What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2020-11-16 compared with 2020-08-13 · 1077 added, 870 removed, 174 unchanged (92% of the section changed)

2 unchanged sentences

CONSOLIDATED BALANCE SHEETS

and cash equivalents

receivables, net

September 30, 2020

December 31, 2019

Current assets

and equipment, net

in joint venture

AND STOCKHOLDERS’

expenses (related party)

Cash and cash equivalents

Marketable investment securities

Accounts receivable, net

Prepaid expenses

Deferred tax asset

Total current assets

Property and equipment, net

Investment in joint venture

Liabilities and stockholders’

Current liabilities

Liabilities, net of current portion

expenses-long-term (related party)

long-term liabilities, net of current portion

STOCKHOLDERS’

preferred stock, $0.001 par value;

5,000,000 shares authorized, 0 and 25,600 shares issued and outstanding as of June 30,

2020 and December 31, 2019, respectively

stock, $0.001 par value, 100,000,000 shares authorized;

27,991,042 and 17,342,922 shares issued and outstanding, as of June

30, 2020 and December 31, 2019, respectively.

paid-in capital

Accounts payable

Accrued expenses

Accrued expenses (related party)

Deferred revenue

Total current liabilities

Accrued expenses-long-term (related party)

Total liabilities

Commitments and contingencies (Note 8)

Stockholders’

liabilities and stockholders’

Convertible preferred stock, $0.001 par value;

5,000,000 shares authorized;

0 and 25,600 shares issued and outstanding as of September 30, 2020 and December 31, 2019, respectively

Common Stock, $0.001 par value;

100,000,000 shares authorized;

28,161,259 and 17,342,922 shares issued and outstanding as of September 30, 2020 and December 31, 2019, respectively

Additional paid-in capital

Accumulated earnings (deficit)

(24,967,814 )

Total stockholders’

Total liabilities and stockholders’

accompanying notes to unaudited condensed consolidated financial statements

1 unchanged sentence

CONSOLIDATED STATEMENTS OF OPERATIONS

the Three Months

Ended June 30,

the Six Months

Ended June 30,

and marketing

Administrative

and development

and amortization

Three Months Ended

September 30, 2020

Nine Months Ended

September 30, 2020

Cost of revenue

Operating expenses

(loss) from operations

on disposition of assets

(loss) on equity method investment in joint venture

other expense

(loss) before income taxes

for income taxes

income (loss)

income (loss) per common share

average common shares outstanding basic

average common shares outstanding diluted

Sales and marketing

Administrative and general

Research and development

Depreciation and amortization

Total operating expenses

Income (loss) from operations

Other income (expense)

Interest income

Interest expense

Gain on disposition of assets

Gain (loss) on equity method investment in joint venture

Total other income (expense)

Income (loss) before income taxes

Income tax provision (benefit)

Net income (loss)

$ (1,747,766 )

$ (4,460,551 )

Earnings (loss) per common share:

Weighted average shares outstanding:

accompanying notes to unaudited condensed consolidated financial statements

1 unchanged sentence

CONSOLIDATED STATEMENTS OF CASH FLOWS

flows from operating activities:

income (loss)

to reconcile net income (loss) to net cash used in operating activities:

and amortization

based compensation

of notes payable discount

on disposition of assets

(gain) of equity method investment

in assets and liabilities:

in accounts and other receivables

in prepaid and other assets

(increase) in inventory

in deferred revenue

(decrease) in accounts payable and accrued expenses

cash used in operating activities

flows from investing activities:

of property and equipment

in joint venture

cash used in investing activities

flows from financing activities:

from sale of common stock

from sale of preferred stock

from exercise of options and warrants

of offering costs

cash provided by financing activities

increase in cash

and cash equivalents beginning of period

and cash equivalents end of period

disclosure of cash flow information:

disclosure of non-cash investing and financing transactions:

moved to property, plant and equipment

Nine Months Ended

September 30,

Cash flows from operating activities

Net income (loss)

$ (4,460,551 )

Adjustments to reconcile net income (loss) to cash used in operating activities:

Depreciation and amortization

Stock-based compensation expense

Accretion of notes payable discount

Gain on disposition of assets

Loss (gain) from equity method investment

Deferred income taxes

Changes in assets and liabilities:

Accounts and other receivable

(10,509,035 )

Prepaid and other assets

(10,647,034 )

Deferred revenue

Accounts payable and accrued expenses

Net cash provided by (used in) operating activities

Cash flows from investing activities

Purchases of property and equipment

Purchases of marketable investment securities

Proceeds from maturities of marketable investment securities

Investment in joint venture

Net cash used in investing activities

Cash flows from financing activities

Proceeds from sale of common stock

Proceeds from sale of preferred stock

Proceeds from exercise of options and warrants

Payment of offering costs

Net cash provided by financing activities

Net increase in cash and cash equivalents

Cash and cash equivalents at beginning of period

Cash and cash equivalents at end of period

Supplemental disclosure of cash flow information

Interest paid

Income taxes paid

Supplemental disclosure of non-cash investing and financing transactions

Inventory moved to property, plant and equipment

Warrants issued for services

Conversion of preferred stock to common

Conversion of debt for preferred stock

accompanying notes to unaudited condensed consolidated financial statements

DIAGNOSTICS, INC.

CONSOLIDATED STATEMENT OF STOCKHOLDERS’

the Six Months ending June 30, 2020 and 2019

Preferred Stock

Stockholders’

as of December 31, 2019

offering, net of offering costs of $1,457,922

of Common Stock for warrant exercises

compensation expense

of Preferred Stock to Common

as of March 31, 2020

of Common Stock for option and warrant exercises

compensation expense

as of June 30, 2020

as of December 31, 2018

offering, net of offering costs of $592,764

of Preferred Stock

of Preferred Stock to Common

as of March 31, 2019

of common stock for services

as of June 30, 2019

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’

the Nine Months ending September 30, 2020 and 2019

Convertible Preferred Stock

Additional Paid-in

Total Stockholders’

Balance as of December 31, 2019

$ (24,967,814 )

Public offering, net of offering costs of $1,457,922

Common stock issued for warrant exercises

Stock-based compensation expense

Conversion of preferred stock to common

Balance as of March 31, 2020

$ (26,033,007 )

Common stock issued for option and warrant exercises

Stock-based compensation expense

Balance as of June 30, 2020

$ (11,027,998 )

Common stock issued for option exercises

Stock-based compensation expense

Balance as of September 30, 2020

Balance as of December 31, 2018

$ (18,694,167 )

$ (1,058,811 )

Public offering, net of offering costs of $592,764

Issuance of preferred stock

Stock-based compensation expense

Conversion of preferred stock to common

Balance as of March 31, 2019

$ (20,062,556 )

Stock-based compensation expense

Issuance of common stock for services

Balance as of June 30, 2019

$ (21,406,952 )

Stock-based compensation expense

Conversion of preferred stock to common

Balance as of September 30, 2019

$ (23,154,718 )

accompanying notes to unaudited condensed consolidated financial statements

2 unchanged sentences

Overview and Basis of Presentation

Co-Diagnostics,

Inc., a Utah corporation (the “Company”

or “CDI”), is developing robust and innovative molecular tools

for detection of infectious diseases, liquid biopsy for cancer screening, and agricultural applications.

The Company develops,

manufactures and sells reagents used for diagnostic tests that function via the detection and/or analysis of nucleic acid

molecules (DNA or RNA).

In connection with the sale of these tests, the Company may sell diagnostic equipment and supplies

from other manufacturers.

Condensed Consolidated Financial Statements

accompanying unaudited condensed consolidated financial statements of the Company have been prepared in accordance with accounting

5 unchanged sentences

not misleading have been included.

Operating results for the six and three-month periods ended June 30, 2020 are not necessarily

Operating results for the three and nine months ended September 30, 2020 are not necessarily

indicative of the results that may be expected for the year ending December 31, 2020.

3 unchanged sentences

2019 financial statement amounts have been reclassified to conform to 2020 presentations.

Co-Diagnostics,

Inc., a Utah corporation (the “Company”

or “CDI”), is developing robust and innovative molecular tools

for detection of infectious diseases, liquid biopsy for cancer screening, and agricultural applications.

We have developed and

we manufacture and sell reagents used for diagnostic tests that function via the detection and/or analysis of nucleic acid molecules

(DNA or RNA).

In connection with the sale of our tests we may sell diagnostic equipment from other manufacturers as self-contained

lab systems (which we refer to as the “MDx Device”).

diagnostics systems enable very rapid, low-cost, molecular testing for organisms and genetic diseases by automating historically

complex procedures in both the development and administration of tests.

CDI’s technical advance involves a novel approach

to Polymerase Chain Reaction (“PCR”) test design of primer and probe structure (“CoPrimers”) that eliminates

one of the key vexing issues of PCR amplification, the exponential growth of primer-dimer pairs (false positives and false negatives)

which adversely interferes with identification of the target DNA.

preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates

6 unchanged sentences

Summary of Significant Accounting Policies

Investment Securities

Company’s marketable investment securities are comprised of investments in certificates of deposit.

determines the appropriate classification of its marketable investment securities at the time of purchase and reevaluates

such designation at each balance sheet date.

The Company has classified and accounted for its marketable investment

securities as available-for-sale securities as the Company may sell these securities at any time for use in its current

operations or for other purposes, even prior to maturity.

As a result, the Company

classifies its marketable investment securities ,

including securities with stated maturities beyond twelve months, within current assets in the condensed consolidated balance

accounts receivable are recorded at the invoiced amount (net of allowance) and do not bear interest.

7 unchanged sentences

of trade receivables previously written off are recorded when collected.

At June 30, 2020 total accounts receivable was $5,885,065

At September 30, 2020 total accounts receivable was $11,495,417

with an allowance for uncollectable accounts of $855,000 resulting in a net amount of $10,640,417.

Equity-Method

equity method investments are initially recorded at costs and are included in other long-term assets in the accompanying condensed

equity method investments are initially recorded at cost and are included in other long-term assets in the accompanying condensed

consolidated balance sheet.

2 unchanged sentences

The earnings or losses are included in other

expense in the accompanying condensed consolidated statements of operations.

income (expense) in the accompanying condensed consolidated statements of operations.

is stated at the lower of cost or net-realizable value.

1 unchanged sentence

average cost in accordance with ASC 330-10-30-12.

At June 30, 2020, we had $10,110,786 in inventory of which $3,763,472

At September 30, 2020, we had $10,726,982 in inventory, of which $1,740,378

was finished goods and $8,986,604 was raw materials.

15 unchanged sentences

Company records any payments received from customers prior to the Company fulfilling its performance obligation(s) as deferred

(Loss) per Share

earnings or loss per common share is computed by dividing net income or loss applicable to common shareholders by the weighted

revenue primarily consists of payments received from customers prior to the Company fulfilling its performance obligation of

providing the product.

When this occurs, the Company records a contract liability as deferred revenue.

Deferred revenue is recognized

as revenue as the related performance obligations are satisfied.

Company accounts for income taxes in accordance with the liability method of accounting for income taxes.

Under this method, d eferred

income tax assets and deferred income tax liabilities represent the tax effect of temporary differences between financial reporting

and tax reporting measured at enacted tax rates in effect for the year in which the differences are expected to reverse.

recognizes only the impact of tax positions that, based on their technical merits, are more likely than not to be sustained upon

an audit by the taxing authority.

allowances are provided when it is more-likely-than-not that some or all of the deferred income tax assets may not be realized.

In assessing the need for a valuation allowance, the Company has considered its historical levels of income, expectations of future

taxable income and ongoing tax planning strategies.

the provision for income taxes, including the effective tax rate and analysis of potential tax exposure items, if any, requires

significant judgment and expertise in federal and state income tax laws, regulations and strategies, including the determination

of deferred income tax assets and liabilities and any estimated valuation allowances deemed necessary to value deferred income

Judgments and tax strategies are subject to audit by various taxing authorities.

While the Company believes it has

no significant uncertain income tax positions in the consolidated financial statements, adverse determinations by these taxing

authorities could have a material adverse effect on the consolidated financial positions, result of operations, or cash flows.

Concentrations

Risk and Significant Customers

Company had certain customers which are each responsible for generating 10% or more of the total revenue for the three and nine

months ended September 30, 2020.

Three customers together accounted for approximately 64% of total revenue for the three months

ended September 30, 2020 and two customers together accounted for 42% of total revenue for the nine months ended September 30,

customers each accounted for more than 10% of accounts receivable at September 30, 2020.

These two customers together accounted

for approximately 66% of accounts receivable at September 30, 2020.

Income (Loss) per Share

net income or loss per common share is computed by dividing net income or loss applicable to common shareholders by the weighted

average number of shares outstanding during each period.

For the three and six months ended June 30, 2020 the Company included

1,401,561 and 87,777, and 1,493,821 and 76,172 for outstanding options and warrants, respectively in calculating

the diluted earnings per share.

As the Company experienced net losses during the three and six months ended June 30, 2019, respectively,

no common stock equivalents have been included in the diluted earnings per common share calculations as the effect of such common

stock equivalents would be anti-dilutive.

For the three and six months ended June 30, 2019, there were 4,534,575 potentially dilutive

shares consisting of:

(i) 1,247,707 for outstanding options, (ii) 953,535 for outstanding warrants and (iii) 2,333,333 for issued

and outstanding shares of convertible preferred stock.

and Development

and development costs are expensed when incurred.

The Company expensed $750,249 and $1,150,271 of research and development costs

for the three and six months ended June 30, 2020, respectively.

The Company expensed $312,590 and $659,896 of research and development

costs for the three and six months ended June 30, 2019, respectively.

net income or loss per share is computed by dividing net income or loss attributable to common stockholders by the weighted-average

number of shares of common stock outstanding during the period increased by common shares that could be issued upon conversion

or exercise of other outstanding securities to the extent those additional common shares would be dilutive.

The dilutive effect

of potentially dilutive securities is reflected in diluted net income or loss per share by application of the treasury stock method.

During periods when the Company is in a net loss position, basic net loss per share is the same as diluted net loss per share

as the effects of potentially dilutive securities are anti-dilutive

Accounting Pronouncements

24 unchanged sentences

The update is effective for annual periods and interim periods with those

periods beginning after December 15, 2021, for public EGC companies like us, but the Company may adopt upon election, it

on January 1, 2021.

The standard requires a cumulative effect adjustment to the balance sheet as of the beginning of the first

early reporting period in which the guidance is effective.

The Company is evaluating the impact of the adoption of ASU

2016-13 on its consolidated financial statements.

periods beginning after December 15, 2021, for public EGC companies like us, but the Company may adopt it upon election on January

The standard requires a cumulative effect adjustment to the balance sheet as of the beginning of the first early reporting

period in which the guidance is effective.

The Company is evaluating the impact of the adoption of ASU 2016-13 on its consolidated

financial statements and when it plans to adopt it.

December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740) (“ASU 2019-12”), which removes certain exceptions

4 unchanged sentences

will have on the Company’s consolidated financial statements and related disclosures.

and Contingency

July 16, 2020, we were served in an action filed in the United States District Court for the District of Utah claiming that the

Company promulgated false and misleading press releases to increase the price of our stock to improperly benefit the officers

and directors of the Company.

The Plaintiff, Gelt Trading, Ltd., a Cayman Islands limited company, demands compensatory damages

sustained as a result of our alleged wrongdoing in an amount to be proven at trial.

We will vigorously defend this action as we

do not believe it has any merit.

addition, there is a threatened lawsuit from former consultants claiming compensation for services rendered in 2015.

We will vigorously

defend this matter if it results in a lawsuit.

Fair Value Measurements

Company measures and records certain financial assets at fair value on a recurring basis.

Fair value is based on the price that

would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants

at the measurement date.

Company’s financial instruments that are measured at fair value on a recurring basis consist of money market funds.

following three levels of inputs are used to measure the fair value of financial instruments:

Quoted market prices in active markets for identical assets or liabilities.

Observable market-based inputs or unobservable inputs that are corroborated by market data.

Unobservable inputs that are not corroborated by market data.

Company’s financial instruments that are measured at fair value on a recurring basis consist of certificates of deposit.

The following table summarizes the assets measured at fair value on a recurring basis as of September 30, 2020 by level within

the fair value hierarchy:

investment securities:

following table sets forth revenue by geographic area:

Three Months Ended

September 30,

Nine Months Ended

September 30,

United States

Rest of World

Percentage of revenue by area:

United States

Rest of World

in the Company’s deferred revenue balance for the nine months ended September 30, 2020 were as follows:

Balance as of December 31, 2019

Revenue recognized that was included in deferred revenue balance at the beginning of the period

Increase due to prepayments from customers

Balance as of September 30, 2020

Company expects to perform its performance obligation and recognize the deferred revenue as revenue during the year ended December

Stockholders’

Stock and Preferred Stock

January 28, 2020, we completed the sale of 3,448,278 shares of the Company’s common stock, par value $0.001 per share, at

10 unchanged sentences

and we received net proceeds of $3,882,420 after deducting offering costs of $347,580.

March 5, 2020 we received $50,000 from the exercise of 25,000 unregistered warrants at an exercise price of $2.00 per share and

issued 25,000 shares of our common stock.

the three months ended March 31, 2020, we issued an aggregate of 2,133,333 shares of our common stock in conversion of

2,560,000 shares of our Series A Preferred Stock at a conversion price calculated by multiplying the number of preferred shares

being converted by $100 and dividing the result by $1.20.

the three months ended March 31, 2020, we issued an aggregate of 694,492 shares of our common stock in relation to the

cashless exercise of 759,445 previously issued unregistered warrants.

the three months ended March 31, 2020.

we issued 12,363 shares of our common stock valued at $31,193 to 2 companies for

investment relations services rendered.

the three months ended June 30, 2020, we received $220,000 from the exercise of 110,000 unregistered warrants at an exercise

price of $2.00 per share and issued an aggregate of 110,000 shares of our common stock to four individuals.

the three months ended June 30, 2020, we received $643,465 from the exercise of 420,289 registered options by10 employees

and two Members of our Board of Directors and issued an aggregate of 420,289 shares of our common stock.

the three months ended June 30, 2020, we issued 9,689 shares of our commons stock valued at $86,050 to 3 companies for

investment relations services rendered.

January 30, 2019, we entered into a securities purchase agreement with accredited investors pursuant to which such investors purchased

from an aggregate of 30,000 shares of Series A Convertible Preferred Stock of the Company for an aggregate purchase price of $3,000,000.

The purchase price was paid by the investors with $1.0 million in cash and the conversion of a $2.0 million promissory note of

the Company issued to the investors.

The investors may not convert the Series A Preferred Stock to the extent that such conversion

would result in beneficial ownership by the investors and their affiliates of more than 4.99% of the issued and outstanding common

stock of the Company.

February 4, 2019, we completed the sale of an aggregate of 3,925,716 shares of the Company’s common stock, par value $0.001

per share, at a purchase price of $1.40 per share in a registered direct offering.

The aggregate gross proceeds for the sale of

the shares of common stock was $5,496,002 and we received net proceeds of $4,903,238 after offering costs of $592,764.

March 7, 2019, we issued an aggregate of 166,667 shares of our common stock in relation to 2,000 shares of our Series A Preferred

Stock being converted to common stock at a conversion price calculated by multiplying the number of preferred shares being converted

by $100 and dividing the result by $1.20.

June 2019, we issued 100,000 shares of our common stock to a company valued at $80,400 pursuant to a professional services agreement.

the nine months ended September 30, 2020, the Company issued an aggregate of 2,133,333 shares of common stock upon conversion

of all of the Company’s convertible preferred stock outstanding as of December 31, 2019.

the nine months ended September 30, 2020, the Company issued 829,492 shares of common stock upon the exercise of warrants and

received $270,000.

the nine months ended September 30, 2020, the Company issued 528,623 shares of common stock upon the exercise of options and received

the nine months ended September 30, 2020, the Company issued 83,935 shares of common stock for services provided by third parties

primarily related to investment relations services.

following table reconciles the numerator and the denominator used to calculate basic and diluted earnings per share for three

and nine months ended September 30, 2020:

Three Months Ended

September 30, 2020

Nine Months Ended

September 30, 2020

Net income, as reported

Weighted average shares, basic

Dilutive effect of stock options and warrants

Shares used to compute diluted earnings per share

Basic earnings per share

Diluted earnings per share

options were excluded from the computation of diluted earnings per share because the effect would have been anti-dilutive.

a result of incurring a net loss for the three and nine months ended September 30, 2019, no potentially dilutive securities are

included in the calculation of diluted earnings per share because such effect would be anti-dilutive.

The Company had potentially

dilutive securities as of September 30, 2019, consisting of:

(i) 2,021,817 options, (ii) 953,535 warrants and (iii) 2,133,333

for issued and outstanding shares of convertible preferred stock.

Stock-Based Compensation

1 unchanged sentence

Co-Diagnostics, Inc.

2015 Long Term Incentive Plan reserves an aggregate of 6,000,000 shares of common stock issuable upon the

grant of awards under the plan.

The number of unissued awards authorized under the plan at June 30, 2020 was 3,828,183.

use a Black-Scholes model to value granted stock options which

requires various judgmental assumptions including the estimated volatility, risk-free interest rate and expected option term.

In determining the expected volatility our computation is based the stock prices of 3 comparable companies and is based on a combination

of historical and market-based implied volatility.

The risk-free interest rate was based on the yield curve of a zero-coupon U.S.

Treasury bond on the date the option was granted with a maturity equal to the expected term of the option.

The fair values for

the options granted were estimated at the date of grant using the Black Scholes option-pricing model with the following weighted

average assumptions:

free interest rate

life (in years)

dividend yield

recognized $301,568 and $703,198 of stock-based compensation expense, related to stock options for the three and six months ended

June 30, 2020 respectively, which is included in administrative and general expenses.

recognized $126,483 and $214,278 of stock-based compensation expense, related to stock options for the three and six months ended

June 30, 2019, respectively, which is included in administrative and general expenses.

following table summarizes option activity during the year ended December 31, 2019 and the six months ended June 30, 2020, respectively.

at January 1, 2019

at December 31, 2019

at June 30, 2020

intrinsic value of options outstanding at June 30, 2020 and 2019 was $15,462,981 and $72,093, respectively.

There were 843,333

and 566,667 of unvested option included the table above as of June 30, 2020 and 2019, respectively.

At June 30, 2020 there

were 843,333 unvested options.

Company estimates the fair value of issued warrants on the date of issuance as determined using a Black-Scholes pricing model.

The Company amortizes the fair value of issued warrants using a vesting schedule based on the terms and conditions of each warrant.

The Black-Scholes valuation model requires various judgmental assumptions including the estimated volatility, risk-free interest

rate and expected warrant term.

In determining the expected volatility, our computation is based on the stock prices of three

comparable companies and on a combination of historical and market-based implied volatility.

The risk-free interest rate is based

on the yield curve of a zero-coupon U.S.

Treasury bond on the date the warrant was issued with a maturity equal to the expected

term of the warrant.

following table summarizes warrant activity during the year ended December 31, 2019 and the six months ended June 30, 2020, respectively.

at January 1, 2019

at December 31, 2019

at June 30, 2020

intrinsic value of options and warrants exercised in the six months ended June 30, 2020 was $16,083,097.

Total unrecognized

stock-based compensation was $468,295 at June 30, 2020 for options granted.

The Company expects to recognize the aggregate amount

of this compensation expense over the next years in accordance with contractual provisions and vesting as follows:

2015 Long Term Incentive Plan (the “Incentive Plan”) reserves an aggregate of 6,000,000 shares

of common stock issuable upon the grant of awards under the Incentive Plan.

The number of awards available for issuance under

the Incentive Plan was 3,828,183 at September 30, 2020.

following table summarizes option activity during the nine months ended September 30, 2020:

Number of Options

Weighted Average Exercise Price

Weighted Average Fair Value

Weighted Average Remaining Contractual Life (Years)

Outstanding at December 31, 2019

Forfeited/Cancelled

Outstanding at September 30, 2020

total intrinsic value of options exercised during the nine months ended September 30, 2020 was approximately $8.3 million.

aggregate intrinsic value of outstanding options at September 30, 2020 was $15,476,739.

There were 296,667 of unvested options

as of September 30, 2020.

compensation cost is measured at the grant date based on the fair value of the award granted and recognized as expense over the

vesting period using the straight-line method.

The Company uses the Black-Scholes model to value options granted.

The following

weighted average assumptions were used in estimating the grant date fair value of options:

Nine months ended

September 30,

Risk-free interest rate

Expected life (years)

Expected volatility

Expected dividend yield

of September 30, 2020, there were 296,667 of unvested options and $339,951 of unrecognized stock-based compensation expense.

unrecognized stock-based compensation expense is expected to be recognized over 2.5 years.

Company has issued warrants related to past financings and as compensation to third parties for services provided.

estimates the fair value of issued warrants on the date of issuance as determined using a Black-Scholes pricing model.

amortizes the fair value of issued warrants using a vesting schedule based on the terms and conditions of each warrant if granted

for services.

following table summarizes warrant activity during nine months ended September 30, 2020

Number of Warrants

Weighted Average Exercise Price

Weighted Average Fair Value

Average Remaining Contractual Life (Years)

Outstanding at December 31, 2019

Forfeited/Cancelled

Outstanding at September 30, 2020

intrinsic value of warrants exercised during the nine months ended September 30, 2020 was approximately $9.4 million.

The aggregate

intrinsic value of outstanding options warrants at September 30, 2020 was approximately $1.3 million.

All outstanding warrants

are exercisable at September 30, 2020 and there was no unrecognized stock-based compensation expense related to warrants.

Issued for Services

Company has issued restricted stock to third parties for services provided.

The grant date fair value of the restricted stock

granted is determined using the closing market price of the Company’s common stock on the grant date with the associated

compensation expense amortized over the vesting period of the stock awards.

The Company has issued 83,935 of restricted stock

for services during the nine months ended September 30, 2020.

Compensation Expense

Company recognized stock-based compensation expense related to the types of awards discussed above as follows:

Three Months Ended

September 30,

Nine Months Ended

September 30,

Total stock-based compensation expense

following table summarizes our benefit from income taxes and our effective tax rates for the three and nine months ended September

30, 2020 and 2019:

Three Months Ended

September 30,

Nine Months Ended

September 30,

Income (loss) before income taxes

$ (1,747,766 )

$ (4,460,551 )

Income tax provision (benefit)

Effective tax rate

the three months ended September 30, 2020, the Company recognized a benefit from income taxes of $2,914,781, representing an effective

tax rate of (22.7%) which was lower than the statutory federal tax rate due primarily to the release of the valuation allowance

during the quarter and the tax benefits related to tax-deductible stock-based compensation expense.

For the three months ended

September 30, 2019, no benefit from income taxes was recorded due to the Company being in a full valuation allowance position,

resulting in an effective tax rate of 0.0%.

the nine months ended September 30, 2020, the Company recognized a benefit from income taxes of $2,914,781, representing an effective

tax rate of (10.9%), which was lower than the statutory federal tax rate due primarily to stock-based compensation adjustments,

non-deductible lobbying expenses and state taxes, partially offset by research and development credits.

For the nine months ended

September 30, 2019, no benefit from income taxes was recorded due to the Company being in a full valuation allowance position,

resulting in an effective tax rate of 0.0%.

of each reporting date, management considers new evidence, both positive and negative, that could affect its view of the future

realization of deferred tax assets.

As of September 30, 2020, in part because in the current year the Company achieved three years

of cumulative pre-tax income, management determined that there is sufficient positive evidence to conclude that it is more likely

than not that its deferred tax assets, which are primarily made up of federal and state net operating losses, are realizable.

Therefore, during the third quarter, the valuation allowance was fully released which resulted in a decrease to income tax expense

for the period the release is recorded.

impact of a tax position is recognized in the financial statements if that position is more likely than not of being sustained

on audit, based on the technical merits of the position.

As of September 30, 2020, and 2019, the Company did not have any significant

uncertain tax positions.

The Company includes any interest and penalties associated with unrecognized tax benefits within the

provision for income taxes.

The Company does not expect a material change to the total amount of unrecognized tax benefits in

the next twelve months.

Coronavirus Aid, Relief and Economic Security (“CARES”) Act was signed into law on March 27, 2020.

The income tax

provisions of the CARES Act include temporary changes to income-based tax laws, including the ability to utilize net operating

losses, interest expense deductions, alternative minimum tax credit refunds, charitable contributions, and depreciation of qualified

improvement property.

The income tax provisions of the CARES Act did not have a material impact on our condensed consolidated

financial statements for the nine months ended September 30, 2020.

Related Party Transactions

2 unchanged sentences

Brent Satterfield,

one of our current executive officers, prior to our acquisition of DNA Logix, Inc.

On March 1, 2017, the Company entered into

an amendment to its Exclusive License Agreement for its Cooperative Primers (“License”) technology with Dr.

The amendment provides in part that all accrued royalties under the License cease as of January 1, 2017, and we began in January

2017 to pay to Dr.

a current executive officer, prior to the Company’s acquisition of DNA Logix, Inc.

On March 1, 2017, the Company entered

into an amendment to its Exclusive License Agreement for its Cooperative Primers (“License”) technology with Dr.

The amendment provides in part that all accrued royalties under the License cease as of January 1, 2017, and the Company began

in January 2017 to pay to Dr.

Satterfield $700,000 of accrued royalties at the rate of $10,000 per month.

At June 30, 2020, the aggregate

balance of this related party liability was $200,000.

LEASE OBLIGATIONS

offices are located at 2401 S.

At September 30, 2020,

the aggregate balance of this related party liability was $180,000.

Commitments and Contingencies

Company’s offices are located at 2401 S.

Foothill Dr., Suite D, Salt Lake City, Utah 84109-1479.

In February 2020, the Company entered into

a 4-year lease agreement for its office space and in March 2020, the Company entered into an addendum with our landlord for additional

The new aggregate space consists of approximately 13,687 square feet at a monthly rate of $28,825 and expires in February

For the three and six months ended June 30, 2020 the Company expensed $86,969 and $138,787, respectively, for rent.

the three and six months ended June 30, 2019, the Company expensed $45,040 and $90,621, respectively, for rent.

The Company’s

ongoing lease obligation as of June 30, 2020 is as follows:

In February 2020, the Company

entered into a 4-year lease agreement for its office space and in March 2020, the Company entered into an addendum with our landlord

for additional space.

The new aggregate space consists of approximately 13,687 square feet at a monthly rate of $28,825 and expires

in February 2024.

For the three and nine months ended September 30, 2020 the Company expensed $86,588 and $225,374, respectively,

For the three and nine months ended September 30, 2019, the Company expensed $42,259 and $132,879, respectively, for

The Company’s future minimum lease payments were as follows as of September 30, 2020:

Year Ending December 31,

2020 (remainder)

Total lease payments

for loss contingencies arising from claims, assessments, litigation, fines, and penalties and other sources are recorded when

it is probable that a liability has been incurred and the amount can be reasonably estimated.

Legal costs incurred in connection

with loss contingencies are expensed as incurred.

July and September, securities class action complaints were filed by certain stockholders of the Company against the Company claiming

that the Company promulgated false and misleading press releases to increase the price of our stock to improperly benefit the

officers and directors of the Company.

The plaintiffs demand compensatory damages sustained as a result of the Company’s

alleged wrongdoing in an amount to be proven at trial.

The Company believes these lawsuits are without merit and intends to defend

the cases vigorously.

The Company is unable to estimate a range of loss, if any, that could result were there to be an adverse

final decision in these cases.

As of the date of this report, the Company does not believe it is probable that these cases will

result in an unfavorable outcome;

however, if an unfavorable outcome were to occur in these cases, it is possible that the impact

could be material to the Company’s results of operations in the period(s) in which any such outcome becomes probable and

Subsequent Events

August, 2020, we discovered that a freezer that held manufactured tests had failed and that approximately $1,200,000 of finished

goods inventory had thawed and was no longer saleable and will be written off.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

Note Regarding Forward-Looking Statements

Quarterly Report on Form 10-Q contains “forward-looking statements”

Company evaluated subsequent events pursuant to ASC Topic 855 and has determined that there are no events that need to be reported.

Management’s Discussion and

Analysis of Financial Condition and Results of Operations

Cautionary Note Regarding Forward-Looking

This Quarterly Report on Form 10-Q contains

“forward-looking statements”

that involve risks and uncertainties.

All statements

other than statements of historical fact contained in this Quarterly Report and the documents incorporated by reference herein,

including statements regarding future events, our future financial performance, business strategy, and plans and objectives of

management for future operations, are forward-looking statements.

We have attempted to identify forward-looking statements by

terminology including “anticipates,”

All statements other than statements of historical

fact contained in this Quarterly Report and the documents incorporated by reference herein, including statements regarding future

events, our future financial performance, business strategy, and plans and objectives of management for future operations, are

forward-looking statements.

We have attempted to identify forward-looking statements by terminology including “anticipates,”

“believes,”

12 unchanged sentences

or the negative of these terms or other comparable terminology.

Although we do not make forward looking statements unless we believe we have a reasonable basis for doing so, we cannot guarantee

their accuracy.

These statements are only predictions and involve known and unknown risks, uncertainties and other factors and

the documents incorporated by reference herein, which may affect our or our industry’s actual results, levels of activity,

performance or achievements expressed or implied by these forward-looking statements.

Moreover, we operate in a highly regulated,

very competitive, and rapidly changing environment.

New risks emerge from time to time and it is not possible for us to predict

all risk factors, nor can we address the impact of all factors on our business or the extent to which any factor, or combination

of factors, may cause our actual results to differ materially from those contained in any forward-looking statements.

have based these forward-looking statements largely on our current expectations and projections about future events and financial

trends that we believe may affect our financial condition, results of operations, business strategy, short term and long-term

business operations, and financial needs.

These forward-looking statements are subject to certain risks and uncertainties that

could cause our actual results to differ materially from those reflected in the forward-looking statements.

Factors that could

cause or contribute to such differences include, but are not limited to, those discussed in this Quarterly Report, and in particular,

the risks discussed below and under the heading “Risk Factors”

Although we do not make forward looking statements

unless we believe we have a reasonable basis for doing so, we cannot guarantee their accuracy.

These statements are only predictions

and involve known and unknown risks, uncertainties and other factors and the documents incorporated by reference herein, which

may affect our or our industry’s actual results, levels of activity, performance or achievements expressed or implied by

these forward-looking statements.

Moreover, we operate in a highly regulated, very competitive, and rapidly changing environment.

New risks emerge from time to time and it is not possible for us to predict all risk factors, nor can we address the impact of

all factors on our business or the extent to which any factor, or combination of factors, may cause our actual results to differ

materially from those contained in any forward-looking statements.

We have based these forward-looking statements

largely on our current expectations and projections about future events and financial trends that we believe may affect our financial

condition, results of operations, business strategy, short term and long-term business operations, and financial needs.

These forward-looking

statements are subject to certain risks and uncertainties that could cause our actual results to differ materially from those reflected

in the forward-looking statements.

Factors that could cause or contribute to such differences include, but are not limited to,

those discussed in this Quarterly Report, and in particular, the risks discussed below and under the heading “Risk Factors”

in other documents we file with the SEC.

The following

discussion should be read in conjunction with the Annual Report on Form 10-K for the fiscal year ended December 31, 2019 filed

with the SEC on March 30, 2020 and the audited financial statements and notes included therein.

should not place undue reliance on any forward-looking statement, each of which applies only as of the date of this Quarterly

Except as required by law, we undertake no obligation to update or revise publicly any of the forward-looking statements

after the date of this Quarterly Report to conform our statements to actual results or changed expectations.

are advised, however, to consult any further disclosures we make on related subjects in our periodic and current reports filed

with the SEC.

You should understand that it is not possible to predict or identify all risk factors.

Consequently, you should

not consider this list to be a complete set of all potential risks or uncertainties.

factors that could cause actual results to differ materially from those in the forward-looking statements include, without limitation:

results of clinical trials and the regulatory approval process;

acceptance of any products that may be approved for commercialization;

ability to protect our intellectual property rights;

impact of any infringement actions or other litigation brought against us;

from other providers and products;

ability to develop and commercialize new and improved products and services;

in government regulation;

factors (including the risks contained in the section entitled “Risk Factors”

in other documents we file with

the SEC) relating to our industry, our operations and results of operations.

Accounting Policies

preparation of financial statements in conformity with U.S.

GAAP requires that we make estimates and judgments that affect the

reported amounts of assets, liabilities, revenues and expenses and the related disclosure of contingent assets and liabilities.

On an ongoing basis, we evaluate our assumptions and estimates, including those related to recognition of revenue, valuation of

investments, valuation of inventory, measurement of stock-based compensation expense and litigation.

We base our estimates on

historical experience and on various assumptions that are believed to be 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

Actual results may differ from these estimates under different assumptions or conditions.

an emerging growth company, we have elected to opt-in to the extended transition period for new or revised accounting standards.

As a result, our financial statements may not be comparable to those of companies that comply with public company effective dates.

following management’s discussion and analysis of financial condition and results of operations describes the principal

factors affecting the results of our operations, financial condition, and changes in financial condition.

This discussion should

be read in conjunction with the accompanying unaudited financial statements and notes thereto included elsewhere in this report.

The information contained in this discussion is subject to a number of risks and uncertainties.

We urge you to review carefully

the section of this report entitled “Cautionary Note Regarding Forward-Looking Statements”

for a summary of the risks

and uncertainties associated with an investment in our securities.

Co-Diagnostics,

Inc., a Utah corporation (the “Company”

or “CDI”), is developing robust and innovative molecular tools

for detection of infectious diseases, liquid biopsy for cancer screening, and agricultural applications.

We have developed and

manufacture and sell reagents used for diagnostic tests that function via the detection and/or analysis of nucleic acid molecules

(DNA or RNA).

In connection with the sale of our tests we may sell diagnostic equipment from other manufacturers as self-contained

lab systems (which we refer to as the “MDx Device”).

diagnostics systems enable very rapid, low-cost, molecular testing for organisms and genetic diseases by automating historically

complex procedures in both the development and administration of tests.

CDI’s technical advance involves a novel approach

to Polymerase Chain Reaction (“PCR”) test design of primer and probe structure (“CoPrimers”) that eliminates

one of the key vexing issues of PCR amplification, the exponential growth of primer-dimer pairs (false positives and false negatives)

which adversely interferes with identification of the target DNA.

believe our proprietary molecular diagnostics technology is paving the way for innovation in disease detection and life sciences

research through our enhanced detection of genetic material.

Because we own our platform, we believe we will be able to

accomplish this faster and more economically, allowing for significant margins while still positioning the Company to be

a low-cost provider of molecular diagnostics and screening services.

addition, continued development has demonstrated the unique properties of our CoPrimer technology that make it ideally

suited to a variety of applications where specificity is key to optimal results, including multiplexing several targets, enhanced

Single Nucleotide Polymorphism (“SNP”) detection and enrichment for next gen sequencing.

scientists use the complex mathematics of DNA/RNA test design, to engineer and optimize a DNA/RNA test and to automate

algorithms that rapidly screen millions of possible options to pinpoint the optimum design.

Satterfield, our Chief Technology

Officer, developed the Company’s intellectual property consisting of the predictive mathematical algorithms and proprietary

reagents used in the testing process, which together represent a major advance in PCR testing systems.

CDI technologies are now

protected by seven granted or pending US and foreign patents, as well as certain trade secrets and copyrights.

Ownership of our

proprietary platform permits us the advantage of avoiding payment of patent royalties required by other PCR test systems, which

enables the sale of diagnostic tests at a lower price than competitors, while enabling us to maintain profit margins.

may either sell or lease the MDx Device to labs and diagnostic centers, through sale or lease agreements, and sell the reagents

that comprise our proprietary tests to those laboratories and testing facilities.

designed our tests by identifying the optimal locations on the target gene for amplification and paired the location with the

optimized primer and probe structure to achieve outputs that meet the design input requirements identified from market research.

This is done by following planned and documented processes, procedures and testing.

In other words, the data resulting from our

tests verify that we succeeded in designing what we intended at the outset.

Verification is a series of testing that concludes

that the product is ready to proceed to validation in an evaluation either in our lab or in an independent laboratory setting

using initial production tests to confirm that the product as designed meets the user needs.

our proprietary test design system and proprietary reagents, we have designed and obtained regulatory approval in

the European Community and in India to sell PCR diagnostic tests for COVID-19, tuberculosis, hepatitis B and C, human papilloma

virus, malaria, chikungunya, dengue, and the zika virus.

In the United States, CDI has obtained Emergency Use Authorization (“EUA”)

for its COVID-19 test from the FDA and sells that test to qualified labs.

In addition, our LogixSmart COVID-19 test has been approved

for sale in Australia and Mexico by the regulatory bodies in those countries.

addition to testing for infectious disease, the technology lends itself to identifying any section of a DNA or RNA strand

that describe any type of genetic trait, which creates a number of significant applications.

We, in conjunction with our customers,

are active in designing and licensing tests that identify genetic traits in plant and animal genomes.

We also have three multiplexed

tests developed to test mosquitos for the identification of diseases carried by the mosquitos to enable municipalities to concentrate

their efforts in spraying mosquito populations on the specific areas known to be breeding the mosquitos that carry deadly viruses.

January 23, 2020, we announced the completion of the principle design work for a PCR screening test for new coronavirus, COVID-19,

intended to address potential need for detection of the virus.

An outbreak of respiratory illness caused by the pneumonia-like

COVID-19 has spread rapidly throughout the world since first being discovered in the Chinese city of Wuhan on December 31, 2019.

China confirmed human-to-human transmission of the virus and the United States announced the first infection in this country,

detected in a traveler returning from Wuhan.

The following discussion should be read in conjunction with the Annual Report on Form

10-K for the fiscal year ended December 31, 2019 filed with the SEC on March 30, 2020 and the audited financial statements and

notes included therein.

You should not place undue reliance on any

forward-looking statement, each of which applies only as of the date of this Quarterly Report.

Except as required by law, we undertake

no obligation to update or revise publicly any of the forward-looking statements after the date of this Quarterly Report to conform

our statements to actual results or changed expectations.

You are advised, however, to consult any further

disclosures we make on related subjects in our periodic and current reports filed with the SEC.

You should understand that it is

not possible to predict or identify all risk factors.

Consequently, you should not consider this list to be a complete set of all

potential risks or uncertainties.

Important factors that could cause actual results

to differ materially from those in the forward-looking statements include, without limitation:

the results of clinical trials and the regulatory approval process;

market acceptance of any products that may be approved for commercialization;

our ability to protect our intellectual property rights;

the impact of any infringement actions or other litigation brought against us;

competition from other providers and products;

our ability to develop and commercialize new and improved products and services;

changes in government regulation;

other factors (including the risks contained in the section entitled “Risk Factors”

in other documents we file with the SEC) relating to our industry, our operations and results of operations.

Critical Accounting Policies

The preparation of financial statements in

conformity with U.S.

GAAP requires that we make estimates and judgments that affect the reported amounts of assets, liabilities,

revenues and expenses and the related disclosure of contingent assets and liabilities.

On an ongoing basis, we evaluate our assumptions

and estimates, including those related to recognition of revenue, valuation of investments, valuation of inventory, measurement

of stock-based compensation expense and litigation.

We base our estimates on historical experience and on various assumptions that

are believed to be 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.

Actual results may differ from these estimates

under different assumptions or conditions.

As an emerging growth company, we have elected

to opt-in to the extended transition period for new or revised accounting standards.

As a result, our financial statements may

not be comparable to those of companies that comply with public company effective dates.

Executive Overview

The following management’s discussion

and analysis of financial condition and results of operations describes the principal factors affecting the results of our operations,

financial condition, and changes in financial condition.

This discussion should be read in conjunction with the accompanying unaudited

financial statements and notes thereto included elsewhere in this report.

The information contained in this discussion is subject

to a number of risks and uncertainties.

We urge you to review carefully the section of this report entitled “Cautionary Note

Regarding Forward-Looking Statements”

for a summary of the risks and uncertainties associated with an investment in our securities.

Co-Diagnostics, Inc., a Utah corporation (the

“Company”

or “CDI”), is developing robust and innovative molecular tools for detection of infectious diseases,

liquid biopsy for cancer screening, and agricultural applications.

We develop, manufacture and sell reagents used for diagnostic

tests that function via the detection and/or analysis of nucleic acid molecules (DNA or RNA).

In connection with the sale of our

tests we may sell diagnostic equipment from other manufacturers as self-contained lab systems (which we refer to as the “MDx

Device”).

Our diagnostics systems enable very rapid,

low-cost, molecular testing for organisms and genetic diseases by automating historically complex procedures in both the development

and administration of tests.

CDI’s technical advance involves a novel approach to Polymerase Chain Reaction (“PCR”)

test design of primer and probe structure (“CoPrimers”) that eliminates one of the key vexing issues of PCR amplification,

the exponential growth of primer-dimer pairs (false positives and false negatives) which adversely interferes with identification

of the target DNA/RNA.

We believe our proprietary molecular diagnostics

technology is paving the way for innovation in disease detection and life sciences research through our enhanced detection of genetic

Because we own our platform, we believe we will be able to accomplish this faster and more economically, allowing for

significant margins while still positioning the Company to be a low-cost provider of molecular diagnostics and screening services.

In addition, continued development has demonstrated

the unique properties of our CoPrimer technology that make it ideally suited to a variety of applications where specificity is

key to optimal results, including multiplexing several targets, enhanced Single Nucleotide Polymorphism (“SNP”) detection

and enrichment for next gen sequencing.

Our scientists use the complex mathematics

of DNA/RNA test design, to engineer and optimize a DNA/RNA test and to automate algorithms that rapidly screen millions of possible

options to pinpoint the optimum design.

Satterfield, our Chief Technology Officer, developed the Company’s intellectual

property consisting of the predictive mathematical algorithms and proprietary reagents used in the testing process, which together

represent a major advance in PCR testing systems.

CDI technologies are now protected by seven granted or pending US and foreign

patents, as well as certain trade secrets and copyrights.

Ownership of our proprietary platform permits us the advantage of avoiding

payment of patent royalties required by other PCR test systems, which enables the sale of diagnostic tests at a lower price than

competitors, while enabling us to maintain profit margins.

We may either sell or lease the MDx Device

to labs and diagnostic centers, through sale or lease agreements, and sell the reagents that comprise our proprietary tests to

those laboratories and testing facilities.

We design our tests by identifying the optimal locations on the

target gene for amplification and pair the location with the optimized primer and probe structure to achieve outputs that meet

the design input requirements identified from market research.

This is done by following planned and documented processes, procedures

In other words, the data resulting from our tests verify that we succeeded in designing what we intended at the outset.

Verification is a series of testing that concludes that the product is ready to proceed to validation in an evaluation either in

our lab or in an independent laboratory setting using initial production tests to confirm that the product as designed meets the

Using our proprietary test design

system and proprietary reagents, we have designed and obtained regulatory approval in the European Community and in India to sell

PCR diagnostic tests for COVID-19, tuberculosis, hepatitis B and C, human papilloma virus, malaria, chikungunya, dengue, and the

In the United States, CDI has obtained Emergency Use Authorization (“EUA”) for its COVID-19 test from the

FDA and sells that test to qualified labs.

In addition, our LogixSmart COVID-19 test has been approved for sale in Australia and

Mexico by the regulatory bodies in those countries and has been registered for sale in many more countries.

In addition to testing for infectious disease,

the technology lends itself to identifying any section of a DNA or RNA strand that describe any type of genetic trait, which creates

a number of significant applications.

We, in conjunction with our customers, are active in designing and licensing tests that identify

genetic traits in plant and animal genomes.

We also have three multiplexed tests developed to test mosquitos for the identification

of diseases carried by the mosquitos to enable municipalities to concentrate their efforts in spraying mosquito populations on

the specific areas known to be breeding the mosquitos that carry deadly viruses.

2020 Developments

On January 23, 2020, we announced the completion

of the principle design work for a PCR screening test for new coronavirus, COVID-19, intended to address the potential need for

detection of the virus.

An outbreak of respiratory illness caused by the pneumonia-like COVID-19 has spread rapidly throughout

the world since first being discovered in the Chinese city of Wuhan on December 31, 2019.

China confirmed human-to-human transmission

of the virus and the United States announced the first infection in this country, detected in a traveler returning from Wuhan.

Our COVID-19 test features the Company’s patented CoPrimer™

and was designed using our proprietary software system, following the guidelines published by the World Health Organization (WHO)

and Centers for Disease Control (CDC).

February 20, 2020, we announced that our Logix Smart™

COVID-19 Test technical file had been submitted for registration with

the European Union, and that it was expected to be available late February as an in vitro diagnostic (“IVD”)

for markets that accept a CE marking as valid regulatory approval.

Subsequently, on February 24, 2020, we announced that our test

obtained regulatory clearance to be sold as an IVD for the diagnosis of COVID-19 in markets that accept CE-marking as valid

regulatory approval, and became available for purchase from the Company’s Utah-based ISO-13485:2016 certified facility.

The Declaration of Conformity for the Logix Smart COVID-19 test confirms that it meets the Essential Requirements of the European

Community’s In-Vitro Diagnostic Medical Device Directive (IVDD 98/79/EC), permitting export and sales of the product as

an IVD to commence immediately in the European Community.

We shipped samples of the Research Use Only version of our test to distributors

in various countries, which allowed future customers to confirm the quality and sensitivity of the product, and for us to accelerate

the sales efforts of the COVID-19 test.

commenced sales of the COVID-19 tests in February and March of 2020 to international customers and sold the tests in numerous

countries around the world through an expanding distributor network.

April 6, 2020, we announced that we had received an Emergency Use Authorization from the FDA allowing us to commence sales of

our Logix Smart COVID-19 test to laboratories certified by the Center for Medicare and Medicaid Services under the Clinical

Laboratories Improvements Act (“CLIA”) to accept human samples for diagnostics testing throughout the United

States and we have been actively marketing to such CLIA labs since that time.

Disease Product Offering

its proprietary test design system and proprietary reagents, CDI designs and sells PCR diagnostic tests for diseases and pathogens

such as COVID-19, tuberculosis, hepatitis B and C, malaria, dengue, human papilloma virus, chikungunya, and zika virus, all of

which tests have been designed and verified in CDI’s laboratory.

Our tuberculosis test and zika test received a CE Mark

in 2018, and a triplex test for zika, dengue and chikungunya received a CE Mark in 2019, qualifying the tests to be sold throughout

the European community and in most countries in central and South America.

In December, 2019, our Indian joint venture received

a license to manufacture and sell tuberculosis, hepatitis B, hepatitis C, human papilloma virus 16/18 and malaria tests in India

from the Central Drugs Standard Control Organization (“CDSCO”).

In February 2020, we received a CE Mark for our Logix

Smart COVID-19 test and in April 2020, our COVID-19 test was approved for manufacture and sale in India by the CDSCO and in Mexico

by the INDRE, Mexico’s equivalent to the United States Center for Disease Control.

In August 2020, we received approval

from the Australian Department of Health Therapeutic Goods Division to sell our COVID-19 in Australia.

explained above, the development of our Logix Smart COVID-19 test was designed, developed, submitted for regulatory approved and

ready to be used both as a Research Use Only (“RUO”) and as an IVD in countries that accept a CE Mark as approval

for use of the test in a period of just over thirty days.

This is a real-world example of how in an evolving epidemic that the

CDI technology can be used to get diagnostics tools in the hands of medical professionals without delay.

It can be similarly used

to design a test for mutations of the virus should they occur.

and Central and South America

initial sales were to entities located in South and Central America.

some of those countries, there are limited regulatory hurdles and sales we started offering our tests immediately.

We have applied

for registration of our tests in those countries that require registration and our distributors in those countries have provided

us with in country assistance in completing such registrations.

first offered our zika test in this region because of the demand for such test, followed quickly by tests for tuberculosis, our

triplex test for zika, chikungunya, and dengue, hepatitis B and C, and dengue.

Sales of those tests have not been material, but

with the granting of a CE mark for our Logix Smart COVID-19, we began significant sales in this region.

Products are manufactured

for sale upon receipt of purchase orders from distributors, labs and hospitals.

January, 2017, the Company entered into an agreement to manufacture

diagnostics tests for seven infectious diseases with a pharmaceutical manufacturing company in India and formed an Indian joint

venture organized as CoSara Diagnostics, Pvt.

The agreement provided for the construction of a manufacturing plant and the manufacture

of the tests named above and the joint sales and marketing of those tests in India.

We have received a license for the plant in

Rinoli, India to manufacture approved tests and it will be used for testing and manufacturing for the Indian market.

mentioned above, the CDSCO has given us the approval for manufacture and sale of the five tests referred above and the Company

has begun manufacture and sale of those tests.

technology, and was designed using our proprietary software

system, following the guidelines published by the World Health Organization (WHO) and Centers for Disease Control (CDC).

On February 20, 2020, we announced that our

Logix Smart™

COVID-19 Test technical file had been submitted for registration with the European Union, and that it was expected

to be available late February as an in vitro diagnostic (“IVD”) for markets that accept a CE marking as valid regulatory

Subsequently, on February 24, 2020, we announced that our test obtained regulatory clearance to be sold as an IVD for

the diagnosis of COVID-19 in markets that accept CE-marking as valid regulatory approval, and became available for purchase from

the Company’s Utah-based ISO-13485:2016 certified facility.

The Declaration of Conformity for the Logix Smart COVID-19 test

confirms that it meets the Essential Requirements of the European Community’s In-Vitro Diagnostic Medical Device Directive

(IVDD 98/79/EC), permitting export and sales of the product as an IVD to commence immediately in the European Community.

samples of the Research Use Only version of our test to distributors in various countries, which allowed future customers to confirm

the quality and sensitivity of the product, and for us to accelerate the sales efforts of the COVID-19 test.

We commenced sales of the COVID-19 tests in

February and March of 2020 to international customers and sold the tests in numerous countries around the world through an expanding

distributor network.

6, 2020, we announced that we had received an Emergency Use Authorization from the FDA allowing us to commence sales of our Logix

Smart COVID-19 test to laboratories certified by the Center for Medicare and Medicaid Services under the Clinical Laboratories

Improvements Act (“CLIA”) to accept human samples for diagnostics testing throughout the United States and we have

been actively marketing to such CLIA labs since that time.

Infectious Disease Product Offering

Using its proprietary test design system and

proprietary reagents, CDI designs and sells PCR diagnostic tests for diseases and pathogens such as COVID-19, tuberculosis, hepatitis

B and C, malaria, dengue, human papilloma virus, chikungunya, and zika virus, all of which tests have been designed and verified

in CDI’s laboratory.

Our tuberculosis test and zika test received a CE Mark in 2018, and a triplex test for zika, dengue

and chikungunya received a CE Mark in 2019, qualifying the tests to be sold throughout the European community and in most countries

in central and South America.

In December, 2019, our Indian joint venture received a license to manufacture and sell tuberculosis,

hepatitis B, hepatitis C, human papilloma virus 16/18 and malaria tests in India from the Central Drugs Standard Control Organization

(“CDSCO”).

In February 2020, we received a CE Mark for our Logix Smart COVID-19 test and in April 2020, our COVID-19

test was approved for manufacture and sale in India by the CDSCO and in Mexico by the INDRE, Mexico’s equivalent to the United

States Center for Disease Control.

In August 2020, we received approval from the Australian Department of Health Therapeutic Goods

Division to sell our COVID-19 in Australia.

As explained above, the development of our

Logix Smart COVID-19 test was designed, developed, submitted for regulatory approved and ready to be used both as a Research Use

Only (“RUO”) and as an IVD in countries that accept a CE Mark as approval for use of the test in a period of just over

This is a real-world example of how in an evolving epidemic that the CDI technology can be used to get diagnostics

tools in the hands of medical professionals without delay.

It can be similarly used to design a test for mutations of the virus

should they occur.

Caribbean and Central and South America

Our initial sales were to entities located

in South and Central America.

In some of those countries, there are limited

regulatory hurdles so we started offering our tests immediately.

We have applied for registration of our tests in those countries

that require registration and our distributors in those countries have provided us with in country assistance in completing such

registrations.

We first offered our zika test in this region

because of the demand for such test, followed quickly by tests for tuberculosis, our triplex test for zika, chikungunya, and dengue,

hepatitis B and C, and dengue.

Sales of those tests have not been material, but with the granting of a CE mark for our Logix Smart

COVID-19, we began significant sales in this region.

Products are manufactured for sale upon receipt of purchase orders from distributors,

labs and hospitals.

In January, 2017, the Company entered into

an agreement to manufacture diagnostics tests for seven infectious diseases with a pharmaceutical manufacturing company in India

and formed an Indian joint venture organized as CoSara Diagnostics, Pvt.

The agreement provided for the construction of a manufacturing

plant and the manufacture of the tests named above and the joint sales and marketing of those tests in India.

We have received

a license for the plant in Ranoli, India to manufacture approved tests and it will be used for testing and manufacturing for the

Indian market.

As mentioned above, the CDSCO has given us

the approval for manufacture and sale of the five tests referred above and the Company has begun manufacture and sale of those

Sales of those tests has not been material to date.

The Company has commenced a

reagent rental program in India with a thermocycler purchased from a third-party vendor and which we refer to as our MDx Device.

We have placed twenty-one of our MDx Devices with labs in India.

Each of the reagent rental placements requires the purchase of

a minimum of 250 tests per month.

India is the country with the highest burden of tuberculosis.

World Health Organization (WHO)

tuberculosis statistics for India for 2015 give an estimated incidence figure of 2.2 million cases of tuberculosis for India out

of a global incidence of 9.6 million.

The tuberculosis incidence for India is the number of new cases of active tuberculosis disease

in India during a certain time period (usually a year).

We believe that we will be able to sell our tuberculosis test in India

through our sales distribution network that we are building currently.

March 19, 2020, we announced that CoSara Diagnostics, Pvt., our Indian joint venture (“CoSara”), received

authorization to begin manufacture and sale of COVID-19 tests in India.

Those tests in India are branded as SaraGene COVID-19

tests and are sold exclusively by CoSara.

Because any commercial activity in India was severely restricted until May 2020,

CoSara was not able to commence the manufacturing and sale of the SaraGene COVID-19 tests until late in the

second quarter, but sales efforts still resulted in sales significant enough to make CoSara profitable for the quarter ending

June 30, 2020.

the efforts of CoSara are currently concentrated in providing the SaraGene COVID-19 test to the Indian market, we

are preparing to submit technical files to the CDSCO requesting approval tests for the human immunodeficiency virus

(HIV) and dengue as well as a blood bank panel before the end of the third quarter of 2020 to increase the number of

tests to be sold in that market.

diagnostics, such as our tests, are governed in Europe by the framework for in vitro diagnostics (IVDs), which encompasses diagnostic

products such as reagents, instruments and systems intended for use in diagnosis of disease.

The regulatory system for IVDs is

built largely on a self-certification procedure, placing heavy responsibility on manufacturers.

Non self-certified products are

subject to the same standards as self-certified products but are subject to audit and review by a notified body prior to receiving

approval to be CE-marked.

A CE-marking is a manufacturer’s declaration that a product meets the requirements of the applicable

European Commission directive.

Examples of current obligations include having in place a qualitative manufacturing process, user

instructions that are clear and fit for purpose, ensuring that the ‘physical’

features of devices and diagnostics

do not pose any danger.

If a product fulfils these and other related control requirements, it may be CE-marked as an indication

that the product is compliant with EU legislation and sold in the European Union.

We have received CE Marks for four of our tests

including COVID-19, tuberculosis, Zika, and our zika, dengue, chikungunya triplex tests.

have received ISO 13485 and ISO 9001 certifications relating to the design and manufacture of our medical device products.

ISO certification indicates that we meet the standards required to self-certify certain of our products and affix a CE-marking

for sales of our products in countries accepting the CE marking (not in the United States) with only minimal further governmental

approvals and registrations in most countries.

Food and Drug Administration (FDA) has granted permission for us to export all of our IVD our products.

The FDA’s

permission to export was granted under Section 801(e) of the Federal Food, Drug, and Cosmetic Act, as amended (the “FDC

Section 801(e) of the FDA Act covers certain medical devices that have not yet received an approved Premarket Approval

in the United States by the FDA, such as our products.

The Company has commenced a reagent rental program in India with a thermocycler

purchased from a third-party vendor and which we refer to as our MDx Device.

We have placed thirty-nine thermocyclers, twenty-one

of which are our MDx Devices, with labs in India.

Each of the reagent rental placements requires the purchase of a minimum number

of tests per month.

The placement of thermocyclers in India has facilitated the sale of the SaraGene COVID-19 tests in India, which

has made CoSara profitable in the last two quarters.

The World Health Organization (“WHO”) 2019 Global Tuberculosis

Report indicates that India is the country with the highest number of cases of tuberculosis in the world and has recently exceeded

all countries in the world for cases of COVID-19.

WHO tuberculosis statistics for India for 2018 give an estimated incidence

figure of 2.69 million cases of tuberculosis for India out of a global incidence of approximately 10.0 million.

The tuberculosis

incidence for India is the number of new cases of active tuberculosis disease in India during a certain time period (usually a

We believe that we will be able to sell our tuberculosis test in India through our sales distribution network that we are

building currently.

On March 19, 2020, we announced that CoSara

Diagnostics, Pvt., our Indian joint venture (“CoSara”), received authorization to begin manufacture and sale of COVID-19

tests in India.

Those tests in India are branded as SaraGene COVID-19 tests and are sold exclusively by CoSara.

Because any commercial

activity in India was severely restricted until May 2020, CoSara was not able to commence the manufacturing and sale of the SaraGene

COVID-19 tests until late in the second quarter, but sales efforts have resulted in CoSara being profitable since the commencement

of sales of the COVID-19 tests.

Although the efforts of CoSara are currently

concentrated in providing the SaraGene COVID-19 test to the Indian market, we are preparing to submit technical files to the CDSCO

requesting approval tests for the human immunodeficiency virus (HIV) and dengue as well as a blood bank panel to increase the number

of tests to be sold in that market.

Molecular diagnostics, such as our tests, are

governed in Europe by the framework for in vitro diagnostics (IVDs), which encompasses diagnostic products such as reagents, instruments

and systems intended for use in diagnosis of disease.

The regulatory system for IVDs is built largely on a self-certification procedure,

placing heavy responsibility on manufacturers.

Non self-certified products are subject to the same standards as self-certified

products but are subject to audit and review by a notified body prior to receiving approval to be CE-marked.

A CE-marking is a

manufacturer’s declaration that a product meets the requirements of the applicable European Commission directive.

of current obligations include having in place a qualitative manufacturing process, user instructions that are clear and fit for

purpose, ensuring that the ‘physical’

features of devices and diagnostics do not pose any danger.

If a product fulfils

these and other related control requirements, it may be CE-marked as an indication that the product is compliant with EU legislation

and sold in the European Union.

We have received CE Marks for four of our tests including COVID-19, tuberculosis, Zika, and our

zika, dengue, chikungunya triplex tests.

We have received ISO 13485 and ISO 9001 certifications

relating to the design and manufacture of our medical device products.

The ISO certification indicates that we meet the standards

required to self-certify certain of our products and affix a CE-marking for sales of our products in countries accepting the CE

marking (not in the United States) with only minimal further governmental approvals and registrations in most countries.

United States

Food and Drug Administration (FDA)

has granted permission for us to export all of our IVD our products.

The FDA’s permission to export was granted under Section

801(e) of the Federal Food, Drug, and Cosmetic Act, as amended (the “FDC Act”).

Section 801(e) of the FDA Act covers

certain medical devices that have not yet received an approved Premarket Approval in the United States by the FDA, such as our

We have not commenced any Premarket Approval steps with the FDA.

801(e) of the FDA Act applies to medical devices that are acceptable to the importing country and that are manufactured under

the FDA’s Good Manufacturing Practices.

We have received Emergency Use Authorization (EUA) for our COVID-19 test, which

allows sales to qualified labs in the United States.

our EUA we are actively marketing our LogixSmart COVID-19 test to CLIA certified laboratories in the United States and the CLIA

labs are able to qualify our LogixSmart test as a Laboratory Developed Test (LDT), a diagnostic test that has been validated for

use in the CLIA lab.

These tests may be used by the lab only in that laboratory.

CLIA laboratories develop the performance characteristics,

perform the analytical validation for their LDT’s and obtain licenses to offer them as diagnostic services.

publicly announced its intention to regulate certain LDTs in a phased-in approach, but draft guidance that was published a couple

of years ago was withdrawn at the end of the Obama administration and replaced by an informal non-enforceable discussion paper

reflecting some of the feedback that it received on LDT regulation.

We are currently marketing to CLIA laboratories throughout

market opportunity for our tests changed radically with the emergence of the COVID-19 pandemic.

Because we were able to respond

rapidly and produce a quality product, we have been able to build a distribution network

that extends to more than 80 countries with over 50 active distributors, most of which have been the sales network that has allowed

us to export products throughout the world.

We believe that after the pandemic is brought under control, the network

of distributors that we have built in these extra-ordinary times will serve us well in sales of other diagnostic tests.

molecular diagnostics market is a fast-growing portion of the in vitro (test tube-based, controlled environment) diagnostics market.

Using estimates of the incidence of disease by the Centers for Disease Control (CDC), the World Health Organization (WHO) and

other international health agencies and sources, the Company estimates that the global annual demand for diagnostic tests are:

resistant Tuberculosis

Transmitted Illnesses

papilloma virus

Section 801(e) of the FDA Act applies to medical devices

that are acceptable to the importing country and that are manufactured under the FDA’s Good Manufacturing Practices.

received Emergency Use Authorization (EUA) for our COVID-19 test, which allows sales to qualified labs in the United States.

Under our EUA we are actively marketing our

LogixSmart COVID-19 test to CLIA certified laboratories in the United States and the CLIA labs are able to qualify our LogixSmart

test as a Laboratory Developed Test (LDT), a diagnostic test that has been validated for use in the CLIA lab.

These tests may be

used by the lab only in that laboratory.

CLIA laboratories develop the performance characteristics, perform the analytical validation

for their LDT’s and obtain licenses to offer them as diagnostic services.

The FDA has publicly announced its intention to

regulate certain LDTs in a phased-in approach, but draft guidance that was published a couple of years ago was withdrawn at the

end of the Obama administration and replaced by an informal non-enforceable discussion paper reflecting some of the feedback that

it received on LDT regulation.

We are currently marketing to CLIA laboratories throughout the US.

Market Opportunity

The market opportunity for our tests changed

radically with the emergence of the COVID-19 pandemic.

Because we were able to respond rapidly and produce a quality product, we

have been able to build a distribution network that extends to more than 80 countries with over 50 active distributors, most of

which have been the sales network that has allowed us to export products throughout the world.

We believe that after the

pandemic is brought under control, the network of distributors that we have built in these extra-ordinary times will serve us well

in sales of other diagnostic tests.

The molecular diagnostics market is a fast-growing

portion of the in vitro (test tube-based, controlled environment) diagnostics market.

Using estimates of the incidence of disease

by the Centers for Disease Control (CDC), the World Health Organization (WHO) and other international health agencies and sources,

the Company estimates that the global annual demand for diagnostic tests are:

Multi-drug resistant Tuberculosis

Sexually Transmitted Illnesses

Human papilloma virus

Total Annual Tests

1,993,680,000

are several advantages of molecular tests, such as the ones we market and sell, over other forms of diagnostic testing.

advantages include higher specificity sensitivities, the ability to perform multiplex tests and the ability to test for

drug resistance or individual genes.

Vector Control Services

response to market demand, we introduced our first diagnostics tests to be used exclusively to test for mosquito borne

pathogens in June 2019.

Municipalities in the US and many other countries in the world are concerned about the diseases carried

by mosquitos and which infect the human population.

To prevent outbreaks of potentially harmful viruses, such as zika or west

nile, from infecting the public the municipalities conduct spraying operations to eliminate the mosquito populations carrying

the diseases.

Because it is too expensive and potentially harmful to the environment to spray all mosquito breeding areas, the

problem is to identify which particular area has mosquitos that are carrying the harmful viruses.

To know where the host mosquitos

with the harmful viruses are located, traps are set, mosquitos collected and then tested to find the areas that most needed spraying.

There are over three thousand mosquito abatement districts throughout the United States and almost all of them conduct testing

to help make the spraying more effective.

first vector related test was a triplex test that tests for west nile, western equine and St.

There are several advantages of molecular tests,

such as the ones we market and sell, over other forms of diagnostic testing.

These advantages include higher specificity sensitivities,

the ability to perform multiplex tests and the ability to test for drug resistance or individual genes.

Mosquito Vector Control Services

In response to market demand, we introduced

our first diagnostics tests to be used exclusively to test for mosquito borne pathogens in June 2019.

Municipalities in the US

and many other countries in the world are concerned about the diseases carried by mosquitos and which infect the human population.

To prevent outbreaks of potentially harmful viruses, such as zika or west nile, from infecting the public the municipalities conduct

spraying operations to eliminate the mosquito populations carrying the diseases.

Because it is too expensive and potentially harmful

to the environment to spray all mosquito breeding areas, the problem is to identify which particular area has mosquitos that are

carrying the harmful viruses.

To know where the host mosquitos with the harmful viruses are located, traps are set, mosquitos collected

and then tested to find the areas that most needed spraying.

There are over three thousand mosquito abatement districts throughout

the United States and almost all of them conduct testing to help make the spraying more effective.

Our first vector related test was a triplex

test that tests for west nile, western equine and St.

Louis encephalitis.

shipping the tests in June 2019.

We added a second test that tests mosquitos for zika, chikungunya and dengue in a triplex

Finally, in November 2019, we completed a test for west nile, eastern equine and St.

Louis encephalitis, specifically

for use in the eastern United States.

As a result, mosquito abatement districts can test for three target viruses in one test

as compared to needing to perform three different tests using other market available PCR tests, which saves our customers money.

Additionally, the districts are more effective because they can get test results in a matter of hours using our product instead

of weeks when they have to wait for a central lab to process the mosquito tests.

have sold our Vector Smart test products and/or related lab equipment to testing districts in in different sections of the country

and are marketing our products through trade shows, electronic and regular mail solicitations and have hired additional sales

personnel in the eastern US to more economically and efficiently market to the east coast areas.

Advantages of Co-Diagnostics

believe that we have the following competitive advantages:

We began shipping the tests in June 2019.

second test that tests mosquitos for zika, chikungunya and dengue in a triplex test.

Finally, in November 2019, we completed a

test for west nile, eastern equine and St.

Louis encephalitis, specifically for use in the eastern United States.

mosquito abatement districts can test for three target viruses in one test as compared to needing to perform three different tests

using other market available PCR tests, which saves our customers money.

Additionally, the districts are more effective because

they can get test results in a matter of hours using our product instead of weeks when they have to wait for a central lab to process

the mosquito tests.

We have sold our Vector Smart test products

and/or related lab equipment to testing districts in different sections of the country and are marketing our products through trade

shows, electronic and regular mail solicitations and have hired additional sales personnel in the eastern US to more economically

and efficiently market to the east coast areas.

Competitive Advantages of Co-Diagnostics

We believe that we have the following

competitive advantages:

Affordability:

2 unchanged sentences

DNA diagnostic testing machines.

These tests are particularly

well suited to the new generation of “lab-on-a-chip”

These tests are particularly well suited to the new generation of “lab-on-a-chip”

and “point-of-care”

(“LOC”

and “POC”),

highly portable analysis machinery for field, clinic and office applications.

and “POC”), highly portable analysis machinery for field, clinic and office applications.

We believe our rapid assay design system software provides shorter time to product release.

This has been demonstrated

with the conception, design, product manufacture, clinical verification and submission for a CE Mark for our Logix Smart coronavirus

disease (COVID-19) test being approximately 30 days.

This has been demonstrated with the conception, design, product manufacture, clinical verification and submission for a CE Mark for our Logix Smart coronavirus disease (COVID-19) test being approximately 30 days.

We believe our tests are more sensitive and specific than competitors’

2 unchanged sentences

We own all patents and all intellectual property used in preparation of our tests.

We project that rising health care costs in developed and developing nations will increasingly require that

health care systems be patient specific to eliminate waste, misdiagnoses, and ineffectiveness.

We believe a critical

component will be accurate, more affordable DNA/RNA-based diagnostics, which we plan to offer.

Personalized Medicine:

We project that rising health care costs in developed and developing nations will increasingly require that health care systems be patient specific to eliminate waste, misdiagnoses, and ineffectiveness.

We believe a critical component will be accurate, more affordable DNA/RNA-based diagnostics, which we plan to offer.

Low-cost Provider :

We plan to keep our overhead low.

Our platform technology obviates the need to pay patent royalties typically

required of our competitors which use patented test platforms to design their tests.

With a dynamic technology that encompasses markets worldwide, we anticipate that we can identify the best

target markets, not only in highly burden developing countries (HBDC’s) but also in developed nations.

Industry Category :

Our platform technology obviates the need to pay patent royalties typically required of our competitors which use patented test platforms to design their tests.

Worldwide Footprint :

With a dynamic technology that encompasses markets worldwide, we anticipate that we can identify the best target markets, not only in highly burden developing countries (HBDC’s) but also in developed nations.

Growth Industry Category :

We believe that DNA/RNA testing is the fastest-growing segment of in-vitro diagnostic testing.

Product Offering :

Our ultra-sensitive tests can be a well-designed match for a new generation of handheld and other

small point-of-care (POC) devices now entering the market.

Used together, these affordable tests and devices may revolutionize

the molecular diagnostics industry in cost, speed of test results and simplification.

Combination Product Offering :

Our ultra-sensitive tests can be a well-designed match for a new generation of handheld and other small point-of-care (POC) devices now entering the market.

Used together, these affordable tests and devices may revolutionize the molecular diagnostics industry in cost, speed of test results and simplification.

Multi-plexing:

Our existing multiplexed tests demonstrate that our CoPrimer designed tests are able to test for multiple targets

in the same sample without the distortion caused by false negatives and false positives that generally occur in multiplexed

Biopsy for Cancer Screening

development of the liquid biopsy test will be expected to spur low cost testing in many developing countries.

that our liquid biopsy cancer screening may be ready for testing in the second quarter of 2021 if we have sufficient development

resources to dedicate to the project.

Medical applications of our SNP detection technology can determine the presence of cancer

cells or cell-free genetic material in a liquid or tissue biopsy, and to determine the distinct type of cancer involved.

example of this includes being able to identify specific mutation(s) in genes linked to breast cancer in order to determine a

patient’s prognosis, initiate the most effective and affordable treatment and to determine whether chemotherapy is necessary.

After diagnosis the relative cost of our technology would allow for frequent testing to measure the effectiveness of the treatment

and thus could be a companion diagnostic for a range of treatments.

technology has for all practical purposes essentially eliminated, primer-dimers, which opens up some very unique applications

for liquid biopsy for cancer detection.

Our ability to multiplex the reaction in testing for several DNA targets allows technicians

to detect multiple cancers as free-circulating DNA fragments or whole cells in a blood sample at the same time

detection is also used in the agricultural industry to identify variations in crop genomes to achieve improved seed viability

and other desired characteristics, including drought resistance, disease resistance, pest resistance and higher yield.

mid-2017, the Company was first approached by a large agribusiness to evaluate our ability to multiplex certain target genomes.

The results of the development project have successfully demonstrated our ability to not only multiplex the target genomes, but

targeted SNP’s as well.

The project was undertaken in conjunction with the manufacturer of our CoPrimer tests.

of the project encouraged the parent of our manufacturer to seek a world-wide licensing arrangement for our CoPrimers in the agricultural

industry, which was completed in October 2018.

Pursuant to the exclusive license for the agronomics industry, the licensee will

pay us a royalty for all CoPrimers sold to the licensee’s customers.

In January 2019, the licensee formally introduced the

product at a large agricultural conference and has branded the product to sell as “BHQ CoPrimers”.

Licensing and Assay Development

addition, the unique properties of our CoPrimer technology make them ideally suited to a variety of applications where sensitivity

is key to optimal results, including multiplexing several targets, enhanced SNP detection and enrichment for next generation

Our licensee for our agricultural testing requested an expansion of our license agreement to include test design

services for their customers and potential customers, both in the infectious disease arena as well as for agricultural customers.

The license was amended in July 2019 and we will derive a license fee from our licensee for its design services.

If any of its

customers desire to commercialize the tests designed, they will need to seek a commercial license directly from us.

these unique characteristics of CoPrimers, research companies and institutions have requested that we design diagnostics to locate

and identify uncommon gene sequences and SNPs and create tests for the target sequences in a multiplexed reaction.

This application

of our technology is in its beginning stages, but we believe that the results from our initial research indicate a significant

step forward in defining the capabilities of our technology, which we believe can be translated to revenue producing licensing

arrangements.

Property Protection

much of our future success and value depends on our proprietary technology, our patent and intellectual property strategy is of

critical importance.

Five of our initial U.S.

Our existing multiplexed tests demonstrate that our CoPrimer designed tests are able to test for multiple targets in the same sample without the distortion caused by false negatives and false positives that generally occur in multiplexed tests.

Liquid Biopsy for Cancer Screening

The development of liquid biopsy tests is expected

to spur low cost testing in many countries.

We believe that our liquid biopsy cancer screening may be ready for testing in the

foreseeable future.

Medical applications of our SNP detection technology can determine the presence of cancer cells or cell-free

genetic material in a liquid or tissue biopsy, and to determine the distinct type of cancer involved.

A real-life example of this

includes being able to identify specific mutation(s) in genes linked to breast cancer in order to determine a patient’s prognosis,

initiate the most effective and affordable treatment and to determine whether chemotherapy is necessary.

After diagnosis the relative

cost of our technology would allow for frequent testing to measure the effectiveness of the treatment and thus could be a companion

diagnostic for a range of treatments.

Our technology has for all practical purposes

essentially eliminated, primer-dimers, which opens up some very unique applications for liquid biopsy for cancer detection.

ability to multiplex the reaction in testing for several DNA targets allows technicians to detect multiple cancers as free-circulating

DNA fragments or whole cells in a blood sample at the same time

Agricultural Applications

SNP detection is also used in the agricultural

industry to identify variations in crop genomes to achieve improved seed viability and other desired characteristics, including

drought resistance, disease resistance, pest resistance and higher yield.

In mid-2017, the Company was first approached

by a large agribusiness to evaluate our ability to multiplex certain target genomes.

The results of the development project have

successfully demonstrated our ability to not only multiplex the target genomes, but targeted SNP’s as well.

The project was

undertaken in conjunction with the manufacturer of our CoPrimer tests.

The results of the project encouraged the parent of our

manufacturer to seek a world-wide licensing arrangement for our CoPrimers in the agricultural industry, which was completed in

October 2018.

Pursuant to the exclusive license for the agronomics industry, the licensee pays us a royalty for all CoPrimers sold

to the licensee’s customers.

In January 2019, the licensee formally introduced the product at a large agricultural conference

and has branded the product under the name “BHQ CoPrimers”.

Additional Licensing and Assay Development

In addition, the unique properties of our CoPrimer

technology make them ideally suited to a variety of applications where sensitivity is key to optimal results, including multiplexing

several targets, enhanced SNP detection and enrichment for next generation sequencing.

Our licensee for our agricultural testing

requested an expansion of our license agreement to include test design services for their customers and potential customers, both

in the infectious disease arena as well as for agricultural customers.

The license was amended in July 2019 and we expect to derive

a license fee from our licensee for its design services.

If any of its customers desire to commercialize the tests designed, they

will need to seek a commercial license directly from us.

Because of these unique characteristics of CoPrimers, research companies

and institutions have requested that we design diagnostics to locate and identify uncommon gene sequences and SNPs and create tests

for the target sequences in a multiplexed reaction.

This application of our technology is in its beginning stages, but we believe

that the results from our initial research indicate a significant step forward in defining the capabilities of our technology,

which we believe can be translated to revenue producing licensing arrangements.

Intellectual Property Protection

Because much of our future success and value

depends on our proprietary technology, our patent and intellectual property strategy is of critical importance.

Five of our initial

patents related to our technology have been granted by the U.S.

Patent and Trademark

Office (PTO), including the patent for our CoPrimer technology, which we consider our most important patent.

One of our patents

has been issued in Great Britain, but is still pending in the United States.

As of July 31, 2020, we had two additional patents

pending in the U.S.

and foreign counterpart applications.

Patent and Trademark Office (PTO), including the patent for

our CoPrimer technology, which we consider our most important patent.

One of our patents has been issued in Great Britain, but

is still pending in the United States.

As of October 2020, we had two additional patents pending in the U.S.

and foreign counterpart

applications.

Two of our issued patents expire in 2034, one in 2036 and one in 2038.

have identified additional applications of the technology, which represent potential patents that further define specific applications

of the processes that are covered by the original patents.

We intend to continue building our intellectual property portfolio

as development continues and resources are available.

have copyrighted our development software that is used by us to develop diagnostic tests based on our technology.

We have allowed

one potential customer access to our development software and intend to sell customized reagents through that customer to labs

serviced by that customer throughout the world.

To date we have not sold any products to that customer.

Company had certain customers which are each responsible for generating 10% or more of the Company’s total revenue

for the three and six months ended June 30, 2020.

These three customers together accounted for approximately 58% and 55%

of the Company’s total revenue for the three and six months ended June 30, 2020, respectively.

These customers

may not account for the same percentage of sales in future periods.

we were to sell nothing to those customers in the future, it would have a material adverse effect on our financial condition unless

we were able to replace those customers with others.

molecular diagnostics industry is extremely competitive.

There are many firms that provide some or all of the products we provide

and provide many diagnostic tests that we have yet to develop.

Many of these competitors are larger than us and have significantly

greater financial resources.

Because we are not established, many of our competitors have a competitive advantage in the diagnostic

testing industry because they also have other lines of business in the pharmaceutical industry from which they derive revenues

and for which they are well known and respected in the medical profession.

We will need to overcome the disadvantage of being

a start up with no history of success and no significant respect from the medical and testing professionals, although this

is changing as we continue to market our LogixSmart COVID-19 tests in the United States to well-known and successful laboratories.

In the diagnostic testing industry, we compete with such companies as BioMerieux, Siemens, Qiagen, and Cepheid and with such pharmaceutical

companies as Abbott Laboratories, Becton Dickinson and Johnson and Johnson.

of these competitors already have an established customer base with industry standard technology, which we must overcome to be

Competition is, and will likely continue to be, particularly intense in the market for COVID-19 diagnostic tests.

companies in the United States and internationally have announced their intention to offer new products, services and technologies

that could be used in substitution for our LogixSmart COVID-19 tests Many of those competitors are significantly larger, and have

substantially greater financial, engineering and other resources, than our company.

Existing and potential competitors in the

market for COVID-19 diagnostic tests include developers of both serological and molecular tests.

We expect competition to continue to increase as other established and emerging companies enter the market, as customer

requirements evolve, and as new products, services and technologies are introduced.

The entrance of new competitors is being encouraged

by governmental authorities, who are offering funding to support development of testing solutions for COVID-19.

For example, on

April 29, 2020, the U.S.

National Institutes of Health announced it would be using a portion of its $1.5 billion in federal stimulus

funding to fund a $500 million national challenge designed to help the agency identify the best candidates for an at-home or point-of-care

test for COVID-19.

Some of our existing or new competitors may have strong relationships with current and potential customers,

including governmental authorities, and, as a result, may be able to respond more quickly to new or changing regulatory requirements,

new or emerging technologies, and changes in customer requirements.

currently employ 37 full-time personnel at our executive offices and lab facilities in Salt Lake City, Utah, and two employees

outside of Utah.

We have engaged independent contractors in India to promote the use of our products and develop outlets for products

and employ the services of independent sales representatives on an “as needed”

the United States, we will be regulated by the U.S.

Federal Drug Administration (FDA) and our products must be approved by the

FDA before we will be allowed to sell our tests in the United States.

However, the FDA granted us an Emergency Use Authorization

(EUA) to manufacture and sell our Logix Smart COVID-19 test to CLIA labs in the United States.

Because our lab is ISO certified,

we are allowed to apply for CE-Marking, which will allow us to sell any CE Marked test in most countries in Europe, South America

We currently have CE Marks issued for our Logix Smart COVID-19 test, tuberculosis test, our zika virus test, and a triplex

test that tests for zika, dengue, and chikungunya simultaneously.

In addition, our Logix Smart COVID-19 has received the license

to manufacture and sell in India from India’s CDSCO and the National Epidemiology Institute in Mexico evaluated our Logix

Smart COVID-19 test and approved it for sale in Mexico.

We are in the process of registering for sale our Logix Smart COVID-19

test in a number of major countries around the world.

Organizational

History and Corporate Information

were incorporated as Co-Diagnostics, Inc.

We have identified additional applications

of the technology, which represent potential patents that further define specific applications of the processes that are covered

by the original patents.

We intend to continue building our intellectual property portfolio as development continues and resources

are available.

We have copyrighted our development software

that is used by us to develop diagnostic tests based on our technology.

We have allowed one potential customer access to our development

software and intend to sell customized reagents through that customer to labs serviced by that customer throughout the world.

date we have not sold any products to that customer.

Major Customers

had certain customers which are each responsible for generating 10% or more of the Company’s total revenue for the three

and nine months ended September 30, 2020.

Three customers together accounted for approximately 64% of total revenue for the three

months ended September 30, 2020 and two customers together accounted for 42% of total revenue for the nine months ended September

These customers may not account for the same percentage of sales in future periods.

If we were to sell nothing

to those customers in the future, it would have a material adverse effect on our financial condition unless we were able to replace

those customers with others.

The molecular diagnostics industry is extremely

There are many firms that provide some or all of the products we provide and provide many diagnostic tests that we

have yet to develop.

Many of these competitors are larger than us and have significantly greater financial resources.

are not established, many of our competitors have a competitive advantage in the diagnostic testing industry because they also

have other lines of business in the pharmaceutical industry from which they derive revenues and for which they are well known and

respected in the medical profession.

We will need to overcome the disadvantage of being a start up with no history of success and

no significant respect from the medical and testing professionals, although this is changing as we continue to market our LogixSmart

COVID-19 tests and other tests in the United States to well-known and successful laboratories.

In the diagnostic testing industry,

we compete with such companies as BioMerieux, Siemens, Qiagen, and Cepheid and with such pharmaceutical companies as Abbott Laboratories,

Becton Dickinson and Johnson and Johnson.

Many of these competitors already have an established

customer base with industry standard technology, which we must overcome to be successful.

Competition is, and will likely continue to

be, particularly intense in the market for COVID-19 diagnostic tests.

Numerous companies in the United States and internationally

have announced their intention to offer new products, services and technologies that could be used in substitution for our LogixSmart

COVID-19 tests.

Many of those competitors are significantly larger, and have substantially greater financial, engineering and other

resources, than our company.

Existing and potential competitors in the market for COVID-19 diagnostic tests include developers

of both serological and molecular tests.

We expect competition to continue to increase

as other established and emerging companies enter the market, as customer requirements evolve, and as new products, services and

technologies are introduced.

The entrance of new competitors is being encouraged by governmental authorities, who are offering

funding to support development of testing solutions for COVID-19.

For example, on April 29, 2020, the U.S.

National Institutes

of Health announced it would be using a portion of its $1.5 billion in federal stimulus funding to fund a $500 million national

challenge designed to help the agency identify the best candidates for an at-home or point-of-care test for COVID-19.

existing or new competitors may have strong relationships with current and potential customers, including governmental authorities,

and, as a result, may be able to respond more quickly to new or changing regulatory requirements, new or emerging technologies,

and changes in customer requirements.

We currently employ 37 full-time personnel

at our executive offices and lab facilities in Salt Lake City, Utah, and two employees outside of Utah.

We have engaged independent

contractors in India to promote the use of our products and develop outlets for products and employ the services of independent

sales representatives on an “as needed”

Government Regulation

In the United States, we will be regulated

Federal Drug Administration (FDA) and our products must be approved by the FDA before we will be allowed to sell our

tests in the United States.

However, the FDA granted us an Emergency Use Authorization (EUA) to manufacture and sell our Logix

Smart COVID-19 test to CLIA labs in the United States.

Because our lab is ISO certified, we are allowed to apply for CE-Marking,

which will allow us to sell any CE Marked test in most countries in Europe, South America and Asia.

We currently have CE Marks

issued for our Logix Smart COVID-19 test, tuberculosis test, our zika virus test, and a triplex test that tests for zika, dengue,

and chikungunya simultaneously.

In addition, our Logix Smart COVID-19 has received the license to manufacture and sell in India

from India’s CDSCO and the National Epidemiology Institute in Mexico evaluated our Logix Smart COVID-19 test and approved

it for sale in Mexico.

We have also received approval to sell in Australia.

We are in the process of registering for sale our Logix

Smart COVID-19 test in a number of major countries around the world.

Organizational History and Corporate Information

We were incorporated as Co-Diagnostics, Inc.

in Utah on April 18, 2013.

Our principal executive office is located at 2401 S.

Drive, Suite D, Salt Lake City, Utah 84109.

Foothill Drive, Suite D, Salt Lake City, Utah 84109.

Our telephone number is (801) 438-1036.

Our website address is http://codiagnostics.com .

The contents of our website are not incorporated by reference in this Quarterly Report.

OF OPERATIONS

of Operations for the Six Months ended June 30, 2020 and 2019

the six months ended June 30, 2020, we generated $25,588,802 of net sales compared to net sales of $64,974 in the six months ended

June 30, 2019.

The increase in sales of $25,523,828 was primarily due to sales of our LogixSmart COVID-19 test due to the

current COVID-19 pandemic.

Of the total sales, $1,782,312 was from the sale of third party manufactured equipment that

we sourced and sold to customers to facilitate usage of our test.

$49,800 of the revenue in 2019 was the result of sales of equipment

and tests to two mosquito abatement districts and the remainder was sales of our test reagents.

the six months ended June 30, 2020, we recorded cost of sales of $8,826,414, of which $7,175,019 was the cost of test reagents

sold and $1,651,395 was the cost of equipment sold.

For the six months ended June 30, 2019, we recorded cost of sales of $39,261

primarily for the cost of equipment included in the sales to mosquito abatement districts.

incurred total operating expenses of $5,505,429 for the six months ended June 30, 2020 compared to total operating expenses of

$2,645,969 for the six months ended June 30, 2019.

The increase in operation expenses was due to the increase in business activities

experienced as a result of the sales increases due to the COVID-19 pandemic.

and administrative expenses increased $2,202,386 from $1,448,132 for the six months ended June 30, 2019 to $3,650,518 for the

six months ended June 30, 2020.

The increase in general and administrative expenses resulted from an increase of $888,572 in other

professional services, and increase of $514,266 in bad debt expense as an allowance for bad debts was established due to the significant

increase in receivables.

Additionally, stock-based compensation expense related to options and warrants increased by $488,920

due to options granted to employees and directors, salaries and related benefits increased by $112,935, attorneys’

fees increased by $54,001 and a 401K contribution of $40,600 was also incurred.

sales and marketing expenses for the six months ended June 30, 2020 were $658,674 compared to sales and marketing expenses of

$508,179 for the six months ended June 30, 2019.

The increase of $150,495 was the result of an increase in salaries and related

benefits of $131,903, an increase of $23,966 in advertising and trade shows, and an increase of $21,600 for a 401K contribution.

These increases were partially offset by a decrease in travel and related expenses of $43,462 as travel was curtailed by the current

research and development expenses increased by $490,376 from $659,896 for the six months ended June 20, 2019 to $1,150,271 for

the six months ended June 30, 2020.

The increase was primarily due to an increase of $193,117 in other profession services related

to development of the capability of freeze drying our COVID-19 test to enable easier international shipping.

In addition, salaries

and related benefits increased $113,946 reflecting additional lab personnel, expenditures for lab supplies increased $89,252,

our 401K contribution increased by $37,800, and the rent for lab space increased $34,929.

the six months ended June 30, 2020, we incurred no interest expense compared to interest expense for the six months ended June

30, 2019 of $28,187.

The decrease of $28,187was the result of having a $2,000,000 loan outstanding during the month of January

2019 for which we incurred $28,187 in interest.

Additionally, we incurred a loss of $78,241 on extinguishment of debt incident

to the payoff of the loan referenced herein.

For the six months ended June 30, 2020 we recorded interest income of $45,748 from

interest on our cash not used in the operations of the business compared to interest income of $20,049 for the six months ending

June 30, 2019

realized net income for the six months ended June 30, 2020 of $11,570,447 compared with a net loss for the six months ended June

30, 2019 of $2,712,785.

The increase in net income of $14,283,232 was primarily the result of sales of our LogixSmart COVID-19

test and resulting margins from those sales.

In addition, we realized income from our Indian joint venture of $267,740 compared

to a loss in the joint venture of $7,000 in the six months ending June 30, 2019 as our joint venture began sales of the Saragene

COVID-19 test after clearance to begin manufacture and sale of the test in India.

The sales in India were primarily made in the

month of June.

three months ended June 30, 2020 compared to the three months ended June 30, 2019

the three months ending June 30, 2020 we generated revenues of $24,040,274 compared to revenues of $61,574 for the three months

ending June 30, 2019.

The revenue in the quarter ending June 30, 2020 primarily represented sales of our LogixSmart COVID-19 test.

Of the total revenue in the three months ending June 30, 2020, $1,676,820 related to the sale of third party manufactured equipment,

which we source and sold to customers to facilitate the sales of our COVID-19 test.

the three months ended June 30, 2020 we recorded costs of revenues of $8,344,674 and for the three months ended June 30, 2019,

we recorded costs of revenues of $38,809.

This increase is due to the increase in revenue in 2020 due to the sale of our LogixSmart

COVID-19 test.

Of the total cost of sale, $1,580,968 was due to equipment that was sold to our customers.

incurred total operating expenses of $3,356,692 for the three months ended June 30, 2020, compared to total operating expenses

of $1,388,529 for the three months ended June 30, 2019.

The increase of $1,968,163 was due primarily to increased general and

administrative costs of $1,383,264, and an increase of $437,659 in our research and development expenses.

The contents of our website are

not incorporated by reference in this Quarterly Report.

RESULTS OF OPERATIONS

The Nine Months Ended September 30, 2020

Compared to the Nine Months Ended September 30, 2019

For the nine months ended September 30, 2020,

we generated $47,407,555 of revenue compared to revenue of $106,408 in the nine months ended September 30, 2019.

The increase in revenue of $47,301,147 was primarily due to sales of our LogixSmart COVID-19 test developed in response

to the current COVID-19 pandemic.

Of the total revenue, $3,239,471 was from the sale of third party manufactured equipment

and supplies that we sourced and sold to customers to facilitate usage of our test.

$63,800 of the revenue in 2019 was the result

of sales of equipment and tests to mosquito abatement districts and the remainder was sales of our test reagents.

Cost of Revenues

For the nine months ended September 30, 2020,

cost of revenues increased by $12,218,700 from $59,626 to $12,278326.

The increase in cost of revenues was due to the significant

increase in revenue discussed above.

Of the total costs of revenues for the nine months ended September 30, 2020, $9,413,497 was

for the cost of test reagents sold and $2,864,829 was the cost of equipment sold.

For the nine months ended September 30, 2019,

we recorded cost of revenues of $59,626, $49,173 of which was for the cost of equipment included in the sales to mosquito abatement

Operating Expenses

We incurred total operating expenses of $9,464,699

for the nine months ended September 30, 2020 compared to total operating expenses of $4,317,125 for the nine months ended September

The increase in operating expenses was primarily due to the increase in business activities experienced as a result of

our increase in revenue.

General and administrative expenses increased

$1,383,265, from $807,769 for the three months ended June 30, 2019 to $2,191,034 for the three months ended June 30, 2020.

increase was primarily the result of an increase of $511,607 in other professional services expense, an increase $483,266 in bad

debt expense reserves and an increase of $175,085 in option and warrant expense.

The increase in option expense was primarily

related to, vesting of options granted in the third quarter of 2019, which had not been outstanding in the second quarter of 2019.

In addition, salaries and other benefits increased $68,421, a contribution to our 401K of $40,600 and attorney fees increased

sales and marketing expenses for the three months ended June 30, 2020 were $390,191, compared to sales and marketing expenses

of $252,076 for the three months ended June 30, 2019.

The increase of $138,115 is due primarily to an increase of $114,394

in salary and related benefits expense and an increase of $21,600 in 401K contributions, an increase of $10,467 in advertising

expense partially offset by a decrease of $30,004 in travel and lodging.

The reduction of travel related expenses was directly

related to a ban on travel due to the coronavirus pandemic.

research and development expenses increased by $437,659, from $312,590 for the three months ended June 30 2019 to $750,249 for

the three months ended June 30, 2020.

The increase was primarily due to an increase of $191,292 in payroll and employee related

expenses resulting from the addition of technical personnel and $196,226 in other professional services related to a development

contract for the freeze drying of our tests to facilitate international shipping.

In addition, lab supplies increased by $56,792

and the 401K contribution for lab employees increased by $37,800.

Income/Expense

the three months ended June 30, 2020 we had total other income of $296,732 compared to a total other income of $21,368 for the

three months ended June 30, 2019.

The increase of $275,364 was due to a gain of $258,559 from our India joint venture compared

to a gain of $1,728 in the same period in 2019 and an increase of $18,533 in interest income in the three months ended June 30,

realized net income for the three months ended June 30, 2020 of $12,635,640, compared with a net loss for the three months

ended June 30, 2019 of $1,344,396.

The income realized was due to the increase in gross profit realized from sales of our LogixSmart

COVID-19 test commencing in March 2020, partially offset by the increase in operating expenses of $1,968,163 as explained

and Capital Resources

is the ability of a company to generate funds to support its current and future operations, satisfy its obligations, and otherwise

operate on an ongoing basis.

Significant factors in the management of liquidity are funds generated by operations, levels of accounts

receivable and accounts payable and capital expenditures.

June 30, 2020, we had cash and cash equivalents of $18,550,437, total current assets of $34,532,279, total current liabilities

of $2,984,642 and total stockholders’

equity of $33,357,493.

We believe that we have sufficient capital to sustain our operations

for the next 12 months.

experienced negative cash flow used in operations during the six months ended June 30, 2020 of $348,459, compared to negative

cash flow used in operations for the six months ended June 30, 2019 of $2,697,691.

The cash generated from operations enabled

us to increase our inventories by $10,030,838 and increase our receivables by $5,742,883.

In addition, we used $1,457,922

of our cash in financing transactions, $714,500 in contributions to our joint venture in India and $205,290 for the purchase of

The negative operating cash flow for the six months ending June 30, 2020 was met by cash reserves received from the

completion of a series of three registered direct offerings in January and February 2020 pursuant to our shelf registration.

received net proceeds of $18,062,083 from those offerings and received $913,465 from the exercise of warrants and options.

we commenced significant sales of our Logix Smart COVID-19 test in March 2020, we have used our cash generated from those sales

to fund the increase in our inventories and receivables and pay our operating expenses.

We have increased our technical staff

to complete development of additional tests to enable us to use our distributor network to sell our other products throughout

The amount of a future operating deficit could occur depending on strategic and other operating decisions, thereby

affecting our need for additional capital.

If needed, we expect additional investment capital to come from (i) additional issuances

of our common stock with existing and new investors and (ii) the private placement of other securities with investors similar

to those that have provided funding in the past.

monthly cash operating expenses, including our technology research and development expenses and interest expense, were approximately

$686,200 per month during the six months ending June 30, 2020.

We completed the registered direct offering described above

in January and February 2020 to fund operations through 2020.

The foregoing estimates, expectations and forward-looking statements

are subject to change as we make strategic operating decisions from time to time and as our expenses fluctuate from period to

date, we have financed our operations through sales of our LogixSmart COVID-19 test and sales of common stock and the issuance

January 30, 2019, we entered into a securities purchase agreement with investors, whereby the investors purchased from the

Company an aggregate of 30,000 shares of Series A Convertible Preferred Stock of the Company for an aggregate purchase price

$3,345,040 from $2,508,895 for the nine months ended September 30, 2019 to $5,853,935 for the nine months ended September 30, 2020.

The increase in general and administrative expenses was primarily due to increased activity to support the growth of our business.

The primary drivers of the increased expenses related to increases in stock-based compensation, employee related expenses and increased

expenses for professional services.

Our sales and marketing expenses for the nine

months ended September 30, 2020 were $1,457,148 compared to sales and marketing expenses of $770,539 for the nine months ended

September 30, 2019.

The increase of $686,609 was primarily a result of increased personnel related expenses, including commissions

paid to our sales team, due to the growth in revenue noted above.

Our research and development expenses increased

by $1,081,237 from $990,923 for the nine months ended September 30, 2019, to $2,072,160 for the nine months ended September 30,

The increase was primarily due to an increase in salaries and related benefits, including stock-based compensation, as we

have added additional employees to our research and development team to increase our product development activities.

Additionally,

there has been an increase in professional and lab services utilized to further help us in our research and product development

Other Income (Expense)

For the nine months ended September 30, 2020,

Other income was $1,092,037 for the nine months ended September 30, 2020 compared to other expense of $190,208 for the nine months

ended September 30, 2019.

The increase in other income of $1,282,245 was primarily related to recording a gain of $1,016,297 from

our India joint venture and incurring no interest expense during 2020 as we have had no debt during the current year.

months ended September 30, 2019 we had recorded a loss $116,876 from our India joint venture and incurred interest expense of $106,437.

We realized net income for the nine months

ended September 30, 2020 of $29,671,348 compared with a net loss for the nine months ended September 30, 2019 of $4,460,551.

increase in net income of $34,131,899 was primarily the result of sales of our LogixSmart COVID-19 test and resulting margins from

those sales offset by increased operating expenses as discussed above.

Additionally, we recorded an income tax benefit of $2,914,781

during the nine months ended September 30, 2020, as a result of releasing our deferred tax asset valuation allowance and recording

a deferred tax asset since we have determined that our net operating losses will be realizable.

The Three Months Ended September 30, 2020

Compared to the Three Months ended September 30, 2019

For the three months ended September 30, 2020

we generated revenue of $21,818,753 compared to revenue of $41,434 for the three months ended September 30, 2019.

in revenue of $21,777,310 was primarily due to sales of our LogixSmart COVID-19 test developed in response to the current COVID-19

Of the total revenue in the three months ended September 30, 2020, $1,457,160 related to the sale of third party manufactured

equipment and consumables, which we sourced and sold to customers to facilitate the sales of our COVID-19 test.

Cost of Revenues

We recorded cost of revenues of $5,821,281

for the three months ended September 30, 2020, compared to $20,365 for the three months ended September 30, 2019.

This increase

is due to the increase in revenue in 2020 due to the sale of our LogixSmart COVID-19 test.

Of the total cost of sales during the

three months ended September 30, 2020, $1,213,434 was from equipment sold to our customers.

We incurred total operating expenses of $3,959,270

for the three months ended September 30, 2020, compared to total operating expenses of $1,671,156 for the three months ended September

The increase in operating expenses was primarily due to the increase in business activities experienced as a result of

our increase in revenue.

General and administrative expenses increased

$1,142,654, from $1,060,763 for the three months ended September 30, 2019 to $2,203,417 for the three months ended September 30,

The increase in general and administrative expenses was primarily due to increased activity to support the growth of our

The primary drivers of the increased expenses related to increases in stock-based compensation, employee related expenses

and increased expenses for professional services.

Our sales and marketing expenses for the three

months ended September 30, 2020 were $798,474, compared to sales and marketing expenses of $262,360 for the three months ended

September 30, 2019.

The increase of $536,114 was primarily a result of increased personnel related expenses, including commissions

paid to our sales team, due to the growth in revenue noted above.

Our research and development expenses increased

by $590,862, from $331,027 for the three months ended September 30, 2019 to $921,889 for the three months ended September 30,

The increase in expenses was primarily due to an increase in salaries and related benefits, including stock-based

compensation, as we have added additional employees to our research and development team to increase our product development activities.

Additionally, there has been an increase in professional and lab services utilized to further help us in our research and product

development activities.

Other Income (Expense)

For the three months ended September 30, 2020

we had total other income of $778,549, compared to total other expenses of $97,679 for the three months ended September 30, 2019.

The increase of $876,228 was due primarily to recording a gain of $748,557 from our India joint venture compared to a loss of $109,876

from our joint venture in the same period in 2019.

We realized net income for the three months

ended September 30, 2020 of $15,731,532, compared with a net loss for the three months ended September 30, 2019 of $1,747,766.

The increase in net income of $17,479,298 was primarily the result of sales of our LogixSmart COVID-19 test and resulting margins

from those sales offset by increased operating expenses as discussed above.

Additionally, we recorded an income tax benefit of

$2,914,781 during the three months ended September 30, 2020, as a result of releasing our deferred tax asset valuation allowance

and recording a deferred tax asset since we have determined that our net operating losses will be realizable.

Liquidity and Capital Resources

At September 30, 2020, we had cash and cash

equivalents of $21,230,362 and marketable investment securities of $6,050,000 that could readily be converted into cash

Additionally, our total current assets of September 30, 2020, were $51,947,184 compared to total current liabilities

of $1,814,453.

The purchase price was paid by the investors with $1 million in cash and the conversion of a $2 million promissory

note issued by the Company to one of the investors.

All of the preferred shares have been converted to common stock.

February 4, 2019, we completed the sale of an aggregate of 3,925,716 shares of common stock, at a purchase price of $1.40

per share in a registered direct offering pursuant the Shelf Registration Statement.

The aggregate gross proceeds for the

sale of the shares were $5,496,002 and we received net proceeds after offering costs of $4,996,322.

January 2020, we sold an aggregate of 3,448,278 shares of common stock to institutional investors for $1.45 per share for

gross proceeds of approximately $5 million pursuant to a shelf-registration statement on Form S-3 (File No:

333-226835) declared

effective by the SEC on September 7, 2018 (the “Shelf Registration Statement”).

February 10, 2020, the Company entered into securities purchase agreements with certain institutional investors pursuant to

which such investors purchased an aggregate of 3,324,676 shares of common stock at a purchase price of $ 3.08 per share in

a registered direct offering pursuant to the Shelf Registration Statement.

The aggregate gross proceeds for the sale of the

shares were approximately $10.2 million.

Net cash provided by operating activities during

the nine months ended September 30, 2020 was $8,207,340, compared to cash used in operating activities of $3,912,850 for the nine

months ended September 30, 2019.

The increase in cash from operating activities was primarily due to our increased revenue offset

by increases in accounts receivable and inventory.

We used $7,070,183 of our cash for investing

activities during the nine months ended September 30, 2020 as compared to $396,466 during the three months ended September 30,

The increase in cash used for investing activities is primarily due to purchasing marketable investment securities, increased

purchases of property and equipment needed to support our increased revenue and additional investment in our India joint venture.

Net cash provided by financing activities was

$19,200,067 for the nine months ended September 30, 2020, compared to $5,903,328 for the same period in the prior year.

is primarily due to net proceeds of $18,062,083 received from a series of three registered direct offerings in January and February

2020 pursuant to our shelf registration in addition to receiving $1,187,984 from the exercise of warrants and options for the nine

months ended September 30, 2020.

Net proceeds of $5,903,238 was received during the nine months ended September 30, 2019 from the

sale of common stock and preferred stock.

Since commencing sales of our Logix Smart COVID-19

test in March 2020, we have used our cash generated from those sales to fund the increase in our inventories and receivables and

pay our operating expenses.

We have increased our work force primarily in the area of research and development to complete development

of additional tests to enable us to use our distributor network to sell other products throughout the world and remain profitable

in the future.

We believe that our existing capital

resources and the cash generated from future sales will be sufficient to meet our projected operating requirements for the

next 12 months.

However, our available capital resources may be consumed more rapidly

than currently expected and we may need or want to raise additional financing for strategic opportunities.

If needed, we

expect additional investment capital to come from (i) additional issuances of our common stock with existing and new

investors or (ii) the private placement of other securities with investors similar to those that have provided funding in the

We may not be able to secure such financing in a timely manner or on favorable terms, if at all.

On October 30, 2020, we filed a Registration

Statement on Form S-3 (File No:

333-249651) with the Securities and Exchange Commission (the “SEC”).

The SEC declared

the Form S-3 effective on November 5, 2020.

Pursuant to a prospectus supplement to the Form S-3, we may offer and sell up to $100

million of the following securities separately or together, in one or more series or classes and in amounts, at prices and on terms

described in one or more offerings:

common stock;

preferred stock;

warrants to purchase our securities, each of which may be convertible

into equity securities;

or units comprised of, or other combinations of, the foregoing securities through underwriting syndicates

managed or co-managed by one or more underwriters or dealers, through agents or directly to purchasers.

Each time our securities

are offered, we will provide a prospectus supplement to the Form S-3 containing more specific information about the particular

Below is a summary of the direct offerings

done in 2020:

In January 2020, we sold an aggregate of 3,448,278 shares of common stock to institutional investors for $1.45 per share for gross proceeds of approximately $5 million pursuant to a shelf-registration statement on Form S-3 (File No:

333-226835) declared effective by the SEC on September 7, 2018 (the “Shelf Registration Statement”).

On February 10, 2020, the Company entered into securities purchase agreements with certain institutional investors pursuant to which such investors purchased an aggregate of 3,324,676 shares of common stock at a purchase price of $ 3.08 per share in a registered direct offering pursuant to the Shelf Registration Statement.

The aggregate gross proceeds for the sale of the shares were approximately $10.2 million.

The closing of the offering occurred on or about February 13, 2020.

February 28, 2020, the Company entered into securities purchase agreements with certain institutional investors pursuant to

which such investors purchased an aggregate of 470,000 shares of common stock at a purchase price of $9.00 per share in a

registered direct offering pursuant to the Shelf Registration Statement.

The aggregate gross proceeds for the sale of the

shares were approximately $4 million.

On February 28, 2020, the Company entered into securities purchase agreements with certain institutional investors pursuant to which such investors purchased an aggregate of 470,000 shares of common stock at a purchase price of $9.00 per share in a registered direct offering pursuant to the Shelf Registration Statement.

The aggregate gross proceeds for the sale of the shares were approximately $4 million.

The closing of the offering occurred on or about February 28, 2020.

March 6, 2020, we received $50,000 in gross proceeds from the exercise of a warrant for

25,000 shares of common stock for $2.00 per share.

the three months ending June 30, 2020, we received $863,465 from the exercise of warrants and stock options.

generated $11,570,447 in net income during the six months ending June 30, 2020 to fund our operations.

amount of our operating income going forward could decrease or increase significantly depending on strategic and other operating

decisions, thereby affecting our need for additional capital.

We have increased our work force and are using the increased technical

staff to complete development on products related to the current pandemic and on products unrelated thereto in an attempt to remain

profitable in the future.

At our current level of operating expenditures, we believe we have sufficient cash to fund operations

for the next 12 months.

Absent a significant acquisition or capital expansion, we do not expect to require additional capital

in the foreseeable future.

long-term liquidity is dependent upon execution of our business model and the commencement of revenue generating activities and

working capital as described above, and upon capital needed for continued commercialization and development of our diagnostic

testing technology.

Sheet Arrangements

have no off-balance sheet arrangements.

Quantitative and Qualitative Disclosures about Market Risk

required under Regulation S-K for “smaller reporting companies.”

The foregoing estimates, expectations and forward-looking

statements are subject to change as we make strategic operating decisions from time to time and as our revenue and expenses fluctuate

from period to period.

Off-Balance Sheet Arrangements

We have no off-balance sheet arrangements.

Quantitative and Qualitative Disclosures

about Market Risk

Not required under Regulation S-K for “smaller

reporting companies.”

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements