What changed in this filing

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Item 1. Financial Statements

2024-05-09 compared with 2023-11-09 · 290 added, 564 removed, 286 unchanged (75% of the section changed)

3 unchanged sentences

CONSOLIDATED BALANCE SHEETS

September 30, 2023

March 31, 2024

December 31, 2023

6 unchanged sentences

Prepaid expenses and other current assets

Note receivable

Total current assets

Property and equipment, net

Deferred tax asset

Operating lease right-of-use asset

1 unchanged sentence

Investment in joint venture

$ 108,681,735

$ 123,086,281

Liabilities and stockholders’ equity

1 unchanged sentence

Accounts payable

Accrued expenses, current

Accrued expenses

Operating lease liability, current

4 unchanged sentences

Income taxes payable

Deferred tax liability

Operating lease liability

6 unchanged sentences

5,000,000 shares authorized;

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

0 shares issued and outstanding as of March 31, 2024 and December 31, 2023, respectively

Common stock, $ 0.001 par value;

100,000,000 shares authorized;

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

36,127,096 shares issued and 31,278,418 shares outstanding as of March 31, 2024 and 36,108,346 shares issued and 31,259,668 shares outstanding as of December 31, 2023

Treasury stock, at cost;

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

( 15,416,122 )

( 14,211,866 )

4,848,678 shares held as of March 31, 2024 and December 31, 2023, respectively

Additional paid-in capital

Accumulated other comprehensive income

Accumulated earnings

Accumulated earnings (deficit)

Total stockholders’ equity

Total liabilities and stockholders’ equity

$ 108,681,735

$ 123,086,281

accompanying notes to unaudited condensed consolidated financial statements

1 unchanged sentence

AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)

Three Months Ended

September 30,

Nine Months Ended

September 30,

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

Three Months Ended March 31,

Product revenue

11 unchanged sentences

( 9,950,650 )

( 30,881,040 )

Other income, net

1 unchanged sentence

Realized gain on investments

Gain (loss) on disposition of assets

Gain on remeasurement of acquisition contingencies

1 unchanged sentence

Total other income, net

Income (loss) before income taxes

( 8,095,775 )

( 3,475,700 )

( 27,268,122 )

Income tax (benefit)

( 2,113,581 )

( 2,114,638 )

Loss before income taxes

( 9,289,279 )

( 8,015,202 )

Net income (loss)

Income tax provision (benefit)

( 2,259,811 )

1 unchanged sentence

$ ( 5,755,391 )

Other comprehensive income (loss)

Other comprehensive loss

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

Total other comprehensive income

Comprehensive income (loss)

$ ( 5,948,672 )

Comprehensive loss

$ ( 9,232,188 )

$ ( 5,576,770 )

Earnings (loss) per common share:

Loss per common share:

Basic and Diluted

Weighted average shares outstanding:

Basic and Diluted

accompanying notes to unaudited condensed consolidated financial statements

2 unchanged sentences

CONSOLIDATED STATEMENTS OF CASH FLOWS

Nine Months Ended September 30,

Three Months Ended March 31,

Cash flows from operating activities

Net (loss) income

$ ( 9,312,043 )

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

$ ( 5,755,391 )

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

Depreciation and amortization

2 unchanged sentences

( 1,037,672 )

( 7,079,446 )

Non-cash lease expense

1 unchanged sentence

(Gain) loss from equity method investment

Loss on disposition of assets

Deferred income taxes

( 2,214,652 )

( 3,431,286 )

Bad debt expense

Provision for credit losses

Inventory obsolescence expense

Changes in assets and liabilities:

1 unchanged sentence

Prepaid expenses and other assets

( 3,656,463 )

Deferred revenue

Income taxes payable

( 1,822,977 )

Accounts payable, accrued expenses and other liabilities

Net cash (used in) provided by operating activities

Net cash used in operating activities

( 8,490,334 )

( 5,917,517 )

Cash flows from investing activities

Purchases of property and equipment

( 1,134,208 )

Proceeds from maturities of marketable investment securities

1 unchanged sentence

( 40,574,387 )

( 9,950,824 )

Net cash (used in) provided by investing activities

Net cash provided by (used in) investing activities

( 10,214,710 )

Cash flows from financing activities

Proceeds from exercise of options and warrants

Repurchases of common stock

( 1,204,256 )

( 12,994,373 )

Net cash used in financing activities

( 1,204,256 )

( 12,816,503 )

Net (decrease) in cash and cash equivalents

( 12,733,905 )

Net increase (decrease) in cash and cash equivalents

( 16,614,423 )

2 unchanged sentences

Supplemental disclosure of cash flow information

Interest paid

Income taxes paid

Supplemental disclosure of non-cash investing and financing transactions

Inventory moved to property, plant and equipment

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

Business acquisition measurement period adjustments

accompanying notes to unaudited condensed consolidated financial statements

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CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

Convertible Preferred

Additional Paid-in

Accumulated Other Comprehensive

Total Stockholders’

Preferred Stock

Other Comprehensive

Accumulated Earnings

Stockholders’

Balance as of December 31, 2023

( 15,575,795 )

$ 114,519,994

Stock-based compensation

Repurchases of common stock

Other comprehensive income, net of tax

3 unchanged sentences

$ ( 15,575,795 )

Stock-based compensation

Repurchases of common stock

Other comprehensive income, net of tax

$ ( 4,713,877 )

( 8,918,825 )

Balance as of June 30, 2023

( 15,249,796 )

Stock-based compensation

Repurchases of common stock

Other comprehensive income, net of tax

( 5,982,194 )

Balance as of September 30, 2023

$ ( 15,416,122 )

Convertible Preferred

Additional Paid-in

Accumulated Other Comprehensive

Total Stockholders’

Preferred Stock

Other Comprehensive

Stockholders’

Balance as of December 31, 2022

$ ( 14,211,866 )

Common stock issued for option exercises

Common stock issued for warrant exercises

Stock-based compensation

Balance as of March 31, 2022

Common stock issued for option exercises

Stock-based compensation

Common stock issued for acquisitions

Repurchases of common stock

$ 114,519,994

1 unchanged sentence

$ 114,519,994

( 2,686,304 )

Balance as of June 30, 2022

( 2,599,478 )

Stock-based compensation

Repurchases of common stock

( 10,394,895 )

( 1,361,062 )

Other comprehensive income, net of tax

( 5,755,391 )

Balance as of September 30, 2022

Balance as of March 31, 2023

$ ( 14,694,062 )

8 unchanged sentences

Co-Diagnostics,

Inc., a Utah corporation (the “Company” or “CODX”), develops, manufactures and sells reagents used for diagnostic

tests that function via the detection and/or analysis of nucleic acid molecules (DNA or RNA), including robust and innovative molecular

tools for detection of infectious diseases and agricultural applications.

In connection with the sale of our tests we may sell diagnostic

equipment from other manufacturers as self-contained lab systems (which we refer to as the “MDx Device”).

We are also developing

a unique, groundbreaking portable PCR device and proprietary test cups (the “Co-Dx™ PCR 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.

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.

Condensed Consolidated Financial Statements

accompanying unaudited condensed consolidated financial statements of the Company have been prepared in accordance with accounting principles

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

prescribed for smaller reporting companies.

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

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

In the opinion of management, all adjustments

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

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.

generally accepted in the United States of America (“U.S.

GAAP”) and the rules and regulations of the Securities and Exchange

Commission (“SEC”) for interim financial information as they are prescribed for smaller reporting companies.

under those rules and regulations, certain notes or other financial information normally included in financial statements prepared in

accordance with U.S.

GAAP have been condensed or omitted.

Accordingly, the accompanying unaudited condensed consolidated financial statements

do not include all the information and footnotes required by U.S.

GAAP for complete financial statements.

In the opinion of management,

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

been included.

Operating results for the three months ended March 31, 2024 are not necessarily indicative of the results that may be

expected for the year ending December 31, 2024.

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

statements and related notes for the year ended December 31, 2023, included in the Company’s Annual Report on Form 10-K filed with

the SEC on March 14, 2024.

The Company’s significant accounting policies are set forth in Note 2 to the consolidated financial

statements in its Annual Report on Form 10-K for the year ended December 31, 2023.

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

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on the previously reported results.

and Cash Equivalents

and cash equivalents consist of cash on hand, money market funds and highly liquid investments with an original maturity date of 90 days

or less from the date of purchase.

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

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

Treasury bills and

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

Available-for-sale debt securities with original

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

Available-for-sale debt

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

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

The Company may sell these securities at any

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

Available-for-sale debt securities are reported

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

stockholders’ equity, net of tax.

Realized gains and losses on the sale of marketable investment 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 (loss).

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

For investments in an unrealized loss position, the Company

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

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

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

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

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

The Company recognizes an allowance for credit

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

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

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

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

accounts receivable are recorded at the invoiced amount 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.

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.

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 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

Company’s equity method investments are initially recorded at cost and are included in other long-term assets in the accompanying

condensed consolidated balance sheet.

The Company adjusts the carrying value of its investment based on our share of the earnings or

losses in the periods which they are reported by the investee until the carrying amount is zero.

The earnings or losses are included

in other income (expense) in the accompanying condensed consolidated statements of operations.

Recoveries of trade receivables previously

written off are recorded when collected.

At March 31, 2024 total accounts receivable was $ 620,548 with an allowance for uncollectable

accounts of $ 185,680 resulting in a net amount of $ 434,868 .

At December 31, 2023 total accounts receivable was $ 504,264 with an allowance

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

is stated at the lower of cost or net-realizable value.

1 unchanged sentence

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

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.

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 slow-moving, obsolete, or unusable inventories

to their estimated useful or scrap values.

Indefinite-lived

intangible assets are not amortized, but rather tested for impairment at least annually on December 31, or more often if and when circumstances

indicate that the carrying value may not be recoverable.

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

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

Depreciation is provided using

the straight-line method over the estimated useful lives of the property, generally from three to five years.

Repairs and maintenance

costs are expensed as incurred except when such repairs significantly add to the useful life or productive capacity of the asset, in

which case the repairs are capitalized.

Company reviews its long-lived assets, including property and equipment, finite-lived intangible assets, and right-of-use (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 value.

Company estimates 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 assumed.

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.

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

Under ASC 842, the Company determines if an arrangement

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

control the identified asset.

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

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

Lease liabilities

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

ROU assets are

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

lease incentives and initial direct costs incurred, as applicable.

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

available at the lease commencement date in determining the present value of future lease payments.

The Company considers its credit

risk, term of the lease, total lease payments and adjusts for the impacts of collateral, as necessary, when calculating its incremental

borrowing rates.

The Company evaluates renewal options at lease inception and on an ongoing basis and includes renewal options that it

is reasonably certain to exercise in its expected lease terms when classifying leases and measuring lease liabilities.

Lease costs for

the Company’s operating leases are recognized on a straight-line basis within operating expenses and cost of revenue over the reasonably

assured lease term.

Company has elected to not separate lease and non-lease components for leases of office space and, as a result, accounts for any lease

and non-lease components for office space as a single lease component, to the extent they are fixed.

Non-lease components that are not

fixed are expensed as incurred as variable lease payments.

The Company’s office leases typically include non-lease components such

as common-area maintenance costs.

The Company has also elected to not apply the recognition requirement to any leases within its existing

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

At March 31, 2024, the Company had $ 1,549,812 in inventory, of which $ 674,142 was finished

goods and $ 875,670 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.

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

useful or scrap values.

The Company recognized $ 311,339 and $ 43,717 related to the change in inventory reserves during the three months

ended March 31, 2024 and 2023, respectively.

Company generates revenue from customers from product and license sales.

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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 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 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”),

to its employees, certain consultants and members of its board of directors.

The Company records stock-based compensation based on the

grant date fair value of the awards and recognizes the fair value of those awards as expense using the straight-line method over the

requisite service period of the award.

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

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

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

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 $ 0.2 million and $ 0 during the three months ended March 31, 2024 and 2023, respectively.

At March 31, 2024, 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.

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

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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

number of shares outstanding during each period.

net income or loss per share is computed by dividing net income or loss attributable to common stockholders by the weighted-average number

of shares of common stock outstanding during the period increased by common shares that could be issued upon conversion or exercise of

other outstanding securities to the extent those additional common shares would be dilutive.

The dilutive effect of potentially dilutive

securities is reflected in diluted net income or loss per share by application of the treasury stock method.

During periods when the

Company is in a net loss position, basic net loss per share is the same as diluted net loss per share as the effects of potentially dilutive

securities are anti-dilutive.

Comprehensive

Income (Loss)

Comprehensive

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

Concentrations

Risk and Significant Customers

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.

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

March 31, 2024.

One customer accounted for approximately 26 % of product revenue, and one granting agency accounted for all of the grant

revenue recognized during the three months ended March 31, 2024.

Two customers accounted for approximately 44 % of product revenue for

the three months ended March 31, 2023.

customers accounted for more than 10 % of accounts receivable at March 31, 2024 and three customers accounted for more than 10 % of accounts

receivable at December 31, 2023.

These customers together accounted for approximately 90 % and 97 % of accounts receivable at March 31,

2024 and December 31, 2023, 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.

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

1 unchanged sentence

of Cash, Cash Equivalents and Marketable Investment Securities

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

March 31, 2024

treasury securities

December 31, 2023

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 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

September 30, 2023

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

Gross Carrying Amount

Accumulated Amortization

Carrying Amount

In-process research and development

Non-competition agreements

Total intangible assets

$ ( 715,667 )

December 31, 2022

Weighted-Average

Useful Life (1)

In-process research and development

Non-competition agreements

Total intangible assets

$ ( 426,667 )

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

Year Ending December 31,

Amortization Expense

2023 (remainder)

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:

investment securities held as of March 31, 2024 mature over the next 12 months.

4 – 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 March 31, 2024 and December 31,

2023, by level within the fair value hierarchy:

of Fair Value Assets and Liabilities

September 30, 2023

March 31, 2024

Cash equivalents

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Total liabilities measured at fair value

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.

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:

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

treasury bills and notes as

of March 31, 2024 and December 31, 2023.

fair value of contingent consideration is calculated using a discounted probability weighted valuation model.

Discount rates used in

such calculations are a significant assumption that are not observed in the market, and therefore, the resulting fair value represents

a Level 3 measurement.

changes for Level 3 items measured at fair value on a recurring basis are as follows:

of Changes in the Fair Value Measurement

1 unchanged sentence

Change in fair value of contingent consideration issued for business acquisitions

( 1,537,373 )

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

Fair value as of March 31, 2024

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:

of Contingent Consideration Common Stock and Warrants

September 30, 2023

March 31, 2024

December 31, 2023

1 unchanged sentence

Expected term (years)

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

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.

5 – Intangible Assets, Net

assets, net consisted of the following:

of Intangible Assets, Net

March 31, 2024

Weighted-Average

Useful Life (1)

In-process research and development

Non-competition agreements

Total intangible assets

$ ( 867,000 )

December 31, 2023

Weighted-Average

Useful Life (1)

In-process research and development

Non-competition agreements

Total intangible assets

$ ( 791,333 )

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

expected future annual amortization expense of the Company’s intangible assets held as of March 31, 2024 is as follows:

of Future Amortization Expense

Year Ending December 31,

Amortization Expense

2024 (remainder)

following table sets forth revenue by geographic area:

of Revenue by Geographic Area

Three Months Ended

September 30,

Nine Months Ended

September 30,

Three Months Ended March 31,

United States

10 unchanged sentences

Rest of World

Deferred Revenue

Changes in the Company’s deferred revenue balance

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

in the Company’s deferred revenue balance for the three months ended March 31, 2024 were as follows:

of Deferred Revenue

Balance as of December 31, 2023

Increase due to prepayments from customers

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:

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

Balance as of March 31, 2024

7 – Loss Per Share

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

March 31, 2024 and 2023, respectively:

of Basis and Diluted Earnings Per Share

Three Months Ended

September 30,

Nine Months Ended

September 30,

Net income (loss), as reported

$ ( 5,982,194 )

Three Months Ended March 31,

Net loss, as reported

$ ( 9,312,043 )

2 unchanged sentences

Dilutive effect of stock options, warrants and RSUs

Shares used to compute diluted earnings per share

Basic earnings (loss) per share

Diluted earnings (loss) per share

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

Shares used to compute diluted loss per share

Basic loss per share

Diluted loss per share

computation of diluted loss per share for the three months ended March 31, 2024 and 2023, respectively, 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 three months ended March 31, 2024 and 2023, respectively, no potentially dilutive securities

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

The Company had potentially dilutive

securities as of March 31, 2024, consisting of:

(i) 2,564,310 restricted stock units and (ii) 532,112 options and warrants.

had potentially dilutive securities as of March 31, 2023, consisting of:

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

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:

and warrants.

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 4,492,462 at March 31, 2024.

following table summarizes option activity during the three months ended March 31, 2024:

of Option Activity

Number of Options

Weighted Average Exercise Price

Weighted Average Fair Value

Weighted Average Remaining Contractual Life (Years)

Outstanding at December 31, 2023

Forfeited/Cancelled

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:

Outstanding at March 31, 2024

Exercisable at March 31, 2024

aggregate intrinsic value of outstanding options at March 31, 2024 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 March 31, 2024, 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 three months ended March 31, 2024:

of Outstanding Restricted Stock Units and Related Party

Number of RSUs

Weighted Average Grant Date Fair Value

Weighted Average

Grant Date Fair

Unvested at December 31, 2023

Forfeited/Cancelled

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:

Unvested at March 31, 2024

of March 31, 2024, there was approximately $ 7.6 million of unrecognized stock-based compensation expense related to outstanding RSUs

which is expected to be recognized over a weighted-average period of 1.5 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 three months ended March 31, 2024:

of Warrant Activity

Number of Warrants

Weighted Average Exercise Price

Weighted Average Fair Value

Weighted Average Remaining Contractual Life (Years)

Outstanding at December 31, 2023

Forfeited/Cancelled

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

Outstanding at March 31, 2024

The aggregate intrinsic value of outstanding

warrants at March 31, 2024 was approximately $ 0 .

total number of warrants exercisable at March 31, 2024 is 20,000 .

The ability to exercise the remaining 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

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

Compensation Expense

Company recognized stock-based compensation expense as follows:

of Recognized Stock-based Compensation Expense

Three Months Ended

September 30,

Nine Months Ended

September 30,

Cost of revenue

3 unchanged sentences

Total stock-based compensation expense

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:

9 – Income Taxes

the three months ended March 31, 2024, the Company recognized expense from income taxes of $ 22,764 ,

representing an effective tax rate of - 0.2 %.

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

Federal statutory rate of 21.0 %,

primarily due to the full valuation allowance as well as state taxes, permanent items, and discrete items.

For the three months

ended March 31, 2023, the Company recognized a benefit from income taxes of $ 2,259,811 .

10 – Commitments and Contingencies

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.

the three months ended March 31,2024, components of lease expense are summarized as follows:

of Lease Expense

Three Months Ended

September 30, 2023

Nine Months Ended

September 30, 2023

March 31, 2024

Operating lease costs

1 unchanged sentence

Total lease costs

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

lease liabilities are as follows:

of March 31, 2024, the maturities of the Company’s lease liabilities are as follows:

of Maturities on Company Lease Liabilities

Year Ending December 31,

2024 (remainder)

4 unchanged sentences

Long-term portion

Other information related to operating leases was

information related to operating leases was as follows:

of Other Information Related to Operating Lease

Nine Months Ended September 30, 2023

Three Months Ended

March 31, 2024

Cash paid for operating leases included in operating cash flows

1 unchanged sentence

Discount rate of operating leases

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

Nine Months Ended

September 30, 2023

Balance, beginning of period

Repurchases of common stock

Balance, end of period

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.

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 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.

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 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.

No shares were repurchased during the three months ended March 31, 2024.

12 – Related Party Transactions

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 three months ended March 31, 2024, the Company recognized

$ 0.1 million of expense related to this agreement.

13 – Subsequent Events

October 2023, the Company was awarded grant funding of a total of approximately $ 9.0 million, contingent on the attainment of certain

The first $ 3.5 million of funding under this grant was received by the Company at the time the grant was awarded in October

In April 2024, a milestone under this grant was met and accepted, which resulted in the disbursement of an additional $ 2.0 million

of funding per the grant agreement.

These funds were received by the Company in April 2024.

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