Item 1. Business
ITEM
1: BUSINESS
Overview
Co-Diagnostics,
Inc., a Utah corporation (the “Company” or “CODX”), develops, manufactures and sells reagents used for
diagnostic tests that function via the detection and/or analysis of nucleic acid molecules (DNA or RNA), including robust and innovative
molecular tools for detection of infectious diseases, liquid biopsy for cancer screening, and agricultural applications. 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”). We have also developed a unique, groundbreaking portable PCR device (the “CODX YourTest
PCR™ Device”) that has been designed to bring affordable, reliable gold-standard polymerase chain reaction (“PCR”)
to patients in point-of-care and even at-home settings.
Our
diagnostics systems enable dependable, low-cost, molecular testing for organisms and genetic diseases by automating historically complex
procedures in both the development and administration of tests. CODX’s technical advance involves a novel, patented approach
to PCR test design of primer and probe structure (“CoPrimers™”) that eliminates one of the key vexing issues
of PCR amplification, the exponential growth of primer-dimer pairs (false positives and false negatives) which adversely interferes with
identification of the target DNA/RNA.
We
believe our proprietary molecular diagnostics technology is paving the way for innovation in disease detection and life sciences research
through our enhanced detection of genetic material. For various reasons, including owning our own our platform, we believe we will be
able to accomplish this faster and more economically, allowing for significant margins while still positioning the Company to be a low-cost
provider of molecular diagnostics and screening services.
In
addition, continued development has demonstrated the unique properties of our CoPrimer technology that we believe makes it ideally suited
for a variety of applications where specificity is key to optimal results, including multiplexing several targets, enhanced Single Nucleotide
Polymorphism (“SNP”) detection and enrichment for next generation sequencing.
Our
scientists use the complex mathematics of DNA/RNA test design to engineer and optimize DNA/RNA tests and to automate algorithms that
rapidly screen millions of possible options to pinpoint the optimum design. Dr. Brent Satterfield, our founder, developed the Company’s
intellectual property consisting of the predictive mathematical algorithms and patented molecular structure used in the testing process,
which together represent a major advance in PCR testing systems. CODX technologies are now protected by more than 20 granted or pending
US and foreign patents, as well as certain trade secrets and copyrights. Ownership of our proprietary platform permits us the advantage
of avoiding payment of patent royalties required by other PCR test systems, which may allow the sale of diagnostic PCR tests at a lower
price than competitors, while enabling us to maintain profit margins.
We
may either sell or lease the MDx Device to labs and diagnostic centers, through sale or lease agreements, and sell the reagents that
comprise our proprietary tests to those laboratories and testing facilities.
Our
proprietary test design process involves identifying the optimal locations on the target genes for amplification and pair the locations
with the optimized primer and probe structure to achieve outputs that meet the design input requirements identified from market research.
This is done by following planned and documented processes, procedures and testing. In other words, we use the data resulting from our
tests to verify whether we succeeded in designing what we intended at the outset. Verification is a series of testing that concludes
that the product is ready to proceed to validation in an evaluation either in our laboratory or in an independent laboratory setting
using initial production tests to confirm that the product as designed meets the user needs.
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Using
our proprietary test design system and proprietary reagents, we have designed and obtained regulatory approval in the European Community
and/or in India to sell PCR diagnostic tests for the detection of COVID-19, influenza, tuberculosis, hepatitis B and C, human papillomavirus,
malaria, chikungunya, dengue, and the zika virus. In the United States, CODX has obtained Emergency Use Authorization (“EUA”)
for its Logix Smart ™ COVID-19 detection test from the Food and Drug Administration,
or FDA, and sells that test to qualified labs. In addition, our COVID-19 detection test and certain of our other suite of COVID-19 products
have been approved for sale in countries such as the United Kingdom, Australia and Mexico by the regulatory bodies in those countries
and have been registered for sale in many more countries.
In
addition to testing for infectious disease, the technology lends itself to identifying any section of a DNA or RNA strand that describe
any type of genetic trait, which creates a number of significant applications. We, in conjunction with our customers, are active in designing
and licensing tests that identify genetic traits in plant and animal genomes. We also have three multiplexed tests developed to test
mosquitos for the identification of diseases carried by the mosquitos to enable municipalities to concentrate their efforts in managing
mosquito populations on the specific areas known to be breeding the mosquitos that carry deadly viruses.
On
January 23, 2020, we announced the completion of the principal design work for a PCR test for the new coronavirus, later named COVID-19,
intended to address the potential need for detection of the virus. This test features the Company’s patented CoPrimer technology,
and was designed using our proprietary software system, following the guidelines published by the World Health Organization (WHO) and
Centers for Disease Control (CDC).
On
February 24, 2020, we announced that this test had obtained regulatory clearance to be sold as an IVD for the diagnosis of COVID-19 in
markets that accept CE-marking as valid regulatory approval, and became available for purchase from the Company’s Utah-based ISO-13485:2016
certified facility—the first US-based company to obtain such a marking for a COVID-19 test.
We
commenced sales of the COVID-19 tests in February and March of 2020 to international customers and to date have since sold over 30,000,000
of this and other COVID tests in numerous countries around the world through an expanding distributor network.
On
April 6, 2020, we announced that we had received an Emergency Use Authorization from the FDA allowing us to commence sales of our Logix
Smart™ COVID-19 test to laboratories certified by the Center for Medicare and Medicaid Services under the Clinical Laboratories
Improvements Act (“CLIA”) to accept human samples for diagnostics testing throughout the United States and have sold our
Logix Smart™ COVID-19 test to such CLIA labs since that time.
Because
we believe that testing for COVID-19 is going to be a consideration for public health worldwide even after the current pandemic has subsided,
we have initiated the Eikon platform to facilitate frequent testing in homes, schools, businesses, and the hospitality industry. We believe
this may be accomplished through the development of a low-cost testing device, easy to use by non-professionals, that can provide PCR
test results in around 30 minutes. The initial project built on this platform, an at-home and point-of-care COVID-19 PCR test, was ultimately
facilitated by our development of a saliva or nasal swab-based PCR test that does not require the RNA/DNA extraction. While the final
result is believed to be approximately equivalent to those processed by a high-complexity clinical laboratory, it has the advantages
of increased speed and ease of handling thanks to lyophilization (or freeze-drying) of our testing reagents to allow for stability at
room temperatures.
On
February 15, 2021, we engaged the services of a group of professionals at Idaho Molecular, Inc and Advanced Conceptions, Inc (the “Entities,”)
with the expertise to develop the hardware for such a device using our CoPrimers™ as the reagent chemistry. On December
22, 2021, we announced that we would be acquiring the Entities along with all existing and future assets and intellectual property related
to the platform and device. It is expected that the device and test will be available to homes, schools, offices, and the travel industry
among other locations at a cost that will allow screening frequently to prevent spread of the COVID-19 virus in the future. The device
would also be available to test for other pathogens detectable through saliva or other samples as we develop those tests and offer them
to the marketplace. All such tests will be subject to regulatory approval.
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Infectious
Disease Product Offering
Using
our proprietary test design system and proprietary reagents, we and CoSara Diagnostics Pvt Ltd (“CoSara”), our joint venture
for manufacturing in India, design and sell PCR diagnostic tests for detection of diseases and pathogens such as COVID-19, tuberculosis,
hepatitis B and C, malaria, dengue, human papillomavirus, chikungunya, and Zika virus, all of which tests have been designed and verified
in our laboratories. Our tuberculosis test and Zika test received a CE Mark in 2018, and a triplex test for Zika, dengue and chikungunya
received a CE Mark in 2019, qualifying the tests to be sold throughout the European community and in most countries in central and South
America. In December, 2019, CoSara received a license to manufacture and sell tuberculosis, hepatitis B, hepatitis C, human papillomavirus
16/18 and malaria tests in India from the Central Drugs Standard Control Organization (“CDSCO”). In February 2020, we received
a CE Mark for our Logix Smart™ COVID-19 test followed by an Emergency Use Authorization by the FDA a few weeks later, and
in April 2020, our COVID-19 test was approved for manufacture and sale in India by the CDSCO and in Mexico by the INDRE, Mexico’s
equivalent to the United States Center for Disease Control. In August 2020, we received approval from the Australian Department of Health
Therapeutic Goods Division to sell our COVID-19 test in Australia. Other regulatory approvals and registrations followed those listed
here.
As
explained above, our Logix Smart™ COVID-19 test was designed, developed, submitted for regulatory approval and ready to be
used as an IVD in countries that accept a CE Mark as approval for use of the test in a period of just over 30 days. This is a real-world
example of how the CODX technology can be used in an evolving epidemic to get diagnostic tools in the hands of medical professionals
without delay. It can be similarly used to design a test for mutated strains of the virus should they not be detectable using currently
available tests.
Caribbean
and Central and South America
Our
initial sales were to entities located in South and Central America. In some of those countries, there are limited regulatory hurdles
so we started offering our tests immediately. We have applied for and received registrations for our tests in many of those countries
that require registration, and our distributors in those countries have provided us with in country assistance in completing such registrations.
We
first offered our Zika test in this region because of the demand for such a test, followed by tests for tuberculosis, our triplex test
for Zika, chikungunya, and dengue. Sales of those tests have not been material, but with the granting of a CE mark for our Logix Smart™
COVID-19, we began significant sales in this region. Products are manufactured for sale upon receipt of purchase orders from distributors,
labs and hospitals.
India
In
January 2017, the Company entered into an agreement to manufacture diagnostics tests for seven infectious diseases with a pharmaceutical
manufacturing company in India and formed an Indian joint venture organized as CoSara Diagnostics, Pvt Ltd (“CoSara”). The
agreement provided for the construction of a manufacturing plant and the manufacture of the tests named above and the joint sales and
marketing of those tests in India. We have received a license for the plant in Ranoli, India to manufacture approved tests and is being
used for testing and manufacturing of our products for the Indian market.
As
mentioned above, the CDSCO has given us the approval for manufacture and sale of the nine tests referred above and the Company has begun
manufacture and sale of those tests. The Company has commenced a reagent rental program in India with thermocyclers purchased from third-party
vendors and which we refer to as our MDx Device. Each of the reagent rental placements requires the purchase of a minimum number of tests
per month. The placement of thermocyclers in India has facilitated the sale of the SaraGene COVID-19 tests in India. The World Health
Organization (“WHO”) 2019 Global Tuberculosis Report indicates that India is the country with the highest number of cases
of tuberculosis in the world. WHO tuberculosis statistics for India for 2018 give an estimated incidence figure of 2.69 million cases
of tuberculosis for India out of a global incidence of approximately 10.0 million.
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On
March 19, 2020, we announced that CoSara received authorization to begin manufacture and sale of COVID-19 tests in India. Those tests
in India are branded as SaraGene COVID-19 tests and are sold exclusively by CoSara. The Indian government places restrictions on the
price that could be charged for COVID-19 tests which has limited the revenue in India more than we have experienced in other parts of
the world. At the time of this report, CoSara has received CDSCO clearance for RT-PCR tests for Mycobacterium tuberculosis, malaria,
hepatitis B, hepatitis C, human papillomavirus (HPV), two COVID-19 assays, chikungunya, dengue, a dengue/chikungunya duplex test, and
an influenza A/influenza B/COVID-19 (“ABC”) multiplex test.
Europe
Molecular
diagnostics, such as our tests, are governed in Europe by the framework for in vitro diagnostics (IVDs), which encompasses diagnostic
products such as reagents, instruments and systems intended for use in diagnosis of disease. The regulatory system for some IVDs allows
for a self-certification procedure, placing heavy responsibility on manufacturers. Non self-certified products are subject to the same
standards as self-certified products but are also subject to audit and review by a notified body prior to receiving approval to be CE-marked.
A CE-marking is a manufacturer’s declaration that a product meets the requirements of the applicable European Commission directive.
Examples of current obligations include having in place a qualitative manufacturing process, user instructions that are clear and fit
for purpose, and ensuring that the ‘physical’ features of devices and diagnostics do not pose any danger. If a product fulfils
these and other related control requirements, it may be CE-marked as an indication that the product is compliant with EU legislation
and sold in the European Union. We have received CE Marks for six of our tests including for COVID-19, COVID-19 (2 gene test), ABC (a
triplex test for Flu A, Flu B and COVID-19), a DS (Direct Saliva, extraction-free) COVID-19 test, tuberculosis, Zika, and our Zika, dengue,
chikungunya triplex tests.
We
are ISO 13485:2016 certified, relating to the design and manufacture of our medical device products. The ISO certification indicates
that we meet the standards required to self-certify certain of our products and affix a CE-marking for sales of our products in countries
accepting the CE marking (not in the United States) with only minimal further governmental approvals and registrations in most countries.
United
States
The
U.S. Food and Drug Administration (FDA) has granted permission for us to export all of our IVD products. The FDA’s permission to
export was granted under Section 801(e) of the Federal Food, Drug, and Cosmetic Act, as amended (the “FDC Act”). Section
801(e) of the FDA Act covers certain medical devices that have not yet received an approved Premarket Approval in the United States by
the FDA, such as our products. We have not commenced any Premarket Approval steps with the FDA. Section 801(e) of the FDA Act applies
to medical devices that are acceptable to the importing country and that are manufactured under the FDA’s Good Manufacturing Practices.
We have received EUA for our COVID-19 test, which allows sales to qualified labs in the United States.
Under
our EUA, we are actively selling our Logix Smart™ COVID-19 test to CLIA certified laboratories in the United States and
the CLIA labs are able to use our test as it is or further validate our COVID-19 or other tests as Laboratory Developed Tests (LDTs),
which refers to a diagnostic test that has been validated for use in the CLIA lab. LDTs may be used by the lab only in that laboratory.
CLIA laboratories develop the performance characteristics, perform the analytical validation for their LDTs and obtain licenses to offer
them as diagnostic services. The FDA has publicly announced its intention to regulate certain LDTs in a phased-in approach, but draft
guidance that was published a couple of years ago was withdrawn at the end of the Obama administration and replaced by an informal non-enforceable
discussion paper reflecting some of the feedback that it received on LDT regulation. We are currently marketing our Logix Smart™
COVID-19 test to CLIA laboratories throughout the US.
Market
Opportunity
The
market opportunity for our tests changed radically with the emergence of the COVID-19 pandemic. Because we were able to respond rapidly
and produce a quality product, we have been able to build a distribution network that extends to
more than 80 countries with over 50 active distributors, most of which have been the sales network that has allowed us to export products
throughout the world. We believe that after the pandemic is brought under control, the network of distributors that we have built
in these extra-ordinary times will serve us well in sales of other diagnostic tests.
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The
molecular diagnostics market is a fast-growing portion of the in vitro (test tube-based, controlled environment) diagnostics market.
There are several advantages of PCR tests, such as the ones we market and sell, over other forms of diagnostic testing. These advantages
include higher specificity and sensitivity, the ability to perform multiplex tests and the ability to test for drug resistance or for
individual genes.
Mosquito
Vector Control Services
In
response to market demand, we introduced our first diagnostics tests to be used exclusively to test for mosquito borne pathogens in June
2019. Municipalities in the US and many other countries in the world are concerned about the diseases carried by mosquitos and which
infect the human population. To prevent outbreaks of potentially harmful viruses, such as Zika or West Nile, from infecting the public
the municipalities conduct mitigation operations to eliminate the mosquito populations carrying the diseases. Because it is too expensive
and potentially harmful to the environment to spray all mosquito breeding areas, the solution is to identify which particular area has
mosquitos that are carrying the harmful viruses. To know where the host mosquitos with the harmful viruses are located, traps are set,
mosquitos collected and then tested to find the areas that most needed spraying. There are over 3,000 mosquito abatement districts throughout
the United States and almost all of them conduct testing to help make the spraying more effective.
Our
first vector related test was a triplex test that tests for West Nile, western equine and St. Louis encephalitis. We began shipping the
tests in June 2019. We added a second test that tests mosquitos for Zika, chikungunya and dengue in a triplex test. Finally, in November
2019, we completed a test for West Nile, eastern equine and St. Louis encephalitis, specifically for use in the eastern United States.
As a result, mosquito abatement districts can test for three target viruses in one test as compared to performing three different tests
using other market available tests, which saves our customers money. Additionally, the districts are more effective because they can
get test results in a matter of hours using our product instead of weeks when they might otherwise have to wait for a central lab to
process the mosquito tests.
We
have sold our Vector Smart test products and/or related lab equipment to testing districts in different sections of the country and are
marketing our products through trade shows, electronic and regular mail solicitations.
Competitive
Advantages of Co-Diagnostics
We
believe that we have the following competitive advantages:
●
Affordability: Lower-cost
test kits and low-cost MDx-device.
●
Flexibility:
CODX’s tests have been designed to run on many vendors’ DNA/RNA diagnostic testing machines. These tests
are particularly well suited to the new generation of “lab-on-a-chip” and “point-of-care” (“LOC and
POC”), highly portable analysis machinery for field, clinical and office applications.
●
Speed :
We believe our rapid assay design system software provides shorter time to product release. This has been demonstrated with the
conception, design, product manufacture, clinical verification and submission for a CE Mark for our Logix Smart™ coronavirus
disease (COVID-19) test being approximately 30 days.
●
Accuracy :
We believe our technology allows us to build tests that are highly sensitive and specific, the two benchmarks for accuracy in PCR
testing.
●
Personalized
Medicine : We project that rising health care costs in developed and developing nations will increasingly require that health
care systems be patient-specific to eliminate waste, misdiagnoses, and ineffectiveness. A critical component will be accurate,
more affordable DNA-based diagnostics, especially in at-home and POC settings, which we plan to offer.
●
Low-cost Provider :
Our platform technology obviates the need to pay patent royalties typically required of our competitors, which use patented test
platforms to design their tests.
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●
Worldwide Footprint :
With a dynamic technology that encompasses markets worldwide, we anticipate that we can identify the best target markets, not
only in high burden developing countries but also in developed nations.
●
Growth Industry Category :
We believe that DNA/RNA testing is the fastest-growing segment of in-vitro diagnostic testing.
●
Combination
Product Offering : Our sensitive tests can be a well-designed match for a new generation of handheld and other small POC devices
now entering the market, including our own MDx and YourTest PCR™ devices. Used together, these affordable tests and
devices may revolutionize the molecular diagnostics industry in cost, speed of test results and simplification.
●
Multiplexing: Our
existing multiplexed tests demonstrate that our CoPrimer-designed tests are able to test for multiple targets in the same sample
without the distortion caused by false negatives and false positives that often occur in multiplexed tests.
Liquid
Biopsy for Cancer Screening
The
enhanced specificity of our technology opens up some unique applications for liquid biopsy, demonstrating its ability to detect small
quantities of mutations associated with cancer within an environment of large amounts of normal DNA, as we position the Company to take
part in this historic and challenging development in human health care.
Agricultural
Applications
SNP
detection is also used in the agricultural industry to identify variations in crop genomes to achieve improved seed viability and other
desired characteristics, including drought resistance, disease resistance, pest resistance and higher yield.
In
mid-2017, the Company was first approached by a large agribusiness to evaluate our ability to multiplex certain target genomes. The results
of the development project have successfully demonstrated our ability to not only multiplex the target genomes, but targeted SNP’s
as well. The project was undertaken in conjunction with the manufacturer of our CoPrimer tests. The results of the project encouraged
the parent of our manufacturer to seek a world-wide licensing arrangement for our CoPrimers™ in the agricultural industry,
which was completed in October 2018. Pursuant to the exclusive license for the agronomics industry, the licensee pays us a royalty for
all CoPrimers™ sold to the licensee’s customers. In January 2019, the licensee formally introduced the product at
a large agricultural conference and has branded the product under the name “BHQ CoPrimers™”.
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Additional
Licensing and Assay Development
In
addition, the unique properties of our CoPrimer technology make them ideally suited to a variety of applications where sensitivity is
key to optimal results, including multiplexing several targets, enhanced SNP detection and enrichment for next generation sequencing.
Our licensee for our agricultural testing requested an expansion of our license agreement to include test design services for their customers
and potential customers, both in the infectious disease arena as well as for agricultural customers. The license was amended in July
2019 and we expect to derive a license fee from our licensee for its design services. If any of its customers desire to commercialize
the tests designed, they will need to seek a commercial license directly from us. Because of these unique characteristics of CoPrimers™,
research companies and institutions have requested that we design diagnostics to locate and identify uncommon gene sequences and
SNPs and create tests for the target sequences in a multiplexed reaction. This application of our technology is in its beginning stages,
but we believe that the results from our initial research indicate a significant step forward in defining the capabilities of our technology,
which we believe can be translated to revenue producing licensing arrangements.
Intellectual
Property
Because
much of our future success and value depends on our proprietary technology, our patent and intellectual property strategy is of critical
importance. Five of our initial U.S. patents related to our technology have been granted by the U.S. Patent and Trademark Office (PTO),
including the patent for our CoPrimer technology, which we consider our most important patent. One of our patents has been issued in
Great Britain but still pending in the United States, and another has been granted in South Korea. As of March 2022, we have an issued
patent in Great Britain and India on “Rapid Oligo Probes.” We also have an issued patent in the U.S. on “Primers for
Nucleic Acid Extension or Amplification Reactions.” We have another issued patent in the U.S. on “Detection of Primers for
Nucleic Acid Extension or Amplification Reactions.” We have 3 patents issued in the US, as well as patents issued in Australia,
Korea, and Mexico on “Cooperative Primers, Probes, and Applications Thereof.” We have applications pending in Australia,
Canada, Europe, and the U.S. for “Methods and Compositions for Next Generation Sequencing (NGS) Library Preparation.” We
have applications pending in the U.S. and internationally as a PCT application for “Allele-Specific Design of Cooperative Primers
for Improved Nucleic Acid Variant Genotyping.” Lastly, we have a provisional application on file in the U.S. for “Methods
and Compositions Related to Cooperative Primers and Reverse Transcription.
We
have identified additional applications of the technology, which represent potential patents that further define specific applications
of the processes that are covered by the original patents. We intend to continue building our intellectual property portfolio as development
continues and resources are available.
We
have copyrighted our development software that is used by us to develop diagnostic tests based on our technology.
Major
Customers
We
had certain customers which were each responsible for generating 10% or more of our total revenue for the year ended December 31, 2021.
Two customers together accounted for approximately 48% of total revenue for the year ended December 31, 2021. These customers may not
account for the same percentage of sales in future periods. If
we were to sell nothing to those customers in the future, it would have a material adverse effect on our financial condition unless we
were able to replace those customers with others.
Competition
The
molecular diagnostics industry is extremely competitive. There are many firms that provide some or all of the products we provide and
provide many diagnostic tests that we have yet to develop. Many of these competitors are larger than us and have significantly greater
financial resources. Because are more recently established, many of our competitors have a competitive advantage in the diagnostic testing
industry because they also have other lines of business in the pharmaceutical industry from which they derive revenues and for which
they are well known and respected in the medical profession. We will need to overcome the disadvantage of being perceived as a start
up with no significant respect from the medical and testing professionals, although this is changing as we continue to market our Logix
Smart™ COVID-19 tests and other tests in the United States to well-known and successful laboratories. In the diagnostic
testing industry, we compete with such companies as BioMerieux, Siemens, Qiagen, Cue Health, Lumira Dx and Cepheid and with such pharmaceutical
companies as Abbott Laboratories, Becton Dickinson and Johnson and Johnson.
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Many
of these competitors already have an established customer base with industry standard technology, which we must overcome to be successful.
Competition
is, and will likely continue to be, particularly intense in the market for COVID-19 diagnostic tests. Numerous companies in the United
States and internationally have announced their intention to offer new products, services and technologies that could be used in substitution
for our Logix Smart™ COVID-19 tests. Many of those competitors are significantly larger, and have substantially greater
financial, engineering and other resources, than our company. Existing and potential competitors in the market for COVID-19 diagnostic
tests include developers of serological, antigen and molecular tests. We also compete with companies from Asia in certain markets who
are willing to sell their tests for much less than we sell our tests, which creates competitive price pressure on us.
We
expect competition to continue to increase as other established and emerging companies enter the market, as customer requirements evolve,
and as new products, services and technologies are introduced. The entrance of new competitors is being encouraged by governmental authorities,
who are offering funding to support development of testing solutions for COVID-19. Some of our existing or new competitors may have strong
relationships with current and potential customers, including governmental authorities, and, as a result, may be able to respond more
quickly to new or changing regulatory requirements, new or emerging technologies, and changes in customer requirements.
Government
Regulation
In
the United States, we are regulated by the FDA and our products must be approved, cleared, or authorized by the FDA before we are allowed
to sell our tests in the United States as in vitro diagnostics. The FDA granted us an EUA to manufacture and sell our Logix Smart™
COVID-19 test to CLIA labs in the United States. Being ISO certified greatly facilitates our applications for CE-Marking, which allows
us to sell any CE Marked test in most countries in Europe, South America and Asia, depending on the country and following that country’s
registration process. We currently have CE Markings issued for our Logix Smart™ COVID-19 test, tuberculosis test, our Zika
virus test, a triplex test that tests for Zika, dengue, and chikungunya simultaneously, a triplex “ABC” test that identifies
and distinguishes between Flu A, Flu B and Covid-19, our SARS-CoV-2 2-gene multiplex test, and our DS (Direct Saliva, extraction-free)
COVID-19 test. In addition, our Logix Smart™ COVID-19 has received the license to manufacture and sell in India from India’s
CDSCO and the National Epidemiology Institute in Mexico evaluated our Logix Smart™ COVID-19 and ABC tests and approved them
for sale in Mexico. We have also received approval to sell in Australia. We are in the process of registering for sale our Logix Smart™
COVID-19 and other tests in a number of major countries around the world.
Employees
As
of December 31, 2021, we had 101 full-time and part-time employees at our executive offices and lab facilities in Salt Lake City, Utah.
We have engaged independent contractors in India to promote the use of our products and develop outlets for products and employ the services
of independent sales representatives on an “as needed” basis.
Organizational
History and Corporate Information
We
were incorporated as Co-Diagnostics, Inc., in Utah on April 18, 2013. Our principal executive office is located 2401 S. Foothill Drive,
Salt Lake City, Utah 84109. Our telephone number is (801) 438-1036. Our web address is www.codiagnostics.com . The contents of
our website are not incorporated by reference in this Annual Report.
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Implications
of Being an Emerging Growth Company
We
are an “emerging growth company,” as defined in the Jumpstart Our Business Startups Act of 2012. We will remain an emerging
growth company until the earlier of (i) the last day of the fiscal year following the fifth anniversary of July 12, 2017, the date of
the first sale of our common stock pursuant to an effective registration statement under the Securities Act of 1933, as amended (the
“Securities Act”); (ii) the last day of the fiscal year in which we have total annual gross revenues of $1 billion or more;
(iii) the date on which we have issued more than $1 billion in nonconvertible debt during the previous three years; or (iv) the date
on which we are deemed to be a large accelerated filer under applicable SEC rules. We expect that we will remain an emerging growth company
for the foreseeable future, but cannot retain our emerging growth company status indefinitely. We refer to the Jumpstart Our Business
Startups Act of 2012 herein as the “JOBS Act”. For so long as we remain an emerging growth company, we are permitted and
intend to rely on exemptions from specified disclosure requirements that are applicable to other public companies that are not emerging
growth companies. These exemptions include:
●
being
permitted to provide only two years of audited financial statements, in addition to any required unaudited interim financial statements,
with correspondingly reduced “Management’s Discussion and Analysis of Financial Condition and Results of Operations”
disclosure;
●
not
being required to comply with the requirement of auditor attestation of our internal controls over financial reporting;
●
not
being required to comply with any requirement that may be adopted by the Public Company Accounting Oversight Board regarding mandatory
audit firm rotation or a supplement to the auditor’s report providing additional information about the audit and the financial
statements;
●
reduced
disclosure obligations regarding executive compensation; and
●
not
being required to hold a nonbinding advisory vote on executive compensation and shareholder approval of any golden parachute payments
not previously approved.
For
as long as we continue to be an emerging growth company, we expect that we will take advantage of the reduced disclosure obligations
available to us as a result of that classification. Accordingly, the information contained herein may be different than the information
received from other public companies.
An
emerging growth company can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for
complying with new or revised accounting standards. This allows an emerging growth company to delay the adoption of certain accounting
standards until those standards would otherwise apply to private companies. We have irrevocably elected to avail ourselves of this extended
transition period and, as a result, we will not be required to adopt new or revised accounting standards on the dates on which adoption
of such standards is required for other public reporting companies.
We
are also a “smaller reporting company” as defined in Rule 12b-2 of the Securities Exchange Act of 1934, as amended, or the
Exchange Act, and have elected to take advantage of certain of the scaled disclosure available for smaller reporting companies.
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