What changed in this filing

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Item 2. Management’s Discussion and Analysis

2021-11-12 compared with 2021-08-12 · 120 added, 117 removed, 153 unchanged (61% of the section changed)

39 unchanged sentences

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;

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.

the results of clinical trials and the regulatory approval process;

ability to acquire in a timely manner the materials necessary to manufacture our products;

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;

and 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.

one or more of these risks or uncertainties materialize, or should the underlying assumptions prove incorrect, actual results may differ

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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”).

Inc., a Utah corporation (the “Company” or “Co-Dx”), 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”).

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

Co-Dx’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

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together represent a major advance in PCR testing systems.

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

Co-Dx technologies are now protected by eight granted or pending US and foreign

patents, as well as certain trade secrets and copyrights.

35 unchanged sentences

OF OPERATIONS

Three Months Ended June 30, 2021 Compared to the Three Months ended June 30, 2020

the three months ended June 30, 2021, we generated revenues of $27,358,140 compared to revenues of $24,040,274 for the three months ended

June 30, 2020.

The increase in revenue of $3,317,866 was primarily due to sales of our LogixSmart COVID-19 test developed in response

to the current COVID-19 pandemic.

Of the total revenue in the three months ended June 30, 2021, $164,470 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 compared

to $1,676,820 of revenue from the sales of such equipment for the three months ended June 30, 2020.

recorded cost of revenues of $2,504,355 for the three months ended June 30, 2021, compared to $5,975,305 for the three months ended June

This decrease is due to a reduction of product production costs, reduction in sales of third-party equipment, which have a

higher cost of sales than tests, and the commission structure of certain sales of tests completed during the period.

Of the total cost

of sales during the three months ended June 30, 2021, $131,403 was from equipment sold to our customers compared to $1,580,968 for equipment

sold to customers for the three months ended June 30, 2020.

incurred total operating expenses of $13,062,620 for the three months ended June 30, 2021, compared to total operating expenses of $3,356,692

for the three months ended June 30, 2020.

The increase in operating expenses was due to the increase in business activities experienced

as a result of our increase in revenue, increased third party sales commissions, reflected in sales and marketing, and increased investment

in research and development.

and administrative expenses increased $277,399, from $2,191,034 for the three months ended June 30, 2020 to $2,468,433 for the three

months ended June 30, 2021.

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 compensation including stock-based compensation,

insurance expense, contributions to retirement plans and increased expenses for professional services.

sales and marketing expenses for the three months ended June 30, 2021 were $5,853,313, compared to $390,191 for the three months ended

June 30, 2020.

The increase of $5,463,122 was primarily a result of increased third-party sales commissions, personnel related expenses,

including commissions paid to our sales team, and increased stock-based compensation due to the growth in revenue.

research and development expenses increased by $3,918,911, from $750,249 for the three months ended June 30, 2020 to $4,669,160 for the

three months ended June 30, 2021.

The primary increase in expenses was research expenditures of greater than $3,500,000 for our point-of-care

device in addition to increases 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.

Three Months Ended September 30, 2021 Compared to the Three Months ended September 30, 2020

the three months ended September 30, 2021, we generated revenues of $30,101,353, compared to revenues of $21,818,753 for the three months

ended September 30, 2020.

The increase in revenue of $8,282,600 was primarily due to sales of our LogixSmart COVID-19 test developed

in response to the current COVID-19 pandemic.

Of the total revenue in the three months ended September 30, 2021, $76,945 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 compared to $1,457,160 of revenue from the sales of such equipment for the three months ended September 30, 2020.

recorded cost of revenues of $3,311,255 for the three months ended September 30, 2021, compared to $5,821,281 for the three months ended

September 30, 2020.

This decrease is due to a reduction of product production costs, reduction in sales of third-party equipment, which

have a higher cost of sales than tests, and the commission structure of certain sales of tests completed during the period.

cost of sales during the three months ended September 30, 2021, $50,563 was from equipment sold to our customers compared to $1,213,434

for equipment sold to customers for the three months ended September 30, 2020.

incurred total operating expenses of $13,159,977 for the three months ended September 30, 2021, compared to total operating expenses

of $3,959,270 for the three months ended September 30, 2020.

The increase in operating expenses was due to the increase in business activities

experienced as a result of our increase in revenue, increased third party sales commissions, reflected in sales and marketing, and increased

investment in research and development.

and administrative expenses increased $716,081, from $2,203,417 for the three months ended September 30, 2020 to $2,919,498 for the three

months ended September 30, 2021.

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 compensation including stock-based

compensation, insurance expense, contributions to retirement plans and increased expenses for professional services.

These increases

were partially offset by a reduction of bad debt expense.

sales and marketing expenses for the three months ended September 30, 2021 were $4,253,091, compared to $798,474 for the three months

ended September 30, 2020.

The increase of $3,454,617 was primarily a result of increased third-party sales commissions, personnel related

expenses, including commissions paid to our sales team, and increased stock-based compensation due to the growth in revenue.

research and development expenses increased by $4,971,461, from $921,889 for the three months ended September 30, 2020 to $5,893,350

for the three months ended September 30, 2021.

The primary increase in expenses was research expenditures of greater than $4,300,000

for our point-of-care device in addition to increases 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.

Income (Expense)

the three months ended June 30, 2021 we had total other income of $139,124, compared to total other income of $296,732 for the three

months ended June 30, 2020.

The decrease was due primarily due to a decreased gain from our India joint venture.

realized net income for the three months ended June 30, 2021 of $9,785,213, compared with a net income for the three months ended June

30, 2020 of $15,005,009.

The decrease in net income of $5,219,796 was primarily the result of an increase in operating expenses, offset

by an increase of product revenues and resulting margins from those sales.

the three months ended September 30, 2021 we had total other expense of $53,561, compared to total other income of $778,549 for the three

months ended September 30, 2020.

The decrease was due primarily to a loss from our India joint venture.

realized net income for the three months ended September 30, 2021 of $11,475,966, compared with net income for the three months ended

September 30, 2020 of $15,731,532.

The decrease in net income of $4,255,566 was primarily the result of an increase in operating expenses,

offset by an increase of product revenues and resulting margins from those sales.

Additionally, we recorded income tax expense of $2,100,594

for the three months ended June 30, 2021.

Six Months Ended June 30, 2021 Compared to the Six Months ended June 30, 2020

the six months ended June 30, 2021, we generated revenues of $47,382,909 compared to revenues of $25,588,802 for the six months ended

June 30, 2020.

The increase in revenue of $21,794,107 was primarily due to sales of our LogixSmart COVID-19 test developed in response

to the current COVID-19 pandemic.

Of the total revenue in the six months ended June 30, 2021, $430,985 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 compared

to $1,782,312 of revenue from the sales of such equipment for the six months ended June 30, 2020.

recorded cost of revenues of $5,776,920 for the six months ended June 30, 2021, compared to $6,457,045 for the six months ended June

This decrease is due to a reduction of product production costs, reduction in sales of third-party equipment, which have a

higher cost of sales than tests, and the commission structure of certain sales of tests completed during the period.

Of the total cost

of sales during the six months ended June 30, 2021, $334,039 was from equipment sold to our customers compared to $1,651,395 for equipment

sold to customers for the six months ended June 30, 2020.

incurred total operating expenses of $19,479,923 for the six months ended June 30, 2021, compared to total operating expenses of $5,505,429

for the six months ended June 30, 2020.

The increase in operating expenses was due to the increase in business activities experienced

as a result of our increase in revenue, increased third party sales commissions, reflected in sales and marketing, and increased investment

in research and development.

and administrative expenses increased $1,753,604, from $3,650,518 for the six months ended June 30, 2020 to $5,404,122 for the six months

ended June 30, 2021.

The primary drivers of the increased expenses related to increases in compensation including stock-based compensation,

insurance expense, contributions to retirement plans and increased expenses for professional services.

sales and marketing expenses for the six months ended June 30, 2021 were $7,050,859, compared to $658,674 for the six months ended June

The increase of $6,392,185 was primarily a result of increased third-party sales commissions, personnel related expenses, including

commissions paid to our sales team, and increased stock-based compensation due to the growth in revenue.

research and development expenses increased by $5,735,952, from $1,150,271 for the six months ended June 30, 2020 to $6,886,223 for the

six months ended June 30, 2021.

The primary increase in expenses was research expenditures of greater than $4,500,000 for our point-of-care

device in addition to increases 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.

for the three months ended September 30, 2021, compared to an income tax benefit of $2,914,781 for the three months ended September 30,

Nine Months Ended September 30, 2021 Compared to the Nine Months ended September 30, 2020

the nine months ended September 30, 2021, we generated revenues of $77,484,262 compared to revenues of $47,407,555 for the nine months

ended September 30, 2020.

The increase in revenue of $30,076,707 was primarily due to sales of our LogixSmart COVID-19 test developed

in response to the current COVID-19 pandemic.

Of the total revenue in the nine months ended September 30, 2021, $507,930 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, compared to $3,239,471 of revenue from the sales of such equipment for the nine months ended September 30, 2020.

recorded cost of revenues of $9,088,175 for the nine months ended September 30, 2021, compared to $12,278,326 for the nine months ended

September 30, 2020.

This decrease is due to a reduction of product production costs, reduction in sales of third-party equipment, which

have a higher cost of sales than tests, and the commission structure of certain sales of tests completed during the period.

cost of sales during the nine months ended September 30, 2021, $384,602 was from equipment sold to our customers compared to $2,864,829

for equipment sold to customers for the nine months ended September 30, 2020.

incurred total operating expenses of $32,639,900 for the nine months ended September 30, 2021, compared to total operating expenses of

$9,464,699 for the nine months ended September 30, 2020.

The increase in operating expenses was due to the increase in business activities

experienced as a result of our increase in revenue, increased third party sales commissions, reflected in sales and marketing, and increased

investment in research and development.

and administrative expenses increased $2,469,685, from $5,853,935 for the nine months ended September 30, 2020 to $8,323,620 for the

nine months ended September 30, 2021.

The primary drivers of the increased expenses related to increases in compensation including stock-based

compensation, insurance expense, contributions to retirement plans and increased expenses for professional services.

These increases

were partially offset by a reduction of bad debt expense.

sales and marketing expenses for the nine months ended September 30, 2021 were $11,303,950, compared to $1,457,148 for the nine months

ended September 30, 2020.

The increase of $9,846,802 was primarily a result of increased third-party sales commissions, personnel related

expenses, including commissions paid to our sales team, and increased stock-based compensation due to the growth in revenue.

research and development expenses increased by $10,707,413, from $2,072,160 for the nine months ended September 30, 2020 to $12,779,573

for the nine months ended September 30, 2021.

The primary increase in expenses was research expenditures of greater than $8,800,000 for

our point-of-care device in addition to increases in compensation 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 lab supplies expense to further help us in our research and product development activities.

Income (Expense)

the six months ended June 30, 2021 we had total other expense of $311,162, compared to total other income of $313,488 for the six months

ended June 30, 2020.

The decrease in other income was due primarily due to recording a loss of $336,348 from our India joint venture

compared to income of $267,740 from our joint venture in the same period in 2020.

realized net income for the six months ended June 30, 2021 of $17,684,188, compared to net income for the six months ended June 30, 2020

the nine months ended September 30, 2021 we had total other expense of $364,723, compared to total other income of $1,092,037 for the

nine months ended September 30, 2020.

The decrease in other income was due primarily due to recording a loss of $401,288 from our India

joint venture compared to income of $1,016,297 from our joint venture in the same period in 2020.

realized net income for the nine months ended September 30, 2021 of $29,160,154, compared to net income for the nine months ended September

30, 2020 of $29,671,348.

The increase in net income of $3,744,372 was primarily the result of sales of our LogixSmart COVID-19 test and resulting

margins from those sales offset by increased operating expenses.

Additionally, we recorded income tax expense of $4,130,716 for the six

months ended June 30, 2021.

The decrease in net income of $511,194 was primarily the result of sales of our LogixSmart COVID-19 test and

resulting margins from those sales offset by increased operating expenses and income taxes.

We recorded income tax expense of $6,231,310

for the nine months ended September 30, 2021, compared to an income tax benefit of $2,914,781 for the nine months ended September 30,

and Capital Resources

June 30, 2021, we had cash and cash equivalents of $70,274,078 and marketable investment securities of $2,109,675 that could readily

September 30, 2021, we had cash and cash equivalents of $82,658,248 and marketable investment securities of $1,251,285 that could readily

be converted into cash if needed.

Additionally, our total current assets of June 30, 2021, were $90,320,358 compared to total current

liabilities of $4,728,903.

cash provided by operating activities during the six months ended June 30, 2021 was $24,694,101, compared to cash used in operating activities

of $348,549 for the six months ended June 30, 2020.

The increase in cash from operating activities was primarily due to our increased

received $2,158,365 of cash from investing activities during the six months ended June 30, 2021 from maturity of marketable investments

and repayment of advances from our India joint venture as compared use of cash of $919,790 during the six months ended June 30, 2020.

cash provided by financing activities was $444,899 for the six months ended June 30, 2021 realized from the exercise of options, compared

to $18,925,548 for the same period in the prior year.

The decrease is primarily due to net proceeds of $18,012,083 received from a series

of three registered direct offerings in January and February 2020 pursuant to our shelf registration in addition to receiving $50,000

from the exercise of warrants and options for the six months ended June 30, 2020.

Additionally, our total current assets of September 30, 2021, were $102,287,152 compared to

total current liabilities of $4,119,897.

cash provided by operating activities during the nine months ended September 30, 2021 was $36,202,945, compared to $8,207,340 for the

nine months ended September 30, 2020.

The increase in cash from operating activities was primarily due to our increased revenue.

received $3,028,192 of cash from investing activities during the nine months ended September 30, 2021 from maturity of marketable investments

and repayment of advances from our India joint venture as compared to use of cash of $7,070,183 during the nine months ended September

cash provided by financing activities was $450,398 for the nine months ended September 30, 2021 realized from the exercise of options,

compared to $19,200,067 for the same period in the prior year.

The decrease is primarily due to net proceeds of $18,012,083 received

from a series of three registered direct offerings in January and February 2020 pursuant to our shelf registration in addition to receiving

$50,000 from the exercise of warrants and options for the nine months ended September 30, 2020.

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

32 unchanged sentences

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 2. Management’s Discussion and Analysis