Co-Diagnostics, Inc. 10-Q

Item 1. Financial Statements CO – DIAGNOSTICS, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) June 30, 2025 December 31, 2024 Assets Current assets Cash and cash equivalents $ 11,115,181 $ 2,936,544 Marketable investment securities 2,247,638 26,811,098 Accounts receivable, net 210,968 132,570 Inventory, net 1,084,627 1,072,724 Prepaid expenses and other current assets 648,752 1,338,762 Total current assets 15,307,166 32,291,698 Property and equipment, net 2,673,390 2,761,280 Operating lease right-of-use asset 1,668,416 2,114,876 Intangible assets, net 26,101,000 26,101,000 Investment in joint venture 715,861 731,065 Total assets $ 46,465,833 $ 63,999,919 Liabilities and stockholders’ equity Current liabilities Accounts payable $ 1,635,196 $ 3,294,254 Accrued expenses 1,008,127 2,562,169 Operating lease liability, current 824,458 915,619 Contingent consideration liabilities, current 197,610 502,819 Deferred revenue 45,857 40,857 Total current liabilities 3,711,248 7,315,718 Long-term liabilities Income taxes payable 736,933 713,643 Operating lease liability 879,258 1,236,560 Contingent consideration liabilities - 422,080 Total long-term liabilities 1,616,191 2,372,283 Total liabilities 5,327,439 9,688,001 Commitments and contingencies (Note 10) - - Stockholders’ equity Convertible preferred stock, $ 0.001 par value; 5,000,000 shares authorized; 0 shares issued and outstanding as of June 30, 2025 and December 31, 2024, respectively - - Common stock, $ 0.001 par value; 100,000,000 shares authorized; 41,031,146 shares issued and 36,182,468 shares outstanding as of June 30, 2025 and 37,902,222 shares issued and 33,053,544 shares outstanding as of December 31, 2024 41,031 37,902 Treasury stock, at cost; 4,848,678 shares held as of June 30, 2025 and December 31, 2024, respectively ( 15,575,795 ) ( 15,575,795 ) Additional paid-in capital 104,843,320 102,472,210 Accumulated other comprehensive income 134,068 418,443 Accumulated deficit ( 48,304,230 ) ( 33,040,842 ) Total stockholders’ equity 41,138,394 54,311,918 Total liabilities and stockholders’ equity $ 46,465,833 $ 63,999,919 See accompanying notes to unaudited condensed consolidated financial statements 3 CO – DIAGNOSTICS, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS (Unaudited) 2025 2024 2025 2024 Three Months Ended June 30, Six Months Ended June 30, 2025 2024 2025 2024 Product revenue $ 162,910 $ 161,102 $ 213,187 $ 413,847 Grant revenue - 2,495,738 - 2,710,847 Total revenue 162,910 2,656,840 213,187 3,124,694 Cost of revenue 32,106 212,148 53,696 446,653 Gross profit 130,804 2,444,692 159,491 2,678,041 Operating expenses Sales and marketing 609,713 1,041,243 1,266,743 2,604,925 General and administrative 2,599,982 3,132,385 5,373,131 6,051,188 Research and development 4,687,459 5,612,691 9,557,478 11,292,369 Depreciation and amortization 291,414 338,335 571,859 668,908 Total operating expenses 8,188,568 10,124,654 16,769,211 20,617,390 Loss from operations ( 8,057,764 ) ( 7,679,962 ) ( 16,609,720 ) ( 17,939,349 ) Other income, net Interest income, net 12,158 342,188 25,759 704,921 Realized gain on investments 340,358 74,165 641,823 302,235 Gain (loss) on disposition of assets ( 9,004 ) 3,500 ( 9,004 ) 3,500 Gain (loss) on remeasurement of acquisition contingencies 10,222 ( 244,116 ) 727,289 206,144 Loss on equity method investment in joint venture ( 13,760 ) ( 74,503 ) ( 15,204 ) ( 145,458 ) Total other income, net 339,974 101,234 1,370,663 1,071,342 Loss before income taxes ( 7,717,790 ) ( 7,578,728 ) ( 15,239,057 ) ( 16,868,007 ) Income tax provision 12,327 20,590 24,331 43,354 Net loss $ ( 7,730,117 ) $ ( 7,599,318 ) $ ( 15,263,388 ) $ ( 16,911,361 ) Other comprehensive income (loss) Change in net unrealized gains (losses) on marketable securities, net of tax ( 196,585 ) 144,653 ( 284,375 ) 224,508 Total other comprehensive income (loss) $ ( 196,585 ) $ 144,653 $ ( 284,375 ) $ 224,508 Comprehensive loss $ ( 7,926,702 ) $ ( 7,454,665 ) $ ( 15,547,763 ) $ ( 16,686,853 ) Loss per common share: Basic and Diluted $ ( 0.23 ) $ ( 0.25 ) $ ( 0.47 ) $ ( 0.56 ) Weighted average shares outstanding: Basic and Diluted 33,108,399 30,124,696 32,581,603 29,983,785 See accompanying notes to unaudited condensed consolidated financial statements 4 CO – DIAGNOSTICS, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) 2025 2024 Six Months Ended June 30, 2025 2024 Cash flows from operating activities Net loss $ ( 15,263,388 ) $ ( 16,911,361 ) Adjustments to reconcile net loss to cash used in operating activities: Depreciation and amortization 571,859 668,908 Stock-based compensation expense 1,455,493 3,070,892 Common stock issued for financial advisory services 135,000 - Change in fair value of acquisition contingencies ( 727,289 ) ( 206,144 ) Non-cash lease expense ( 2,003 ) 10,613 Realized gain on investments ( 641,823 ) ( 302,235 ) Loss from equity method investment 15,204 145,458 (Gain) loss on disposition of assets 9,004 ( 3,500 ) Provision for (recoveries of) credit losses ( 13,248 ) ( 40,944 ) Inventory obsolescence expense (recovery) ( 95,302 ) 84,430 Changes in assets and liabilities: Accounts receivable ( 65,150 ) ( 206,634 ) Prepaid expenses and other assets 690,010 299,970 Inventory 83,399 116,335 Deferred revenue 5,000 ( 141,519 ) Income taxes payable 23,290 39,927 Accounts payable, accrued expenses and other liabilities ( 3,213,100 ) ( 318,728 ) Net cash used in operating activities ( 17,033,044 ) ( 13,694,532 ) Cash flows from investing activities Purchases of property and equipment ( 492,973 ) ( 500,922 ) Proceeds from maturities of marketable investment securities 31,509,485 26,836,743 Purchases of marketable securities ( 6,588,577 ) ( 13,699,301 ) Net cash provided by investing activities 24,427,935 12,636,520 Cash flows from financing activities Issuance of common stock related to at-the-market offering, net of offering costs 783,746 - Net cash provided by financing activities 783,746 - Net increase (decrease) in cash and cash equivalents 8,178,637 ( 1,058,012 ) Cash and cash equivalents at beginning of period 2,936,544 14,916,878 Cash and cash equivalents at end of period $ 11,115,181 $ 13,858,866 Supplemental disclosure of cash flow information Income taxes paid $ - $ 800 See accompanying notes to unaudited condensed consolidated financial statements 5 CO – DIAGNOSTICS, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (Unaudited) Shares Amount Shares Amount Stock Capital Income (Deficit) Equity Convertible Preferred Stock Common Stock Treasury Additional Paid-in Accumulated Other Comprehensive Accumulated Earnings Total Stockholders’ Shares Amount Shares Amount Stock Capital Income (Deficit) Equity Balance as of December 31, 2024 - $ - 37,902,222 $ 37,902 $ ( 15,575,795 ) $ 102,472,210 $ 418,443 $ ( 33,040,842 ) $ 54,311,918 Issuance of common stock related to at-the-market offering, net of offering costs - - 519,099 519 - 354,227 - - 354,746 Stock-based compensation - - - - - 875,228 - - 875,228 Other comprehensive loss, net of tax - - - - - - ( 87,790 ) - ( 87,790 ) Net loss - - - - - - - ( 7,533,271 ) ( 7,533,271 ) Balance as of March 31, 2025 - - 38,421,321 38,421 ( 15,575,795 ) 103,701,665 330,653 ( 40,574,113 ) 47,920,831 Issuance of common stock related to at-the-market offering, net of offering costs - - 1,375,325 1,375 - 427,625 - - 429,000 Stock-based compensation - - 734,500 735 - 579,530 - - 580,265 Issuance of common stock related to financial advisory services - - 500,000 500 - 134,500 - - 135,000 Other comprehensive loss, net of tax - - - - - - ( 196,585 ) - ( 196,585 ) Net loss - - - - - - - ( 7,730,117 ) ( 7,730,117 ) Balance as of June 30, 2025 - $ - 41,031,146 $ 41,031 $ ( 15,575,795 ) $ 104,843,320 $ 134,068 $ ( 48,304,230 ) $ 41,138,394 Convertible Preferred Stock Common Stock Treasury Additional Paid-in Accumulated Other Comprehensive Accumulated Earnings Total Stockholders’ Shares Amount Shares Amount Stock Capital Income (Deficit) Equity Balance as of December 31, 2023 - $ - 36,108,346 $ 36,108 $ ( 15,575,795 ) $ 96,808,436 $ 146,700 $ 4,598,166 $ 86,013,615 Stock-based compensation - - 18,750 19 - 1,571,215 - - 1,571,234 Other comprehensive income, net of tax - - - - - - 79,855 - 79,855 Net loss - - - - - - - ( 9,312,043 ) ( 9,312,043 ) Balance as of March 31, 2024 - - 36,127,096 36,127 ( 15,575,795 ) 98,379,651 226,555 ( 4,713,877 ) 78,352,661 Balance - - 36,127,096 36,127 ( 15,575,795 ) 98,379,651 226,555 ( 4,713,877 ) 78,352,661 Stock-based compensation - - 632,584 633 - 1,499,025 - - 1,499,658 Other comprehensive income, net of tax - - - - - - 144,653 - 144,653 Other comprehensive income (loss), net of tax - - - - - - 144,653 - 144,653 Net loss - - - - - - - ( 7,599,318 ) ( 7,599,318 ) Balance as of June 30, 2024 - $ - 36,759,680 $ 36,760 $ ( 15,575,795 ) $ 99,878,676 $ 371,208 $ ( 12,313,195 ) $ 72,397,654 Balance - $ - 36,759,680 $ 36,760 $ ( 15,575,795 ) $ 99,878,676 $ 371,208 $ ( 12,313,195 ) $ 72,397,654 See accompanying notes to unaudited condensed consolidated financial statements 6 CO – DIAGNOSTICS, INC. AND SUBSIDIARIES NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) Note 1 – Overview and Basis of Presentation Description of Business Co-Diagnostics, 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. Unaudited Condensed Consolidated Financial Statements The 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 (“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. As permitted 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 and six months ended June 30, 2025 are not necessarily indicative of the results that may be expected for the year ending December 31, 2025. These statements should be read in conjunction with the Company’s audited financial statements and related notes for the year ended December 31, 2024, included in the Company’s Annual Report on Form 10-K filed with the SEC on March 27, 2025. A summary of the Company’s significant accounting policies is set forth in Note 2 to the consolidated financial statements in its Annual Report on Form 10-K for the year ended December 31, 2024. Use of Estimates The 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 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. Liquidity and Going Concern In accordance with Accounting Standards Codification (“ASC”) 205-40, Going Concern, (“ASC 205-40”) the Company evaluated whether there are conditions and events, considered in the aggregate, that raise substantial doubt about the Company’s ability to continue as a going concern within one year after the date on which this Quarterly Report on Form 10-Q is filed. Based on the Company’s cash, cash equivalents, and short-term investments as of June 30, 2025, the Company’s current and forecasted level of operations, and its forecasted cash flows, the Company’s ability to continue as a going concern is dependent upon its ability to obtain the necessary financing to meet its obligations and repay its liabilities arising from normal business operations when they come due, and to generate profitable operations in the future. Management plans to provide for the Company’s capital requirements through equity financing, including through selling shares under the Company’s ATM Agreement, seeking additional grant funding, and through operational efficiencies. Our ability to obtain additional financing in equity capital markets is subject to several factors, including market and economic conditions, our performance and investor sentiment with respect to us and our industry. Accordingly, there can be no assurance that the Company will be able to raise a sufficient amount of additional capital to fund operations with terms acceptable to the Company, or at all. Because certain elements of management’s plans to mitigate the conditions that raised substantial doubt about the Company’s ability to continue as a going concern are outside of the Company’s control, including the ability to raise capital through equity or other financings, those elements cannot be considered probable according to ASC 205-40, and therefore cannot be considered in the evaluation of mitigating factors. As a result, management has concluded that substantial doubt exists about the Company’s ability to continue as a going concern for 12 months from the date these condensed consolidated financial statements are issued. 7 The condensed consolidated financial statements as of June 30, 2025 have been prepared under the assumption that the Company will continue as a going concern for the next 12 months after these financial statements are issued, and that contemplates the realization of assets and satisfaction of liabilities and commitments in the normal course of business. The Company’s ability to continue as a going concern is dependent upon its uncertain ability to obtain additional capital, reduce expenditures, and execute on its business plans. These consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty. Note 2 – Summary of Significant Accounting Policies Reclassifications Certain prior year amounts have been reclassified to conform with the current year’s presentation. These reclassifications have no impact on the previously reported results. Operating Segments The Company operates as one operating segment. Operating segments are defined as components of an entity for which separate financial information is regularly evaluated by the chief operating decision maker (“CODM”), which is the Company’s Chief Executive Officer, in deciding how to allocate resources and assess performance. The Company’s CODM evaluates financial information and resources and assesses the performance of these resources on a consolidated basis. There is no expense or asset information that is supplemental to information disclosed within the condensed consolidated financial statements, that is regularly provided to the CODM. The allocation of resources and assessment of performance of the operating segment is based on consolidated net loss and functional expenses as reported on our condensed consolidated statements of operations and comprehensive loss. Because the Company operates as one operating segment, financial segment information, including expense and asset information, can be found in the condensed consolidated financial statements. All material long-lived assets are located in the United States and India. Accounts Receivable Trade 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 June 30, 2025 total accounts receivable was $ 297,991 with an allowance for uncollectable accounts of $ 87,023 resulting in a net amount of $ 210,968 . At December 31, 2024 total accounts receivable was $ 242,625 with an allowance for uncollectable accounts of $ 110,055 resulting in a net amount of $ 132,570 . 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 . Inventory Inventory is stated at the lower of cost or net-realizable value. Inventory cost is determined on a first-in first-out basis that approximates average cost in accordance with ASC 330-10-30-12. At June 30, 2025, the Company had $ 1,084,627 in net inventory, of which $ 601,756 was finished goods and $ 482,871 was raw materials. At December 31, 2024, the Company had $ 1,072,724 in net inventory, of which $ 567,281 was finished goods and $ 505,443 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 $ 59,591 and $ 101,065 related to the change in inventory reserves during the three and six months ended June 30, 2025, respectively, compared to $ 24,333 and $ 287,006 during the three and six months ended June 30, 2024, respectively. 8 Revenue Recognition The Company generates revenue from customers from product and license sales. The Company recognizes revenue from customers when all of the following criteria are satisfied: (i) identification of the promised goods or services in the contract; (ii) determination of whether the promised goods or services are performance obligations, including whether they are distinct in the context of the contract; (iii) measurement of the transaction price, including the constraint on variable consideration; (iv) allocation of the transaction price to the performance obligations; and (v) recognition of revenue when, or as the Company satisfies each performance obligation. The Company constrains revenue by giving consideration to factors that could otherwise lead to a probable reversal of revenue. The Company records any payments received from customers prior to the Company fulfilling its performance obligation(s) as deferred revenue. Grant Revenue The 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 agreements. 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 no grant funding revenue during the three and six months ended June 30, 2025, respectively, compared to $ 2,495,738 and $ 2,710,847 during the three and six months ended June 30, 2024, respectively. At June 30, 2025, and December 31, 2024, the Company has recorded $ 40,857 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. Income Taxes The Company accounts for income taxes in accordance with the liability method of accounting for income taxes. Under this method, d eferred income tax assets and deferred income tax liabilities represent the tax effect of temporary differences between financial reporting and tax reporting measured at enacted tax rates in effect for the year in which the differences are expected to reverse. The Company recognizes only the impact of tax positions that, based on their technical merits, are more likely than not to be sustained upon an audit by the taxing authority. Valuation allowances are provided when it is more-likely-than-not that some or all of the deferred income tax assets may not be realized. In assessing the need for a valuation allowance, the Company has considered its historical levels of income, expectations of future taxable income and ongoing tax planning strategies. Developing 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 condensed consolidated financial statements, and adverse determinations by these taxing authorities could have a material adverse effect on the condensed consolidated financial positions, result of operations, or cash flows. Concentrations Risk and Significant Customers The Company had certain customers which were each responsible for generating 10 % or more of the total revenue for the three and six months ended June 30, 2025 and 2024. Three customers accounted for approximately 53 % of product revenue recognized during the three months ended June 30, 2025. Three customers accounted for approximately 41 % of product revenue recognized during the six months ended June 30, 2025. Two customers accounted for approximately 37 % of product revenue, and two granting agencies accounted for approximately 94 % of grant revenue recognized during the three months ended June 30, 2024. One customer accounted for approximately 29 % of product revenue, and two granting agencies accounted for approximately 95 % of grant revenue recognized during the six months ended June 30, 2024. 9 Three customers individually accounted for more than 10 % of accounts receivable at June 30, 2025 and two customers individually accounted for more than 10 % of accounts receivable at December 31, 2024. These customers together accounted for approximately 82 % and 94 % of accounts receivable at June 30, 2025 and December 31, 2024, respectively. Recently Issued Accounting Standards From time to time, new accounting pronouncements are issued by the Financial Accounting Standards Board (“FASB”) that are adopted by the Company as of the specified effective date. If not discussed, management believes that the impact of recently issued standards, which are not yet effective, will not have a material impact on the Company’s financial statements upon adoption. In November 2023, the FASB issued Accounting Standards Update (“ASU”) 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, which improves reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses. The standard is effective for full year 2024 reporting, and for interim reporting beginning in 2025. The adoption of this ASU did not change the way the Company evaluates its reportable segments and, as a result, did not have a material impact on the Company’s segment-related disclosures. In 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 period. 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. In November 2024, the FASB issued ASU 2024-03, Income Statement (Subtopic 220-40): Reporting Comprehensive Income - Expense Disaggregation Disclosures, which requires an entity to disclose on an annual and interim basis, disaggregated information about specific income statement expense categories. The guidance should be applied prospectively with the option to apply the standard retrospectively. The standard becomes effective for the Company for full year 2027 reporting. The Company is currently evaluating the impact of this new standard on its consolidated financial statements. Note 3 – Cash, Cash Equivalents, and Financial Instruments The following table shows the Company’s cash, cash equivalents, and marketable investment securities by significant investment category: Schedule of Cash, Cash Equivalents and Marketable Investment Securities June 30, 2025 Adjusted Cost Total Unrealized Gains / (Losses) Fair Value Cash and Cash Equivalents Marketable Investment Securities Cash $ 11,115,181 $ - $ 11,115,181 $ 11,115,181 $ - Level 2: U.S. treasury securities 2,113,570 134,068 2,247,638 - 2,247,638 Subtotal 2,113,570 134,068 2,247,638 - 2,247,638 Total $ 13,228,751 $ 134,068 $ 13,362,819 $ 11,115,181 $ 2,247,638 10 December 31, 2024 Adjusted Cost Total Unrealized Gains / (Losses) Fair Value Cash and Cash Equivalents Marketable Investment Securities Cash $ 2,936,544 $ - $ 2,936,544 $ 2,936,544 $ - Level 2: U.S. treasury securities 26,392,655 418,443 26,811,098 - 26,811,098 Subtotal 26,392,655 418,443 26,811,098 - 26,811,098 Total $ 29,329,199 $ 418,443 $ 29,747,642 $ 2,936,544 $ 26,811,098 Marketable investment securities held as of June 30, 2025 mature over the next 12 months. Note 4 – 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: Level 1: Quoted market prices in active markets for identical assets or liabilities. Level 2: Observable market-based inputs or unobservable inputs that are corroborated by market data. Level 3: 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 June 30, 2025 and December 31, 2024, by level within the fair value hierarchy: Schedule of Fair Value Assets and Liabilities (Level 1) (Level 2) (Level 3) Total June 30, 2025 (Level 1) (Level 2) (Level 3) Total Assets: Cash equivalents $ 10,301,832 $ - $ - $ 10,301,832 Marketable securities (U.S. treasury bills and notes) - 2,247,638 - 2,247,638 Total assets measured at fair value $ 10,301,832 $ 2,247,638 $ - $ 12,549,470 Liabilities: Contingent consideration - common stock $ - $ - $ 197,610 $ 197,610 Contingent consideration - warrants - - - - Total liabilities measured at fair value $ - $ - $ 197,610 $ 197,610 11 (Level 1) (Level 2) (Level 3) Total December 31, 2024 (Level 1) (Level 2) (Level 3) Total Assets: Cash equivalents $ 441,000 $ - $ - $ 441,000 Marketable securities (U.S. treasury bills and notes) - 26,811,098 - 26,811,098 Total assets measured at fair value $ 441,000 $ 26,811,098 $ - $ 27,252,098 Liabilities: Contingent consideration - common stock $ - $ - $ 743,794 $ 743,794 Contingent consideration - warrants - - 181,105 181,105 Total liabilities measured at fair value $ - $ - $ 924,899 $ 924,899 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 June 30, 2025 and December 31, 2024. 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: Schedule of Changes in the Fair Value Measurement Fair value as of December 31, 2024 $ 924,899 Change in fair value of contingent consideration issued for business acquisitions ( 727,289 ) Fair value as of June 30, 2025 $ 197,610 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. 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: Schedule of Contingent Consideration Common Stock and Warrants June 30, 2025 December 31, 2024 Stock price $ 0.28 $ 0.75 Strike price $ 9.13 $ 9.13 Volatility 332.5 % 246.4 % Risk-free rate 3.8 % 4.3 % Expected term (years) 1.5 2.0 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 5 – Intangible Assets, Net Intangible assets, net consisted of the following: Schedule of Intangible Assets, Net June 30, 2025 Weighted-Average Gross Net Useful Life (1) Carrying Accumulated Carrying (in Years) Amount Amortization Amount In-process research and development Indefinite $ 26,101,000 $ - $ 26,101,000 Non-competition agreements 1,094,000 ( 1,094,000 ) - Total intangible assets $ 27,195,000 $ ( 1,094,000 ) $ 26,101,000 December 31, 2024 Weighted-Average Gross Net Useful Life (1) Carrying Accumulated Carrying (in Years) Amount Amortization Amount In-process research and development Indefinite $ 26,101,000 $ - $ 26,101,000 Non-competition agreements 1,094,000 ( 1,094,000 ) - Total intangible assets $ 27,195,000 $ ( 1,094,000 ) $ 26,101,000 (1) Based on weighted-average useful life established as of the acquisition date. 12 Note 6 – Revenue The following table sets forth revenue by geographic area: Summary of Revenue by Geographic Area 2025 2024 2025 2024 Three Months Ended June 30, Six Months Ended June 30, 2025 2024 2025 2024 United States Product revenue $ 162,910 $ 137,411 $ 203,087 $ 223,706 Grant revenue - 2,495,738 - 2,710,847 Total United States 162,910 2,633,149 203,087 2,934,553 Rest of World Product revenue - 23,691 10,100 190,141 Grant revenue - - - - Total Rest of World - 23,691 10,100 190,141 Total $ 162,910 $ 2,656,840 $ 213,187 $ 3,124,694 Revenue geographic area $ 162,910 $ 2,656,840 $ 213,187 $ 3,124,694 Percentage of revenue by area: United States 100 % 99 % 95 % 94 % Rest of World 0 % 1 % 5 % 6 % Changes in the Company’s deferred revenue balance for the six months ended June 30, 2025 were as follows: Schedule of Deferred Revenue Balance as of December 31, 2024 $ 40,857 Revenue recognized included in deferred revenue balance at the beginning of the period - Increase due to prepayments from customers 5,000 Balance as of June 30, 2025 $ 45,857 Note 7 – Loss Per Share The following table reconciles the numerator and the denominator used to calculate basic and diluted loss per share for three and six months ended June 30, 2025 and 2024, respectively: Schedule of Basis and Diluted Earnings Per Share 2025 2024 2025 2024 Three Months Ended June 30, Six Months Ended June 30, 2025 2024 2025 2024 Numerator Net loss, as reported $ ( 7,730,117 ) $ ( 7,599,318 ) $ ( 15,263,388 ) $ ( 16,911,361 ) Denominator Weighted average shares, basic 33,108,399 30,124,696 32,581,603 29,983,785 Dilutive effect of stock options, warrants and RSUs - - - - Shares used to compute diluted earnings per share 33,108,399 30,124,696 32,581,603 29,983,785 Loss per share, basic and diluted $ ( 0.23 ) $ ( 0.25 ) $ ( 0.47 ) $ ( 0.56 ) 13 The computation of diluted loss per share for the three and six months ended June 30, 2025 and 2024, 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. As a result of incurring a net loss for the three and six months ended June 30, 2025 and 2024, 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 June 30, 2025, consisting of: (i) 2,535,184 restricted stock units and (ii) 982,918 options and warrants. The Company had potentially dilutive securities as of June 30, 2024, consisting of: (i) 1,758,323 restricted stock units and (ii) 532,112 options and warrants. 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 3,237,236 at June 30, 2025. The Incentive Plan will expire on December 31, 2025. The Company’s board of directors adopted in March 2025, and in May 2025 our shareholders approved, the Co-Diagnostics, Inc. 2025 Equity Incentive Plan (the “2025 Plan”) providing for the issuance of stock-based incentive awards to employees, officers, consultants, directors and independent contractors. The number of awards available for issuance under the 2025 Plan was 6,700,000 at June 30, 2025. No awards have been made under the 2025 Plan. Stock Options The following table summarizes option activity during the six months ended June 30, 2025: Schedule of Option Activity Number of Options Weighted Average Exercise Price Weighted Average Fair Value Weighted Average Remaining Contractual Life (Years) Outstanding at December 31, 2024 1,040,572 $ 2.19 $ 1.37 3.88 Granted - - - Expired ( 70,002 ) $ 1.29 $ 0.76 Forfeited/Cancelled - - - Exercised - - - Outstanding at June 30, 2025 970,570 $ 2.26 $ 1.41 3.57 Exercisable at June 30, 2025 970,570 $ 2.26 $ 1.41 3.57 The aggregate intrinsic value of outstanding options at June 30, 2025 and 2024 was approximately $ 0 and $ 152,521 , respectively. 14 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. The Company uses the Black-Scholes model to value options granted. As of June 30, 2025, 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 six months ended June 30, 2025: Schedule of Outstanding Restricted Stock Units and Related Party Number of RSUs Weighted Average Grant Date Fair Value Unvested at December 31, 2024 2,742,316 $ 2.50 Granted - - Vested ( 734,500 ) 2.59 Forfeited/Cancelled ( 105,285 ) 5.32 Unvested at June 30, 2025 1,902,531 $ 2.30 As of June 30, 2025, there was approximately $ 3,000,770 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. Warrants 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 six months ended June 30, 2025: Schedule of Warrant Activity Number of Warrants Weighted Average Exercise Price Weighted Average Fair Value Weighted Average Remaining Contractual Life (Years) Outstanding at December 31, 2024 485,000 $ 8.81 $ 1.00 2.0 Granted - - - Expired ( 20,000 ) 1.40 15.19 Forfeited/Cancelled - - - Exercised - - - Outstanding at June 30, 2025 465,000 $ 9.13 $ - 1.5 The aggregate intrinsic value of outstanding warrants at June 30, 2025 was $ 0 . 15 There are no warrants exercisable at June 30, 2025. The ability to exercise the 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 as follows: Schedule of Recognized Stock-Based Compensation Expense 2025 2024 2025 2024 Three Months Ended June 30, Six Months Ended June 30, 2025 2024 2025 2024 Cost of revenue $ - $ 6,054 $ - $ 14,195 Sales and marketing 105,342 292,983 241,539 663,363 General and administrative 531,707 1,046,148 1,267,622 2,132,644 Research and development ( 56,784 ) 154,473 ( 53,668 ) 260,690 Total stock-based compensation expense $ 580,265 $ 1,499,658 $ 1,455,493 $ 3,070,892 Note 9 – Income Taxes For the three months ended June 30, 2025, the Company recognized expense from income taxes of $ 12,327 , representing an effective tax rate of 0.2 %. For the six months ended June 30, 2025, the Company recognized expense from income taxes of $ 24,331 , 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 and six months ended June 30, 2024, the Company recognized expense from income taxes of $ 20,590 and $ 43,354 , respectively. Note 10 – Commitments and Contingencies Lease Obligations The 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 cancellable leases in the period incurred in accordance with the practical expedient elected. The components of lease expense are summarized as follows: Schedule of Lease Expense 2025 2024 2025 2024 Three Months Ended June 30, Six Months Ended June 30, 2025 2024 2025 2024 Operating lease costs $ 258,122 $ 252,646 $ 516,188 $ 503,841 Short-term lease costs - 12,250 - 37,789 Total lease costs $ 258,122 $ 264,896 $ 516,188 $ 541,630 16 As of June 30, 2025, the maturities of the Company’s lease liabilities are as follows: Schedule of Maturities on Company Lease Liabilities Years Ending December 31, 2025 (remainder) $ 511,287 2026 714,630 2027 300,591 2028 308,462 Total lease payments 1,834,970 Less: imputed interest 131,254 Present value of operating lease liabilities 1,703,716 Less: current portion 824,458 Long-term portion $ 879,258 Other information related to operating leases was as follows: Schedule of Other Information Related to Operating Leases Six Months Ended June 30, 2025 Cash paid for operating leases included in operating cash flows $ 518,191 Remaining lease term of operating leases 2.5 Discount rate of operating leases 6.2 % Litigation 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 one class action claim and four 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 three civil actions, two 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; 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. 17 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. No shares were repurchased during the three and six months ended June 30, 2025. Note 12 – At-the-Market Agreement The Company has entered into an Amended and Restated Equity Distribution Agreement (the “ATM Agreement”) with Piper Sandler & Co. (“Piper Sandler”) and Clear Street, LLC (“Clear Street”), pursuant to which it may offer and sell shares of its common stock having an aggregate offering price of up to $ 17,111,650 from time to time through Piper Sandler and Clear Street acting as agents, under the prospectus supplement dated October 18, 2024. As of June 30, 2025, the Company has sold 2,209,131 shares of common stock under the ATM Agreement resulting in net proceeds to the Company of $ 1,016,988 . As of June 30, 2025, the Company has up to $ 16,063,209 remaining in aggregate gross proceeds that can be issued through the ATM Agreement. Note 13 – Related Party Transactions The Company has a services agreement with CoSara Diagnostics Pvt Ltd (“CoSara”), our joint venture for manufacturing in India, under which CoSara provides certain research and development consulting and support services. The Company recognized $ 182,364 and $ 422,467 of expense related to this agreement during the three and six months ended June 30, 2025, respectively, compared to $ 74,040 and $ 179,965 of expense during the three and six months ended June 30, 2024, respectively. Note 14 – Subsequent Events New United States tax legislation was signed into law on July 4, 2025. Income tax effects of changes in tax law or rates on deferred tax assets or liabilities are recognized at the date of enactment. The Company is still evaluating the impact of the changes included in this new legislation but does expect to realize material future benefits from certain aspects of the new law. On July 10, 2025, the Company received notification from the NASDAQ Stock Market indicating that the Company will have an additional 180-day grace period, until January 5, 2026, to regain compliance with NASDAQ’s $ 1.00 minimum bid requirement. The notification indicated that the Company did not regain compliance during the initial 180-day grace period provided under the rule. In accordance with NASDAQ Marketplace Rule 5810(c)(3)(A), the Company is eligible for the additional grace period because it meets the continued listing requirement for market value of publicly held shares and all other applicable requirements for initial listing on the Nasdaq Capital Market with the exception of the bid price requirement, and provided written notice of its intention to cure the deficiency during the second compliance period by effecting a reverse stock split, if necessary. 18