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Item 8. Financial Statements and Supplementary Data

2024-03-14 compared with 2023-03-16 · 355 added, 341 removed, 597 unchanged (54% of the section changed)

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31, 2023 AND 2022

Report of Independent Registered Public Accounting Firm (PCAOB ID No.

Balance Sheets

Statements of Operations

Statement of Changes in Stockholders’ Equity

Statements of Cash Flows

Notes to Financial Statements

Reports of Independent Registered Public Accounting Firms (PCAOB ID No.

270 and ID No.

Consolidated Balance Sheets

Consolidated Statements of Operations

Consolidated Statement of Changes in Stockholders’ Equity

Consolidated Statements of Cash Flows

Notes to Consolidated Financial Statements

of Independent Registered Public Accounting Firm

the Board of Directors and Stockholders

Co-Diagnostics,

on the Consolidated Financial Statements

have audited the accompanying consolidated balance sheet of Co-Diagnostics Inc.

and subsidiaries (the Company) as of December 31, 2023,

the related consolidated statements of operations and comprehensive loss, changes in stockholders’ equity, and cash flows for the

year then ended, and the related notes (collectively, the consolidated financial statements).

In our opinion, the consolidated financial

statements referred to above present fairly, in all material respects, the consolidated financial position of the Company as of December

31, 2023, and the consolidated results of its operations and its cash flows for the year then ended, in conformity with accounting principles

generally accepted in the United States of America.

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

Our responsibility is to express an opinion

on the Company’s consolidated financial statements based on our audit.

We are a public accounting firm registered with the Public

Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance

with the U.S.

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

conducted our audit in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain

reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud.

The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.

of our audit, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing

an opinion on the effectiveness of the Company’s internal control over financial reporting.

Accordingly, we express no such opinion.

audit included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due

to error or fraud, and performing procedures that respond to those risks.

Such procedures included examining, on a test basis, evidence

regarding the amounts and disclosures in the consolidated financial statements.

Our audit also included evaluating the accounting principles

used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.

We believe that our audit provides a reasonable basis for our opinion.

Audit Matters

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

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

(1) relate to accounts or disclosures that are

material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments.

communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole,

and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the

accounts or disclosures to which they relate.

of the Fair Value of Intangible Assets

more fully described in Notes 2 and 6 to the consolidated financial statements, the Company acquired Idaho Molecular, Inc., and Advanced

Conceptions, Inc.

in December 2021.

As part of the transaction, the Company acquired in-process research and development indefinite-lived

intangible assets totaling $26,101,000.

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

in circumstances occur that may indicate impairment.

The Company’s analysis for the year ended December 31, 2023, required significant

judgment to assess qualitative factors in determining whether it is more likely than not that the indefinite-lived intangible asset is

As a result of their analysis, the Company determined there was no impairment as of year-end.

the Company’s annual impairment assessment was complex and highly judgmental due to the significant judgement required in determining

whether it is more likely than not that an indefinite-lived intangible asset is impaired.

This required a high degree of auditor judgement,

subjectivity and effort in performing procedures and evaluating audit evidence to evaluate management assessment in evaluating these

indefinite-lived intangibles for impairment.

These procedures included among others:

(1) evaluating management’s process for evaluating

for impairment, (2) evaluating the factors assessed by management (3) evaluating other relevant factors in making our own determination,

and (4) evaluating and discussing considerations and conclusions made by management.

have served as the Company’s auditor since 2023

Lake City, Utah

OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

the Board of Directors and Stockholders of Co-Diagnostics, Inc.

on the Financial Statements

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

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

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

notes (collectively referred to as the financial statements).

In our opinion, the financial statements present fairly, in all material

respects, the financial position of the Company as of December 31, 2022 and 2021, and the results of its operations and its cash flows

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

United States of America.

have audited the accompanying consolidated balance sheet of Co-Diagnostics, Inc (the Company) as of December 31, 2022, and

the related consolidated statements of operations and comprehensive income (loss), changes in stockholders’ equity, and cash flows

for the year ended December 31, 2022, and the related notes (collectively referred to as the financial

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company

as of December 31, 2022, and the results of its operations and its cash flows for the year ended

December 31, 2022, in conformity with accounting principles generally accepted in the United States of America.

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

Our responsibility is to express an opinion on the Company’s

financial statements based on our audits.

financial statements based on our audit.

We are a public accounting firm registered with the Public Company Accounting Oversight Board

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laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

conducted our audits in accordance with the standards of the PCAOB.

conducted our audit in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain

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is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.

As part of our audits,

As part of our audit,

we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion

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Accordingly, we express no such opinion.

audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error

audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error

or fraud, and performing procedures that respond to those risks.

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the amounts and disclosures in the financial statements.

Our audits also included evaluating the accounting principles used and significant

Our audit also included evaluating the accounting principles used and significant

estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that our audits

provide a reasonable basis for our opinion.

Audit Matters

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

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

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

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

The communication of critical audit matters does

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

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

and Intangible Assets

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

Conceptions, Inc.

in December 2021.

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

totaling $15,388,546.

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

occur that may indicate impairment.

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

to create a valuation based on future cash flows.

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

was recorded for the intangible assets.

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

the acquisition is highly subjective.

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

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

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

financial statements.

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

value estimate.

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

the evaluation.

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

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

We tested the mathematical accuracy

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

Finally, we considered

the sensitivity of changes to key assumptions in the model.

We believe that our audit provides a reasonable basis for our opinion.

Haynie & Company

Lake City, Utah

have served as the Company’s auditor since 2016.

began serving as the Company’s auditor in 2016.

In 2023, we became the predecessor auditor.

CO-DIAGNOSTICS,

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Accounts receivable, net

Inventory, net

Income taxes receivable

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Investment in joint venture

Note receivable

$ 123,086,281

$ 160,034,282

Liabilities and stockholders’ equity

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Accounts payable

Accrued expenses, current

Accrued expenses

Operating lease liability, current

Contingent consideration liabilities, current

Income taxes payable

Deferred revenue

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100,000,000 shares authorized;

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

36,108,346 shares issued and 31,259,668 shares outstanding as of December 31, 2023 and 34,754,265 shares issued and 30,872,607 shares outstanding as of December 31, 2022

Treasury stock, at cost;

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( 15,575,795 )

( 14,211,866 )

Additional paid-in capital

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$ 123,086,281

$ 160,034,282

accompanying notes to consolidated financial statements.

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AND SUBSIDIARIES

STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)

STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

Years Ended December 31,

Product revenue

Grant revenue

Total revenue

Cost of revenue

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Total operating expenses

Income (loss) from operations

Loss from operations

( 42,706,234 )

Other income (expense)

( 26,979,837 )

Other income, net

Interest income

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)

Income (loss) before income taxes

Gain (loss) on equity method investment in joint venture

Total other income, net

Loss before income taxes

( 38,110,556 )

Income tax provision (benefit)

( 18,847,234 )

Net income (loss)

Income tax benefit

( 2,777,691 )

Other comprehensive income

( 4,608,985 )

$ ( 35,332,865 )

$ ( 14,238,249 )

Other comprehensive loss

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

Total other comprehensive income

Comprehensive income (loss)

$ ( 146,440 )

Earnings per common share:

Total other comprehensive income (loss)

$ ( 146,440 )

Comprehensive loss

$ ( 35,479,305 )

$ ( 13,945,109 )

Loss per common share:

Weighted average shares outstanding:

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Preferred Stock

Other Comprehensive

Comprehensive

Stockholders’

Balance as of December 31, 2021

Common stock issued for option

$ 134,475,099

Common stock issued for option exercises

Common stock issued for warrant exercises

Stock-based compensation expense

Common stock issued for acquisitions

Repurchases of common stock

( 14,211,866 )

Other comprehensive income, net of tax

( 14,238,249 )

Balance as of December 31, 2022

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$ 114,519,994

Common stock issued for option

Common stock issued for warrant

$ ( 14,211,866 )

$ 114,519,994

Stock-based compensation expense

Common stock issued for acquisitions

Repurchases of common stock

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( 1,363,929 )

Other comprehensive income,

Other comprehensive loss, net of tax

( 35,332,865 )

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$ ( 15,575,795 )

$ ( 14,211,866 )

$ 114,519,992

accompanying notes to consolidated financial statements.

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$ ( 35,332,865 )

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

$ ( 14,238,249 )

Adjustments to reconcile net loss to cash (used in) provided by operating activities:

Depreciation and amortization

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( 1,092,581 )

( 7,899,644 )

Non-cash lease expense

Loss from equity method investment

Realized gain on investments

( 2,243,059 )

(Gain) loss from equity method investment

Loss on disposition of assets

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( 2,417,987 )

Bad debt expense

( 4,810,457 )

Provision for credit losses

Inventory obsolescence expense

Changes in assets and liabilities:

Accounts receivable

( 8,740,851 )

Prepaid expenses

( 2,049,095 )

Prepaid expenses and other assets

( 3,673,309 )

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( 2,483,821 )

Net cash provided by operating activities

Net cash (used in) provided by operating activities

( 22,081,865 )

Cash flows from investing activities

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( 1,365,306 )

( 1,427,512 )

Proceeds from maturities of marketable investment securities

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( 110,497,444 )

Investment in joint venture

Business combinations, net of cash acquired

( 67,995,926 )

Net cash (used in) provided by investing activities

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( 1,363,929 )

Net cash (used in) provided by financing activities

( 14,211,866 )

Net increase in cash and cash equivalents

Net cash (used in) financing activities

( 1,363,929 )

( 14,033,996 )

Net decrease in cash and cash equivalents

( 8,056,925 )

( 65,633,431 )

Cash and cash equivalents at beginning of period

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Co-Diagnostics,

Inc., a Utah corporation (the “Company” or “CODX”), is developing robust and innovative molecular tools for detection

of infectious diseases, liquid biopsy for cancer screening, and agricultural applications.

The Company develops, manufactures, and sells

reagents used for diagnostic tests that function via the detection and/or analysis of nucleic acid molecules (DNA or RNA), including

robust and innovative molecular tools for detection of infectious diseases, liquid biopsy for cancer screening, and agricultural applications.

In connection with the sale of our tests we may sell diagnostic equipment from other manufacturers as self-contained lab systems.

Inc., a Utah corporation (the “Company” or “CODX”), is a molecular diagnostics company that develops, manufactures

and markets state-of-the-art diagnostics technologies.

The Company’s technologies are utilized for tests that are designed using

the detection and/or analysis of nucleic acid molecules (DNA or RNA).

The Company also uses its proprietary technology to design specific

tests for its Co-Dx PCR platform and to locate genetic markers for use in applications other than infectious disease.

In connection with

the sale of our tests we may sell diagnostic equipment from other manufacturers as self-contained lab systems.

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

and assumptions that affect the amounts reported in the financial statements and the accompanying notes.

Such estimates include receivables

and other long-lived assets, legal and regulatory contingencies, income taxes, share based arrangements, and others.

These estimates

and assumptions are based on management’s best estimates and judgments.

Actual amounts and results could differ from those estimates.

Such estimates include inventories,

receivables and other long-lived assets, legal and regulatory contingencies, income taxes, share based arrangements, and others.

estimates and assumptions are based on management’s best estimates and judgments.

Actual amounts and results could differ from

those estimates.

of Presentation

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2 – Summary of Significant Accounting Policies

Reclassifications

prior year amounts have been reclassified to conform with the current year’s presentation.

These reclassifications have no impact

on the previously reported results.

and Cash Equivalents

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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.

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

comprehensive loss.

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

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accounts of $ 200,338 resulting in a net amount of $ 303,926 .

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

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

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

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

At December 31, 2021, the Company had $ 2,004,169 in inventory, of which $ 983,088

was finished goods and $ 1,021,081 was raw materials.

At December 31, 2023, the Company had $ 1,664,725 in inventory, of which $ 700,467 was

finished goods and $ 964,258 was raw materials.

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

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

The Company establishes reserves to reduce low-moving, obsolete, or unusable inventories

to their estimated useful or scrap values.

The Company recognized $ 2,760,011 and $ 0 related to the change in inventory reserves during

the years ended December 31, 2023 and 2022, respectively.

and Intangible Assets

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intangible assets are amortized over their useful lives.

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

the years ended December 31, 2023 and 2022, the Company recognized impairment charges related to goodwill of $ 0 and $ 15,388,546 , respectively.

assets, such as property and equipment, are stated at cost less accumulated depreciation and amortization.

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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.

Goodwill as of the acquisition date is

measured as the excess of consideration transferred over the net of the acquisition date fair values of the assets acquired and the liabilities

Such valuations require management to make significant estimates and assumptions, especially with respect to intangible assets.

Management’s estimates of fair value are based upon assumptions believed to be reasonable, but which are inherently uncertain and

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

in-process research and development projects acquired in business combinations, the in-process research and development project is capitalized

and evaluated for impairment until the development process has been completed.

Once the development process has been completed the asset

will be amortized over its remaining estimated useful life.

The Company reviews its long-lived assets, including property and equipment,

indefinite-lived and 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.

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

Company generates revenue from product sales and license sales.

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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 consolidated statements of operations and comprehensive income (loss).

The Company recognizes grant funding with conditions or continuing

performance obligations as deferred revenue in the consolidated balance sheets if the conditions or performance obligations

have not yet been met.

The Company recognized grant funding revenue of $ 5.8 million during the year ended December 31, 2023.

31, 2023, the Company has also recorded $ 0.3 million of deferred revenue related to grant funding for which the cash was received, but

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 prior to the Company fulfilling its performance obligation of providing

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and development costs are expensed when incurred.

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

The Company recorded $ 22,962,593 and $ 17,438,098 of research and development costs

for the years ended December 31, 2023 and 2022, respectively.

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and ongoing tax planning strategies.

the provision for income taxes, including the effective tax rate and analysis of potential tax exposure items, if any, requires

significant judgment and expertise in federal and state income tax laws, regulations and strategies, including the determination of

deferred income tax assets and liabilities and any estimated valuation allowances deemed necessary to value deferred income tax

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

The Company has uncertain income tax

positions in the consolidated financial statements, and adverse determinations by these taxing authorities could have a material

adverse effect on the consolidated financial positions, result of operations, or cash flows.

Income per Share

the provision for income taxes, including the effective tax rate and analysis of potential tax exposure items, if any, requires significant

judgment and expertise in federal and state income tax laws, regulations and strategies, including the determination of deferred income

tax assets and liabilities and any estimated valuation allowances deemed necessary to value deferred income tax assets.

Judgments and

tax strategies are subject to audit by various taxing authorities.

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 (Loss) per Share

net income or loss per common share is computed by dividing net income or loss applicable to common shareholders by the weighted average

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Comprehensive

Income (Loss)

Comprehensive

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

loss is comprised of net loss and 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 years ended December

31, 2022 and 2021.

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

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

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

at December 31, 2022 and 2021, respectively.

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

at December 31, 2022 and 2021, respectively.

Company had certain customers which were each responsible for generating 10 % or more of the total revenue for the years ended December

31, 2023 and 2022, respectively.

Two customers accounted for approximately 28 % of product revenue for the year ended December 31, 2023

and one customer accounted for approximately 37 % of product revenue for the year ended December 31, 2022.

One granting agency accounted

for 100 % of grant revenue for the year ended December 31, 2023.

customers accounted for more than 10 % of accounts receivable at December 31, 2023 and 2022, respectively.

These customers together accounted

for approximately 97 % and 61 % of accounts receivable at December 31, 2023 and 2022, respectively.

Issued Accounting Standards

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

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 application.

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

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

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

whether expired or existing contracts are or contain leases;

not reassessing the classification of expired or existing leases;

not reassessing the initial direct cost for any existing leases.

Upon adoption, the Company recognized an operating lease liability

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

December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740):

Improvements to Income Tax Disclosures, which requires an entity

to disclose annually additional information related to the company’s income tax rate reconciliation and income taxes paid during

The guidance should be applied prospectively with the option to apply the standard retrospectively.

The standard becomes

effective for the Company for full year 2025 reporting.

The Company is currently evaluating the impact of this new standard on its consolidated

financial statements.

3 – Cash, Cash Equivalents, and Financial Instruments

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

as of December 31, 2022:

of Cash, Cash Equivalents and Marketable Investment Securities

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Cash and Cash Equivalents

Marketable Investment 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

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investment securities held as of December 31, 2023 mature over the next 12 months.

4 – Business Combinations

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

(“ACI”) and Idaho Molecular, Inc.

(“IdMo”), which were related

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

Upon the completion of the acquisition,

all outstanding ACI and IdMo common stock was initially exchanged for approximately 3.2

million shares of the Company’s common stock and contingent consideration that includes up to approximately 1.4

million shares and approximately 456,000

warrants to purchase shares of the Company’s common stock.

The contingent consideration is based on the achievement of certain

milestones, which include regulatory approval for identified products, as well as production and net revenue targets.

completion of the acquisition, both ACI and IdMo became 100 %

wholly-owned subsidiaries of the Company.

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

change within the measurement period.

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

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

Additionally, there was an

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

Due to the change in purchase consideration

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

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

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

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

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

contingencies of $ 78,617 .

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

assumed as set forth below:

of Assets and Liabilities assumed

Amounts Recognized as of Acquisition Date (as previously reported)

Measurement Period Adjustments

Amounts Recognized as of Acquisition Date (as adjusted)

Purchase Consideration

Fair value of common shares issued

Payable to shareholder

Fair value of contingent shares

Fair value of contingent warrants

Total fair value of consideration transferred

Identifiable assets acquired and liabilities assumed

Accounts receivable

Prepaid expenses and other current assets

Property and equipment

Technology - In-process research and development

Non-competition agreements

Accounts payable and accrued other expenses

( 1,069,274 )

( 1,170,867 )

Deferred tax liability

( 6,845,587 )

Total identifiable net assets

in-process research and development is considered an indefinite-lived intangible until the completion or abandonment of the research

and development activities.

The non-competition agreements are being amortized over a range of 1.5 to 3 years.

4 – Fair Value Measurements

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31, 2022, by level within the fair value hierarchy:

Schedule of Fair Value Assets and Liabilities

of Fair Value Assets and Liabilities

December 31, 2023

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

connection with the acquisitions of IdMo and ACI on December 31, 2021, the Company recorded a liability for contingent consideration

in the form of shares of common stock and warrants to purchase common stock.

The fair value of contingent consideration is calculated

using a discounted probability weighted valuation model.

Discount rates used in such calculations are a significant assumption that are

not observed in the market, and therefore, the resulting fair value represents a Level 3 measurement.

connection with prior year acquisitions, the Company recorded a liability for contingent consideration in the form of shares of common

stock and warrants to purchase common stock, both to be issued when certain milestones are achieved.

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

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warrants were valued based on the following inputs:

Schedule of Contingent Consideration Common Stock and Warrants

December 31, 2022

December 31, 2021

Risk-free rate

Expected term

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

consideration-warrants, the Company estimated the probability as of the valuation date of achieving certain milestones, which

include regulatory approval for identified products, as well as production and net revenue targets.

The probability of achieving the

milestone related to net revenues was estimated as of the acquisition date using a Monte Carlo simulation valuation model.

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

The unobservable

significant inputs to the valuation model were as follows:

of Contingent Consideration Common Stock and Warrants

December 31, 2023

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Risk-free rate

Expected term

Weighted-average cost of capital

Revenue discount rate

Equity volatility

Asset volatility

Revenue volatility

Expected term (years)

Value of Other Financial Instruments

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of Property and Equipment

Estimated Useful Lives

Useful Lives in years

Lab equipment

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( 2,232,495 )

( 1,372,248 )

Fixed assets, net

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acquired in business combinations.

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

The following table presents the changes in the carrying amount of goodwill:

Balance as of December 31, 2021

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Total intangible assets

$ ( 791,333 )

December 31, 2022

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Total intangible assets

$ ( 426,667 )

(1) Based 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 December 31, 2023 is as follows:

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following table sets forth revenue by geographic area:

Summary of Revenue by Geographic Area

of Revenue by Geographic Area

Years Ended December 31,

United States

Product revenue

Grant revenue

Total United States

Rest of World

Product revenue

Grant revenue

Total Rest of World

Revenue geographic area

Percentage of revenue by area:

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Rest of World

in the Company’s deferred revenue balance for the years ended December 31, 2022 and 2021 were as follows:

Schedule of Deferred Revenue

in the Company’s deferred revenue balance for the year ended December 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

Increase due to prepayments from customers

Increase due to note receivable

Decrease due to refunds to customers and application to open balances

Balance as of December 31, 2021

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

Increase due to grant funding awarded

Balance as of December, 2023

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31, 2023 and 2022:

Schedule of Basic and Diluted Earnings Per Share

of Basis and Diluted Earnings Per Share

Years Ended December 31,

Net income, as reported

Net loss, as reported

$ ( 35,332,865 )

$ ( 14,238,249 )

Weighted average shares, basic

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Diluted earnings per share

the year ended December 31, 2021, potentially dilutive securities of 154,644 were excluded from the computation of diluted earnings per

share because the effect would have been anti-dilutive.

The computation of diluted earnings per share for the years ended December 31,

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

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

a result of incurring a net loss for the year ended December 31, 2022, no potentially dilutive securities are included in the calculation

of diluted earnings per share because such effect would be anti-dilutive.

The Company had potentially dilutive securities as of December

31, 2022, consisting of:

computation of diluted earnings per share for the years ended December 31, 2023 and December 31, 2022 also excludes 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 years ended December 31, 2023 and 2022, respectively, no potentially dilutive securities are

included in the calculation of diluted earnings per share because such effect would be anti-dilutive.

The Company had potentially dilutive

securities as of December 31, 2023, consisting of:

(i) 2,618,362 restricted stock units and (ii) 512,112 options, and potentially dilutive

securities as of December 31, 2022, consisting of:

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

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following table summarizes option activity during the years ended December 31, 2023 and 2022:

Schedule of Option Activity

of Option Activity

Number of Options

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Exercisable at December 31, 2023

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

total intrinsic value of options exercised during the years ended December 31, 2023 and 2022, respectively, was $ 0 and approximately

$ 0.4 million.

The aggregate intrinsic value of outstanding options at December 31, 2023 and 2022 was approximately $ 0.2 million and $ 0.8

million, respectively.

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

and $ 7.6 million, respectively.

As of December 31, 2022, there were no unvested options and no unrecognized stock-based compensation

expense related to options.

As of December 31, 2023, there were no unvested options and no unrecognized stock-based compensation expense related

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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RSUs and related activity for the years ended December 31, 2023 and 2022:

Schedule of Outstanding Restricted Stock Units and Related Activity

of Outstanding Restricted Stock Units and Related Party

Number of RSUs

Weighted Average Grant Date Fair Value

Average Grant Date Fair Value

Unvested at December 31, 2021

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Unvested at December 31, 2022

( 1,354,081 )

Forfeited/Cancelled

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following table summarizes warrant activity during the years ended December 31, 2023 and 2022:

Schedule of Warrant Activity

of Warrant Activity

Number of Warrants

Weighted Average Exercise Price

Weighted Average Exercise

Weighted Average Fair Value

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Outstanding at December 31, 2021

Issued for adjustments to contingent purchase consideration

Forfeited/Cancelled

Outstanding at December 31, 2022

Issued for adjustments to contingent purchase consideration

Forfeited/Cancelled

Outstanding at December 31, 2023

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

intrinsic value of warrants exercised during the years ended December 31, 2023 and 2022, respectively, was $ 0 and approximately $ 0.3

The aggregate intrinsic value of outstanding warrants at December 31, 2023 was approximately $ 0 .

warrants are exercisable at December 31, 2022.

As discussed in Note 3 and Note 4, approximately 456,000 warrants to purchase shares of

the Company’s common stock were issued in connection with the acquisition of ACI and IdMo.

The ability to exercise the warrants

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.

Note 5 for additional information regarding the fair value calculation of the warrants issued during the year ended December 31, 2021.

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 years ended December 31, 2022 and 2021, respectively, and there was no unrecognized stock-based compensation expense related to restricted

stock issued.

total number of warrants exercisable at December 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.

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

Company recognized stock-based compensation expense as follows:

of Recognized Stock-based Compensation Expense

Years Ended December 31,

Restricted stock units

Cost of sales

Sales and marketing

General and administrative

Research and development

Total stock-based compensation expense

11 – Income Taxes

components of the provision for income taxes consists of the following for the years ended December 31, 2022 and 2021:

components of the provision (benefit) for income taxes consists of the following for the years ended December 31, 2023 and

of Components Income Tax Provision

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$ ( 455,805 )

( 7,228,611 )

( 3,945,090 )

( 2,068,509 )

Change in valuation allowance

Total deferred

( 2,321,886 )

Total income tax (benefit) expense

( 4,906,558 )

Total income tax benefit

$ ( 2,777,691 )

$ ( 4,608,985 )

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

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deferred tax liabilities consist of the following components as of December 31, 2023 and 2022:

of Deferred Tax Assets

of Deferred Tax Assets and Liabilities

Deferred tax assets:

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Deferred compensation

Research and development credits

Section 174 costs

Lease liability

Net operating loss carryforwards

Research and development credits

Total gross deferred tax assets

Less valuation allowance

( 6,938,829 )

Total deferred tax assets

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( 7,562,202 )

Net deferred tax (liabilities)

( 2,417,987 )

( 7,228,444 )

Less valuation allowance

Net deferred tax (liabilities)

$ ( 2,417,987 )

Net deferred tax liability

$ ( 2,417,987 )

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

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

carryforwards.

December 31, 2023, the Company had federal net operating loss carryforwards of $ 16.3 million and federal research and development credit

carryforwards of $ 1.4 million.

At December 31, 2023, the Company had state net operating loss carryforwards of $ 16.9 million and $ 0.8

million of state research and development credit carryforwards.

If unused, the state research credit carryforward will expire in 2037.

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12 – Commitments and Contingencies

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

The Company expenses

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

As such, one lease makes up the entirety

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

Company leases administrative, R&D, sales and marketing and manufacturing facilities under non-cancellable operating leases and leases

cancellable with one month notice.

The Company expenses the cancelable leases in the period incurred in accordance with the practical

expedient elected.

During the year December 31, 2023, the Company amended two operating leases to extend the lease term and entered into

two new operating leases.

As a result, the Company recognized additional operating lease liabilities and corresponding operating right-of-use

assets of $ 3,203,146 .

the year ended December 31, 2023, components of lease expense are summarized as follows:

of Lease Expense

Year Ended December, 2022

December 31, 2023

Operating lease costs

1 unchanged sentence

Total lease costs

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

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

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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 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

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 civil actions, one in the US and the other in the United Kingdom.

Each of the civil actions is based on breach

of contract claims against 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;

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.

13 – Share Repurchase Program

17 unchanged sentences

Balance, end of period

Note 14 – Related Party Transactions

The Company employs one person who is related to

current or former executive officers.

Seth Egan is the Company’s Director of Sales and Marketing, and is the son of Dwight

Egan, the Company’s President and Chief Executive Officer and Chairman of the Board.

During the year ended December 31, 2023,

the total compensation paid to this person, including salaries, bonuses, and the grant date fair value of equity awards which vest

years , was $ 0.6

The Company also uses the services of Winston Egan as an independent contractor for sales operations consulting.

Winston Egan is also the son of Dwight Egan, the Company’s President and Chief Executive Officer and Chairman of the Board.

During the year ended December 31, 2023, the total compensation paid to this contractor, comprised of consulting fees, was $ 0.1

In August 2023, the Company entered into a

services agreement with CoSara, the Company’s equity method investment, under which CoSara provides certain research and

development consulting and support services.

During the year ended December 31, 2023, the Company recognized $ 0.2 million

of expense related to this agreement.

15 – Subsequent Events

1 unchanged sentence

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

What changed 10-K

Item 8. Financial Statements and Supplementary Data