| Description of Business and Summary of Significant Accounting Policies | Note 1. Description of Business and Summary
of Significant Accounting Policies Cadrenal Therapeutics, Inc. (the “Company”
or “Cadrenal”) was incorporated on January 25, 2022 (inception) in the State of Delaware and is headquartered in Ponte
Vedra, Florida. Cadrenal is focused on developing a novel therapy with orphan drug indication, tecarfarin, for the prevention of systemic
thromboembolism (blood clots) of cardiac origin in patients with end-stage renal disease (on dialysis) and atrial fibrillation (irregular
heartbeat) or AFib. Tecarfarin is an anticoagulant designed using a drug design process which targets a different pathway than most commonly
prescribed drugs for the treatment of thrombosis and AFib. Basis of Presentation The accompanying financial statements have been
prepared in accordance with accounting principles generally accepted in the United States of America (GAAP) and applicable rules
and regulations of the U.S. Securities and Exchange Commission (“SEC”) for the fair presentation of the Company’s
financial statements for the period from January 25, 2022 (inception) through December 31, 2022. The Company’s date of inception
was January 25, 2022 and the fiscal year-end is December 31. Liquidity In accordance with Accounting Standards Codification (“ASC”)
205-40, Going Concern, the Company evaluated whether there are conditions and events, considered in the aggregate, that raise substantial
doubt about its ability to continue as a going concern within one year after the date that the financial statements are issued. This evaluation
initially does not take into consideration the potential mitigating effect of the Company’s plans that have not been fully implemented
as of the date the financial statements are issued. When substantial doubt exists under this methodology, the Company evaluates whether
the mitigating effect of its plans sufficiently alleviates substantial doubt about its ability to continue as a going concern. The mitigating
effect of the Company plans, however, is only considered if both (1) it is probable that the plans will be effectively implemented within
one year after the date that the financial statements are issued, and (2) it is probable that the plans, when implemented, will mitigate
the relevant conditions or events that raise substantial doubt about its ability to continue as a going concern within one year after
the date that the financial statements are issued. The accompanying financial statements have been
prepared assuming that the Company will continue as a going concern, which contemplates the realization of assets and settlement of liabilities
and commitments in the normal course of business. The financial statements do not reflect any adjustments relating to the recoverability
and reclassification of assets and liabilities that might be necessary if the Company is unable to continue as a going concern. Since
inception, the Company has incurred operating losses, and negative cash flows from operations. For the period from January 25, 2022
(inception) to December 31, 2022, the Company had a net loss of $6,714,329 which included $4,901,824 of non-cash expenses. Cash used in
operations for the period January 25, 2022 (inception) to December 31, 2022 totaled $1,204,770. As of December 31, 2022, the Company
had cash of $32,586, negative working capital of $606,881, and an accumulated deficit of $6,714,329. On January 24, 2023, the Company
consummated its initial public offering (the “IPO”) of 1,400,000 shares of its common stock at a public offering price of
$5.00 per share, generating gross proceeds of $7.0 million and net proceeds of $5.4 million. The Company is projecting that its existing cash
balances as of March 2023 is sufficient to fund its operations for at least the next twelve months from the date of the filing of
its Annual Report on Form 10-K, however, the Company will require additional funding to commence and complete its planned Phase 3
clinical trial and submit its NDA. Management intends to raise additional funds through
equity and debt financings. However, there can be no assurance that the Company will be able to complete any additional equity or debt
financings on terms acceptable to the Company or at all. If the Company is unable to raise additional funding to meet its working capital
needs in the future, it will be forced to delay or reduce the scope of its research programs and/or limit or cease its operations. Emerging Growth Company Status As an “emerging growth company” (“EGC”)
under the Jumpstart Our Business Startups Act (“JOBS Act”), the Company may elect to take advantage of certain forms of relief
from various reporting requirements that are applicable to public companies. The relief afforded under the JOBS Act includes an extended
transition period for the implementation of new or revised accounting standards. The Company has elected to take advantage of this extended
transition period and, as a result, the Company’s financial statements may not be comparable to those of companies that implement
accounting standards as of the effective dates for public companies. The Company may take advantage of the relief afforded under the
JOBS Act up until the last day of the fiscal year following the fifth anniversary of an offering or such earlier time that it is
no longer an EGC. Use of Estimates The preparation of financial statements in conformity
with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure
of contingent assets and liabilities as of the date of the financial statements and the reported amounts of expenses during the reporting
period. Significant estimates and assumptions made in the accompanying financial statements include but are not limited to the fair value
of financial instruments, the fair value of common stock, deferred tax assets and valuation allowance, income tax uncertainties, and
certain accruals. The Company evaluates its estimates and assumptions on an ongoing basis using historical experience and other factors
and adjusts those estimates and assumptions when facts and circumstances change. Actual results could differ from those estimates. Concentration of Credit and other Risks
and Uncertainties Financial instruments, which potentially subject
the Company to significant concentrations of credit risk, consist primarily of cash. Cash is maintained at high credit quality financial
institutions and, at times, balances may exceed federally insured limits. All interest-bearing and non-interest-bearing cash balances
are insured up to $250,000 per depositor at each financial institution. The Company has never experienced any losses related to these
balances. The Company is subject to a number of risks common
for early-stage biopharmaceutical companies including, but not limited to, dependency on the clinical and commercial success of its product
candidates, ability to obtain regulatory approval of its product candidates, the need for substantial additional financing to achieve
its goals, uncertainty of broad adoption of its approved products, if any, by physicians and patients, significant competition and untested
manufacturing capabilities. Segments Operating segments are defined as components
of an entity for which separate financial information is available and that is regularly reviewed by the Chief Operating Decision Maker
(CODM) in deciding how to allocate resources to an individual segment and in assessing performance. The Company’s CODM is its Chief
Executive Officer. The Company has determined it operates in a single operating segment and has one reportable segment. Cash and Cash Equivalents The Company considers all highly liquid investments
purchased with original maturities of three months or less from the purchase date to be cash equivalents. The Company did not have
any cash equivalents at December 31, 2022. Derivative Financial Instruments The Company evaluates all of its agreements to
determine if such instruments have derivatives or contain features that qualify as embedded derivatives. The Company accounts for certain
redemption features that are associated with convertible notes as liabilities at fair value and adjusts the instruments to their fair
value at the end of each reporting period. Derivative financial liabilities are initially recorded at fair value, with gains and losses
arising from changes in the fair value recognized in other income (expense) in the accompanying statements of operations and comprehensive
loss for each reporting period while such instruments are outstanding. The embedded derivative liabilities are valued using a probability-weighted
expected return model. If the Company repays the noteholders or if, during the next round of financing, the note holders convert the debt
into equity, the derivative financial liabilities will be de-recognized and reclassified to stockholders’ equity (deficit) on that
date. Derivative instrument liabilities are classified in the balance sheet as current or non-current based on whether or not net-cash
settlement of the derivative instrument could be required within 12 months of the balance sheet date. Stock-Based Compensation The Company measures its stock-based awards granted
to employees, consultants and directors based on the estimated fair values of the awards and recognizes the compensation over the requisite
service period. The Company uses the Black-Scholes option-pricing model to estimate the fair value of its stock option awards. Stock-based
compensation is recognized using the straight-line method. As the stock compensation expense is based on awards ultimately expected to
vest, it is reduced by forfeitures. The Company accounts for forfeitures as they occur. Determination of the Fair Value of Common
Stock The fair value of the Company’s common
stock for purposes of stock-based awards has been determined by its board of directors. Because there has been no public market for the
Company’s common stock, and in the absence of arm’s-length transactions in the Company’s common stock with independent
third parties, the board of directors has determined the fair value of its common stock with the assistance of an independent third-party
valuation prepared in accordance with the guidelines outlined in the American Institute of Certified Public Accountants Practice Aid,
Valuation of Privately-Held-Company Equity Securities Issued as Compensation. In assessing the fair value of the Company’s common
stock on each grant date, the Company considered numerous objective and subjective factors, including, but not limited to, the following:
● independent third-party valuation as of May 31, 2022;
● the Company’s current and expected operating and financial
performance, including our level of available capital resources;
● the value of the Company’s tangible and intangible
assets;
● market conditions affecting comparable public companies,
as reflected in comparable companies’ market trading multiples, initial public offering valuations, comparable sales or merger
transactions, and other metrics;
● the illiquidity of the Company’s common stock by virtue
of being a private company, and the resulting discount for lack of marketability;
● the business risks we face;
● the likelihood of achieving a particular liquidity event,
such as a sale, a merger, or an initial public offering, given prevailing pharmaceutical and biotechnology industry and capital markets
conditions; and
● the experience of management and the board of directors Deferred Offering Costs The Company capitalizes certain legal, professional,
and other third-party costs that are directly associated with in-process equity financings until such financings are consummated at which
time such costs are recorded against the gross proceeds of the offering. Should an in-process equity financing be abandoned, the deferred
offering costs will be expensed immediately as a charge to operating expenses in the statements of operations and comprehensive loss.
As of December 31, 2022, deferred offering costs were $672,295 and are included on the accompanying balance sheet. Acquisitions The Company evaluates acquisitions of assets
and other similar transactions to assess whether or not the transaction should be accounted for as a business combination or asset acquisition
by first applying a screen test to determine whether substantially all of the fair value of the gross assets acquired is concentrated
in a single identifiable asset or group of similar identifiable assets. If so, the transaction is accounted for as an asset acquisition.
If not, further determination is required as to whether or not the Company has acquired inputs and processes that have the ability to
create outputs, which would meet the definition of a business. Significant judgment is required in the application of the screen test
to determine whether an acquisition is a business combination or an acquisition of assets. Acquisitions meeting the definition of business
combinations are accounted for using the acquisition method of accounting, which requires that the purchase price be allocated to the
net assets acquired at their respective fair values. In a business combination, any excess of the purchase price over the estimated fair
values of the net assets acquired is recorded as goodwill. For asset acquisitions, a cost accumulation model
is used to determine the cost of an asset acquisition. Direct transaction costs are recognized as part of the cost of an asset acquisition.
The Company also evaluates which elements of a transaction should be accounted for as a part of an asset acquisition and which should
be accounted for separately. The cost of an asset acquisition, including transaction costs, is allocated to identifiable assets acquired
and liabilities assumed based on a relative fair value basis. Goodwill is not recognized in an asset acquisition. Any difference between
the cost of an asset acquisition and the fair value of the net assets acquired is allocated to the non-monetary identifiable assets based
on their relative fair values. When a transaction accounted for as an asset acquisition includes an in-process research and development
(“IPR&D”) asset, the IPR&D asset is only capitalized if it has an alternative future use other than in a particular
research and development project. For an IPR&D asset to have an alternative future use: (a) the Company must reasonably expect
that it will use the asset acquired in the alternative manner and anticipate economic benefit from that alternative use, and (b) the
Company’s use of the asset acquired is not contingent on further development of the asset subsequent to the acquisition date (that
is, the asset can be used in the alternative manner in the condition in which it existed at the acquisition date). Otherwise, amounts
allocated to IPR&D that have no alternative use are expensed to research and development. Asset acquisitions may include contingent
consideration arrangements that encompass obligations to make future payments to sellers contingent upon the achievement of future financial
targets. Contingent consideration is not recognized until all contingencies are resolved and the consideration is paid or probable of
payment, at which point the consideration is allocated to the assets acquired on a relative fair value basis. Income Taxes Income taxes are accounted for under the asset
and liability method. Under this method, deferred tax assets and liabilities are determined based on the difference between the financial
statement and tax bases of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected
to affect taxable income. Management makes an assessment of the likelihood that the resulting deferred tax assets will be realized. A
valuation allowance is provided when it is more likely than not that some portion or all of a deferred tax asset will not be realized.
Due to the Company’s historical operating performance and net losses, the net deferred tax assets have been fully offset by a valuation
allowance. The Company recognizes uncertain income tax positions
at the largest amount that is more likely than not to be sustained upon audit by the relevant taxing authority. An uncertain income tax
position will not be recognized if it has less than a 50% likelihood of being sustained. Changes in recognition or measurement are reflected
in the period in which judgment occurs. The Company’s policy is to recognize interest and penalties related to the underpayment
of income taxes as a component of the provision for income taxes. Net Loss Per Common Share Basic net loss per common share is calculated
by dividing the net loss by the weighted-average number of shares of common stock outstanding for the period, without consideration for
potential dilutive shares of common stock. Diluted net loss per common share is computed by dividing net loss by the weighted average
number of shares of common stock and common stock equivalents of potentially dilutive securities outstanding for the period determined
using the treasury stock or if-converted methods. Since the Company was in a loss position for all periods presented, basic net loss
per common share is the same as diluted net loss per common share since the effects of potentially dilutive securities are anti-dilutive.
Shares of common stock subject to repurchase are excluded from the weighted-average shares. Comprehensive Loss Comprehensive loss is defined as the change in
equity during a period from transactions and other events or circumstances from non-owner sources. Net loss and comprehensive loss were
the same for the period presented in the accompanying financial statements. Research and Development Expenses Research and development costs are expensed as
incurred and consist of fees paid to other entities that conduct certain research and development activities on the Company’s behalf.
Acquired intangible assets are expensed as research and development costs if, at the time of payment, the technology is under development;
is not approved by the FDA or other regulatory agencies for marketing; has not reached technical feasibility; or otherwise has no foreseeable
alternative future use. Non-refundable advance payments for goods or services to be received in the future for use in research and development
activities are capitalized and then expensed as the related goods are delivered or the services are performed. For the period from January 25, 2022 (inception)
through December 31, 2022, the Company’s research and development expenses were comprised primarily of the cost of the acquired
tecarfarin asset and related transaction costs, as well as stock-based compensation and consulting services. Patents Patent costs are comprised primarily of external
legal fees, filing fees incurred to file patent applications, and periodic renewal fees to keep the patent in force and are expensed
as incurred as a component of general and administrative expense. |
