What changed in this filing

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Item 7. Management’s Discussion and Analysis

2025-03-27 compared with 2024-03-14 · 137 added, 144 removed, 135 unchanged (68% of the section changed)

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Risk Factors” in this Annual Report on Form 10-K.

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, liquid biopsy

for cancer screening, and agricultural applications.

Our diagnostics systems enable dependable, low-cost, molecular testing for organisms

and genetic diseases by automating or simplifying historically complex procedures in both the development and administration of tests.

CODX’s technical advance involves a novel, patented approach to PCR test design of primer and probe structure (“CoPrimers™”)

that eliminates one of the key vexing issues of PCR amplification:

the exponential growth of primer-dimer pairs (false positives and false

negatives) which adversely interferes with identification of the target DNA/RNA.

Using our proprietary test design system and proprietary

reagents, we have designed and obtained regulatory approval to sell PCR diagnostic tests for the detection of COVID-19, influenza, tuberculosis,

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.

Our diagnostics systems enable dependable, low-cost, molecular testing for organisms and

genetic diseases by automating or simplifying historically complex procedures in both the development and administration of tests.

technical advance involves a novel, proprietary approach to PCR test design of primer and probe structure (“Co-Primers ® ”)

that dramatically reduces one of the key vexing issues of PCR amplification:

the exponential growth of primer-dimer amplification (false

positives) which adversely interferes with identification of the target DNA/RNA.

Using our proprietary test design system and reagents,

we have designed and obtained regulatory approval to sell PCR diagnostic tests for the detection of COVID-19, influenza, tuberculosis,

hepatitis B and C, human papillomavirus, malaria, chikungunya, dengue, and the Zika virus.

These initial diagnostic tests were cleared

These initial diagnostic tests are cleared

for use in clinical labs only and not for point-of-care or at-home use.

are currently developing a unique, groundbreaking portable diagnostic device and test system designed for point-of-care and at-home

The system is comprised of our PCR instrument that we refer to as the Co-Dx™ PCR Pro™ instrument, our proprietary

diagnostic test cup system and a mobile application to be installed on the user’s mobile device.

We refer to the system as the

“Co-Dx™ PCR platform that is being designed to bring affordable, reliable polymerase chain reaction (“PCR”)

testing to patients in point-of-care and at-home settings.

are currently developing a unique, groundbreaking portable diagnostic device and test system designed for point-of-care and at-home use.

The system is comprised of our PCR instrument that we refer to as the Co-Dx™ PCR Pro™ instrument, our patent-pending diagnostic

test cup system and a mobile application to be installed on the user’s mobile device.

We refer to the system as the “Co-Dx™

PCR platform which has been designed to bring affordable, reliable polymerase chain reaction (“PCR”) testing to patients

in point-of-care and at-home settings.

The Co-Dx PCR platform is subject to U.S.

Food and Drug Administration

(“FDA”) review and is not available for sale at the time of this filing.

In December 2023, we submitted the Co-Dx PCR

platform for review by the U.S.

Food and Drug Administration (FDA) for Emergency Use Authorization (EUA).

The submission included

the PCR Pro instrument, Co-Dx PCR COVID-19 detection test cups, and mobile app, all designed for use in point-of-care and at-home

There is no guarantee that our 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.

believe our proprietary molecular diagnostics technology is paving the way for innovation in disease detection and life sciences research

through our enhanced detection of genetic material.

For various reasons, including owning our own platform, we believe we will be able

to accomplish this faster and more economically than some competitors, allowing for significant margins while still positioning ourselves

as a low-cost provider of molecular diagnostics and screening services.

For example, we were the first US-based company to receive a

CE-marking for a COVID-19 test in early 2020, as we worked to help slow the spread of the pandemic through our global network of distributors

covering clinical labs in more than 50 countries.

Our Logix Smart COVID-19 test was designed, developed, submitted for regulatory approval

and ready to be used as an in vitro diagnostic or IVD in countries that accept a CE Mark as approval for use of the test in a period

of just over 30 days.

This is a real-world example of how the CODX technology can be used in an evolving epidemic or pandemic to get

diagnostic tools in the hands of medical professionals in a timely manner.

It can be similarly used to design a test for mutated strains

of the virus should they not be detectable using currently available tests.

addition, continued development has demonstrated the unique properties of our CoPrimer technology that we believe makes it ideally suited

Food and Drug Administration (“FDA”) review

and is not available for sale at the time of this filing.

In June 2024, we completed our first U.S.

Food and Drug Administration (FDA)

application for 510(k) clearance for the Co-Dx™ PCR Pro™ instrument, the Co-Dx PCR COVID-19 Test, and the Co-Dx PCR mobile

app for over-the-counter (OTC) use.

Following productive engagement with the FDA related to the regulatory submission, the Company withdrew

its 510(k) application.

The decision to withdraw the submission was based on discussions with the FDA regarding the ability to detect

a potential deterioration of one component of the test, related to shelf-life stability.

Following dialogue with the FDA and exploring

the various courses of action available, we determined that the best long-term solution would be to submit a version of the test that

has been enhanced to address the matter raised in the 510(k) review process.

The Company plans to submit the next iteration of the Co-Dx

PCR COVID-19 test for 510(k) OTC clearance, following the collection of clinical evaluation data to support the new test’s performance.

A new submission also allows the Company to incorporate more recent Co-Dx PCR platform developments into the COVID-19 test, which the Company

believes will also help create greater operational and manufacturing efficiencies, such as consolidating manufacturing processes to utilize

the next generation of test kits and instruments across all tests on the at-home and point-of-care Co-Dx PCR platform.

There is no guarantee

that our 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.

believe our proprietary and patented molecular diagnostics technology is paving the way for innovation in disease detection and life

sciences research through our enhanced detection of genetic material.

For various reasons, including owning our own platform, we believe

we will be able to accomplish this faster and more economically than some competitors, allowing for significant margins while still positioning

ourselves as a low-cost provider of molecular diagnostics and screening services.

For example, we were the first US-based company to

receive a CE-marking for a COVID-19 test in early 2020, as we worked to help slow the spread of the pandemic through our global network

of distributors covering clinical labs in more than 50 countries.

Our Logix Smart ® COVID-19 test was designed, developed, submitted

for regulatory approval and ready to be used as an in vitro diagnostic or IVD in countries that accept CE marking for regulatory clearance

in a period of just over 30 days.

This is a real-world example of how CODX technology can be used in an evolving epidemic or pandemic

to get diagnostic tools in the hands of medical professionals in a timely manner.

It can be similarly used to design a test for mutated

strains of SARS-CoV-2 or other viruses should they not be detectable using currently available tests.

addition, continued development has demonstrated the unique properties of our Co-Primers technology that we believe makes it ideally suited

for a variety of applications where specificity is key to optimal results, including multiplexing several targets, enhanced Single Nucleotide

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rapidly screen millions of possible options to pinpoint the optimum design.

The intellectual property we use in our business, consisting

of the predictive mathematical algorithms and patented molecular structure used in the testing process, which together represents a major

The intellectual property we use in our business consists

of the predictive mathematical algorithms and patented molecular structure used in the testing process, which together represent a major

advance in PCR testing systems.

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enabling us to maintain profit margins.

proprietary test design process involves identifying the optimal locations on the target genes for amplification and pair the locations

proprietary test design process involves identifying the optimal locations on the target genes for amplification and pairing the locations

with the optimized primer and probe structure to achieve outputs that meet the design input requirements identified from market research.

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production tests to confirm that the product as designed meets the user needs.

our proprietary test design system and proprietary reagents, we have designed and obtained regulatory approval in the European Community

and in India to sell PCR diagnostic tests for the detection of COVID-19, influenza, tuberculosis, hepatitis B and C, human papillomavirus,

malaria, chikungunya, dengue, and the Zika virus.

In the United States, we obtained Emergency Use Authorization (“EUA”) for

our Logix Smart ® COVID-19 detection test from the Food and Drug Administration, or

FDA, and we sell that test to qualified labs.

In addition, our COVID-19 detection test and certain of our other suite of COVID-19 products

have been approved for sale in countries such as the United Kingdom, Australia and Mexico by the regulatory bodies in those countries

and have been registered for sale in many more countries.

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”).

addition to testing for infectious disease, the technology lends itself to identifying any section of a DNA or RNA strand that describes

any type of genetic trait, which creates several significant applications.

our proprietary test design system and reagents, we have designed and obtained regulatory approval in the European Community and in India

to sell PCR diagnostic tests for the detection of COVID-19, influenza, tuberculosis, hepatitis B and C, human papillomavirus, malaria,

chikungunya, dengue, and the Zika virus.

In the United States, we obtained Emergency Use Authorization (“EUA”) for our Logix

Smart ® COVID-19 detection test from the FDA, and we sell that test to qualified labs.

In addition, our COVID-19 detection test and certain of our other suite of COVID-19 products have been cleared for sale in countries

such as the United Kingdom, Australia, India, and Mexico by the regulatory bodies in those countries and have been registered for sale

in many more countries.

In connection with the sale of our tests we may sell diagnostic equipment from other manufacturers, including

an OEM’s PCR instrument which we refer to here as the “Co-Dx Box”.

In addition to testing for infectious disease, Co-Primers technology lends

itself to identifying any section of a DNA or RNA strand that describes any type of genetic trait, which creates several significant applications.

We, in conjunction with our customers, have designed and licensed tests that identify genetic traits in plant and animal genomes.

We also have three multiplexed tests developed

to test mosquitos for the identification of diseases carried by the mosquitos to enable municipalities to concentrate their efforts in

managing mosquito populations on the specific areas known to be breeding the mosquitos that carry deadly viruses.

have commercialized three multiplexed tests to test mosquitos for the presence of diseases they carry, which enables municipalities to

concentrate their efforts in managing mosquito populations in specific areas where mosquitos carrying deadly viruses are known to breed.

OF OPERATIONS

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Product revenue

$ (33,226,736 )

Grant revenue

Total revenue

(27,406,171 )

Cost of revenue

(26,110,027 )

Operating expenses

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Depreciation and amortization

Goodwill impairment charges

(15,388,546 )

Total operating expenses

(10,383,630 )

Loss from operations

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(42,706,234 )

(15,726,397 )

Interest income

Interest income, net

Realized gain on investments

Loss on disposition of assets

Gain (loss) on disposition of assets

Gain on remeasurement of acquisition contingencies

Gain (loss) on equity method investment in joint venture

Total other income

Total other income, net

Loss before income taxes

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(38,110,556 )

(19,263,322 )

Income tax benefit

Income tax provision (benefit)

$ (37,639,008 )

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the year ended December 31, 2024, we generated $3.9 million of revenue compared to revenue of $6.8 million in the year ended December

The decrease in revenue of $27.4 million was primarily due to lower sales of our Logix Smart COVID-19 test throughout the world.

As global attention and regulatory responses to the COVID-19 pandemic have eased, we have experienced significantly decreased demand

for our COVID-19 test.

This decrease was partially offset by the generation of $5.8 million of grant revenue during the year ended December

The decrease in revenue of $2.9 million was primarily due to lower grant revenues, as the majority of revenue for grants previously

awarded was recognized in the prior year.

of Revenues and Gross Profit

of revenues decreased by $3.2 million from $4.2 million for the year ended December 31, 2023 to $1.0 million for the year ended December

Included within cost of revenues for the year ended December 31, 2023 is an increase of approximately $2.8 million related

to reserves against certain raw materials and finished goods inventories.

The decrease in revenues combined with a larger percentage

of fixed product manufacturing costs and reserves for obsolete inventory resulted in a lower gross margin percentage.

incurred total operating expenses of $45.3 million for the year ended December 31, 2023 compared to total operating expenses of $55.7

million for the year ended December 31, 2022.

The decrease in operating expenses was primarily due to the decreases related to the impairment

of goodwill, bad debt expense, and third party sales commissions, partially offset by increased expenses related to personnel, including

stock-based compensation, increased legal and professional services expenses, and increased investment in research and development.

Included within cost of revenues is a decrease of approximately $0.1 million for the year ended December 31, 2024, and an increase

of approximately $2.8 million for the year ended December 31, 2023, related to reserves against certain raw materials and finished goods

The initial recording of the reserves for obsolete inventory in the prior year, partially offset by the decrease in revenues

in the current year, resulted in a higher gross margin percentage.

operating expenses were $43.0 million for the year ended December 31, 2024 compared to total operating expenses of $45.3 million for

the year ended December 31, 2023.

The decrease in operating expenses was primarily due to decreased stock-based compensation expense,

bad debt expense and expense related to development of and clinical trials for the Co-Dx PCR platform.

These decreases were partially

offset by increased personnel related and legal expenses.

and marketing expenses for the year ended December 31, 2024 were $4.5 million compared to $6.9 million for the year ended December 31,

The decrease of $0.4 million was primarily a result of decreased variable compensation, such as bonuses and commissions, and decreased

third-party sales commissions, partially offset by increased professional services and stock-based compensation expense.

and administrative expenses were flat at $14.3 million for the years ended December 31, 2023 and 2022, respectively.

Increases in professional,

legal, and advisory fees, personnel related expenses, and stock-based compensation expense were offset by decreases in bad debt expense

and insurance expense.

research and development expenses increased by $5.6 million from $17.4 million for the year ended December 31, 2022, to $23.0 million

for the year ended December 31, 2023.

The primary increase in expenses related to increased personnel expenses, as well as increases

in supplies expenses and professional and lab services utilized to further help us in our research and product development activities.

the year ended December 31, 2022, the Company recognized charges of $15.4 million related to goodwill impairment.

The decrease of $2.4 million was primarily a result of decreased stock-based compensation expense, tradeshow and travel expenses,

consulting and professional services expenses, and personnel related expenses.

and administrative expenses for the year ended December 31, 2024 were $16.2 million compared to $14.3 million for the year ended December

The increase of $1.9 million was primarily due to increased legal expenses, partially offset by decreases in stock-based compensation

expense, bad debt expense, consulting and professional services expense, and insurance expense.

and development expenses for the year ended December 31, 2024 were $21.0 million compared to $23.0 million for the year ended December

The decrease of $2.0 million was primarily a result of decreased expenses related to development of and clinical trials for

the Co-Dx PCR platform and stock-based compensation expense, partially offset by increases in personnel expense and professional services

income was $2.5 million for the year ended December 31, 2024, compared to other income of $4.6 million for the year ended December 31,

The decrease in other income of $2.1 million was primarily due to a change in the fair value of contingent consideration liabilities,

driven by changes in the Company’s stock price, and partially offset by increased interest income and realized investment gains

due to the Company’s investing activities.

an increased loss related to the Company’s joint venture investment, and decreased realized gains from investments in marketable

realized a net loss for the year ended December 31, 2024 of $37.6 million compared to $35.3 million for the year ended December 31, 2023.

The decrease of $21.1 million was primarily the result of reduced sales of our Logix Smart COVID-19 test, increased operating expenses

as discussed above, and a decrease in the gain related to the fair value of acquisition related contingent consideration liabilities,

partially offset by a decrease in impairment charges related to the impairment of goodwill recorded in the prior year and increased interest

income and realized investment gains.

Additionally, we recorded an income tax benefit of $2.8 million during the year ended December

31, 2023, compared to an income tax benefit of $4.6 million for the year ended December 31, 2022.

The larger net loss of $2.3 million was primarily the result of decreases in grant revenue, changes in the fair value of acquisition

contingencies, and decreases in realized gains from investments in marketable securities, partially offset by a decrease in operating

Additionally, we recorded income tax expense of $0.1 million during the year ended December 31, 2024, compared to an income

tax benefit of $2.8 million for the year ended December 31, 2023.

The primary reason for the change in the provision for income taxes

is a result of the Company now recording a full valuation allowance.

AND CAPITAL RESOURCES

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liabilities of $7.3 million.

cash used in operating activities during the year ended December 31, 2023 was $22.1 million, compared to cash provided by operating activities

cash used in operating activities during the year ended December 31, 2024 was $29.2 million, compared to net cash used in operating activities

of $22.1 million for the year ended December 31, 2023.

The decrease in cash from operating activities was primarily due to decreases in

revenue and increases in operating expenses.

cash provided by investing activities was $15.4 million for the year ended December 31, 2023, compared to net cash used in investing

The increase in cash used in operating activities was primarily due to decreases

in revenue, grant funding, and realized gains on investments, and increases in cash-payable operating expenses.

cash provided by investing activities was $17.1 million for the year ended December 31, 2024, compared to net cash provided by investing

activities of $15.4 million during the year ended December 31, 2023.

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due to interest and realized gains related to marketable investment securities, as well as the redemption of certain investments as they

cash used in financing activities was $1.4 million for the year ended December 31, 2023, compared to $14.0 million of cash used in financing

activities for the year ended December 31, 2022.

The decrease in cash used in financing activities is primarily due to fewer repurchases

of outstanding common shares during 2023 as compared to 2022.

cash provided by financing activities was $0.1 million for the year ended December 31, 2024, compared to $1.4 million of cash used in

financing activities for the year ended December 31, 2023.

The cash provided by financing activities during 2024 relates to issuances

of common stock, compared to cash used in financing activities for repurchases of outstanding common shares during 2023.

commencing sales of our Logix Smart COVID-19 test in March 2020, we have used our cash generated from those sales to fund the purchase

of inventories and the development of our Co-Dx PCR Platform, and to pay our operating expenses.

We have increased our work force most

significantly in research and development in order to continue development of the Co-Dx PCR platform and additional tests that will enable

continued use of our distributor network to sell additional products throughout the world.

believe that our existing capital resources and the cash generated from future sales will be sufficient to meet our projected operating

requirements for the next 12 months.

However, our available capital resources may be consumed more

rapidly than currently expected and we may need or want to raise additional financing for strategic opportunities.

It is anticipated

that the Company will continue to generate operating losses and use cash in operations in the near term.

needed, we expect additional investment capital to come from additional issuances of our common stock or other equity based securities

with existing and new investors similar to those that have provided funding in the past.

On March 16, 2023, the Company entered into

an Equity Distribution Agreement with Piper Sandler & Co.

(“Piper”), pursuant to which we may sell from time to time,

shares of our common stock, having an aggregate offering price of up to $50.0 million through Piper, as agent.

No shares have been sold

under the distribution agreement as of December 31, 2023.

We may not be able to secure such financing in a timely manner or on favorable

terms, if at all.

available capital resources may be consumed more rapidly than currently expected and we may need

or want to raise additional financing for strategic opportunities.

It is anticipated that the Company will continue to generate

operating losses and use cash in operations in the near term.

If needed, we expect additional investment

capital to come from additional issuances of our common stock or other equity based securities with existing and new investors similar

to those that have provided funding in the past.

We have entered into an Equity Distribution Agreement (the “ATM Agreement”)

with Piper Sandler & Co.

(“Piper Sandler”), pursuant to which we may offer and sell shares of our common stock having

an aggregate offering price of up to $17,111,650 from time to time through Piper Sandler acting as our agent, under our prospectus supplement

dated October 18, 2024.

As of December 31, 2024, we have sold 314,707 shares of common stock under the ATM Agreement resulting in net

proceeds to the Company of $0.2 million.

we are seeking to obtain additional equity and/or debt financing, such funding is not assured and may not be available to us on favorable

or acceptable terms and may involve significant restrictive covenants.

Any additional equity financing is also not assured and, if available

to us, will most likely be dilutive to our current stockholders.

If we are not able to obtain additional debt or equity financing on

a timely basis, the impact on us will be material and adverse.

These uncertainties create substantial doubt about our ability to continue

as a going concern.

The consolidated financial statements do not include any adjustments that might result from the outcome of these

uncertainties.

ACCOUNTING POLICIES AND ESTIMATES

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could reduce our earnings.

and Intangible Assets

useful lives of intangible assets with definite lives are based on the expected number of years the asset will generate revenue or otherwise

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Examples of such events or circumstances include:

asset’s ability to continue to generate income from operations and positive cash flow in future periods;

assets’ ability to continue to generate income from operations and positive cash flow in future periods;

volatility or significant decline in our stock price and market capitalization compared to our net book value;

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would increase.

For goodwill, the entity has the option to first assess qualitative factors to determine whether it is necessary to perform

the quantitative goodwill impairment test.

The quantitative impairment test compares the fair value of a reporting unit with the carrying

amount, including goodwill.

If the fair value of a reporting unit exceeds its carrying amount, goodwill is considered not impaired;

goodwill is impaired and the loss is recorded.

Upon the completion of our annual evaluation for impairment of goodwill as of December

31, 2022, we recorded a goodwill impairment charge of $15.4 million.

periodically review inventory for both potential obsolescence and potential declines in anticipated selling prices.

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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 7. Management’s Discussion and Analysis