What changed in this filing

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Item 1. Financial Statements

2023-05-11 compared with 2022-11-10 · 296 added, 327 removed, 390 unchanged (62% of the section changed)

3 unchanged sentences

BALANCE SHEETS

September 30, 2022

March 31, 2023

December 31, 2022

3 unchanged sentences

Accounts receivable, net

Inventory, net

Income taxes receivable

6 unchanged sentences

Investment in joint venture

Note receivable

$ 116,996,846

6 unchanged sentences

Contingent consideration liabilities, current

Income taxes payable

Deferred revenue

11 unchanged sentences

5,000,000 shares authorized;

0 shares issued and outstanding as of September 30, 2022 and December 31, 2021, respectively

0 shares issued and outstanding as of March 31, 2023 and December 31, 2022, respectively

Common stock, $ 0.001 par value;

100,000,000 shares authorized;

34,332,182 shares issued and 30,917,856 shares outstanding as of September 30, 2022 and 33,819,862 shares issued and outstanding as of December 31, 2021

34,823,015 shares issued and 30,632,345 shares outstanding as of March 31, 2023 and 34,754,265 shares issued and 30,872,607 shares outstanding as of December 31, 2022

Treasury stock, at cost;

3,414,326 and 0 shares held as of September 30, 2022 and December 31, 2021, respectively

4,190,670 and 3,881,658 shares held as of March 31, 2023 and December 31, 2022, respectively

( 14,694,062 )

( 14,211,866 )

Additional paid-in capital

Accumulated other comprehensive income

Accumulated earnings

6 unchanged sentences

AND SUBSIDIARIES

STATEMENTS OF OPERATIONS

Three Months Ended September 30,

Nine Months Ended September 30,

STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)

Three Months Ended March 31,

Cost of revenue

7 unchanged sentences

( 9,950,650 )

Other income (expense)

Interest income

Gain (loss) on disposition of assets

Realized gain on investments

(Loss) on disposition of assets

Gain on remeasurement of acquisition contingencies

Loss on equity method investment in joint venture

Total other income (expense)

Gain (loss) on equity method investment in joint venture

Total other income

Income (loss) before income taxes

2 unchanged sentences

( 2,259,811 )

( 1,470,058 )

Net income (loss)

$ ( 5,755,391 )

Other comprehensive income

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

Total other comprehensive income

Comprehensive income (loss)

$ ( 5,576,770 )

Earnings per common share:

4 unchanged sentences

STATEMENTS OF CASH FLOWS

Nine Months Ended September 30,

Three Months Ended March 31,

Cash flows from operating activities

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

Net (loss) income

$ ( 5,755,391 )

Adjustments to reconcile net income to cash (used in) provided by operating

Depreciation and amortization

2 unchanged sentences

( 1,037,672 )

( 3,379,890 )

Non-cash lease expense

Loss from equity method investment

(Gain) loss from equity method investment

Loss on disposition of assets

1 unchanged sentence

( 2,214,652 )

( 1,359,716 )

Bad debt expense

1 unchanged sentence

Accounts receivable

( 2,608,777 )

Prepaid expenses

2 unchanged sentences

Income taxes payable

( 1,822,977 )

Accounts payable, accrued expenses and other liabilities

Net cash provided by operating activities

Net cash (used in) provided by operating activities

( 5,499,435 )

Cash flows from investing activities

Purchases of property and equipment

( 1,134,208 )

Proceeds from maturities of marketable investment securities

1 unchanged sentence

( 40,992,469 )

Investment in joint venture

Net cash provided by (used in) investing activities

Net cash (used in) provided by investing activities

( 10,632,792 )

2 unchanged sentences

Repurchases of common stock

( 12,994,373 )

Net cash provided by (used in) financing activities

( 12,816,503 )

Net increase in cash and cash equivalents

Net cash (used in) provided by financing activities

Net (decrease) increase in cash and cash equivalents

( 16,614,423 )

7 unchanged sentences

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

Business acquisition measurement period adjustments

accompanying notes to unaudited consolidated financial statements

2 unchanged sentences

STATEMENTS OF STOCKHOLDERS’ EQUITY

Convertible Preferred Stock

Preferred Stock

Additional Paid-in

Accumulated Other

Comprehensive

Total Stockholders’

1 unchanged sentence

$ ( 14,211,866 )

Common stock issued for option exercises

Common stock issued for warrant exercises

Stock-based compensation

Balance as of March 31, 2022

$ 114,519,994

Common stock issued for option exercises

Stock-based compensation

Common stock issued for acquisitions

Repurchases of common stock

( 2,599,478 )

( 2,686,303 )

Balance as of June 30, 2022

$ ( 2,599,478 )

$ 144,470,940

Stock-based compensation

Repurchases of common stock

( 10,394,895 )

Other comprehensive income, net of tax

( 5,755,391 )

Balance as of September 30, 2022

Balance as of March 31, 2023

$ ( 14,694,062 )

2 unchanged sentences

Additional Paid-in

Accumulated Other Comprehensive

Total Stockholders’

Balance as of December 31, 2021

$ 134,475,100

Common stock issued for option exercises

Common stock issued for warrant exercises

Stock-based compensation

Net income (loss)

Balance as of March 31, 2022

Common stock issued for option exercises

Stock-based compensation

Balance as of June 30, 2021

Common stock issued for option exercises

Stock-based compensation

Balance as of September 30, 2021

$ 147,714,793

accompanying notes to unaudited consolidated financial statements

4 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.

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, 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 at-home settings.

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 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 are also developing

a unique, groundbreaking portable PCR device and proprietary test cups (the “Co-Dx PCR Home™ platform”) that have been

designed to bring affordable, reliable polymerase chain reaction (“PCR”) to patients in point-of-care and even at-home settings.

This platform is subject to U.S.

Food and Drug Administration (“FDA”) review and is not available for sale at the time of

There is no guarantee the Co-Dx PCR Home platform will receive the necessary regulatory approvals for commercialization,

or that, if regulatory approval is received, we will be able to successfully commercialize this platform.

Consolidated Financial Statements

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accepted in the United States of America for interim financial information and with the instructions to Form 10-Q as they are prescribed

for smaller reporting companies and emerging growth companies.

Accordingly, they do not include all the information and footnotes required

by accounting principles generally accepted in the United States of America for complete financial statements.

In the opinion of management,

all adjustments (consisting of normal recurring accruals) considered necessary to make the financial statements not misleading have been

Operating results for the three and nine months ended September 30, 2022 are not necessarily indicative of the results that

may be expected for the year ending December 31, 2022.

These statements should be read in conjunction with the Company’s audited

financial statements and related notes for the year ended December 31, 2021, included in the Company’s Annual Report on Form 10-K

filed on March 24, 2022.

for smaller reporting companies.

Accordingly, they do not include all the information and footnotes required by accounting principles

generally accepted in the United States of America for complete financial statements.

In the opinion of management, all adjustments (consisting

of normal recurring accruals) considered necessary to make the financial statements not misleading have been included.

Operating results

for the three months ended March 31, 2023 are not necessarily indicative of the results that may be expected for the year ending December

These statements should be read in conjunction with the Company’s audited financial statements and related notes for

the year ended December 31, 2022, included in the Company’s Annual Report on Form 10-K filed on March 16, 2023.

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

6 unchanged sentences

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

1 unchanged sentence

or less from the date of purchase.

The fair value of cash equivalents approximated their carrying value as of September 30, 2022 and

December 31, 2021.

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

federally insured limits.

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

to any significant credit risk on cash and cash equivalents.

The fair value of cash equivalents approximated their carrying value as of March 31, 2023 and December

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

and the balance exceeded federally insured limits.

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

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

Investment Securities

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

treasury bills.

Company determines the appropriate classification of its marketable investment securities at the time of purchase and re-evaluates such

designation at each balance sheet date.

The Company has classified and accounted for its marketable investment securities as available-for-sale

securities as the Company may sell these securities at any time for use in its current operations or for other purposes, even prior to

As 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.

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.

6 unchanged sentences

written off are recorded when collected.

At September 30, 2022, total accounts receivable was $ 8,969,317 with an allowance for uncollectable

At March 31, 2023, total accounts receivable was $ 5,686,589 with an allowance for uncollectable

accounts of $ 2,984,393 resulting in a net amount of $ 2,702,196 .

At December 31, 2021, total accounts receivable was $ 21,508,779 with

an allowance for uncollectable accounts of $ 669,597 resulting in a net amount of $ 20,839,182 .

At December 31, 2022, total accounts receivable was $ 6,552,249 with an

allowance for uncollectable accounts of $ 3,098,526 resulting in a net amount of $ 3,453,723 .

Equity-Method

8 unchanged sentences

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

At September 30, 2022, the Company had $ 5,441,726 in inventory, of which $ 1,283,850

was finished goods and $ 4,157,876 was raw materials.

At March 31, 2023, the Company had $ 5,294,653 in inventory, comprised of $ 1,081,540

of finished goods, and $ 4,213,113 of raw materials.

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

2 unchanged sentences

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

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.

Finite-lived intangible assets are amortized over their useful lives.

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.

4 unchanged sentences

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

described in “Recently Adopted Accounting Standards” below, the Company adopted ASC 842, Leases (“ASC 842”) effective

January 1, 2022.

Under ASC 842, the Company determines if an arrangement is or contains a lease at inception by assessing whether the

arrangement contains an identified asset and whether it has the right to control the identified asset.

Right-of-use (ROU) assets represent

the Company’s right to use an underlying asset for the lease term and lease liabilities represent the Company’s obligation

to make lease payments arising from the lease.

Lease liabilities are recognized at the lease commencement date based on the present value

of future lease payments over the lease term.

ROU assets are based on the measurement of the lease liability and also include any lease

payments made prior to or on lease commencement and exclude lease incentives and initial direct costs incurred, as applicable.

Company adopted ASC 842, Leases (“ASC 842”) effective January 1, 2022.

Under ASC 842, the Company determines if an arrangement

is or contains a lease at inception by assessing whether the arrangement contains an identified asset and whether it has the right to

control the identified asset.

Right-of-use (ROU) assets represent the Company’s right to use an underlying asset for the lease

term and lease liabilities represent the Company’s obligation to make lease payments arising from the lease.

Lease liabilities

are recognized at the lease commencement date based on the present value of future lease payments over the lease term.

ROU assets are

based on the measurement of the lease liability and also include any lease payments made prior to or on lease commencement and exclude

lease incentives and initial direct costs incurred, as applicable.

the implicit rate in the Company’s leases is generally unknown, the Company uses its incremental borrowing rate based on the information

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and development costs are expensed when incurred.

For the three and nine months ended September 30, 2022, the Company expensed $ 5,037,461

and $ 12,698,632 of research and development costs, respectively.

For the three and nine months ended September 30, 2021, the Company

expensed $ 5,893,350 and $ 12,779,573 , respectively.

For the three months ended March 31, 2023, the Company expensed $ 5,014,060 of research

and development costs, respectively.

For the three months ended March 31, 2022, the Company expensed $ 3,771,327 .

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

4 unchanged sentences

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

When an award is forfeited prior to the vesting date, the Company recognizes an adjustment for the previously recognized expense

in the period of the forfeiture.

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

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

Company accounts for income taxes in accordance with the liability method of accounting for income taxes.

Under this method, deferred

Under this method, d eferred

income tax assets and deferred income tax liabilities represent the tax effect of temporary differences between financial reporting and

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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 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

Risk and Significant Customers

Company had certain customers which are each responsible for generating 10 % or more of the total revenue for the three and nine months

ended September 30, 2022.

One customer accounted for approximately 52 % of total revenue for the three months ended September 30, 2022,

and two customers together accounted for approximately 47 % of total revenue for the nine months ended September 30, 2022.

Two customers

together accounted for approximately 56 % of total revenue for the three months ended September 30, 2021, and three customers together

accounted for approximately 49 % of total revenue for the nine months ended September 30, 2021.

customers accounted for more than 10 % of accounts receivable at September 30, 2022 and two customers accounted for more than 10 % of accounts

Company had certain customers which are each responsible for generating 10 % or more of the total revenue for the three months ended March

Two customers accounted for approximately 44 % of total revenue for the three months ended March 31, 2023.

Three customers together

accounted for approximately 54 % of total revenue for the three months ended March 31, 2022.

customers accounted for more than 10 % of accounts receivable at March 31, 2023 and one customer accounted for more than 10 % of accounts

receivable at December 31, 2022.

These customers together accounted for approximately 67 % and 66 % of accounts receivable at September

These customers together accounted for approximately 82 % and 37 % of accounts receivable at March 31,

2023 and December 31, 2022, respectively.

Accounting Pronouncements

Issued Accounting Standards

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

2 unchanged sentences

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

Adopted Accounting Standards

June 2016, the FASB issued ASU No.

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

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

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

more timely recognition of credit losses.

The 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

Consequently, results for the three and nine months ended September 30, 2022 are presented under Topic 842.

No prior period

amounts were adjusted and continue to be reported in accordance with previous lease guidance, ASC Topic 840, Leases.

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;

and not reassessing the initial direct cost

for any existing leases.

Upon adoption, the Company recognized an operating lease liability of $ 626,699 and a corresponding operating

right-of-use asset of $ 681,327 .

3 – Business Combinations

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

(“ACI”) and Idaho Molecular Inc.

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

Upon the completion of

the acquisition, all outstanding ACI and Idaho Molecular common stock was 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.

completion of the acquisition, both ACI and IdMo became 100 % wholly-owned subsidiaries of the Company.

the quarter ended June 30, 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 .

4 – 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 nine months ended

September 30, 2022:

Balance as of December 31, 2021

Measurement period adjustments

Balance as of September 30, 2022

following table presents details of the Company’s intangible assets, excluding goodwill:

3 - Cash, Cash Equivalents, and Financial Instruments

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

of Cash,Cash Equivalents and Marketable Investment Securities

March 31, 2023

Adjusted Cost

Allowance for Credit Losses

Total Unrealized Gains / (Losses)

Cash and Cash Equivalents

Marketable Securities

Money market funds

treasury 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 March 31, 2023 mature over the next 12 months.

4 – Intangible Assets, Net

assets, net consisted of the following:

of Intangible Assets, Net

September 30, 2022

March 31, 2023

Weighted-Average

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Total intangible assets

$ ( 426,667 )

on weighted-average useful life established as of the acquisition date.

expected future annual amortization expense of the Company’s intangible assets held as of March 31, 2023 is as follows:

of Future Amortization Expense

Year Ending December 31,

Amortization Expense

5 – Fair Value Measurements

Company measures and records certain financial assets at fair value on a recurring basis.

Fair value is based on the price that would

be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement

Company’s financial instruments that are measured at fair value on a recurring basis consist of money market funds.

The following

three levels of inputs are used to measure the fair value of financial instruments:

Company measures and records certain financial assets and liabilities at fair value on a recurring basis.

Fair value is based on the

price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants

at the measurement date.

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

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

1 unchanged sentence

Unobservable inputs that are not corroborated by market data.

following table summarizes the assets measured at fair value on a recurring basis as of September 30, 2022, and December 31, 2021, by

level within the fair value hierarchy:

Schedule of Fair Value Assets and Liabilities

September 30, 2022

following table summarizes the assets and liabilities measured at fair value on a recurring basis as of March 31, 2023 and December 31,

2022, by level within the fair value hierarchy:

of Fair Value Assets and Liabilities

March 31, 2023

Cash equivalents

Marketable securities (U.S.

treasury bills)

treasury bills and notes)

Total assets measured at fair value

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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 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 as of December 31, 2021 and September 30, 2022, respectively.

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

treasury bills and notes as

of March 31, 2023 and December 31, 2022.

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:

Schedule of Changes in Fair Value Measurement

of Changes in the Fair Value Measurement

Fair value as of December 31, 2022

Change in contingent purchase consideration for measurement period adjustments

Change in fair value of contingent consideration issued for business acquisitions

( 1,037,672 )

Fair value as of September 30, 2022

Fair value as of March 31, 2023

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

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

stock as of September 30, 2022.

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 September 30, 2022.

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

September 30, 2022

of Contingent Consideration Common Stock and Warrants

March 31, 2023

December 31, 2022

1 unchanged sentence

Expected term

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.

following table sets forth revenue by geographic area:

Summary of Revenue by Geographic Area

Three Months Ended September 30,

Nine Months Ended September 30,

of Revenue by Geographic Area

Three Months Ended March 31,

United States

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Rest of World

in the Company’s deferred revenue balance for the nine months ended September 30, 2022 were as follows:

Schedule of Deferred Revenue

in the Company’s deferred revenue balance for the three months ended March 31, 2023 were as follows:

of Deferred Revenue

Balance as of December 31, 2022

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

Balance as of September 30, 2022

Increase due to prepayments from customers

Balance as of March 31, 2023

7 – Earnings Per Share

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

months ended September 30, 2022:

Schedule of Basic and Diluted Earnings Per Share

Three Months Ended September 30,

Nine Months Ended September 30,

Net income (loss), as reported

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

ended March 31, 2023 and 2022, respectively:

of Basic and Diluted Earnings Per Share

Three Months Ended March 31,

Net income, as reported

$ ( 5,755,391 )

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Diluted earnings per share

the three and nine months ended September 30, 2022, potentially dilutive securities of 2,631,642 and 1,385,869 were excluded from the

calculation because their effect would have been anti-dilutive.

For the three and nine months ended September 30, 2021, potentially dilutive

securities of 50,000 and 147,436 were excluded from the calculation because their effect would have been anti-dilutive.

The computation

of basic and diluted earnings per share for the three and nine months ended September 30, 2022 also excludes the approximately 1.4 million

shares of common stock and approximately 465,000 warrants to purchase shares of common stock that are contingent upon the achievement

of certain milestones.

the three months ended March 31, 2022, potentially dilutive securities of 1,271,304 were excluded from the calculation because their

effect would have been anti-dilutive.

The computation of basic and diluted earnings per share for the three months ended March 31, 2023

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

shares of common stock that are contingent upon the achievement of certain milestones.

a result of incurring a net loss for the three months ended March 31, 2023, 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 March

31, 2023, consisting of:

(i) 2,732,517 restricted stock units and (ii) 120,445 options.

8 – Stock-Based Compensation

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The number of awards available for issuance under

the Incentive Plan was 6,210,790 at September 30, 2022.

following table summarizes option activity during the nine months ended September 30, 2022:

Schedule of Option Activity

the Incentive Plan was 5,518,290 at March 31, 2023.

following table summarizes option activity during the three months ended March 31, 2023:

of Option Activity

Number of Options

Weighted Average

Weighted Average Exercise Price

Weighted Average Fair Value

Weighted Average Remaining Contractual Life (Years)

Outstanding at December 31, 2022

Forfeited/Cancelled

Outstanding at September 30, 2022

Exercisable at September 30, 2022

total intrinsic value of options exercised during the nine months ended September 30, 2022 was approximately $ 0.4 million.

The aggregate

intrinsic value of outstanding options at September 30, 2022 was approximately $ 1.4 million.

Outstanding at March 31, 2023

Exercisable at March 31, 2023

aggregate intrinsic value of outstanding options at March 31, 2023 was approximately $ 0.3 million.

compensation cost is measured at the grant date based on the fair value of the award granted and recognized as expense over the vesting

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The Company uses the Black-Scholes model to value options granted.

of September 30, 2022, there were no unvested options and no unrecognized stock-based compensation expense related to options.

As of March 31, 2023, there

were no unvested options and no unrecognized stock-based compensation expense related to options.

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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The following table sets forth the outstanding

RSUs and related activity for the nine months ended September 30, 2022:

Schedule of Outstanding Restricted Stock Units and Related Activity

Number of RSUs

RSUs and related activity for the three months ended March 31, 2023:

of Outstanding Restricted Stock Units and Related Activity

Weighted Average Grant Date Fair Value

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Forfeited/Cancelled

Unvested at September 30, 2022

of September 30, 2022, there was approximately $ 17.1 million of unrecognized stock-based compensation expense related to outstanding

RSUs which is expected to be recognized over a weighted-average period of 2.4 years.

Unvested at March 31, 2023

of March 31, 2023, there was approximately $ 14.5 million of unrecognized stock-based compensation expense related to outstanding RSUs

which is expected to be recognized over a weighted-average period of 2.1 years.

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

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the fair value of issued warrants using a vesting schedule based on the terms and conditions of each warrant if granted for services.

following table summarizes warrant activity during the nine months ended September 30, 2022:

Schedule of Warrant Activity

following table summarizes warrant activity during the three months ended March 31, 2023:

of Warrant Activity

Number of Warrants

Exercise Price

Weighted Average Exercise Price

Weighted Average Fair Value

Weighted Average Remaining Contractual Life (Years)

Outstanding at December 31, 2022

Issued for adjustments to contingent purchase consideration

Forfeited/Cancelled

Outstanding at September 30, 2022

intrinsic value of warrants exercised during the nine months ended September 30, 2022 and 2021 was approximately $ 0.3 million and $ 0 ,

respectively.

The aggregate intrinsic value of outstanding warrants at September 30, 2022 was approximately $ 0.1 million.

total number of warrants exercisable at September 30, 2022 are 20,000 .

The ability to exercise the approximately 465,000 warrants issued

in connection with acquisitions in the prior year is contingent upon the achievement of certain development and revenue milestones on

or before January 1, 2027.

Outstanding at March 31, 2023

were no warrants exercised during the three months ended March 31, 2023.

The intrinsic value of warrants exercised during the three months

ended March 31, 2022 was approximately $ 0.3 million.

The aggregate intrinsic value of outstanding warrants at March 31, 2023 was approximately

$ 0.1 million.

total number of warrants exercisable at March 31, 2023 is 20,000 .

The ability to exercise the approximately 465,000 warrants issued in

connection with acquisitions in prior years is contingent upon the achievement of certain development and revenue milestones on or before

January 1, 2027.

There was no unrecognized stock-based compensation expense related to warrants.

Issued for Services

Company has issued restricted stock to third parties for services provided.

The grant date fair value of the restricted stock granted

is determined using the closing market price of the Company’s common stock on the grant date with the associated compensation expense

amortized over the vesting period of the stock awards.

The Company issued 0 and 5,548 shares of restricted stock for services during

the nine months ended September 30, 2022 and 2021, respectively.

There was no unrecognized stock-based compensation expense related to

restricted stock issued.

Compensation Expense

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

Schedule of Recognized Stock-based Compensation Expense

Three Months Ended September 30,

Nine Months Ended September 30,

Restricted stock units

Company recognized stock-based compensation expense as follows:

of Recognized Stock-based Compensation Expense

Three Months Ended March 31,

Cost of sales

Sales and marketing

General and administrative

Research and development

Total stock-based compensation expense

9 – Income Taxes

the three months ended September 30, 2022, the Company recognized a benefit from income taxes of $ 2,114,638 , representing an effective

tax rate of 43.8 %.

For the nine months ended September 30, 2022, the Company recognized a benefit from income taxes of $ 1,470,058 , representing

an effective tax rate of 30.0 %.

the three months ended March 31, 2023, the Company recognized a benefit from income taxes of $ 2,259,811 , representing an effective tax

rate of 28.2 %.

The Company’s effective tax rate will generally differ from the U.S.

Federal statutory rate of

21.0 % due to state taxes, permanent items, and discrete items.

For the three and nine months ended September 30, 2021, the Company recognized

expense from income taxes of $ 2,100,594 and $ 6,231,310 , respectively.

10 – 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, a former 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 provides in part

that all accrued royalties under the License cease as of January 1, 2017, and the Company began in January 2017 to pay to Dr.

$ 700,000 of accrued royalties at the rate of $ 10,000 per month through December 2021.

At September 30, 2022 and 2021, the aggregate balance

of this related party liability was $ 0 and $ 30,000 , respectively.

Federal statutory rate of 21.0 % due to state

taxes, permanent items, and discrete items.

For the three months ended March 31, 2022, the Company recognized expense from income taxes

of $ 1,386,087 .

10 – Commitments and Contingencies

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

The Company expenses

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

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 three and nine months ended September 30, 2022, components of lease expense are summarized as follows:

During the three months ended March 31, 2023, this lease was amended to extend

the lease term.

As a result of this amendment, the Company recognized an additional operating lease liability and corresponding operating

right-of-use asset of $ 657,150 .

the three months ended March 31, 2023, components of lease expense are summarized as follows:

of Lease Expense

Three Months Ended September 30, 2022

Nine Months Ended September 30, 2022

Three Months Ended March 31, 2023

Operating lease costs

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

of September 30, 2022, the maturities of the Company’s lease liabilities are as follows:

of March 31, 2023, the maturities of the Company’s lease liabilities are as follows:

of Maturities on Company Lease Liabilities

Year Ending December 31,

2022 (remainder)

Total lease payments

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of Other Information Related to Operating Lease

Three Months Ended September 30, 2022

Nine Months Ended September 30, 2022

Three Months Ended

March 31, 2023

Cash paid for operating leases included in operating cash flows

1 unchanged sentence

Discount rate of operating leases

previously disclosed in our Annual Report on Form 10-K for the year ended December 31, 2021, future lease payments under ASC 840 for

operating leases were as follows:

Schedule of Future Minimum Lease Payments

Year Ending December 31,

Total lease payments

12 – Commitments and Contingencies

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.

Company is currently a defendant in five different securities class action complaints that were filed by certain stockholders of the

Company claiming that the Company promulgated false and misleading press releases to increase the price of our stock to improperly benefit

the officers and directors of the Company.

The plaintiffs demand compensatory damages sustained as a result of the Company’s alleged

wrongdoing in an amount to be proven at trial.

The Company believes these lawsuits are without merit and intends to defend the cases

The Company is unable to estimate a range of loss, if any, that could result were there to be an adverse final decision in

As of the date of this report, the Company does not believe it is probable that these cases will result in an unfavorable

however, if an unfavorable outcome were to occur in these cases, it is possible that the impact could be material to the Company’s

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

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.

The plaintiffs demand

compensatory damages sustained as a result of the Company’s alleged wrongdoing in an amount to be proven at trial.

is also a party to two commercial litigation lawsuits in which plaintiffs are claiming they are owned certain remuneration based on alleged

agreements with the Company.

The Company believes these lawsuits are without merit and intends to defend the cases vigorously.

is unable to estimate a range of loss, if any, that could result were there to be an adverse final decision in these cases.

date of this report, the Company does not believe it is probable that these cases will result in an unfavorable outcome;

an unfavorable outcome were to occur in these cases, it is possible that the impact could be material to the Company’s results

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

11 – Share Repurchase Program

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of Treasury Stock

Nine Months Ended

September 30, 2022

Three Months Ended

March 31, 2023

Balance, beginning of period

2 unchanged sentences

12 – Subsequent Events

Company evaluated subsequent events pursuant to ASC Topic 855 and determined that there are no subsequent events to be reported.

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 1. Financial Statements