What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2023-03-16 compared with 2022-03-24 · 408 added, 292 removed, 530 unchanged (57% of the section changed)

11 unchanged sentences

on the Financial Statements

have audited the accompanying balance sheets of Co-Diagnostics, Inc.

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

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.

We have audited the accompanying consolidated balance sheets of Co-Diagnostics,

Inc (the Company) as of December 31, 2022 and 2021, and the related consolidated statements of operations and comprehensive income (loss),

changes in stockholders’ equity, and cash flows for each of the years in the two-year period ended December 31, 2022, 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, 2022 and 2021, and the results of its operations and its cash flows

for each of the years in the two-year period ended December 31, 2022, in conformity with accounting principles generally accepted in the

United States of America.

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

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provide a reasonable basis for our opinion.

Audit Matters

critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated

or required to be communicated to the audit committee and that:

(1) relate to accounts or disclosures that are material to the financial

statements and (2) involved especially challenging, subjective, or complex judgments.

The communication of critical audit matters does

not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters

below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

and Intangible Assets

discussed in Note 4 and in Note 7 to the consolidated financial statements, the Company acquired Idaho Molecular, Inc., and Advanced

Conceptions, Inc.

in December 2021.

As part of the transaction, the Company acquired intangible assets totaling $27,195,000, and goodwill

totaling $15,388,546.

The Company assesses these assets for impairment at least annually or whenever events or changes in circumstances

occur that may indicate impairment.

The Company’s analysis for the year ended December 31, 2022, required significant judgment

to create a valuation based on future cash flows.

As a result of their analysis, the Company fully impaired its goodwill, while no impairment

was recorded for the intangible assets.

identified the carrying amount of goodwill and intangible assets as a critical audit matter because management’s assessment of

the acquisition is highly subjective.

This required an increased amount of effort, including the need to involve our internal valuation

specialist, when performing audit procedures to evaluate the reasonableness of management’s estimates and assumptions.

the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated

financial statements.

These procedures included, among others, gaining an understanding of management’s process for developing the fair

value estimate.

We also evaluated the expertise, qualifications, and independence of management’s specialist engaged to complete

the evaluation.

We used professionals inside our firm with specialized skills and knowledge to assess the Company’s methodology.

We considered the inputs, sources of data used, assumptions, and estimates used in the valuation model.

We tested the mathematical accuracy

of the underlying schedules used in the valuation assessment to ensure the completeness and accuracy of the reports.

Finally, we considered

the sensitivity of changes to key assumptions in the model.

Haynie & Company

Lake City, Utah

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Accounts receivable, net

Prepaid expenses

Income taxes receivable

Prepaid expenses and other current assets

Note receivable

1 unchanged sentence

Property and equipment, net

Operating lease right-of-use asset

Intangible assets, net

Investment in joint venture

Deferred tax asset

Note receivable

$ 123,086,280

$ 160,034,282

Liabilities and stockholders’ equity

2 unchanged sentences

Accrued expenses, current

Accrued expenses (related party), current

Operating lease liability, current

Contingent consideration liabilities, current

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Deferred tax liability

Operating lease liability

Contingent consideration liabilities

Accrued expenses (related party), noncurrent

Total long-term liabilities

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5,000,000 shares authorized;

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

0 shares issued and outstanding as of December 31, 2022 and December 31, 2021, respectively

Common stock, $ 0.001 par value;

100,000,000 shares authorized;

33,819,862 and 28,558,033 shares issued and outstanding as of December 31, 2021 and December 31, 2020, respectively

34,754,265 shares issued and 30,872,607 shares outstanding as of December 31, 2022 and 33,819,862 shares issued and outstanding as of December 31, 2021

Treasury stock, at cost;

3,881,658 and 0 shares held as of December 31, 2022 and December 31, 2021, respectively

( 14,211,866 )

Additional paid-in capital

Accumulated other comprehensive income

Accumulated earnings

2 unchanged sentences

$ 123,086,280

$ 160,034,282

accompanying notes to consolidated financial statements.

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AND SUBSIDIARIES

STATEMENTS OF OPERATIONS

STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)

Years Ended December 31,

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Depreciation and amortization

Goodwill impairment charges

Total operating expenses

Income from operations

Income (loss) from operations

( 26,979,836 )

Other income (expense)

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Loss on disposition of assets

Gain (loss) on equity method investment in joint venture

Gain on remeasurement of acquisition contingencies

Loss on equity method investment in joint venture

Total other income (expense)

Income before income taxes

Income tax provision

Income (loss) before income taxes

( 18,847,234 )

Income tax provision (benefit)

( 4,608,985 )

Net income (loss)

$ ( 14,238,249 )

Other comprehensive income

Change in net unrealized gains on marketable securities, net of tax

Total other comprehensive income

Comprehensive income (loss)

$ ( 13,945,109 )

Earnings per common share:

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Preferred Stock

Other Comprehensive

Stockholders’

Balance as of December 31, 2020

$ ( 24,967,814 )

Public offering, net of offering costs of $ 1,457,922

Common stock issued for warrant exercises

Common stock issued for option exercises

Common stock issued for option

Stock-based compensation expense

Conversion of preferred stock to common

Common stock issued for acquisitions

Common stock issued for acquisitions , shares

Balance as of December 31, 2021

Common stock issued for option exercises

$ 134,475,098

Common stock issued for option

Common stock issued for warrant

Stock-based compensation expense

Common stock issued for acquisitions

Repurchases of common stock

( 14,211,866 )

Other comprehensive income,

( 14,238,249 )

Balance as of December 31, 2022

$ ( 14,211,866 )

$ 114,519,992

$ ( 14,211,866 )

$ 114,519,992

accompanying notes to consolidated financial statements.

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Cash flows from operating activities

$ ( 14,238,249 )

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

Depreciation and amortization

Goodwill impairment charges

Stock-based compensation expense

Loss (gain) from equity method investment

Change in fair value of acquisition contingencies

( 7,899,644 )

Non-cash lease expense

Loss from equity method investment

Loss on disposition of assets

Deferred income taxes

( 4,810,457 )

Bad debt expense

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( 8,740,851 )

( 12,960,255 )

Prepaid expenses

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Income taxes payable

Accounts payable and accrued expenses

( 2,201,250 )

Accounts payable, accrued expenses and other liabilities

( 2,483,821 )

Net cash provided by operating activities

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Purchases of property and equipment

Purchases of marketable investment securities

( 1,427,512 )

Proceeds from maturities of marketable investment securities

Purchases of marketable securities

( 67,995,926 )

Investment in joint venture

Business combinations, net of cash acquired

Net cash provided by (used in) investing activities

Net cash (used in) provided by investing activities

( 58,168,172 )

Cash flows from financing activities

Proceeds from sale of common stock

Proceeds from exercise of options and warrants

Payment of offering costs

Repurchases of common stock

( 14,211,866 )

Net cash provided by financing activities

Net cash (used in) provided by financing activities

( 14,033,996 )

Net increase in cash and cash equivalents

( 65,633,431 )

Cash and cash equivalents at beginning of period

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Inventory moved to property, plant and equipment

Right-of-use assets obtained in exchange for new operating lease liabilities

Business acquisition measurement period adjustments

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

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

accompanying notes to consolidated financial statements.

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Co-Diagnostics,

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).

In connection with the sale of these tests, the Company may sell diagnostic equipment and supplies from other manufacturers.

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), 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.

preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates

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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

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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

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.

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

Treasury bills and

The Company designates investments in debt securities as available-for-sale.

Available-for-sale debt securities with original

maturities of three months or less from the date of purchase are classified within cash and cash equivalents.

Available-for-sale debt

securities with original maturities longer than three months are available to fund current operations and are classified as marketable

investment securities, within current assets on the consolidated balance sheets.

The Company may sell these securities at any time for

use in its current operations or for other purposes, even prior to maturity.

Available-for-sale debt securities are reported at fair

value with the related unrealized gains and losses included in accumulated other comprehensive income (loss), a component of stockholders’

equity, net of tax.

Realized gains and losses on the sale of marketable securities are determined using the average cost method on a

first-in, first-out basis and recorded in total other income (expense), net in the condensed consolidated statements of operations and

comprehensive income.

available-for-sale debt securities are subject to a periodic impairment review.

For investments in an unrealized loss position, the Company

writes down the amortized cost basis of the investment if it is more likely than not that the Company will be required or will intend

to sell the investment before recovery of its amortized cost basis.

For investments not likely to be sold before recovery of the amortized

cost basis, the Company determines whether a credit loss exists by considering information about the collectability of the instrument,

current market conditions, and reasonable and supportable forecasts of economic conditions.

The Company recognizes an allowance for credit

losses up to the amount of the unrealized loss when appropriate.

Allowances for credit losses and write-downs are recognized in total

other income (expense), net, and unrealized losses not related to credit losses are recognized in accumulated other comprehensive income

There are no allowances for credit losses recorded for the periods presented.

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

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

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.

At December 31, 2022, the Company had $ 5,310,473 in inventory, of which $ 1,327,264

was finished goods and $ 3,983,209 was raw materials.

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.

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

and Intangible Assets

represents the excess of the purchase price and related costs over the value assigned to net tangible and identifiable intangible assets

acquired in business combinations.

Goodwill and indefinite-lived intangible assets are not amortized, but rather tested for impairment

at least annually on December 31, or more often if and when circumstances indicate that the carrying value may not be recoverable.

intangible assets are amortized over their useful lives.

the year ended December 31, 2022, the Company recognized impairment charges related to goodwill of $ 15,388,546 .

assets, such as property 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, finite-lived intangible assets, and ROU assets, 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.

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.

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

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and development costs are expensed when incurred.

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.

The Company expensed $ 17,438,098 and $ 14,961,916 of research and development costs

for the years ended December 31, 2022 and 2021, respectively.

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

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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.

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

Judgments and tax strategies are subject to audit by various taxing authorities.

The Company has uncertain income tax

positions in the consolidated financial statements, and 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

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securities are anti-dilutive.

Comprehensive

income is comprised of unrealized gains and losses on marketable securities, net of income taxes.

Concentrations

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31, 2022 and 2021.

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

One customer accounted for approximately 37 % and two customers together accounted for approximately 48 % of total revenue

for the years ended December 31, 2022 and 2021, respectively.

customers accounted for more than 10 % of accounts receivable, and two customers each accounted for more than 10 % of accounts receivable,

at December 31, 2022 and 2021, respectively.

These customers together accounted for approximately 61 % and 66 % of accounts receivable

at December 31, 2022 and 2021, respectively.

Issued Accounting Standards

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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 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.

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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.

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.

The Company adopted ASU 2016-13 on January 1, 2022.

The adoption did not have an impact on

the Company’s financial statements.

February 2016, the FASB issued ASU No.

2016-02, Leases (Topic 842) (“ASU 2016-02”), which requires a lessee to recognize

most leases on the balance sheet as lease liabilities with corresponding right-of-use assets.

The objective of ASU 2016-02 is to increase

transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing

key information about leasing arrangements.

The recognized lease liabilities and lease assets represent the obligation to make payments

and the right to use or control the use of a specified asset for the lease term, respectively.

January 1, 2022, the Company adopted Topic 842 using the modified retrospective approach with the effective date as the date of

initial application.

Consequently, results for the year ended December 31, 2022 are presented under Topic

No prior period amounts were adjusted and continue to be reported in accordance with previous lease guidance, ASC Topic 840,

The Company elected the practical expedients available under the provisions of the new standard, including not reassessing

whether expired or existing contracts are or contain leases;

not reassessing the classification of expired or existing leases;

not reassessing the initial direct cost for any existing leases.

Upon adoption, the Company recognized an operating lease liability

and a corresponding operating right-of-use asset of $ 681,327 .

3 - Cash, Cash Equivalents, and Financial Instruments

following table shows the Company’s cash, cash equivalents, and marketable investment securities by significant investment category

as of December 31, 2022:

of Cash, Cash Equivalents, and Marketable Investment Securities

December 31, 2022

Adjusted Cost

Allowance for Credit Losses

Total Unrealized Gains / (Losses)

Cash and Cash Equivalents

Marketable Securities

Money market funds

treasury securities

investment securities held as of December 31, 2022 mature over the next 12 months.

4 – Business Combinations

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

December 31, 2021, the Company completed its acquisitions 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

(“IdMo”), 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 IdMo common stock was initially 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 %

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.

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:

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

change within the measurement period.

During 2022, the Company finalized negotiations that were ongoing as of December 31, 2021 with

one remaining shareholder of ACI, which resulted in an increase to the purchase consideration of $ 580,135 .

Additionally, there was an

increase of $ 101,593 in the estimated tax liabilities that resulted from the acquisition.

Due to the change in purchase consideration

and estimated tax liabilities, a measurement period adjustment was recorded, resulting in an increase to goodwill of $ 681,728 .

the resolution with the remaining shareholder, the total number of shares exchanged as purchase consideration was approximately 3.3 million

Additionally, the updated purchase consideration includes contingent consideration of up to approximately 1.4 million shares

and 465,000 warrants to purchase shares of the Company’s common stock.

addition, the adjustments to the provisional purchase consideration amount resulted in an increase in the gain on remeasurement of acquisition

contingencies of $ 78,617 .

total purchase consideration, including adjustment during the measurement period, was allocated to the assets acquired and liabilities

assumed as set forth below:

of Assets and Liabilities assumed

Amounts Recognized as of Acquisition Date (as previously reported)

Measurement Period Adjustments

Amounts Recognized as of Acquisition Date (as adjusted)

Purchase Consideration

Fair value of common shares issued

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( 1,069,274 )

( 1,170,867 )

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

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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.

5 – Fair Value Measurements

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31, 2021, by level within the fair value hierarchy:

of Fair Value Assets and Liabilities

Schedule of Fair Value Assets and Liabilities

December 31, 2022

Marketable securities (certificates of deposit)

Cash equivalents

Marketable securities (U.S.

treasury bills and notes)

Total assets measured at fair value

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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.

Contingent consideration - common stock

Contingent consideration - warrants

Total liabilities measured at fair value

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

treasury bills and notes as of December 31, 2021 and 2022, respectively.

connection with the acquisitions of IdMo and ACI 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 calculations 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

Schedule of Changes in Fair Value Measurement

Fair value as of December 31, 2021

Contingent considered issued for business acquisitions

Change in contingent purchase consideration for measurement period adjustments

Change in fair value of contingent consideration issued for business acquisitions

( 7,899,644 )

Fair value as of December 31, 2022

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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.

stock as of the valuation date.

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

a call option with terms consistent with the terms of the warrants as of the valuation date.

Prior to the probability adjustments, the

warrants were valued based on the following inputs:

Schedule of Contingent Consideration Common Stock and Warrants

December 31, 2022

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:

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

consideration-warrants, the Company estimated the probability as of the valuation date 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 as of the acquisition date using a Monte Carlo simulation valuation model.

Significant inputs other than the fair value assumptions noted above were consistent as of the valuation date.

The unobservable

significant inputs to the valuation model were as follows:

December 31, 2022

December 31, 2021

Risk-free rate

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Value of Other Financial Instruments

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.

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.

6 – Property and Equipment

1 unchanged sentence

of Property and Equipment

Useful Lives in

Estimated Useful Lives

Lab equipment

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Less accumulated depreciation and amortization

( 1,372,248 )

Fixed assets, net

7 - Goodwill and Intangible Assets

represents the excess of purchase price and related costs over the value assigned to net tangible and identifiable intangible assets

acquired in business combinations.

The following table presents the changes in the carrying amount of goodwill for the year ended December

Balance as of December 31, 2021

Measurement period adjustments

Goodwill impairment charges

( 15,388,546 )

Balance as of December 31, 2022

Company assesses goodwill for impairment at the reporting unit level on an annual basis, or whenever events or changes in circumstances

occur that indicate that the fair value of a reporting unit is below its carrying amount.

The Company estimates the fair value of its

reporting unit by using forecasts of discounted future cash flows and peer market multiples.

If the fair value is less than the carrying

value, impairment will be recognized in the amount by which the carrying value exceeds the fair value.

The Company performed a qualitative

and quantitative goodwill impairment assessment as of December 31, 2022.

Based on the impairment assessment performed the Company concluded

that it was more likely than not that the fair value of the Company’s reporting unit was less than it’s carrying amount.

Accordingly, the Company recorded an impairment charge to reduce the carrying value of goodwill to $ 0 .

assets, net consisted of the following:

of Intangible Assets

Useful Lives in

Schedule of Intangible Assets, Net

December 31, 2022

Weighted-Average

Useful Life (1)

In-process research and development

Non-competition agreements

Less accumulated amortization

Intangible assets, net

Total intangible assets

December 31, 2021

Weighted-Average

Useful Life (1)

In-process research and development

Non-competition agreements

Total intangible assets

expected future annual amortization expense of the Company’s intangible assets held as of December 31, 2022 is as follows:

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Amortization Expense

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

8 - Accrued Expenses

expenses consisted of the following:

of Accrued Expenses

Schedule of Accrued Expenses

December 31, 2022

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Distributor commissions

Sales tax payable

Other accrued liabilities

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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

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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,

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 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, 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.

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

Balance as of December 31, 2022

10 – Earnings per Share

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Net income, as reported

$ ( 14,238,249 )

Weighted average shares, basic

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Diluted earnings per share

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.

the year ended December 31, 2021, potentially dilutive securities of 154,644 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 years ended December 31,

2022 and December 31, 2021 also excludes the approximately 1.4 million shares of common stock and approximately 465,000 warrants to purchase

shares of common stock mentioned in Note 4 that are contingent upon the achievement of certain milestones.

a result of incurring a net loss for the year ended December 31, 2022, 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, 2022, consisting of:

(i) 1,443,238 restricted stock units and (ii) 50,000 options.

11 – Stock-Based Compensation

Incentive Plans

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 2,095,266 at December 31, 2021.

Company’s board of directors adopted, and shareholders approved, the Co-Diagnostics, Inc.

Amended and Restated 2015 Long Term Incentive

Plan (the “Incentive Plan”) providing for the issuance of stock-based incentive awards to employees, officers, consultants,

directors and independent contractors.

On August 31, 2022 the shareholders approved an increase in the number of awards available for

issuance under the Incentive Plan to an aggregate of 12,000,000 shares of common stock.

The number of awards available for issuance under

the Incentive Plan was 6,210,790 at December 31, 2022.

following table summarizes option activity during the years ended December 31, 2022 and 2021:

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Exercisable at December 31, 2022

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

total intrinsic value of options exercised during the years ended December 31, 2022 and 2021 was approximately $ 0.4 million and $ 1.3

million, respectively.

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

unvested options and $ 78,115

of unrecognized stock-based compensation

The aggregate intrinsic value of outstanding options at December 31, 2022 and 2021 was approximately $ 0.8 million

and $ 7.6 million, respectively.

As of December 31, 2022, there were no unvested options and no 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:

Schedule of Fair Value of Options Weighted Average Assumptions

Years Ended December 31,

Risk-free interest rate

Expected life (years)

Expected volatility

Expected dividend yield

grant date fair value of RSUs granted is determined using the closing market price of the Company’s common stock on the grant date

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Outstanding at December 31, 2021

Issued for adjustments to contingent purchase consideration

Forfeited/Cancelled

Outstanding at December 31, 2022

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

intrinsic value of warrants exercised during the years ended December 31, 2022 and 2021 was $ 0.3 million and $ 0.0 million, respectively.

The aggregate intrinsic value of outstanding warrants at December 31, 2022 was approximately $ 22,000 .

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Note 5 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

Expected life (years)

Expected volatility

Expected dividend yield

Issued for Services

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

Schedule of Recognized Stock-based Compensation Expense

Schedule of Recognized

Stock-based Compensation Expense

Years Ended December 31,

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Total current

( 3,945,090 )

Total deferred

Total income tax expense

( 4,906,558 )

Total income tax (benefit) expense

$ ( 4,608,985 )

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

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- Stock based compensation

- Contingent consideration remeasurement

- Goodwill impairment

- Other permanent differences

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Effective income tax rate

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

deferred tax liabilities consist of the following components as of December 31, 2022 and 2021:

of Deferred Tax Assets

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Research and development credits

Lease liability

Total deferred tax assets

3 unchanged sentences

( 6,608,914 )

( 6,743,972 )

Right of use asset

Other comprehensive income

Total deferred tax liabilities

( 7,562,202 )

Net deferred tax assets (liabilities)

( 7,788,365 )

Net deferred tax (liabilities)

( 2,417,987 )

( 7,228,444 )

Less valuation allowance

Net deferred tax assets (liabilities)

Net deferred tax (liabilities)

$ ( 2,417,987 )

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 .

$ ( 7,228,444 )

December 31, 2022, the Company had no federal net operating loss carryforwards and no federal research and development credit carryforwards.

At December 31, 2022, the Company had no state net operating loss carryforwards and $ 288,292 of state research and development credit

carryforwards.

If unused, the state research credit carryforward will expire in 2036.

Topic 740-10-05 requires that the impact of a tax position be recognized in the financial statements if that position is more likely

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

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.

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

party liability was $ 0 .

13 – Commitments and Contingencies

Company’s offices are located at 2401 S.

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

In February 2020, the Company

entered into a 4 -year lease agreement for its office space and in March 2020, the Company entered into an addendum with our landlord

for additional space.

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,

Company leases office space under a non-cancellable operating lease and leases cancellable with one month notice.

The Company expenses

the cancelable leases in the period incurred in accordance with the practical expedient elected.

As such, one lease makes up the entirety

of the right-of-use asset and lease liability disclosed.

the year ended December 31, 2022, components of lease expense are summarized as follows:

of Lease Expense

Year Ended December, 2022

Operating lease costs

Short-term lease costs

Total lease costs

lease costs under month-to-month lease agreements are paid to related parties.

of December 31, 2022, the maturities of the Company’s lease liabilities are as follows:

of Maturities on Company Lease Liabilities

Total lease payments

imputed interest

Present value of operating lease liabilities

current portion

Long-term portion

information related to operating leases was as follows:

of Other Information Related to Operating Lease

December 31, 2022

Cash paid for operating leases included in operating cash flows

Remaining lease term of operating leases

Discount rate of operating leases

for loss contingencies arising from claims, assessments, litigation, fines, and penalties and other sources are recorded when it is probable

2 unchanged sentences

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

The Company is a defendant in two class action claims and three derivative

actions 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.

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results of operations in the period(s) in which any such outcome becomes probable and estimable.

15 – Subsequent Events

14 – Share Repurchase Program

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

to $ 30.0 million of CODX common stock.

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

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

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

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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

accounting purposes, common stock repurchased under the stock repurchase program is recorded based upon the transaction date of the applicable

Such repurchased shares are held in treasury and are presented using the cost method.

These shares are not retired and are considered

issued but not outstanding.

The following table shows the changes in treasury stock for the periods presented:

of Treasury Stock

December 31, 2022

Balance, beginning of period

Repurchases of common stock

Balance, end of period

15 – Subsequent Events

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