What changed in this filing

/stocks — the workspaceLOADING

Item 3. Legal Proceedings

2023-03-16 compared with 2022-03-24 · 143 added, 34 removed, 2 unchanged (99% of the section changed)

LEGAL PROCEEDINGS

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

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

The Plaintiff, Gelt Trading, Ltd., a Cayman Islands limited company, demands compensatory damages sustained as a result of our alleged

wrongdoing in an amount to be proven at trial.

We will vigorously defend this action as we do not believe it has any merit.

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

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

The Plaintiff, Fernando Hernandez demands compensatory damages sustained as a result of our alleged wrongdoing in an amount to be proven

We will vigorously defend this action as we do not believe it has any merit.

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

and the directors harmed the Company by promulgating false and misleading press releases to increase the price of our stock to improperly

benefit the officers and directors of the Company.

The Plaintiff, Luis Aguliera, on behalf of Co-Diagnostics, Inc.

seeks damages from

the individual defendants and attorneys’ fees.

We will vigorously defend this as we do not believe it has any merit.

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

and the directors harmed the Company by promulgating false and misleading press releases to increase the price of our stock to improperly

benefit the officers and directors of the Company.

The Plaintiff, Melvyn Klein, on behalf of Co-Diagnostics, Inc.

seeks damages from

the individual defendants and attorneys’ fees.

We will vigorously defend this as we do not believe it has any merit.

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

and the directors harmed the Company by promulgating false and misleading press releases to increase the price of our stock to improperly

benefit the officers and directors of the Company.

The Plaintiff, Mathew Wallace, on behalf of Co-Diagnostics, Inc.

seeks damages from

the individual defendants and attorneys’ fees.

We will vigorously defend this as we do not believe it has any merit.

time to time, we may become involved in litigation relating to claims arising out of our operations in the normal course of business.

Although we have received inquiries from FINRA, NASDAQ and the SEC, to which we have responded, to the best of our knowledge, no governmental

authority is contemplating any proceeding to which we are a party or to which any of our properties or businesses are subject, which

would reasonably be likely to have a material adverse effect on the Company.

the ordinary course of business, we are at times subject to various legal proceedings and disputes, including the proceedings specifically

discussed below.

We assess our liabilities and contingencies in connection with outstanding legal proceedings utilizing the latest information

Where it is probable that we will incur a loss and the amount of the loss can be reasonably estimated, we record a liability

in our consolidated financial statements.

These legal reserves may be increased or decreased to reflect any relevant developments on

a quarterly basis.

Where a loss is not probable or the amount of loss is not estimable, we do not accrue legal reserves.

While the outcome

of legal proceedings is inherently uncertain, based on information currently available and available insurance coverage, our management

believes that it has established appropriate legal reserves.

Any incremental liabilities arising from pending legal proceedings are not

expected to have a material adverse effect on our consolidated financial position, consolidated results of operations, or consolidated

However, it is possible that the ultimate resolution of these matters, if unfavorable, may be material to our consolidated

financial position, consolidated results of operations, or consolidated cash flows.

Actions and Shareholder Derivative Suits

Securities Class Action (District of Utah)

June 15, 2020, Gelt Trading Co.

(“Gelt”) filed a lawsuit in the United States District Court for the District of Utah (“District

of Utah”), against the Company and certain of our directors and officers, on behalf of itself and a putative class, seeking to

recover damages for alleged violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 (“Gelt Litigation”).

The complaint alleges that Co-Diagnostics and the individual defendants overstated the accuracy of the Company’s Logix Smart COVID-19

test in statements on April 30, 2020 and May 1, 2020, and that plaintiff suffered losses when the Company’s stock price dropped

after public reports questioned the accuracy of the Logix Smart test on May 14, 2020.

On July 15, 2020, plaintiff filed an amended complaint.

On March 10, 2021, the court appointed Gelt as Lead Plaintiff, and on April 7, 2021, Lead Plaintiff filed a second amended complaint

(“SAC”), which asserts the same Sections 10(b) and 20(a) claims against the same defendants on largely the same theory.

May 5, 2021, the defendants moved to dismiss the SAC.

On March 9, 2022, the court entered a Decision & Order denying the motion to

dismiss, and on April 13, 2022, the defendants filed an answer to the SAC.

On October 17, 2022, Gelt filed a motion to certify the putative

Discovery is currently underway and the motion to certify the class is pending.

The defendants believe the claims are without

merit and intend to defend vigorously against them, but there can be no assurances as to the outcome.

Derivative Lawsuits (District of Utah & Utah State Court)

September 17, 2020, a shareholder derivative lawsuit was filed in the District of Utah by Luis Aguilera, allegedly on behalf of Co-Diagnostics,

Inc., that substantially piggybacks on the Gelt Litigation referenced above.

The lawsuit asserts that the defendants failed to prevent

the alleged securities law violations largely asserted in the Gelt Litigation.

On December 2, 2020, a second shareholder derivative lawsuit

was filed in the District of Utah by Melvyn Klein asserting essentially the same claims, allegedly on behalf of Co-Diagnostics, as the

Aguilera shareholder derivative action.

And on April 29, 2021, the District of Utah consolidated the two shareholder derivative cases,

with the Aguilera case serving as the lead case under the caption In re Co-Diagnostics, Inc.

Derivative Litigation .

2022, plaintiffs filed an amended complaint asserting claims for breach of fiduciary duty, unjust enrichment, and contribution under

Sections 10(b) and 21D of the Securities Exchange Act of 1934.

Defendants answered the amended complaint on June 24, 2022.

November 24, 2020, an additional shareholder derivative lawsuit was filed in the District of Utah by Matthew Wallace, allegedly on behalf

of Co-Diagnostics, Inc., that also piggybacks on the Gelt Litigation referenced above.

It named the same defendants and asserted essentially

the same claims, allegedly on behalf of Co-Diagnostics, as in the other District of Utah shareholder derivative actions referenced above.

On January 25, 2021, another shareholder derivative lawsuit was filed in the District of Utah by Jason Reagan, asserting essentially

the same claims as in the Wallace lawsuit.

On March 18, 2021, the court consolidated the two lawsuits, with the Wallace lawsuit serving

as the lead case.

On April 30, 2021, plaintiffs filed an amended complaint asserting claims for breach of fiduciary duty against defendants

and claims for insider trading.

March 29, 2021, an additional shareholder derivative lawsuit was filed in the Third District Court in and for Salt Lake County, State

of Utah (“Utah State Court”) by Hua Ding, allegedly on behalf of Co-Diagnostics, Inc., that also piggybacks on the Gelt Litigation

referenced above.

It names the same defendants and asserts essentially the same claims as in In re Co-Diagnostics, Inc.

Litigation pending in the District of Utah referenced above.

On December 12, 2022, a second shareholder derivative lawsuit was filed

in Utah State Court by Kathryn Matuch asserting essentially the same claims, allegedly on behalf of Co-Diagnostics, as the Ding shareholder

derivative action.

defendants believe the claims asserted in all of the shareholder derivative lawsuits referenced above are without merit and intend to

defend vigorously against them, but there can be no assurances as to the outcome.

Capital Securities Class Action (Southern District of New York)

August 16, 2022, Stadium Capital LLC (“Stadium”) filed a lawsuit in the United States District Court for the Southern District

of New York, against Co-Diagnostics, Inc., and certain of our officers, on behalf of itself and a putative class, seeking to recover

damages for alleged violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934.

The complaint alleges that Co-Diagnostics

and the individual defendants overstated the demand for the Company’s Logix Smart COVID-19 test in statements on May 12, 2022 and

June 15, 2022.

The complaint alleges that plaintiff suffered losses when the Company’s stock price dropped after the Company disclosed

its financial results for the quarter ended June 30, 2022 in a press release on August 11, 2022.

On October 31, 2022, Stadium filed a

motion seeking to be appointed as Lead Plaintiff and for Kaplan Fox & Kilsheimer LLP to be appointed as lead counsel.

is pending before the U.S.

District Court.

The defendants believe the claims are without merit and intend to defend vigorously against

them, but there can be no assurances as to the outcome.

Co-Diagnostics,

Hukui Technology, Inc., et al.

(Third Judicial District Court, Salt Lake County, State of Utah, Civil No.

210902131, filed on

April 21, 2021).

Company filed a complaint against Defendants Hukui Technology, Inc., Hukui Tech, Inc., and Hukui Bio Co., Ltd (collectively, “Hukui”)

seeking a declaratory judgment that the Company is not obligated to any of them in any amount.

On August 24, 2021, Hukui filed their

Answer and Counterclaim seeking damages on a number of theories, including breach of contract for letter agreements, breach of oral agreement,

promissory estoppel, unjust enrichment, and interference with economic relations.

Hukui requested a money judgment against the Company

in an amount to be determined at trial.

On September 20, 2021, Hukui filed their Unopposed Motion for Leave to Amend Answer to the Complaint,

Affirmative Defenses, and Counterclaims and, on October 14, 2021, Hukui filed their Amended Answer and Counterclaims seeking damages

on declaratory judgment, as well as breach of contract for letters of authorization, breach of oral agreement, promissory estoppel, unjust

enrichment, and interference with economic relations.

In 2022 the parties exchanged their initial disclosures, exchanged written discovery

requests, and conducted a number of depositions on each side that were concluded in January 2023.

The Company believes the claims are

without merit and intends to defend vigorously against them, but there can be no assurances as to the outcome.

Co-Diagnostics,

Pantheon International Advisors Ltd.

(Third Judicial District Court, Salt Lake County, State of Utah, Civil No.

210902609, filed

on May 14, 2021).

Company filed a complaint against Pantheon International Advisors (“Pantheon”) asking the court to declare that the Company

has no ongoing contractual business relationship with Pantheon, no monies owing, nor does Pantheon have any interest, right, title or

claim to any stock issued by the Company or ownership of any kind in the Company.

Pantheon was served with a 30-Day Summons on September

9, 2021 to which it failed to respond, and a default judgement against Pantheon International Advisors was entered by the Court on November

The time to appeal from the judgment or seek to vacate the judgment has passed.

learning that the Company had initiated suit in Utah, and after learning of Company’s intent to serve it with process of that suit,

on May 24, 2021, Pantheon filed a claim against the Company in the Royal Courts of Justice Group, Queens Bench Division, Claim No.

QB-21-002245,

stating that the Company owes Pantheon $2,860,809.79 for alleged breach of contract for failing to make payments purportedly due under

a contract allegedly entered into on October 18, 2018.

The Company is being represented locally in the UK by Freshfields Bruckhaus Deringer

LLP in that matter.

On March 4, 2022, the Company filed a jurisdictional challenge to the UK suit, alleging that there was no 2018 agreement,

and that the Company is not subject to jurisdiction in the UK.

The oral argument and presentation of evidence on solely the jurisdictional

claim took place on November 9, 2022, with the court taking the matter of jurisdiction over the Company under advisement.

The court has

not yet ruled on the motion to dismiss, and it is not yet known when the court will rule upon that motion.

The Company intends to vigorously

defend against the UK claims and will seek to the full extent possible to enforce its rights under the Declaratory Judgment already obtained

in Utah but there can be no assurances as to the outcome.

time to time, we may become involved in litigation and other proceedings relating to claims arising out of our operations in the normal

course of business and to inquiries from FINRA, NASDAQ and the U.S.

Securities and Exchange Commission (the SEC).

2020, the Company received a voluntary request for documents from the SEC relating to disclosures regarding our COVID-19 test and other

Since that time we and certain of our current and former officers have been cooperating with the SEC and providing documents

and information.

The Company has entered into negotiations with the SEC in an attempt to reach a consensual resolution of the matters

raised in the SEC’s investigation.

Any such resolution may include the imposition of civil penalties, injunctive and other relief

against the Company, senior management and related individuals.

We cannot predict the outcome of these negotiations or of the SEC’s

investigation at this time, however, to the best of our knowledge, we do not believe that the matter is reasonably likely to result in

financial penalties having a material adverse effect on the Company.

MINE SAFETY DISCLOSURES

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 3. Legal Proceedings