What changed in this filing

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Item 1. Financial Statements

2023-11-09 compared with 2023-08-10 · 360 added, 253 removed, 490 unchanged (56% of the section changed)

3 unchanged sentences

CONSOLIDATED BALANCE SHEETS

June 30, 2023

September 30, 2023

December 31, 2022

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5,000,000 shares authorized;

0 shares issued and outstanding as of June 30, 2023 and December 31, 2022, respectively

0 shares issued and outstanding as of September 30, 2023 and December 31, 2022, respectively

Common stock, $ 0.001 par value;

100,000,000 shares authorized;

35,348,350 shares issued and 30,788,871 shares outstanding as of June 30, 2023 and 34,754,265 shares issued and 30,872,607 shares outstanding as of December 31, 2022

35,367,100 shares issued and 30,658,580 shares outstanding as of September 30, 2023 and 34,754,265 shares issued and 30,872,607 shares outstanding as of December 31, 2022

Treasury stock, at cost;

4,559,479 and 3,881,658 shares held as of June 30, 2023 and December 31, 2022, respectively

4,708,520 and 3,881,658 shares held as of September 30, 2023 and December 31, 2022, respectively

( 15,416,122 )

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CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)

Three Months Ended June 30,

Six Months Ended June 30,

Three Months Ended

September 30,

Nine Months Ended

September 30,

Product revenue

Grant revenue

Total revenue

Cost of revenue

5 unchanged sentences

Total operating expenses

Income (loss) from operations

(Loss) from operations

( 8,935,951 )

4 unchanged sentences

Realized gain on investments

(Loss) on disposition of assets

Gain (loss) on disposition of assets

Gain on remeasurement of acquisition contingencies

5 unchanged sentences

( 27,268,122 )

Income tax provision (benefit)

Income tax (benefit)

( 2,113,581 )

( 2,114,638 )

( 6,611,712 )

( 1,470,058 )

Net income (loss)

15 unchanged sentences

CONSOLIDATED STATEMENTS OF CASH FLOWS

Six Months Ended June 30,

Nine Months Ended September 30,

Cash flows from operating activities

8 unchanged sentences

Non-cash lease expense

Realized gain on investments

(Gain) loss from equity method investment

12 unchanged sentences

Accounts payable, accrued expenses and other liabilities

( 1,702,718 )

Net cash (used in) provided by operating activities

2 unchanged sentences

Purchases of property and equipment

( 1,134,208 )

Proceeds from maturities of marketable investment securities

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CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

Comprehensive

Stockholders’

Convertible Preferred

Additional Paid-in

Accumulated Other Comprehensive

Total Stockholders’

Balance as of December 31, 2022

8 unchanged sentences

( 14,694,062 )

Stock-based compensation

Repurchases of common stock

Other comprehensive income, net of tax

( 8,918,825 )

Balance as of June 30, 2023

( 15,249,796 )

Stock-based compensation

3 unchanged sentences

( 5,982,194 )

Net income (loss)

( 5,982,194 )

Balance as of June 30, 2023

$ ( 15,249,796 )

$ 103,432,377

Balance as of September 30, 2023

$ ( 15,416,122 )

Preferred Stock

Comprehensive

Stockholders’

Convertible Preferred

Additional Paid-in

Accumulated Other Comprehensive

Total Stockholders’

Balance as of December 31, 2021

$ 134,475,100

Common stock issued for option exercises

2 unchanged sentences

Balance as of March 31, 2022

$ 147,714,793

Common stock issued for option exercises

6 unchanged sentences

( 2,686,304 )

Net income (loss)

Balance as of June 30, 2022

( 2,599,478 )

Balance as of June 30, 2022

Stock-based compensation

Repurchases of common stock

( 10,394,895 )

2 unchanged sentences

( 1,361,062 )

Balance as of September 30, 2022

$ ( 12,994,373 )

$ 134,945,417

$ ( 12,994,373 )

$ 134,945,417

accompanying notes to unaudited condensed consolidated financial statements

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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 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.

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

to bring affordable, reliable polymerase chain reaction (“PCR”) to patients in point-of-care and 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 this filing.

There is no guarantee the Co-Dx PCR 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.

Condensed Consolidated Financial Statements

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

results for the three and six months ended June 30, 2023 are not necessarily indicative of the results that may be expected for the year

ending December 31, 2023.

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.

results for the three and nine months ended September 30, 2023 are not necessarily indicative of the results that may be expected for

the year ending December 31, 2023.

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 with the Securities

and Exchange Commission (the “SEC”) on March 16, 2023.

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

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or less from the date of purchase.

The fair value of cash equivalents approximated their carrying value as of June 30, 2023 and December

The Company has its cash and cash equivalents with large creditworthy financial institutions

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 September 30, 2023 and

December 31, 2022.

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

institutions 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

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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.

The Company maintains an allowance

for doubtful accounts for amounts the Company does not expect to collect.

In establishing the required allowance, management considers

historical losses, current market condition, customers’ financial condition, the age of receivables, and current payment patterns.

accounts receivable are recorded at the invoiced amount less estimates for credit losses.

Management determines the allowance for credit

losses by specifically identifying troubled accounts and by using historical write off experience, adjusted for current market conditions,

customers’ financial condition and payment patterns, and reasonable supportable forecasts of future economic conditions, applied

to an aging of all other accounts.

Account balances are written off against the allowance once the receivable is deemed uncollectible.

Recoveries of trade receivables previously

written off are recorded when collected.

At June 30, 2023, total accounts receivable was $ 4,510,545 with an allowance for uncollectable

accounts of $ 3,413,152 resulting in a net amount of $ 1,097,393 .

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 .

Recoveries of trade receivables previously written off are recorded when collected.

At September 30, 2023, total accounts receivable

was $ 4,231,877 with an allowance for credit losses of $ 3,425,173 resulting in a net amount of $ 806,704 .

At December 31, 2022, total accounts

receivable was $ 6,552,249 with an allowance for credit losses of $ 3,098,526 resulting in a net amount of $ 3,453,723 .

Equity-Method

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

At June 30, 2023, the Company had $ 4,691,068 in inventory, comprised of $ 842,087

At September 30, 2023, the Company had $ 4,520,430 in inventory, comprised of $ 788,104

of finished goods, and $ 3,732,326 of raw materials.

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classes of assets with a term of 12 months or less.

Company generates revenue from product sales and license sales.

The Company recognizes revenue when all of the following criteria are

Company generates revenue from customers from product and license sales.

The Company recognizes revenue from customers when all of the

following criteria are satisfied:

(i) identification of the promised goods or services in the contract;

(ii) determination of whether the promised goods or

services are performance obligations, including whether they are distinct in the context of the contract;

(iii) measurement of the transaction

price, including the constraint on variable consideration;

(iv) allocation of the transaction price to the performance obligations;

(v) recognition of revenue when, or as the Company satisfies each performance obligation.

(ii) determination of whether

the promised goods or services are performance obligations, including whether they are distinct in the context of the contract;

measurement of the transaction price, including the constraint on variable consideration;

(iv) allocation of the transaction price to

the performance obligations;

and (v) recognition of revenue when, or as the Company satisfies each performance obligation.

Company constrains revenue by giving consideration to factors that could otherwise lead to a probable reversal of revenue.

records any payments received from customers prior to the Company fulfilling its performance obligation(s) as deferred revenue.

Company may submit applications to receive grant funding from governmental and non-governmental entities.

The Company accounts for grants

by analogizing to the contribution accounting model under ASC 958-605, Not-for-Profit Entities (“ASC 958”).

Revenues from

grants, contracts, and awards provided by governmental and non-governmental agencies are recorded based upon the terms of the specific

The Company recognizes grant funding without conditions or continuing performance obligations as revenue in the condensed

consolidated statements of operations and comprehensive income (loss).

Company recognizes grant funding with conditions or continuing performance obligations as deferred revenue in the condensed consolidated

balance sheets if the conditions or performance obligations have not yet been met.

Company recognized grant funding revenue of $ 2.3 million during the three and nine months ended September 30, 2023.

At September 30,

2023, the Company has also recorded $ 0.3 million of deferred revenue related to grant funding for which the underlying conditions or

performance obligations have not yet been met.

Cash received from federal grants, contracts, and awards can be subject to audit by the

grantor and, if the examination results in a disallowance of any expenditure, repayment could be required.

revenue primarily consists of payments received from customers related to product sales or from granting agencies for services to be

rendered under research grants, prior to the Company fulfilling its performance obligation of providing the product or performing research

activities under the grant agreement.

When this occurs, the Company records a contract liability as deferred revenue.

Deferred revenue

is recognized as revenue as the related performance obligations are satisfied.

rendered under research and development grants, prior to the Company fulfilling its performance obligation of providing the product or

performing research and development activities under the grant agreement.

When this occurs, the Company records a contract liability

as deferred revenue.

Deferred revenue is recognized as revenue as the related performance obligations are satisfied.

and Development

and development costs are expensed when incurred.

For the three and six months ended June 30, 2023, the Company expensed $ 5,981,043 and

$ 10,995,103 of research and development costs, respectively.

For the three and six months ended June 30, 2022, the Company expensed $ 3,889,844

and $ 7,661,171 , respectively.

For the three and nine months ended September 30, 2023, the Company expensed $ 5,788,789

and $ 16,783,892 of research and development costs, respectively.

For the three and nine months ended September 30, 2022, the Company

expensed $ 5,037,461 and $ 12,698,632 , respectively.

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

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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 six months

ended June 30, 2023.

Three customers accounted for approximately 44 % of total revenue for the three months ended June 30, 2023, and two

customers accounted for approximately 33 % of total revenue for the six months ended June 30, 2023.

One customer accounted for approximately

55 % of total revenue for the three months ended June 30, 2022, and two customers accounted for approximately 46 % of total revenue for

the six months ended June 30, 2022.

customers accounted for more than 10 % of accounts receivable at June 30, 2023 and one customer accounted for more than 10 % of accounts

receivable at December 31, 2022.

These customers together accounted for approximately 77 % and 37 % of accounts receivable at June 30,

2023 and December 31, 2022, respectively.

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

ended September 30, 2023.

Three customers accounted for approximately 47 % of product revenue for the three months ended September 30,

2023, and two customers accounted for approximately 28 % of product revenue for the nine months ended September 30, 2023.

agency accounted for approximately 94 % of grant revenue for the three and nine months ended September 30, 2023.

One customer accounted

for approximately 52 % of product revenue for the three months ended September 30, 2022, and two customers accounted for approximately

47 % of product revenue for the nine months ended September 30, 2022.

customers accounted for more than 10 % of accounts receivable at September 30, 2023 and three customers accounted for more than 10 % of

accounts receivable at December 31, 2022.

These customers together accounted for approximately 71 % and 37 % of accounts receivable at

September 30, 2023 and December 31, 2022, respectively.

Issued Accounting Standards

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of Cash, Cash Equivalents and Marketable Investment Securities

June 30, 2023

September 30, 2023

Adjusted Cost

Allowance for Credit Losses

Total Unrealized Gains / (Losses)

Cash and Cash Equivalents

Marketable Investment Securities

Cash and cash equivalents

$ ( 222,480 )

Money market funds

1 unchanged sentence

December 31, 2022

Adjusted Cost

Allowance for Credit Losses

Total Unrealized Gains / (Losses)

Cash and Cash Equivalents

Marketable Investment Securities

Cash and cash equivalents

Money market funds

treasury securities

investment securities held as of June 30, 2023 mature over the next 12 months.

4 – Intangible Assets, Net

assets, net consisted of the following:

investment securities held as of September 30, 2023 mature over the next 12 months.

Note 4 – Intangible Assets, Net

Intangible assets, net consisted of the following:

of Intangible Assets, Net

June 30, 2023

Weighted-Average

Useful Life (1)

September 30, 2023

Weighted-Average Useful Life (1) (in Years)

Gross Carrying Amount

Accumulated Amortization

Carrying Amount

In-process research and development

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$ ( 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 June 30, 2023 is as follows:

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

The expected future annual amortization expense of the Company’s

intangible assets held as of September 30, 2023 is as follows:

of Future Amortization Expense

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2023 (remainder)

5 – Fair Value Measurements

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.

Observable market-based inputs or unobservable inputs that are corroborated by market data.

Unobservable inputs that are not corroborated by market data.

following table summarizes the assets and liabilities measured at fair value on a recurring basis as of June 30, 2023 and December 31,

2022, by level within the fair value hierarchy:

Note 5 – Fair Value Measurements

The 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.

The 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.

Observable market-based

inputs or unobservable inputs that are corroborated by market data.

Unobservable inputs

that are not corroborated by market data.

The following table summarizes the assets and liabilities

measured at fair value on a recurring basis as of September 30, 2023 and December 31, 2022, by level within the fair value hierarchy:

of Fair Value Assets and Liabilities

June 30, 2023

September 30, 2023

Cash equivalents

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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 U.S.

treasury bills and notes as

of June 30, 2023 and December 31, 2022.

connection with the acquisitions of Idaho Molecular, Inc.

The Company’s financial instruments that are

measured at fair value on a recurring basis consist of U.S.

treasury bills and notes as of September 30, 2023 and December 31, 2022.

In connection with the acquisitions of Idaho Molecular,

(IdMo) and Advanced Conceptions, Inc.

(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.

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:

(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.

The changes for Level 3 items measured at fair value

on a recurring basis are as follows:

of Changes in the Fair Value Measurement

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( 1,537,373 )

Fair value as of June 30, 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 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 the valuation date.

Prior to the probability adjustments, the

warrants were valued based on the following inputs:

Fair value as of September 30, 2023

The 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 the valuation date.

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 the valuation date.

Prior to the probability adjustments, the warrants were valued based on the following

of Contingent Consideration Common Stock and Warrants

June 30, 2023

September 30, 2023

December 31, 2022

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Expected term (years)

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:

Fair Value of Other Financial Instruments

The 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.

Note 6 – Revenue

The following table sets forth revenue by geographic

of Revenue by Geographic Area

Three Months Ended June 30,

Six Months Ended June 30,

Three Months Ended

September 30,

Nine Months Ended

September 30,

United States

Product revenue

Grant revenue

Total United States

Rest of World

Product revenue

Grant revenue

Total Rest of World

Revenue geographic area

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Rest of World

in the Company’s deferred revenue balance for the six months ended June 30, 2023 were as follows:

Deferred Revenue

Changes in the Company’s deferred revenue balance

for the nine months ended September 30, 2023 were as follows:

of Deferred Revenue

1 unchanged sentence

Increase due to prepayments from customers

Increase due to prepayments from grants received

Balance as of June 30, 2023

7 – Earnings (Loss) Per Share

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

and six months ended June 30, 2023 and 2022, respectively:

Increase due to grant funding awarded

Balance as of September 30, 2023

Note 7 – Earnings (Loss) Per Share

The following table reconciles the numerator and the

denominator used to calculate basic and diluted earnings (loss) per share for three and nine months ended September 30, 2023 and 2022,

respectively:

of Basis and Diluted Earnings Per Share

Three Months Ended June 30,

Six Months Ended June 30,

Three Months Ended

September 30,

Nine Months Ended

September 30,

Net income (loss), as reported

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Diluted earnings (loss) per share

the three and six months ended June 30, 2022, potentially dilutive securities of 1,391,156 and 1,155,136 were excluded from the calculation

because their effect would have been anti-dilutive.

The computation of basic and diluted earnings (loss) per share for the three and

six months ended June 30, 2023 and 2022, respectively, also excludes the approximately 1,400,000 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 and six months ended June 30, 2023, no potentially dilutive securities are included in

the calculation of diluted earnings (loss) per share because such effect would be anti-dilutive.

The Company had potentially dilutive

securities as of June 30, 2023, consisting of:

For 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.

The computation of basic and diluted earnings (loss) per share for the three and nine months ended September 30, 2023 and

2022, respectively, also excludes the approximately 1,400,000 shares of common stock and approximately 465,000 warrants to purchase shares

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

As a result of incurring a net loss for the three

and nine months ended September 30, 2023, no potentially dilutive securities are included in the calculation of diluted earnings (loss)

per share because such effect would be anti-dilutive.

The Company had potentially dilutive securities as of September 30, 2023, consisting

(i) 2,750,302 restricted stock units and (ii) 512,112 options.

8 – Stock-Based Compensation

Incentive Plans

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 4,340,736 at June 30, 2023.

following table summarizes option activity during the six months ended June 30, 2023:

Note 8 – Stock-Based Compensation

Stock Incentive Plans

The 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 4,361,861 at

September 30, 2023.

Stock Options

The following table summarizes option activity during

the nine months ended September 30, 2023:

of Option Activity

Exercise Price

Number of Options

Weighted Average Exercise Price

Weighted Average Fair Value

Weighted Average Remaining Contractual Life (Years)

Outstanding at December 31, 2022

Forfeited/Cancelled

Outstanding at June 30, 2023

Exercisable at June 30, 2023

aggregate intrinsic value of outstanding options at June 30, 2023 was approximately $ 0.1 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

period using the straight-line method.

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

As of June 30, 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

with the associated compensation expense amortized over the vesting period of the awards.

The following table sets forth the outstanding

RSUs and related activity for the six months ended June 30, 2023:

Outstanding at September 30, 2023

Exercisable at September 30, 2023

The aggregate intrinsic value of outstanding options

at September 30, 2023 was approximately $ 0.1 million.

Stock-based 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.

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

As of September 30, 2023, there were no unvested options and no unrecognized

stock-based compensation expense related to options.

Restricted Stock Units

The grant date fair value of RSUs 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 awards.

The following table sets forth the outstanding RSUs and related activity for the nine months ended

September 30, 2023:

of Outstanding Restricted Stock Units and Related Party

Number of RSUs

Weighted Average

Grant Date Fair

Weighted Average Grant Date Fair Value

Unvested at December 31, 2022

Forfeited/Cancelled

Unvested at June 30, 2023

of June 30, 2023, there was approximately $ 13.8 million of unrecognized stock-based compensation expense related to outstanding RSUs

which is expected to be recognized over a weighted-average period of 2.0 years.

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

estimates the fair value of issued warrants on the date of issuance as determined using a Black-Scholes pricing model.

The Company amortizes

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 six months ended June 30, 2023:

Unvested at September 30, 2023

As of September 30, 2023, there was approximately

$ 11.5 million of unrecognized stock-based compensation expense related to outstanding RSUs which is expected to be recognized over a weighted-average

period of 1.9 years.

The Company has issued warrants related to financings,

acquisitions and as compensation to third parties for services provided.

The Company estimates the fair value of issued warrants on the

date of issuance as determined using a Black-Scholes pricing model.

The Company amortizes the fair value of issued warrants using a vesting

schedule based on the terms and conditions of each warrant if granted for services.

The following table summarizes warrant activity during

the nine months ended September 30, 2023:

of Warrant Activity

Exercise Price

Number of Warrants

Weighted Average Exercise Price

Weighted Average Fair Value

Weighted Average Remaining Contractual Life (Years)

Outstanding at December 31, 2022

Forfeited/Cancelled

Outstanding at June 30, 2023

were no warrants exercised during the six months ended June 30, 2023.

The intrinsic value of warrants exercised during the six months

ended June 30, 2022 was approximately $ 0.3 million.

The aggregate intrinsic value of outstanding warrants at June 30, 2023 was approximately

total number of warrants exercisable at June 30, 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.

Compensation Expense

Company recognized stock-based compensation expense as follows:

Outstanding at September 30, 2023

There were no warrants exercised during the nine months

ended September 30, 2023.

The intrinsic value of warrants exercised during the nine months ended September 30, 2022 was approximately

$ 0.3 million.

The aggregate intrinsic value of outstanding warrants at September 30, 2023 was approximately $ 0 .

The total number of warrants exercisable at September

30, 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.

Stock-Based Compensation Expense

The Company recognized stock-based compensation expense

of Recognized Stock-based Compensation Expense

Three Months Ended June 30,

Six Months Ended June 30,

Three Months Ended

September 30,

Nine Months Ended

September 30,

Cost of revenue

3 unchanged sentences

Total stock-based compensation expense

9 – Income Taxes

the three months ended June 30, 2023, the Company recognized a benefit from income taxes of $ 2,238,320 , representing an effective tax

rate of 20.1 %.

For the six months ended June 30, 2023, the Company recognized a benefit from income taxes of $ 4,498,131 , representing

an effective tax rate of 23.5 %.

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 months ended June 30, 2022, the Company recognized a benefit

from income taxes of $ 741,507 .

For the six months ended June 30, 2022, the Company recognized expense from income taxes of $ 644,580 .

10 – Commitments and Contingencies

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

The Company expenses

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

During the six months ended June 30,

2023, the Company amended two operating leases to extend the lease term and entered into one new operating lease.

As a result, the Company

recognized additional operating lease liabilities and corresponding operating right-of-use assets of $ 3,063,782 .

the three and six months ended June 30, 2023, components of lease expense are summarized as follows:

Note 9 – Income Taxes

For the three months ended September 30, 2023, the

Company recognized a benefit from income taxes of $ 2,113,581 , representing an effective tax rate of 26.1 %.

For the nine months ended September

30, 2023, the Company recognized a benefit from income taxes of $ 6,611,712 , representing an effective tax rate of 24.2 %.

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

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

For the nine months

ended September 30, 2022, the Company recognized a benefit from income taxes of $ 1,470,058 .

Note 10 – Commitments and Contingencies

Lease Obligations

The Company leases office space under non-cancellable

operating leases and leases cancellable with one month notice.

The Company expenses the cancellable leases in the period incurred in accordance

with the practical expedient elected.

During the nine months ended September 30, 2023, the Company amended two operating leases to extend

the lease term and entered into one new operating lease.

As a result, the Company recognized additional operating lease liabilities and

corresponding operating right-of-use assets of $ 3,063,782 .

For the three and nine months ended September 30,

2023, components of lease expense are summarized as follows:

of Lease Expense

Three Months Ended

June 30, 2023

Six Months Ended

June 30, 2023

September 30, 2023

Nine Months Ended

September 30, 2023

Operating lease costs

1 unchanged sentence

Total lease costs

of June 30, 2023, the maturities of the Company’s lease liabilities are as follows:

As of September 30, 2023, the maturities of the Company’s

lease liabilities are as follows:

of Maturities on Company Lease Liabilities

Year Ending December 31,

2023 (remainder)

4 unchanged sentences

Long-term portion

information related to operating leases was as follows:

Other information related to operating leases was

of Other Information Related to Operating Lease

Six Months Ended

June 30, 2023

Nine Months Ended September 30, 2023

Cash paid for operating leases included in operating cash flows

1 unchanged sentence

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

that a liability has been incurred and the amount can be reasonably estimated.

Legal costs incurred in connection with loss contingencies

are expensed as incurred.

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

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 number of common

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

The timing and amount

of any share repurchases under the share repurchase program will be determined by Co-Diagnostics’ management at its discretion

based on ongoing assessments of the capital needs of the business, the market price of the Company’s common stock, corporate and

regulatory requirements, and general market conditions.

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:

Liabilities for loss contingencies arising from claims,

assessments, litigation, fines, and penalties and other sources are recorded when it is probable that a liability has been incurred and

the amount can be reasonably estimated.

Legal costs incurred in connection with loss contingencies are expensed as incurred.

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.

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 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.

The Company is unable to estimate a range of loss, if any,

that could result were there to be an adverse final decision in these cases.

As of the date of this report, the Company does not believe

it is probable that these cases will result in an unfavorable outcome;

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.

Note 11 – Share Repurchase Program

In 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 number of common shares, and the repurchase program may be suspended or

discontinued at any time at the Company’s discretion.

The timing and amount of any share repurchases under the share repurchase

program will be determined by Co-Diagnostics’ management at its discretion based on ongoing assessments of the capital needs of

the business, the market price of the Company’s common stock, corporate and regulatory requirements, and general market conditions.

For accounting purposes, common stock repurchased

under the stock repurchase program is recorded based upon the transaction date of the applicable trade.

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 (in shares) for the periods presented:

of Treasury Stock

Six Months Ended

June 30, 2023

Nine Months Ended

September 30, 2023

Balance, beginning of period

1 unchanged sentence

Balance, end of period

12 – Subsequent Events

Note 12 – Subsequent Events

In October 2023, the Company was awarded additional

grant funding of approximately $ 9.0 million from one of the granting entities from whom the Company had previously been awarded grant

funding during the three months ended September 30, 2023.

The first $ 3.5 million of funding under this grant was received by the Company

in October 2023.

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