What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2022-08-11 compared with 2022-05-12 · 110 added, 70 removed, 157 unchanged (53% of the section changed)

67 unchanged sentences

Co-Diagnostics,

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

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

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 are also developing a unique, groundbreaking portable PCR testing platform (the

“Co-Dx PCR home testing platform”) designed to bring affordable, reliable gold-standard polymerase chain reaction (“PCR”)

We are also developing a unique, ground-breaking portable PCR testing platform (the “Co-Dx

PCR home testing platform”) designed to bring affordable, reliable gold-standard polymerase chain reaction (“PCR”)

to patients in point-of-care and even at-home settings.

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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 Co-Dx PCR home testing platform to facilitate frequent testing in homes, schools, businesses, and

the hospitality industry.

we have initiated the Co-Dx PCR home testing platform to facilitate frequent testing in homes, schools, businesses, and the hospitality

We believe this may be accomplished through the development of a low-cost testing device, easy to use by non-professionals,

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On December 31,

2021, we announced that we would be acquiring IdMo and ACI, and on December 31, 2021, we completed the acquisitions, 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.

2021, we completed the acquisitions of IdMO and ACI, 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 frequent screening to reduce the spread of the COVID-19 virus and other contagions 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 prior to commercialization.

OF OPERATIONS

Three Months Ended March 31, 2022 Compared to the Three Months ended March 31, 2021

the three months ended March 31, 2022, we generated revenues of $22,699,044, compared to revenues of $20,024,769 for the three months

ended March 31, 2021.

The increase in revenue of $2,674,275 was primarily due to sales of our Logix Smart™ COVID-19 test developed

Three Months Ended June 30, 2022 Compared to the Three Months ended June 30, 2021

the three months ended June 30, 2022, we generated revenues of $5,023,226, compared to revenues of $27,358,140 for the three months ended

June 30, 2021.

The decrease in revenue of $22,334,914 was primarily due to lower sales of our Logix Smart™ COVID-19 test developed

in response to the current COVID-19 pandemic.

Of the total revenue in the three months ended March 31, 2022, $364,950 related to the

sale of third party manufactured equipment and consumables, which we sourced and sold to customers to facilitate the sales of our COVID-19

test compared to $266,515 of revenue from the sales of such equipment for the three months ended March 31, 2021.

recorded cost of revenues of $3,281,951 for the three months ended March 31, 2022, compared to $3,272,565 for the three months ended

March 31, 2021.

The increase in revenues combined with a reduction of product production costs resulted in improved gross margin.

the total cost of sales during the three months ended March 31, 2022, $374,683 was from equipment sold to our customers compared to $202,636

for equipment sold to customers for the three months ended March 31, 2021.

incurred total operating expenses of $9,592,934 for the three months ended March 31, 2022, compared to total operating expenses of $6,417,303

for the three months ended March 31, 2021.

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

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

in research and development.

sales and marketing expenses for the three months ended March 31, 2022 were $2,652,148, compared to $1,197,546 for the three months ended

March 31, 2021.

The increase was primarily a result of increased third-party sales commissions, advertising and promotional expenses,

including tradeshows and related travel, and increased stock-based compensation due to the growth in revenue.

and administrative expenses decreased from $2,935,689 for the three months ended March 31, 2021 to $2,922,195 for the three months ended

March 31, 2022.

The slight decrease in general and administrative expenses was primarily due to decreased stock-based compensation expense,

Of the total revenue in the three months ended June 30, 2022, $74,989 related to the sale

of third party manufactured equipment and consumables, which we sourced and sold to customers to facilitate the sales of our COVID-19

test compared to $164,470 of revenue from the sales of such equipment for the three months ended June 30, 2021.

recorded cost of revenues of $915,432 for the three months ended June 30, 2022, compared to $2,504,355 for the three months ended June

The decrease in revenues combined with a larger percentage of fixed product production costs resulted in a lower cost of revenues

and gross margin percentage.

Of the total cost of sales during the three months ended June 30, 2022, $88,636 was from equipment sold

to our customers compared to $131,403 for equipment sold to customers for the three months ended June 30, 2021.

incurred total operating expenses of $8,254,832 for the three months ended June 30, 2022, compared to total operating expenses of $13,062,620

for the three months ended June 30, 2021.

The decrease in operating expenses was due to a decrease in business activities experienced

as a result of our decrease in revenue, variable compensation, third party sales commissions reflected in sales and marketing, and a

lower investment in third-party research and development.

sales and marketing expenses for the three months ended June 30, 2022 were $1,472,225, compared to $5,853,313 for the three months ended

June 30, 2021.

The decrease was primarily a result of decreased variable compensation, such as bonuses and commissions, and decreased

third-party sales commissions, partially offset by increased stock-based compensation expense.

and administrative expenses decreased from $2,468,433 for the three months ended June 30, 2021 to $2,468,421 for the three months ended

June 30, 2022.

The slight decrease in general and administrative expenses was primarily due to decreased variable compensation expense,

partially offset by increased activity to support the growth of our business, including increased insurance expense and professional

and advisory fees related to our recent acquisitions.

research and development expenses increased from $2,217,063 for the three months ended March 31, 2021 to $3,771,327 for the three months

ended March 31, 2022.

The primary increase in expenses was a result of increases in personnel expenses related to our acquisitions of

IdMo and ACI on December 31, 2021.

and advisory fees related to our recent acquisitions, as well as increased stock-based compensation expense.

research and development expenses decreased from $4,669,160 for the three months ended June 30, 2021 to $3,889,844 for the three months

ended June 30, 2022.

The primary decrease in expenses was a result of decreased expenditures to third parties related our point-of-care

device development, partially offset by increases in personnel expenses related to our acquisitions of IdMo and ACI on December 31, 2021.

Income (Expense)

the three months ended March 31, 2022 we had total other income of $3,276,523, compared to total other expense of $450,286 for the three

months ended March 31, 2021.

the three months ended June 30, 2022 we had total other income of $719,228, compared to total other income of $139,124 for the three

months ended June 30, 2021.

The increase was due primarily to a change in the fair value of contingent consideration liabilities recorded

in conjunction with the acquisitions of IdMo and ACI.

realized net income for the three months ended March 31, 2022 of $11,714,595, compared with net income for the three months ended March

in conjunction with the acquisitions of IdMo and ACI, partially offset by a loss from our India joint venture.

realized a net loss for the three months ended June 30, 2022 of $2,686,303, compared with net income for the three months ended June

30, 2021 of $9,785,213.

The increase in net income was primarily the result of an increase in operating expenses, offset by an increase

of product revenues and resulting margins from those sales, as well as changes in the fair value of acquisition contingencies.

Additionally,

we recorded income tax expense of $1,386,087 for the three months ended March 31, 2022, compared to $1,985,640 for the three months ended

March 31, 2021.

The decrease in net income was primarily the result of a decrease in revenues, partially offset by a decrease

of operating expenses, as well as changes in the fair value of acquisition contingencies.

Additionally, we recorded an income tax benefit

of $741,507 for the three months ended June 30, 2022, compared to income tax expense of $2,145,076 for the three months ended June 30,

Six Months Ended June 30, 2022 Compared to the Six Months ended June 30, 2021

the six months ended June 30, 2022, we generated revenues of $27,722,270, compared to revenues of $47,382,909 for the six months ended

June 30, 2021.

The decrease in revenue of $19,660,639 was primarily due to lower sales of our Logix Smart™ COVID-19 test developed

in response to the current COVID-19 pandemic.

Of the total revenue in the six months ended June 30, 2022, $438,939 related to the sale

of third party manufactured equipment and consumables, which we sourced and sold to customers to facilitate the sales of our COVID-19

test compared to $430,985 of revenue from the sales of such equipment for the six months ended June 30, 2021.

recorded cost of revenues of $4,197,383 for the six months ended June 30, 2022, compared to $5,776,920 for the six months ended June

The decrease in revenues combined with a larger percentage of fixed product production costs resulted in a lower cost of revenues

and gross margin percentage.

Of the total cost of sales during the six months ended June 30, 2022, $463,318 was from equipment sold to

our customers compared to $334,039 for equipment sold to customers for the six months ended June 30, 2021.

incurred total operating expenses of $17,847,766 for the six months ended June 30, 2022, compared to total operating expenses of $19,479,923

for the six months ended June 30, 2021.

The decrease in operating expenses was due to a decrease in business activities experienced as

a result of our decrease in revenue, variable compensation, third party sales commissions reflected in sales and marketing, and a lower

investment in third-party research and development.

sales and marketing expenses for the six months ended June 30, 2022 were $4,124,373, compared to $7,050,859 for the six months ended

June 30, 2021.

The decrease was primarily a result of decreased variable compensation, such as bonuses and commissions, and decreased

third-party sales commissions, partially offset by increased stock-based compensation expense.

and administrative expenses decreased from $5,404,122 for the six months ended June 30, 2021 to $5,390,616 for the six months ended June

The slight decrease in general and administrative expenses was primarily due to decreased variable compensation expense, partially

offset by increased activity to support the growth of our business, including increased insurance expense and professional and advisory

fees related to our recent acquisitions, as well as increased stock-based compensation expense.

research and development expenses increased from $6,886,223 for the six months ended June 30, 2021 to $7,661,171 for the six months ended

June 30, 2022.

The primary increase in expenses was a result of increases in personnel expenses related to our acquisitions of IdMo and

ACI on December 31, 2021, partially offset by a decrease in third-party research and development investment.

Income (Expense)

the six months ended June 30, 2022 we had total other income of $3,995,751, compared to total other expense of $311,162 for the six months

ended June 30, 2021.

The increase was due primarily to a change in the fair value of contingent consideration liabilities recorded in

conjunction with the acquisitions of IdMo and ACI, partially offset by a loss from our India joint venture.

realized net income for the six months ended June 30, 2022 of $9,028,292, compared with net income for the six months ended June 30,

2021 of $17,684,188.

The decrease in net income was primarily the result of a decrease in revenues, partially offset by a decrease of

operating expenses, as well as changes in the fair value of acquisition contingencies.

Additionally, we recorded income tax expense of

$644,580 for the six months ended June 30, 2022, compared to $4,130,716 for the six months ended June 30, 2021.

and Capital Resources

March 31, 2022, we had cash and cash equivalents of $97,421,739 that could readily be converted into cash if needed.

June 30, 2022, we had cash and cash equivalents of $86,045,405 that could readily be converted into cash if needed.

Additionally, our

total current assets of March 31, 2022, were $125,338,797 compared to total current liabilities of $13,020,695.

cash provided by operating activities during the three months ended March 31, 2022 was $7,805,838, compared to $12,269,955 for the three

months ended March 31, 2021.

The decrease in cash from operating activities was primarily due to increased operating expenses, increases

in inventory, and the effects of non-cash items.

received $858,666 of cash from investing activities during the three months ended March 31, 2022, primarily from maturities of marketable

investments offset by purchases of property and equipment, compared to cash from investing activities of $2,393,244 during the three

months ended March 31, 2021.

cash provided by financing activities was $150,001 for the three months ended March 31, 2022 realized from the exercise of options and

warrants, compared to $148,981 for the same period in the prior year.

total current assets of June 30, 2022, were $114,567,459 compared to total current liabilities of $6,716,136.

cash provided by operating activities during the six months ended June 30, 2022 was $9,460,222, compared to $24,694,101 for the six months

ended June 30, 2021.

The decrease in cash from operating activities was primarily due to decreased revenues, increases in inventory,

and the impact of non-cash items.

used $9,600,444 of cash in investing activities during the six months ended June 30, 2022, primarily from purchases of marketable securities,

offset by maturities of marketable investments and purchases of property and equipment, compared to cash from investing activities of

$2,158,365 during the six months ended June 30, 2021.

cash used in financing activities was $2,421,607 for the six months ended June 30, 2022, compared to net cash provided by financing activities

of $444,899 for the same period in the prior year.

This decrease is due to the repurchase of outstanding common shares during the current

commencing sales of our Logix Smart™ COVID-19 test in March 2020, we have used our cash generated from those sales to fund the

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throughout the world and remain profitable in the future.

In March 2022 our board of directors authorized repurchasing up to $30.0 million

of the company’s outstanding common stock.

We have no obligation to repurchase any shares under the repurchase program and may

suspend or discontinue it at any time without prior notice.

We have not repurchased any of our outstanding common shares under the repurchase

In March 2022 our board of directors authorized the repurchase of up to $30.0

million of the company’s outstanding common stock.

We have no obligation to repurchase any shares under the repurchase program

and may suspend or discontinue it at any time without prior notice.

During the six months ended June 30, 2022 we have repurchased 532,440

outstanding common shares under the repurchase program.

believe that our existing capital resources and the cash generated from future sales will be sufficient to meet our projected operating

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis