CARDIOL THERAPEUTICS INC. CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS THREE MONTHS ENDED MARCH 31, 2025 (EXPRESSED IN CANADIAN DOLLARS) (UNAUDITED) Cardiol Therapeutics Inc. Condensed Interim Consolidated Stateme

CARDIOL THERAPEUTICS INC.

CONDENSED INTERIM CONSOLIDATED

FINANCIAL STATEMENTS

MONTHS ENDED MARCH 31, 2025

(EXPRESSED IN CANADIAN DOLLARS)

The accompanying notes are an integral part of these unaudited condensed

interim consolidated financial statements.

Commitments (note 11)

Subsequent events (note 8)

Approved on behalf of the Board:

The accompanying notes are an integral part of these unaudited condensed

interim consolidated financial statements.

The accompanying notes are an integral part of these unaudited condensed

interim consolidated financial statements.

The accompanying notes are an integral part of these unaudited condensed

interim consolidated financial statements.

Cardiol Therapeutics Inc. was incorporated under

the laws of the Province of Ontario on January 19, 2017. The Corporation's registered and legal office is located at 2265 Upper Middle

Rd. E., Suite 602, Oakville, Ontario, L6H 0G5, Canada.

Cardiol Therapeutics Inc. and its subsidiary (the

"Corporation" or "Cardiol") is a clinical-stage life sciences company focused on developing anti-inflammatory and

anti-fibrotic therapies for the treatment of heart disease. The Corporation's lead small molecule drug candidate, CardiolRx (cannabidiol)

oral solution, is pharmaceutically manufactured and in clinical development for use in the treatment of heart disease.

On December 20, 2018, the Corporation completed

its initial public offering on the Toronto Stock Exchange (the "TSX"). As a result, the Corporation's common shares commenced

trading on that date on the TSX under the symbol "CRDL". On August 10, 2021, the Corporation's common shares commenced

trading on The Nasdaq Capital Market under the symbol "CRDL".

Statement of compliance

These unaudited condensed interim consolidated financial statements

have been prepared in accordance with International Accounting Standard 34, Interim Financial Reporting. Accordingly, they do not include

all of the information required for full annual financial statements required by International Financial Reporting Standards and International

Accounting Standards as issued by the International Accounting Standards Board (IASB) and Interpretations (collectively "IFRS Accounting

These unaudited condensed interim consolidated

financial statements have been prepared on a historical cost basis. In addition, these unaudited condensed interim consolidated financial

statements have been prepared using the accrual basis of accounting except for cash flow information.

The policies applied in these unaudited condensed

interim consolidated financial statements are based on IFRS Accounting Standards issued and outstanding as of May 14, 2025, the date

the Board of Directors approved the statements. The same accounting policies and methods of computation are followed in these unaudited

condensed interim consolidated financial statements as compared with the most recent annual consolidated financial statements as at and

for the year ended December 31, 2024.

Any subsequent changes to IFRS Accounting Standards

that are given effect in the Corporation's annual consolidated financial statements for the year ending December 31, 2025,

could result in restatement of these unaudited condensed interim consolidated financial statements.

Interest earned on cash and cash equivalents for

the three months ended March 31, 2025, amounted to $248,269 (three months ended March 31, 2024 - $377,294).

(i) When measuring the lease liability for

the property lease that was classified as an operating lease, the Corporation discounted the lease payments using its incremental borrowing

rate. The original property lease had an expiration date of May 31, 2024, and the lease payments were discounted with a 9% interest

rate. During the year ended December 31, 2023, the property lease was extended to October 30, 2028. The lease liability was

revalued as of the extension date with lease payments discounted with a 15% interest rate.

On November 5, 2021, the Corporation issued

8,175,000 warrants as part of a unit financing. Each warrant was exercisable into one common share at the price of USD$3.75 per share

for a period of three years from closing. The warrants were classified as a derivative liability on the statement of financial position

and re-valued at each reporting date, as the warrants were issued in a currency other than the Corporation's functional currency. During

the three months ended March 31, 2024, the value of the derivative liability increased $1,808,603. During 2024, all 8,175,000 warrants

expired unexercised.

a) Authorized share capital

The authorized share capital consists of an unlimited

number of common shares. The common shares do not have a par value. All issued shares are fully paid.

Common shares issued

The Corporation has adopted an Omnibus Equity

Incentive Plan in accordance with the policies of the TSX, which permits the grant or issuance of options, Restricted Share Units ("RSUs"),

Performance Share Units ("PSUs"), and Deferred Share Units ("DSUs"), as well as other share-based payment arrangements.

The maximum number of shares that may be issued upon the exercise or settlement of awards granted under the plan may not exceed 15% of

the Corporation's issued and outstanding shares from time to time. The Board of Directors determines the price per common share and the

number of common shares which may be allotted to directors, officers, employees, and consultants, and all other terms and conditions of

the option, subject to the rules of the TSX.

During the three months ended March 31,

2025, the total expenses related to share-based compensation amounted to $1,146,974 (three months ended March 31, 2024 -

$902,100). All outstanding awards are settleable with common shares and not cash.

At the grant date, the fair value of stock options issued was estimated

using the Black-Scholes option pricing model based on the following weighted average assumptions:

(a) Stock Options (continued)

The following table reflects the actual stock options issued and outstanding

as of March 31, 2025:

(b) Performance Share Units

(c) Restricted Share Units

(i) The weighted average share price on date of redemption was

The following table reflects the actual RSUs issued and outstanding

as of March 31, 2025:

For the three months ended March 31, 2025,

basic and diluted loss per share has been calculated based on the loss attributable to common shareholders of $8,287,653 (three months

ended March 31, 2024 - $9,179,632) and the weighted average number of common shares outstanding of 82,608,992 (three months ended

March 31, 2024 - 67,259,344). Diluted loss per share did not include the effect of stock options, PSUs, RSUs, and warrants as they