| 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 in the State of Delaware and is headquartered in Ponte Vedra, Florida.
Cadrenal is developing tecarfarin for unmet needs in anticoagulation therapy. Tecarfarin is a late-stage novel oral and
reversible anticoagulant (blood thinner) to prevent heart attacks, strokes, and deaths due to blood clots in patients with rare cardiovascular
conditions requiring chronic anticoagulation. Tecarfarin has orphan drug and fast-track designations from the United States
Food and Drug Administration (the “FDA”) for the prevention of systemic thromboembolism (blood clots) of cardiac
origin in patients with end-stage kidney disease (“ESKD”) and atrial fibrillation (“AFib”). The Company
also has orphan drug designation for the prevention of thrombosis and thromboembolism in patients with an implanted mechanical circulatory
support device (left ventricular assist devices, right ventricular assist devices, biventricular assist device, total artificial heart
(collectively, “VADs”)). The Company is also pursuing additional regulatory strategies for unmet needs in anticoagulation
therapy for patients with thrombotic antiphospholipid syndrome (“APS”). 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 periods presented. The Company’s fiscal year-end is December 31. The accompanying financial statements of the
Company are unaudited. The unaudited interim financial statements have been prepared on the same basis as the audited annual financial
statements and, in the opinion of management, reflect all adjustments, which include only normal recurring adjustments, necessary for
the fair statement of the Company’s financial position as of March 31, 2024, the results of its operations for the three months
ended March 31, 2024 and 2023, the statements of stockholders’ equity for the three months ended March 31, 2024 and 2023, and its
cash flows for the three months ended March 31, 2024 and 2023. The financial data and other information disclosed in these notes related
to the three months ended March 31, 2024 and 2023 are also unaudited. The results for the three months ended March 31, 2024 are not necessarily
indicative of results to be expected for the year ending December 31, 2024, any other interim periods, or any future year or period.
These interim financial statements should be read in conjunction with the audited financial statements as of and for the year ended December
31, 2023, and notes thereto, which are included in the Company’s Annual Report on Form 10-K that was filed with the SEC on March
11, 2024. Liquidity 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 three months ended March 31, 2024,
the Company had a net loss of $1,663,288, which included $163,223 of non-cash expenses. Cash used in operations for the three months
ended March 31, 2024 totaled $1,836,380. As of March 31, 2024, the Company had cash and cash equivalents of $6,566,418, net working capital
of $6,171,714, and an accumulated deficit of $16,734,703. The Company’s cash and cash
equivalents balance of approximately $6.1 million as of May 9, 2024 is expected to be sufficient to fund its operations for at least
the next twelve months from the date of the filing of its Quarterly Report on Form 10-Q, however, the Company will require
additional funding to complete its planned Phase 3 clinical trial and submit its New Drug Application (“NDA”). Management intends to raise additional funds
through partnering and equity and debt financings. However, there can be no assurance that the Company will be able to complete partnering
transactions or 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 stock-based awards, 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 and cash equivalents. 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 at each financial institution. Any loss incurred or a lack of access to such funds could have
a significant adverse impact on the Company’s financial condition, results of operations, and cash flows. 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
candidate, ability to obtain regulatory approval of its product candidate, 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. Cash and cash equivalents
include cash and money market funds. 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 accounted for certain
redemption features that were associated with convertible notes as liabilities at fair value and adjusted 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 were valued using a probability-weighted
expected return model. If the Company repays the noteholders or if, during the next round of financing, the noteholders convert the debt
into equity, the derivative financial liabilities are 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. Concurrent with the closing of the initial public
offering in January 2023 (the “IPO”), the note holders converted the debt into common stock, accordingly, the derivative
financial liabilities were de-recognized and reclassified to stockholders’ equity (deficit) on January 24, 2023. 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. 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. 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 an alternative manner and anticipate economic benefit from that alternative use, and (b) the
Company’s use of the asset acquired is not contingent on the further development of the asset subsequent to the acquisition date
(that is, the asset can be used in an 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 and pre-funded warrants 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 periods 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. On January 19, 2023, the Company issued 600,000
shares of common stock to HESP LLC, pursuant to the terms of an Amendment to the Asset Purchase Agreement, dated August 18, 2022, between
the Company and HESP LLC. This payment was determined to be IPR&D with no alternative use. Accordingly, the Company recorded the
common stock payment of $3.0 million as research and development expense on January 19, 2023. This payment settled all obligations
under the Amendment to the Asset Purchase Agreement. 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 expenses. |
