What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2022-03-24 compared with 2021-03-25 · 576 added, 404 removed, 246 unchanged (80% of the section changed)

2 unchanged sentences

31, 2021 AND 2020

Report of Independent Registered Public Accounting Firm

Report of Independent Registered Public Accounting Firm (PCAOB ID No.

Balance Sheets

Statements of Operations

Statement of Changes in Stockholders’

Equity (Deficit)

Statement of Changes in Stockholders’ Equity

Statements of Cash Flows

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(the Company) as of December 31, 2021 and 2020, and the related

statements of operations, changes in stockholders’

equity (deficit), and cash flows for each of the years in the two-year

period ended December 31, 2020, and the related notes (collectively referred to as the financial statements).

In our opinion,

the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2020

and 2019 and the results of its operations and its cash flows for each of the years in the two-year period ended December 31,

2020, in conformity with accounting principles generally accepted in the United States of America.

financial statements are the responsibility of the Company’s management.

Our responsibility is to express an opinion on

the Company’s financial statements based on our audits.

We are a public accounting firm registered with the Public Company

Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance

with the U.S.

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the

statements of operations, changes in stockholders’ equity, and cash flows for each of the years in the two-year period

ended December 31, 2021, and the related notes (collectively referred to as the financial statements).

In our opinion, the financial

statements present fairly, in all material respects, the financial position of the Company as of December 31, 2021 and 2020 and the results

of its operations and its cash flows for each of the years in the two-year period ended December 31, 2021, in conformity with accounting

principles generally accepted in the United States of America.

financial statements are the responsibility of the Company’s management.

Our responsibility is to express an opinion on the Company’s

financial statements based on our audits.

We are a public accounting firm registered with the Public Company Accounting Oversight Board

(United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S.

federal securities

laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

conducted our audits in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audit

to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error

The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial

As part of our audits, we are required to obtain an understanding of internal control over financial reporting, but

not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting.

Those standards require that we plan and perform the audit to obtain

reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.

is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.

As part of our audits,

we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion

on the effectiveness of the Company’s internal control over financial reporting.

Accordingly, we express no such opinion.

audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to

error or fraud, and performing procedures that respond to those risks.

Such procedures included examining, on a test basis, evidence

regarding the amounts and disclosures in the financial statements.

Our audits also included evaluating the accounting principles

used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that our audits provide a reasonable basis for our opinion.

audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error

or fraud, and performing procedures that respond to those risks.

Such procedures included examining, on a test basis, evidence regarding

the amounts and disclosures in the financial statements.

Our audits also included evaluating the accounting principles used and significant

estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that our audits

provide a reasonable basis for our opinion.

Lake City, Utah

have served as the Company’s auditor since 2016.

CO-DIAGNOSTICS,

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BALANCE SHEETS

December 31, 2021

December 31, 2020

Current assets

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Prepaid expenses

Deferred tax asset

Note receivable

Total current assets

Property and equipment, net

Intangible assets, net

Investment in joint venture

Liabilities and stockholders’

Deferred tax asset

Note receivable

$ 160,034,282

Liabilities and stockholders’ equity

Current liabilities

Accounts payable

Accrued expenses

Accrued expenses (related party)

Accrued expenses, current

Accrued expenses (related party), current

Contingent consideration liabilities, current

Income taxes payable

Deferred revenue

Total current liabilities

Accrued expenses-long-term (related party)

Long-term liabilities

Income taxes payable

Deferred tax liability

Contingent consideration liabilities

Accrued expenses (related party), noncurrent

Total long-term liabilities

Total liabilities

Commitments and contingencies (Note 14)

Stockholders’

Stockholders’ equity

Convertible preferred stock, $ 0.001 par value;

5,000,000 shares authorized;

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

0 shares issued and outstanding as of December 31, 2021 and December 31, 2020

Common stock, $ 0.001 par value;

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Additional paid-in capital

Accumulated earnings (deficit)

Accumulated earnings

Total stockholders’ equity

Total liabilities and stockholders’ equity

$ 160,034,282

Total stockholders’

Total liabilities and stockholders’

accompanying notes to consolidated financial statements.

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Total operating expenses

Income (loss) from operations

Income from operations

Other income (expense)

Interest income

Interest expense

Gain (loss) on disposition of assets

Loss on disposition of assets

Gain (loss) on equity method investment in joint venture

Total other income (expense)

Income (loss) before income taxes

Income before income taxes

Income tax provision

Net income (loss)

$ (6,195,557 )

Earnings (loss) per common share:

Earnings per common share:

Weighted average shares outstanding:

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AND SUBSIDIARIES

STATEMENT OF CHANGES IN STOCKHOLDERS’

EQUITY (DEFICIT)

Convertible Preferred Stock

Additional Paid-in

Accumulated Earnings

Total Stockholders’

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

Conversion of preferred stock to common

Warrant exercise price reset

Stock-based compensation

STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY

Preferred Stock

Stockholders’

Balance as of December 31, 2019

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Conversion of preferred stock to common

Common stock issued for acquisitions

Common stock issued for acquisitions , shares

Balance as of December 31, 2020

Common stock issued for option exercises

Stock-based compensation expense

Common stock issued for acquisitions

Balance as of December 31, 2021

$ 134,475,098

accompanying notes to consolidated financial statements.

4 unchanged sentences

Cash flows from operating activities

Net income (loss)

$ (6,195,557 )

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

Adjustments to reconcile net income to cash used in operating activities:

Depreciation and amortization

Stock-based compensation expense

Accretion of notes payable discount

Loss (gain) on disposition of assets

Loss (gain) from equity method investment

Bad debt expense

Loss on disposition of assets

Deferred income taxes

Bad debt expense

Changes in assets and liabilities:

Accounts and other receivable

Accounts receivable

( 8,740,851 )

Prepaid and other assets

( 12,960,255 )

Prepaid expenses

( 2,049,095 )

( 7,915,241 )

Deferred revenue

Income taxes payable

Accounts payable and accrued expenses

Net cash provided by (used in) operating activities

Net cash provided by operating activities

Cash flows from investing activities

1 unchanged sentence

Purchases of marketable investment securities

( 9,310,000 )

Proceeds from maturities of marketable investment securities

Investment in joint venture

Net cash used in investing activities

Business combinations, net of cash acquired

Net cash provided by (used in) investing activities

( 5,824,343 )

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

( 1,457,921 )

Net cash provided by financing activities

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Inventory moved to property, plant and equipment

Warrants issued for services

Conversion of preferred stock to common

Conversion of debt for preferred stock

Fair value of common stock issued as consideration for business acquisitions

Fair value of contingent common stock and warrants issued as consideration for business acquisitions

accompanying notes to consolidated financial statements.

5 unchanged sentences

Co-Diagnostics,

Inc., a Utah corporation (the “Company”

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

Inc., a Utah corporation (the “Company” or “CODX”), 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).

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.

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and assumptions that affect the amounts reported in the financial statements and the accompanying notes.

Such estimates include

receivables and other long-lived assets, legal and regulatory contingencies, income taxes, share based arrangements, and others.

These estimates and assumptions are based on management’s best estimates and judgments.

Actual amounts and results could

differ from those estimates.

Such estimates include receivables

and other long-lived assets, legal and regulatory contingencies, income taxes, share based arrangements, and others.

These estimates

and assumptions are based on management’s best estimates and judgments.

Actual amounts and results could differ from those estimates.

of Presentation

accompanying audited consolidated financial statements of Co-Diagnostics, Inc.

and its wholly owned subsidiary have been prepared

to reflect the financial position, results of operations and cash flows of the Company and have been prepared in accordance with

accounting principles generally accepted in the United States of America (“GAAP”).

All intercompany balances and transactions

have been eliminated.

and its wholly owned subsidiaries have been prepared to

reflect the financial position, results of operations and cash flows of the Company and have been prepared in accordance with accounting

principles generally accepted in the United States of America (“GAAP”).

All intercompany balances and transactions have been

2 – Summary of Significant Accounting Policies

Reclassifications

prior year amounts have been reclassified to conform with the current year’s presentation.

These reclassifications have no impact

on the previously reported results.

and Cash Equivalents

and cash equivalents consist of cash on hand, money market funds and highly liquid investments with an original maturity date

of 90 days or less from the date of purchase.

The fair value of cash equivalents approximated their carrying value as of December

31, 2020 and December 31, 2019.

The Company has its cash and cash equivalents with a large

creditworthy financial institution and the balance exceeded federally insured limits.

The Company has not experienced any losses

in such accounts, and management believes the Company is not exposed to any significant credit risk on cash and cash equivalents.

and cash equivalents consist of cash on hand, money market funds and highly liquid investments with an original maturity date of 90 days

or less from the date of purchase.

The fair value of cash equivalents approximated their carrying value as of December 31, 2021 and December

The Company has its cash and cash equivalents with a large creditworthy financial institution

and the balance exceeded federally insured limits.

The Company has not experienced any losses in such accounts, and management believes

the Company is not exposed to any significant credit risk on cash and cash equivalents.

Investment Securities

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

The Company 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

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

The Company determines the

appropriate classification of its marketable investment securities at the time of purchase and reevaluates such designation at each balance

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.

a result, the Company classifies its marketable investment securities, including securities with stated maturities beyond twelve months,

within current assets in the consolidated balance sheets.

Any unrealized gains or losses are immaterial.

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

The Company maintains an

allowance for doubtful accounts for amounts the Company does not expect to collect.

In establishing the required allowance, management

considers historical losses, current market condition, customers’

financial condition, the age of receivables, and current

payment patterns.

The Company maintains an allowance

for doubtful accounts for amounts the Company does not expect to collect.

In establishing the required allowance, management considers

historical losses, current market condition, customers’ financial condition, the age of receivables, and current payment patterns.

Account balances are written off against the allowance once the receivable is deemed uncollectible.

of trade receivables previously written off are recorded when collected.

At December 31, 2020 total accounts receivable was $12,928,633

with an allowance for uncollectable accounts of $791,800 resulting in a net amount of $12,136,833.

At December 31, 2019 total

accounts receivable was $142,382 with an allowance for uncollectable accounts of $11,000 resulting in a net amount of $131,382.

Recoveries of trade receivables previously

written off are recorded when collected.

At December 31, 2021 total accounts receivable was $ 21,508,779 with an allowance for uncollectable

accounts of $ 669,597 resulting in a net amount of $ 20,839,182 .

At December 31, 2020 total accounts receivable was $ 12,928,633 with an

allowance for uncollectable accounts of $ 791,800 resulting in a net amount of $ 12,136,833 .

Equity-Method

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

consolidated balance sheet.

We adjust the carrying value of our investment based on our share of the earnings or losses in the

periods which they are reported by the investee until the carrying amount is zero.

The earnings or losses are included in other

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

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

balance sheet.

We adjust the carrying value of our investment based on our share of the earnings or losses in the periods which they

are reported by the investee until the carrying amount is zero.

The earnings or losses are included in other income (expense) in the

accompanying consolidated statements of operations.

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

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

At December 31, 2020, the Company had $7,995,189 in inventory, of which $598,881

was finished goods and $7,396,308 was raw materials.

At December 31, 2019, the $197,168 of inventory was finished goods.

establishes reserves to reduce low-moving, obsolete, or unusable inventories to their estimated useful or scrap values.

At December 31, 2021, the Company had $ 2,004,169 in inventory, of which $ 983,088 was

finished goods and $ 1,021,081 was raw materials.

At December 31, 2020, the Company had $ 7,995,189 in inventory, of which $ 598,881 was

finished goods and $ 7,396,308 was raw materials.

The Company establishes reserves to reduce low-moving, obsolete, or unusable inventories

to their estimated useful or scrap values.

and Equipment

and equipment are stated at cost less accumulated depreciation and amortization.

Depreciation is provided using the straight-line

method over the estimated useful lives of the property, generally from three to five years.

Repairs and maintenance costs are

expensed as incurred except when such repairs significantly add to the useful life or productive capacity of the asset, in which

case the repairs are capitalized.

Company reviews its long-lived assets, including property and equipment, for impairment whenever an event or change in facts and

circumstances indicates that their carrying amounts may not be recoverable.

Recoverability of these assets is measured by comparing

the carrying amount to the estimated undiscounted future cash flows expected to be generated.

If the carrying amount exceeds the

undiscounted cash flows, the assets are determined to be impaired and an impairment charge is recognized as the amount by which

the carrying amount exceeds fair value.

Depreciation is provided using the straight-line method

over the estimated useful lives of the property, generally from three to five years .

Repairs and maintenance costs are expensed as incurred

except when such repairs significantly add to the useful life or productive capacity of the asset, in which case the repairs are capitalized.

Company reviews its long-lived assets, including property and equipment, for impairment whenever an event or change in facts and circumstances

indicates that their carrying amounts may not be recoverable.

Recoverability of these assets is measured by comparing the carrying amount

to the estimated undiscounted future cash flows expected to be generated.

If the carrying amount exceeds the undiscounted cash flows,

the assets are determined to be impaired and an impairment charge is recognized as the amount by which the carrying amount exceeds fair

estimate the fair value of assets acquired and liabilities assumed in a business combination.

Goodwill as of the acquisition date is

measured as the excess of consideration transferred over the net of the acquisition date fair values of the assets acquired and the liabilities

Such valuations require management to make significant estimates and assumptions, especially with respect to intangible assets.

Management’s estimates of fair value are based upon assumptions believed to be reasonable, but which are inherently uncertain and

unpredictable, and as a result, actual results may differ from estimates.

Company generates revenue from product sales and license sales.

The Company recognizes revenue when all of the following criteria

are satisfied:

The Company recognizes revenue when all of the following criteria are

(i) identification of the promised goods or services in the contract;

(ii) determination of whether the promised

goods or services are performance obligations, including whether they are distinct in the context of the contract;

(iii) measurement

of the transaction price, including the constraint on variable consideration;

(iv) allocation of the transaction price to the

performance obligations;

and (v) recognition of revenue when, or as the Company satisfies each performance obligation.

the criteria above, the Company typically recognizes revenue upon delivery.

(ii) determination of whether the promised goods or

services are performance obligations, including whether they are distinct in the context of the contract;

(iii) measurement of the transaction

price, including the constraint on variable consideration;

(iv) allocation of the transaction price to the performance obligations;

(v) recognition of revenue when, or as the Company satisfies each performance obligation.

Based on the criteria above, the Company typically

recognizes revenue upon delivery.

Company constrains revenue by giving consideration to factors that could otherwise lead to a probable reversal of revenue.

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

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

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

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.

Deferred revenue is recognized as revenue

as the related performance obligations are satisfied.

and Development

and development costs are expensed when incurred.

The Company expensed $3,185,290 and $1,371,433 of research and development costs

for the years ended December 31, 2020 and 2019, respectively.

Company has granted stock-based awards, including restricted stock, stock options, stock warrants and restricted stock units (“RSUs”),

The Company expensed $ 14,961,916 and $ 3,185,290 of research and development costs for

the years ended December 31, 2021 and 2020, respectively.

Company has granted stock-based awards, including restricted stock, stock options, stock warrants and restricted stock units (“RSUs”),

to its employees, certain consultants and members of its board of directors.

The Company records stock-based compensation based

on the grant date fair value of the awards and recognizes the fair value of those awards as expense using the straight-line method

over the requisite service period of the award.

The Company estimates the grant date fair value of stock options using the Black-Scholes

option-pricing model.

When an award is forfeited prior to the vesting date, the Company

recognizes an adjustment for the previously recognized expense in the period of the forfeiture.

The Company records stock-based compensation based on the

grant date fair value of the awards and recognizes the fair value of those awards as expense using the straight-line method over the

requisite service period of the award.

The Company estimates the grant date fair value of stock options using the Black-Scholes option-pricing

When an award is forfeited prior to the vesting date, the Company recognizes an adjustment

for the previously recognized expense in the period of the forfeiture.

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.

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.

The Company 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.

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.

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

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 tax assets.

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.

Income 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.

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

Concentrations

Risk and Significant Customers

Company had certain customers which are each responsible for generating 10% or more of the total revenue for the year ended December

Two customers together accounted for approximately 38% of total revenue for the year ended December 31, 2020.

customers each accounted for more than 10% of accounts receivable at December 31, 2020.

Company had certain customers which are each responsible for generating 10% or more of the total revenue for the years ended December

31, 2021 and 2020.

Two customers together accounted for approximately 48 % and 38 % of total revenue for the years ended December 31, 2021

and 2020, respectively.

customers each accounted for more than 10% of accounts receivable at December 31, 2021 and 2020.

These two customers together accounted

for approximately 48% of accounts receivable at December 31, 2020.

for approximately 66 % and 48 % of accounts receivable at December 31, 2021 and 2020, respectively.

Issued Accounting Standards

time to time, new accounting pronouncements are issued by the Financial Accounting Standards Board (“FASB”) that are

adopted by the Company as of the specified effective date.

If not discussed, management believes that the impact of recently issued

standards, which are not yet effective, will not have a material impact on the Company’s financial statements upon adoption.

an emerging growth company (“EGC”), the Company has elected to take advantage of the benefits of the extended transition

period provided for in Section 7(a)(2)(B) of the Securities Act of 1933, as amended, for complying with new or revised accounting

standards which allows the Company to defer adoption of certain accounting standards until those standards would otherwise apply

to private companies.

time to time, new accounting pronouncements are issued by the Financial Accounting Standards Board (“FASB”) that are adopted

by the Company as of the specified effective date.

If not discussed, management believes that the impact of recently issued standards,

which are not yet effective, will not have a material impact on the Company’s financial statements upon adoption.

an emerging growth company (“EGC”), the Company has elected to take advantage of the benefits of the extended transition

period provided for in Section 7(a)(2)(B) of the Securities Act of 1933, as amended, for complying with new or revised accounting standards

which allows the Company to defer adoption of certain accounting standards until those standards would otherwise apply to private companies.

February 2016, the FASB issued ASU No.

2016-02, Leases (Topic 842), which requires recognition of leased assets and liabilities

on the balance sheet and disclosing key information about leasing arrangements.

This update is effective for annual periods and

interim periods with those periods beginning after December 15, 2021, for public EGC companies like us.

The Company expects to

use the modified retrospective transition method with the option to recognize a cumulative-effect adjustment at the date of adoption.

The Company expects its balance sheet will be impacted as it records right-of-use assets and lease liabilities on its consolidated

balance sheet, but does not expect the adoption of this standard will have a material impact on its consolidated statements of

operations and cash flows.

2016-02, Leases (Topic 842), which requires recognition of leased assets and liabilities on the

balance sheet and disclosing key information about leasing arrangements.

This update is effective for annual periods and interim periods

with those periods beginning after December 15, 2021, for public EGC companies like us.

The Company will use the modified retrospective

transition method with the option to recognize a cumulative-effect adjustment at the date of adoption.

The Company’s balance

sheet will be impacted as it records right-of-use assets and lease liabilities on its consolidated balance sheets, but the Company

does not expect the adoption of this standard will have a material impact on its consolidated statements of operations and cash flows.

June 2016, the FASB issued ASU No.

2016-13, Financial Instruments-Credit Losses (Topic 326) (“ASU 2016-13”), which

requires the measurement and recognition of expected credit losses for certain financial instruments, which includes the Company’s

accounts receivable.

ASU 2016-13 replaces the existing incurred loss impairment model with an expected loss methodology, which will result

in more timely recognition of credit losses.

2016-13, Financial Instruments-Credit Losses (Topic 326) (“ASU 2016-13”), which requires

the measurement and recognition of expected credit losses for certain financial instruments, which includes the Company’s accounts

ASU 2016-13 replaces the existing incurred loss impairment model with an expected loss methodology, which will result in

more timely recognition of credit losses.

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 it upon election on January 1, 2021.

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

for investments, intra-period allocations and interim calculations and adds guidance to reduce complexity in accounting for income

ASU 2019-12 is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15,

early adoption is permitted.

The Company does not believe the adoption of this standard will have a material impact on its

consolidated financial statements and related disclosures.

after December 15, 2021, for public EGC companies.

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 but does not expect the adoption of this standard will have a material impact

on its consolidated financial statements.

3 – Business Combinations

December 31, 2021, the Company completed its acquisition of Advanced Conceptions, Inc.

(“ACI”) and Idaho Molecular Inc.

which were related entities developing, with the Company, an at-home/point-of-care medical diagnostic device.

Upon the completion of

the acquisition, all outstanding ACI and Idaho Molecular common stock was exchanged for approximately 3.2

million shares of the Company’s common

stock and contingent consideration that includes up to approximately 1.4

million shares and approximately 456,000

warrants to purchase shares of the Company’s

common stock.

The contingent consideration is based on the achievement of certain milestones, which include regulatory approval for identified

products, as well as production and net revenue targets.

The purchase consideration also includes a payable to a shareholder of ACI of

In connection with the acquisition, the Company incurred transaction costs of approximately $ 151,000 ,

which is included in general and administrative expenses.

Upon the completion of the acquisition, both ACI and IdMo became 100 %

wholly-owned subsidiaries of the Company .

fair value of assets acquired and liabilities assumed was based on a preliminary valuation, and our estimates and assumptions are subject

to change within the measurement period.

The primary area that remains preliminary relates to the evaluation of certain tax-related items

and potential minor adjustments to the purchase consideration.

The total purchase consideration was allocated to the assets acquired

and liabilities assumed as set forth below:

of Assets and Liabilities assumed

Fair value of common shares issued

Payable to shareholder

Fair value of contingent shares

Fair value of contingent warrants

Total fair value of consideration transferred

Identifiable assets acquired and liabilities assumed

Accounts receivable

Prepaid expenses and other current assets

Property and equipment

Technology - In-process research and development

Non-competition agreements

Accounts payable and accrued other expenses

( 1,069,274 )

Deferred tax liability

( 6,845,587 )

Total identifiable net assets

excess of the purchase price over the net assets acquired was recorded as goodwill.

Goodwill generated from the acquisition is primarily

attributable to assembled workforce and expected growth from future technologies, sales to future customers and buyer specific synergies.

Goodwill will not be amortized but instead will be tested for impairment at least annually and more frequently if certain indicators

of impairment are present.

As a result of the structure of the transaction, the balance of goodwill is not amortizable for tax purposes.

in-process research and development is considered an indefinite-lived intangible until the completion or abandonment of the research

and development activities.

The non-competition agreements are being amortized over a range of 1.5 to 3 years.

the acquisition was completed on December 31, 2021, the acquired entities did not contribute to the net revenues or to the net income

of the Company during the year ended December 31, 2021.

Pro forma revenue and results of operations have not been presented because the

historical results of ACI and IdMo are not material to the Company’s consolidated financial statements in any period presented.

4 – 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

Company measures and records certain financial assets and liabilities 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:

following three levels of inputs are used to measure the fair value of financial assets and liabilities:

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

1 unchanged sentence

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 December 31, 2020 by level within

the fair value hierarchy:

following table summarizes the assets and liabilities measured at fair value on a recurring basis as of December 31, 2021 and December

31, 2020, by level within the fair value hierarchy:

of Fair Value Assets and Liabilities

December 31, 2021

Marketable investment securities:

Certificates of deposit

Marketable securities (certificates of deposit)

Total assets measured at fair value

Contingent consideration - common stock

Contingent consideration - warrants

Total liabilities measured at fair value

December 31, 2020

Marketable securities (certificates of deposit)

Total assets measured at fair value

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

connection with the acquisitions of Idaho Molecular, Inc and Advanced Conceptions, Inc.

on December 31, 2021, the Company recorded a

liability for contingent consideration in the form of shares of common stock and warrants to purchase common stock.

The fair value of

contingent consideration is calculated using a discounted probability weighted valuation model.

Discount rates used in such calculation

are a significant assumption that are not observed in the market, and therefore, the resulting fair value represents a Level 3 measurement.

changes for Level 3 items measured at fair value on a recurring basis are as follows:

of Changes in Fair Value Measurement

Fair value as of December 31, 2020

Contingent considered issued for business acquisitions

Fair value as of December 31, 2021

fair value of the contingent consideration is based on the fair value of the contingent consideration-common stock and contingent consideration-warrants.

The fair value of the contingent consideration-common stock is equal to the probability-adjusted value of the Company’s common

stock as of December 31, 2021.

The fair value of the contingent consideration-warrants is equal to the probability adjusted value of

a call option with terms consistent with the terms of the warrants as of December 31, 2021.

Prior to the probability adjustments,

the warrants were valued based on the following inputs:

of Contingent Consideration Common Stock and Warrants

December 31, 2021

Risk-free rate

Expected term

order to calculate the probability-adjusted value of the contingent consideration-common stock and contingent consideration-warrants,

the Company estimated the probability of achieving certain milestones, which include regulatory approval for identified products, as

well as production and net revenue targets.

The probability of achieving the milestone related to net revenues was estimated using a

Monte Carlo simulation valuation model.

The unobservable significant inputs to the valuation model were as follows:

December 31, 2021

Risk-free rate

Expected term

Weighted-average cost of capital

Revenue discount rate

Equity volatility

Asset volatility

Revenue volatility

Value of Other Financial Instruments

carrying amounts of certain financial instruments, including cash held in banks, accounts receivable, accounts payable, accrued

liabilities, and other liabilities approximate fair value due to their short-term maturities and are excluded from the fair value

tables above.

carrying amounts of certain financial instruments, including cash held in banks, accounts receivable, notes receivable, accounts

payable, accrued liabilities, and other liabilities approximate fair value due to their short-term maturities and are excluded from the

fair value tables above.

5 – Property and Equipment

and equipment, net consisted of the following:

of Property and Equipment

Useful Lives in

Lab equipment

3 unchanged sentences

Fixed assets, net

6 - Goodwill and Intangible Assets

assets, net consisted of the following:

of Intangible Assets

Useful Lives in

In-process research and development

Non-competition agreements

Less accumulated amortization

Intangible assets, net

expected future annual amortization expense of the Company’s intangible assets held as of December 31, 2021 is as follows:

of Future Amortization Expense

Year Ending December 31,

Amortization Expense

Company had goodwill of $14.7 million as of December 31, 2021.

7 - Accrued Expenses

expenses consisted of the following:

of Accrued Expenses

December 31, 2021

December 31, 2020

Payroll liabilities

Distributor commissions

Sales tax payable

Other accrued liabilities

Total accrued expenses

following table sets forth revenue by geographic area:

Summary of Revenue by Geographic Area

Years Ended December 31,

4 unchanged sentences

Rest of World

in the Company’s deferred revenue balance for the year ended December 31, 2020 were as follows:

in the Company’s deferred revenue balance for the years ended December 31, 2021 and 2020 were as follows:

Schedule of Deferred Revenue

Balance as of December 31, 2019

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

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

Increase due to prepayments from customers

Balance as of December 31, 2020

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

Increase due to prepayments from customers

Increase due to note receivable

Decrease due to refunds to customers and application to open balances

Balance as of December 31, 2021

Company expects to perform its performance obligation and recognize the deferred revenue as revenue during the year ended December 31,

Stockholders’

Stock and Preferred Stock

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

share, at a purchase price of $1.45 per share in a registered direct offering.

The aggregate gross proceeds for the sale of the

shares were $5,000,003 and the Company received net proceeds of $4,517,102 after deducting offering costs of $482,901.

February 13, 2020, the Company completed the sale of 3,324,676 shares of the Company’s common stock, par value $0.001 per

share, at a purchase price of $3.08 per share in a registered direct offering.

The aggregate gross proceeds for the sale of the

shares were $10,240,002 and the Company received net proceeds of $9,612,561 after deducting offering costs of $627,441.

March 2, 2020, the Company completed the sale of 470,000 shares of the Company’s common stock, par value $0.001 per share,

at a purchase price of $9.00 per share in a registered direct offering.

9 – Stockholders’ Equity

the year ended December 31, 2021, the Company issued 189,225

shares of common stock upon the exercise of options

and received $ 450,398

in proceeds from the exercises.

the year ended December 31, 2021, the Company issued 5,548 shares of common stock for services provided by third parties primarily related

to investor relations services.

the year ended December 31, 2021, the Company issued 438,502 shares of common stock upon the vest and release of restricted stock units.

the year ended December 31, 2021, the Company issued 4,628,554

shares of common stock related to the acquisitions

of Idaho Molecular, Inc.

and Advanced Conceptions, Inc., 1,390,430

of which are subject to forfeiture in favor

of the Company if certain milestones are not achieved on or before January 1, 2027.

the year ended December 31, 2020, the Company completed the sale of 3,448,278 shares of the Company’s common stock, par value $ 0.001

per share, at a purchase price of $ 1.45 per share in a registered direct offering.

The aggregate gross proceeds for the sale of the shares

were $ 5,000,003 and the Company received net proceeds of $ 4,517,102 after deducting offering costs of $ 482,901 .

the year ended December 31, 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 year ended December 31, 2020, the Company issued 856,660 shares of common stock upon the exercise of warrants and received

the year ended December 31, 2020, the Company issued 871,229 shares of common stock upon the exercise of options and received

the year ended December 31, 2020, the Company issued 83,935 shares of common stock for services provided by third parties primarily

related to investment relations services.

January 2019, we entered into a securities purchase agreement with investors, whereby the investors purchased from the Company

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

The Series A Convertible

Preferred Stock was convertible 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.

the year ended December 31, 2019, 366,667 shares of our common stock were issued for the conversion of 4,400 shares of Series

A Preferred Stock.

February 2019, the Company completed the sale 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 year ended December 31, 2020, the Company completed the sale of 3,324,676 shares of the Company’s common stock, par value $ 0.001

per share, at a purchase price of $ 3.08 per share in a registered direct offering.

The aggregate gross proceeds for the sale of the shares

were $ 10,240,002 and the Company received net proceeds of $ 9,612,561 after deducting offering costs of $ 627,441 .

the year ended December 31, 2019, the Company issued an aggregate of 127,516 shares of common stock for services provided by third

parties primarily related to investment relations services.

the year ended December 31, 2020, the Company completed the sale of 470,000 shares of the Company’s common stock, par value $ 0.001

per share, at a purchase price of $ 9.00 per share in a registered direct offering.

The aggregate gross proceeds for the sale of the shares

were $ 4,230,000 and the Company received net proceeds of $ 3,882,420 after deducting offering costs of $ 347,580 .

the year ended December 31, 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 year ended December 31, 2020, the Company issued 856,660 shares of common stock upon the exercise of warrants and received $ 270,000 .

the year ended December 31, 2020, the Company issued 871,229

shares of common stock upon the exercise of options

and received $ 1,460,600 .

the year ended December 31, 2020, the Company issued 83,935 shares of common stock for services provided by third parties primarily related

to investor relations services.

10 – Earnings per Share

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

ended December 31, 2020 and 2019:

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

31, 2021 and 2020:

Schedule of Basic and Diluted Earnings Per Share

Years Ended December 31,

Net income (loss), as reported

$ (6,195,557 )

Net income, as reported

Weighted average shares, basic

3 unchanged sentences

Diluted earnings per share

options were excluded from the computation of diluted earnings per share for the year ended December 31, 2020, because the effect

would have been anti-dilutive.

a result of incurring a net loss for the year ended December 31, 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 December 31, 2019, consisting of:

(i) 2,021,817 options, (ii) 983,535 warrants and (iii) 2,133,333 for shares of convertible

preferred stock.

the years ended December 31, 2021 and 2020, respectively, potentially dilutive securities of 154,644 and 50,000 were

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

The computation of

diluted earnings per share for the year ended December 31, 2021 also excludes the approximately 1.4 million shares of common stock

and approximately 456,000 warrants to purchase shares of common stock mentioned in Note 3 that are contingent upon the achievement

of certain milestones.

11 – Stock-Based Compensation

1 unchanged sentence

Co-Diagnostics, Inc.

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 3,278,683 at December 31, 2020.

following table summarizes option activity during the year ended December 31, 2020:

Exercise Price

Contractual Life

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 2,095,266 at December 31, 2021.

following table summarizes option activity during the years ended December 31, 2021 and 2020:

Schedule of Option Activity

Number of Options

Weighted Average Exercise Price

Weighted Average Fair Value

Weighted Average Remaining Contractual Life (Years)

Outstanding at December 31, 2019

1 unchanged sentence

Outstanding at December 31, 2020

Forfeited/Cancelled

Outstanding at December 31, 2021

Exercisable at December 31, 2021

total intrinsic value of options exercised during the year ended December 31, 2020 was approximately $11.8 million.

The aggregate

intrinsic value of outstanding options at December 31, 2020 was approximately $7.1 million.

There were 296,667 of unvested options

as of December 31, 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.

total intrinsic value of options exercised during the years ended December 31, 2021 and 2020 was approximately $ 1.3

million and $ 11.8

million, respectively.

The aggregate intrinsic

value of outstanding options at December 31, 2021 and 2020 was approximately $ 7.6

million and $ 7.1

million, respectively.

As of December 31, 2021, there were 16,666

unvested options and $ 78,115

of unrecognized stock-based compensation

expense related to options.

The unrecognized stock-based compensation expense is expected to be recognized over 0.5

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:

The following weighted average

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

Schedule of Fair Value of Options Weighted Average Assumptions

Years Ended December 31,

3 unchanged sentences

Expected dividend yield

of December 31, 2020, there were 296,667 of unvested options and $270,147 of unrecognized stock-based compensation expense related

The unrecognized stock-based compensation expense is expected to be recognized over 1.5 years.

grant date fair value of RSUs 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 awards.

The following table sets

forth the outstanding RSUs and related activity for the year ended December 31, 2020:

grant date fair value of RSUs 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 awards.

The following table sets forth the outstanding

RSUs and related activity for the years ended December 31, 2021 and 2020:

Schedule of Outstanding Restricted Stock Units and Related Activity

Number of RSUs

Weighted Average

Grant Date Fair Value

Outstanding at December 31, 2019

Weighted Average Grant Date Fair Value

Unvested at December 31, 2019

Forfeited/Cancelled

Outstanding at December 31, 2020

of December 31, 2020, there was $5.2 million of unrecognized stock-based compensation expense related to outstanding RSUs which

is expected to be recognized over a weighted-average period of 2.8 years.

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

Unvested at December 31, 2020

Forfeited/Cancelled

Unvested at December 31, 2021

of December 31, 2021, there was $ 11.6 million of unrecognized stock-based compensation expense related to outstanding RSUs which is expected

to be recognized over a weighted-average period of 2.3 years.

Company has issued warrants related to financings, acquisitions 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 the year ended December 31, 2020:

Exercise Price

Contractual Life

The Company 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 the years ended December 31, 2021 and 2020:

Schedule of Warrant Activity

Number of Warrants

Weighted Average Exercise Price

Weighted Average Fair Value

Weighted Average Remaining Contractual Life (Years)

Outstanding at December 31, 2019

1 unchanged sentence

Outstanding at December 31, 2020

intrinsic value of warrants exercised during the year ended December 31, 2020 was approximately $9.7 million.

The aggregate intrinsic

value of outstanding warrants at December 31, 2020 was approximately $523,000.

fair values for the warrants issued were estimated at the date of grant using the Black Scholes model with the following weighted

average assumptions:

Years Ended December 31,

Forfeited/Cancelled

Outstanding at December 31, 2021

intrinsic value of warrants exercised during the years ended December 31, 2021 and 2020 was $ 0 and approximately $ 9.7 million, respectively.

The aggregate intrinsic value of outstanding warrants at December 31, 2021 was approximately $ 497,000 .

warrants are exercisable at December 31, 2021.

As discussed in Note 3 and Note 4, approximately 456,000 warrants to purchase shares of

the Company’s common stock were issued in connection with the acquisition of ACI and IdMo.

The ability to exercise the warrants

is contingent upon the achievement of certain development and revenue milestones on or before January 1, 2027.

There was no unrecognized

stock-based compensation expense related to warrants.

Note 4 for additional information regarding the fair value calculation of the warrants issued during the year ended December 31, 2021.

The fair values for the warrants issued during the year ended December 31, 2020 were estimated at the date of grant using the Black Scholes

model with the following weighted average assumptions:

Schedule of Fair Value of Warrants Assumptions

Year Ended December 31,

Risk-free interest rate

2 unchanged sentences

Expected dividend yield

outstanding warrants are exercisable at December 31, 2020 and there was no unrecognized stock-based compensation expense related

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 year ended December 31, 2020 and there was no unrecognized stock-based compensation expense related to

restricted stock issued.

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 issued 5,548 and 83,935 shares of restricted stock for services during

the years ended December 31, 2021 and 2020, respectively, and there was no unrecognized stock-based compensation expense related to restricted

stock issued.

Compensation Expense

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

Schedule of Recognized Stock-based Compensation Expense

Years Ended December 31,

1 unchanged sentence

Total stock-based compensation expense

12 – Income Taxes

components of the provision for income taxes consists of the following for the years ended December 31, 2021 and 2020:

of Components Income Tax Provision

Year Ended December 31,

2 unchanged sentences

Total income tax expense

income tax provision differs from the amount of income tax determined by applying the U.S.

federal income tax rate to income (loss)

before income taxes for the years ended December 31, 2020 and 2019 due to the following:

reconciliation of income tax expense at the statutory federal income tax rate and income taxes as reflected in the financial statements

is as follows:

of Benefit from Income Taxes and Effective Tax Rates

Year Ended December 31,

Federal income tax benefit at statutory rate

$ (1,610,800 )

State income tax benefit, net of federal tax benefit

Federal income tax expense at statutory rate

State income tax expense, net of federal tax benefit

Permanent differences:

- Foreign derived intangible income deduction

- Stock based compensation

- Other permanent differences

Research and development credits

Change in uncertain tax positions

Change in valuation allowance

Effective income tax rate

deferred tax assets consist of the following components as of December 31, 2021 and 2020:

of Deferred Tax Assets

Deferred tax assets:

3 unchanged sentences

Research and development credits

Net operating loss carryforwards

SEC 179 carry-forwards

Total deferred tax assets

1 unchanged sentence

Property and equipment, net

Intangibles, net

( 6,743,972 )

Total deferred tax liabilities

Net deferred tax assets

( 7,788,365 )

Net deferred tax assets (liabilities)

( 7,228,444 )

Less valuation allowance

Net deferred tax assets

December 31, 2020, the Company had no federal or state net operating loss carryforwards.

At December 31, 2020, the Company had

$750,634 of federal research and development credit carryforward.

This credit has been offset by a liability for unrecognized

tax benefits of $375,317.

If not utilized, the credit will expire beginning in 2036.

At December 31, 2020, the Company had $120,198

of state research and development credit carryforward.

This credit has been offset by a liability for unrecognized tax benefits

If not utilized, the credit will expire beginning in 2032.

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 December 31, 2020, in part because in the current year we 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 taxes are realizable.

It therefore fully reduced its valuation allowance accordingly by $5,161,500.

Topic 740-10-05 requires that the impact of a tax position be 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.

At December 31, 2020, the Company

had a $447,831 liability for unrecognized tax benefits which is fully netted against deferred tax assets for related carryforward

The Company expects no material changes to the liability for unrecognized tax benefits in the next 12 months.

and penalties associated with uncertain tax positions are recorded as a component of income tax expense.

A reconciliation of the

beginning and ending amount of unrecognized benefits is as follows:

Net deferred tax assets (liabilities)

$ ( 7,228,444 )

December 31, 2021, the Company had no federal or state net operating loss carryforwards and no federal or state research and development

credit carryforwards.

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 December 31, 2020, in part because in that year the Company achieved three years of cumulative pre-tax

income, management determined that there was sufficient positive evidence to conclude that it was more likely than not that its deferred

taxes were realizable.

The Company therefore fully reduced its valuation allowance accordingly by $ 5,161,500 .

Topic 740-10-05 requires that the impact of a tax position be 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.

Our unrecognized tax benefit balances included $ 1,067,853

at December 31, 2021 and $ 447,831 at December 31, 2020 of tax positions that, if recognized, would impact our effective tax rate.

Company expects no material changes to the liability for unrecognized tax benefits in the next 12 months.

Interest and penalties associated

with uncertain tax positions are recorded as a component of income tax expense.

A reconciliation of the beginning and ending amount of

unrecognized benefits is as follows:

of Unrecognized Tax Benefits

Unrecognized tax benefits at the beginning of the year

5 unchanged sentences

Company is subject to taxation in the United States and other state jurisdictions.

The tax years from December 31, 2016 through

December 31, 2020 remain open to examination for federal income tax purposes and by the other major taxing jurisdictions to which

the Company is subject.

The tax years from December 31, 2017 through December

31, 2021 remain open to examination for federal income tax purposes and by the other major taxing jurisdictions to which the Company

The Company is not currently under examination by any taxing authority.

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 consolidated financial

statements for the year ended December 31, 2020.

13 – Related Party Transactions

Company acquired the exclusive rights to the CoPrimer technology pursuant to an exclusive license agreement, dated April 2014

(the “Exclusive License Agreement”), between the Company and DNA Logix, Inc., which was assigned to Dr.

Brent Satterfield,

an 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 provided in part that all accrued royalties under the License ceased as of January 1, 2017, and the Company agreed

to pay to Dr.

Satterfield $700,000 of accrued royalties at the rate of $10,000 per month starting in January 2017.

31, 2020, the aggregate balance of this related party liability was $150,000.

Company acquired the exclusive rights to the CoPrimer technology pursuant to an exclusive license agreement, dated April 2014 (the “Exclusive

License Agreement”), between the Company and DNA Logix, Inc., which was assigned to Dr.

Brent Satterfield, an 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 provided in part

that all accrued royalties under the License ceased as of January 1, 2017, and the Company agreed to pay to Dr.

Satterfield $ 700,000

of accrued royalties at the rate of $ 10,000 per month starting in January 2017.

At December 31, 2021, the aggregate balance of this related

party liability was $ 0 .

14 – Commitments and Contingencies

Company’s offices are located at 2401 S.

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

2 unchanged sentences

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 years ended December 31, 2020 and 2019, the Company expensed $311,963 and $175,137, respectively, for

The Company’s future minimum lease payments were as follows as of December 31, 2020:

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

As a result of business acquisitions during the year ended December 31, 2021, the Company also leases additional laboratory and

office space under two month-to-month leases.

For the years ended December 31, 2021 and 2020, the Company expensed $ 346,350 and $ 311,963 ,

respectively, for rent.

The Company’s future minimum lease payments were as follows as of December 31, 2021:

of Future Minimum Lease Payments

Year Ending December 31,

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.

different securities class action complaints were filed in July, September and December 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 estimable.

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.

different securities class action complaints were filed in July, September and December 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

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 estimable.

15 – Subsequent Events

Company evaluated subsequent events pursuant to ACS Topic 855 and determined that there are no additional events that need to

March 2022, the Company’s Board of Directors authorized a share repurchase program that would allow the Company to repurchase up

to $ 30 million of CODX common stock.

The repurchase program does not obligate the Company to acquire any particular amount of common

shares, and the repurchase program may be suspended or discontinued at any time at the Company’s discretion.

The timing and amount

of any share repurchases under the share repurchase program will be determined by Co-Diagnostics’ management at its discretion

based on ongoing assessments of the capital needs of the business, the market price of the Company’s common stock, corporate and

regulatory requirements, and general market conditions.

Share repurchases under the program may be made through a variety of methods,

which may include open market purchases, in block trades, accelerated share repurchase transactions, exchange transactions, the use of

trading plans intended to qualify under Rule 10b5-1 under the Securities Exchange Act of 1934, as amended, or any combination of such

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.

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-K

Item 8. Financial Statements and Supplementary Data