARES Act allows NOL’s incurred in 2018, 2019, and 2020 to be carried back to each of the five preceding taxable years to generate a refund of previously paid income taxes. The Company is currently evaluating the impact of the CARES Act, but at present does not expect that the NOL carryback provision of the CARES Act would result in a material cash benefit to us.

Cash is maintained at a major financial institution. Accounts held at U.S. financial institutions are insured by the FDIC up to $250,000. Cash balances could exceed insured amounts at any given time, however, the Company has not experienced any such losses. The Company did not have any interest-bearing accounts at December 31, 2020 and 2019, respectively.

Included in stock to be issued (Note 7) are SAFE agreements from related parties of $221,471 and $106,471 as of December 31, 2020 and 2019, respectively.

The Company reimburses Behavioral Diagnostic, LLC (“BDLLC”), a company owned by its Chief Medical Officer for salaries of the Company’s CEO and its senior data scientist, who is the husband of the CEO. Payments to BDLLC for salaries totaled $116,105 and $18,882 for the years ended December 31, 2020 and 2019, respectively.

Research and development laboratory runs are performed on a fee-for-service basis at the Chief Medical Officer’s academic laboratory at the University of Iowa. Payments for these services totaled $1,500 and $0 for the years ended December 31, 2020 and 2019, respectively.

The Company evaluated its December 31, 2020 consolidated financial statements for subsequent events through the date the consolidated financial statements were issued.

On April 12, 2021, the Company issued a private offering memorandum through a placement agent to raise a maximum $1,000,000 in capital for 74,906 units valued at $13.35 per unit. Each unit consists of one share of common stock and one-half of a warrant to purchase on share of common stock. During the second quarter of 2021 through the date of this report, the Company issued 108,614 units to investors for proceeds of $1,025,000.

During the first quarter of 2021, the Company received proceeds totaling $105,000 from the issuance of SAFE agreements under the same terms discussed in Note 7.