美國
證券交易委員會 及交易所
華盛頓特區，DC 20549
表單
截至年度季度結束
或
從__________到____________的過渡期間
佣金
文件號碼
(準確地 根據其章程所指定之註冊人名稱)
| （州或其他管轄區 （公司）成立或組織的文件 |
(美國國稅局雇主 身份識別號碼) |
(主要行政辦公室地址及郵政編碼)
（申報人的電話號碼，包括區號）
根據該法案第12(b)條紀錄的證券：
| 每個類別的標題 | 交易標誌 | 在哪個交易所上市的名字 | ||
| 這
|
請勾選是否申報人（1）已於過去12個月內（或對申報人要求申報此類報告的較短期間）按照1934年交易所法第13或15（d）條的規定申報所有要求的報告，並且（2）在過去90天內一直受到此類申報要求的約束。
請以檢查標記表示，登記者在過去12個月內（或登記者需要提交並發帖此類檔案的較短時段）是否已按照法規S-T條例第405條（本章第232.405條）的規定提交了每個所需提交的互動數據檔案。
請勾選以下選項，指明掛牌者是否為大型快速申報掛牌者、快速申報掛牌者、非快速申報掛牌者、較小型的報告公司或新興成長型公司。關於Exchange Act第1202條中「大型快速申報掛牌者」、「快速申報掛牌者」、「較小型報告公司」和「新興成長型公司」的定義，請參閱。
| 大型及加速提交者 | ☐ | 加速提交者 | ☐ |
| ☒ | 較小的報告公司 | ||
| 新興成長型公司 |
若屬新興成長公司，則請在適用於依據第13(a)款擬定的任何新或修訂財務會計準則時，打勾表示註冊人已選擇不使用過度過渡期遵守該準則。 ☐
請選上勾號，表示申報人是否屬於外殼公司（定義於法案第1202條規定中）。是 ☐ 否
截至2024年11月5日，有 每股$ 的普通股 。
CO-DIAGNOSTICS，INC.及其子公司
目錄
| 第一部分 基本報表: | ||
| 項目 1 | 基本報表（未經審計）： | 3 |
| 縮短的合併財務報表 | 3 | |
| 損益綜合表簡明合併報表 | 4 | |
| 簡明合併現金流量量表 | 5 | |
| 股東權益簡明合併報表 | 6 | |
| 基本報表註記 | 7 | |
| 項目 2 | 管理層對財務狀況和業績的討論與分析 | 18 |
| 項目 3. | 市場風險的定量和定性披露。 | 22 |
| 事項4。 | 內部控制及程序 | 22 |
| 第 II 部分 其他資訊: | ||
| 項目 1 | 法律訴訟 | 23 |
| 項目 1A | 風險因素 | 23 |
| 項目 2. | 股票權益的未註冊銷售和資金用途 | 23 |
| 項目 3. | 優先證券違約 | 23 |
| 項目 4. | 礦業安全披露 | 23 |
| 項目 5. | 其他信息 | 23 |
| 項目 6. | 展品 | 24 |
| 簽名 | 25 | |
| 2 |
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
CO – DIAGNOSTICS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
| September 30, 2024 | December 31, 2023 | |||||||
| Assets | ||||||||
| Current assets | ||||||||
| Cash and cash equivalents | $ | $ | ||||||
| Marketable investment securities | ||||||||
| Accounts receivable, net | ||||||||
| Inventory, net | ||||||||
| Income taxes receivable | ||||||||
| Prepaid expenses and other current assets | ||||||||
| Total current assets | ||||||||
| Property and equipment, net | ||||||||
| Operating lease right-of-use asset | ||||||||
| Intangible assets, net | ||||||||
| Investment in joint venture | ||||||||
| Total assets | $ | $ | ||||||
| Liabilities and stockholders’ equity | ||||||||
| Current liabilities | ||||||||
| Accounts payable | $ | $ | ||||||
| Accrued expenses | ||||||||
| Operating lease liability, current | ||||||||
| Contingent consideration liabilities, current | ||||||||
| Deferred revenue | ||||||||
| Total current liabilities | ||||||||
| Long-term liabilities | ||||||||
| Income taxes payable | ||||||||
| Operating lease liability | ||||||||
| Contingent consideration liabilities | ||||||||
| Total long-term liabilities | ||||||||
| Total liabilities | ||||||||
| Commitments and contingencies (Note 10) | ||||||||
| Stockholders’ equity | ||||||||
| Convertible preferred stock, $ par value; shares authorized; shares issued and outstanding as of September 30, 2024 and December 31, 2023, respectively | ||||||||
| Common stock, $ par value; shares authorized; shares issued and shares outstanding as of September 30, 2024 and shares issued and shares outstanding as of December 31, 2023 | ||||||||
| Treasury stock, at cost; shares held as of September 30, 2024 and December 31, 2023, respectively | ( | ) | ( | ) | ||||
| Additional paid-in capital | ||||||||
| Accumulated other comprehensive income | ||||||||
| Accumulated earnings (deficit) | ( | ) | ||||||
| Total stockholders’ equity | ||||||||
| Total liabilities and stockholders’ equity | $ | $ | ||||||
See accompanying notes to unaudited condensed consolidated financial statements
| 3 |
CO – DIAGNOSTICS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
(Unaudited)
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
| 2024 | 2023 | 2024 | 2023 | |||||||||||||
| Product revenue | $ | $ | $ | $ | ||||||||||||
| Grant revenue | ||||||||||||||||
| Total revenue | ||||||||||||||||
| Cost of revenue | ||||||||||||||||
| Gross profit | ||||||||||||||||
| Operating expenses | ||||||||||||||||
| Sales and marketing | ||||||||||||||||
| General and administrative | ||||||||||||||||
| Research and development | ||||||||||||||||
| Depreciation and amortization | ||||||||||||||||
| Total operating expenses | ||||||||||||||||
| Loss from operations | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Other income, net | ||||||||||||||||
| Interest income | ||||||||||||||||
| Realized gain on investments | ||||||||||||||||
| Gain (loss) on disposition of assets | ( | ) | ( | ) | ||||||||||||
| Gain (loss) on remeasurement of acquisition contingencies | ( | ) | ||||||||||||||
| Gain (loss) on equity method investment in joint venture | ( | ) | ( | ) | ||||||||||||
| Total other income, net | ||||||||||||||||
| Loss before income taxes | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Income tax provision (benefit) | ( | ) | ( | ) | ||||||||||||
| Net loss | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Other comprehensive loss | ||||||||||||||||
| Change in net unrealized gains on marketable securities, net of tax | ||||||||||||||||
| Total other comprehensive income | $ | $ | $ | $ | ||||||||||||
| Comprehensive loss | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Loss per common share: | ||||||||||||||||
| Basic and Diluted | $ | ) | $ | ) | $ | ) | $ | ) | ||||||||
| Weighted average shares outstanding: | ||||||||||||||||
| Basic and Diluted | ||||||||||||||||
See accompanying notes to unaudited condensed consolidated financial statements
| 4 |
CO – DIAGNOSTICS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
| Nine Months Ended September 30, | ||||||||
| 2024 | 2023 | |||||||
| Cash flows from operating activities | ||||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Adjustments to reconcile net loss to cash used in operating activities: | ||||||||
| Depreciation and amortization | ||||||||
| Stock-based compensation expense | ||||||||
| Change in fair value of acquisition contingencies | ( | ) | ( | ) | ||||
| Non-cash lease expense | ||||||||
| Realized gain on investments | ( | ) | ( | ) | ||||
| (Gain) loss from equity method investment | ( | ) | ||||||
| (Gain) loss on disposition of assets | ( | ) | ||||||
| Deferred income taxes | ( | ) | ||||||
| Provision for credit losses | ||||||||
| Inventory obsolescence expense | ||||||||
| Changes in assets and liabilities: | ||||||||
| Accounts receivable | ||||||||
| Prepaid expenses and other assets | ||||||||
| Inventory | ||||||||
| Deferred revenue | ( | ) | ||||||
| Income taxes payable | ||||||||
| Accounts payable, accrued expenses and other liabilities | ||||||||
| Net cash used in operating activities | ( | ) | ( | ) | ||||
| Cash flows from investing activities | ||||||||
| Purchases of property and equipment | ( | ) | ( | ) | ||||
| Proceeds from maturities of marketable investment securities | ||||||||
| Purchases of marketable securities | ( | ) | ( | ) | ||||
| Investment in joint venture | ( | ) | ||||||
| Net cash provided by investing activities | ||||||||
| Cash flows from financing activities | ||||||||
| Repurchases of common stock | ( | ) | ||||||
| Net cash used in financing activities | ( | ) | ||||||
| Net decrease in cash and cash equivalents | ( | ) | ( | ) | ||||
| Cash and cash equivalents at beginning of period | ||||||||
| Cash and cash equivalents at end of period | $ | $ | ||||||
| Supplemental disclosure of cash flow information | ||||||||
| Cash paid (received) for income taxes | $ | ( | ) | $ | ||||
| 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 | $ | $ | ||||||
See accompanying notes to unaudited condensed consolidated financial statements
| 5 |
CO – DIAGNOSTICS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(Unaudited)
| 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 | $ | $ | $ | ( | ) | $ | $ | $ | $ | |||||||||||||||||||||||||||
| Stock-based compensation | - | |||||||||||||||||||||||||||||||||||
| Other comprehensive income, net of tax | - | - | ||||||||||||||||||||||||||||||||||
| Net loss | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||||||
| Balance as of March 31, 2024 | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||
| Stock-based compensation | - | |||||||||||||||||||||||||||||||||||
| Other comprehensive income, net of tax | - | - | ||||||||||||||||||||||||||||||||||
| Net loss | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||||||
| Balance as of June 30, 2024 | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||
| Stock-based compensation | - | |||||||||||||||||||||||||||||||||||
| Other comprehensive income, net of tax | - | - | ||||||||||||||||||||||||||||||||||
| Net loss | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||||||
| Balance as of September 30, 2024 | $ | $ | $ | ( | ) | $ | $ | $ | ( | ) | $ | |||||||||||||||||||||||||
| 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, 2022 | $ | $ | $ | ( | ) | $ | $ | $ | $ | |||||||||||||||||||||||||||
| Stock-based compensation | - | |||||||||||||||||||||||||||||||||||
| Repurchases of common stock | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||||||
| Other comprehensive income, net of tax | - | - | ||||||||||||||||||||||||||||||||||
| Net loss | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||||||
| Balance as of March 31, 2023 | ( | ) | ||||||||||||||||||||||||||||||||||
| Stock-based compensation | - | |||||||||||||||||||||||||||||||||||
| Repurchases of common stock | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||||||
| Other comprehensive income, net of tax | - | - | ||||||||||||||||||||||||||||||||||
| Net loss | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||||||
| Balance as of June 30, 2023 | ( | ) | ||||||||||||||||||||||||||||||||||
| Stock-based compensation | - | |||||||||||||||||||||||||||||||||||
| Repurchases of common stock | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||||||
| Other comprehensive income, net of tax | - | - | ||||||||||||||||||||||||||||||||||
| Net loss | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||||||
| Balance as of September 30, 2023 | $ | $ | $ | ( | ) | $ | $ | $ | $ | |||||||||||||||||||||||||||
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™ 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 nine months ended September 30, 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.
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.
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.
| 7 |
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 September 30, 2024 total accounts receivable was $
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 September 30, 2024, the Company had $
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 grant funding revenue of $
| 8 |
Income Taxes
The Company accounts for income taxes in accordance with the liability method of accounting for income taxes. Under this method, deferred 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
Three
customers individually accounted for more than
| 9 |
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 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.
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:
| September 30, 2024 | ||||||||||||||||||||
| Adjusted Cost | Total Unrealized Gains / (Losses) | Fair Value | Cash and Cash Equivalents | Marketable Investment Securities | ||||||||||||||||
| Cash | $ | $ | $ | $ | $ | |||||||||||||||
| Level 2: | ||||||||||||||||||||
| U.S. treasury securities | ||||||||||||||||||||
| Subtotal | ||||||||||||||||||||
| Total | $ | $ | $ | $ | $ | |||||||||||||||
| December 31, 2023 | ||||||||||||||||||||
| Adjusted Cost | Total Unrealized Gains / (Losses) | Fair Value | Cash and Cash Equivalents | Marketable Investment Securities | ||||||||||||||||
| Cash | $ | $ | $ | $ | $ | |||||||||||||||
| Level 1: | ||||||||||||||||||||
| Money market funds | ||||||||||||||||||||
| Subtotal | ||||||||||||||||||||
| Level 2: | ||||||||||||||||||||
| U.S. treasury securities | ||||||||||||||||||||
| Subtotal | ||||||||||||||||||||
| Total | $ | $ | $ | $ | $ | |||||||||||||||
Marketable investment securities held as of September 30, 2024 mature over the next 12 months.
| 10 |
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 September 30, 2024 and December 31, 2023, by level within the fair value hierarchy:
| September 30, 2024 | ||||||||||||||||
| (Level 1) | (Level 2) | (Level 3) | Total | |||||||||||||
| Assets: | ||||||||||||||||
| Cash equivalents | $ | $ | $ | $ | ||||||||||||
| Marketable securities (U.S. treasury bills and notes) | ||||||||||||||||
| Total assets measured at fair value | $ | $ | $ | $ | ||||||||||||
| Liabilities: | ||||||||||||||||
| Contingent consideration - common stock | $ | $ | $ | $ | ||||||||||||
| Contingent consideration - warrants | ||||||||||||||||
| Total liabilities measured at fair value | $ | $ | $ | $ | ||||||||||||
| December 31, 2023 | ||||||||||||||||
| (Level 1) | (Level 2) | (Level 3) | Total | |||||||||||||
| Assets: | ||||||||||||||||
| Cash equivalents | $ | $ | $ | $ | ||||||||||||
| Marketable securities (U.S. treasury bills and notes) | ||||||||||||||||
| Total assets measured at fair value | $ | $ | $ | $ | ||||||||||||
| Liabilities: | ||||||||||||||||
| Contingent consideration - common stock | $ | $ | $ | $ | ||||||||||||
| Contingent consideration - warrants | ||||||||||||||||
| Total liabilities measured at fair value | $ | $ | $ | $ | ||||||||||||
| 11 |
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, 2024 and December 31, 2023.
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:
| Fair value as of December 31, 2023 | $ | |||
| Change in fair value of contingent consideration issued for business acquisitions | ( | ) | ||
| Fair value as of September 30, 2024 | $ |
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:
| September 30, 2024 | December 31, 2023 | |||||||
| Stock price | $ | $ | ||||||
| Strike price | $ | $ | ||||||
| Volatility | % | % | ||||||
| Risk-free rate | % | % | ||||||
| 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 5 – Intangible Assets, Net
Intangible assets, net consisted of the following:
| September 30, 2024 | ||||||||||||||
| Weighted-Average | Gross | Net | ||||||||||||
| Useful Life (1) | Carrying | Accumulated | Carrying | |||||||||||
| (in Years) | Amount | Amortization | Amount | |||||||||||
| In-process research and development | $ | $ | $ | |||||||||||
| Non-competition agreements | ( | ) | ||||||||||||
| Total intangible assets | $ | $ | ( | ) | $ | |||||||||
| December 31, 2023 | ||||||||||||||
| Weighted-Average | Gross | Net | ||||||||||||
| Useful Life (1) | Carrying | Accumulated | Carrying | |||||||||||
| (in Years) | Amount | Amortization | Amount | |||||||||||
| In-process research and development | $ | $ | $ | |||||||||||
| Non-competition agreements | ( | ) | ||||||||||||
| Total intangible assets | $ | $ | ( | ) | $ | |||||||||
| (1) |
| 12 |
The expected future annual amortization expense of the Company’s intangible assets held as of September 30, 2024 is as follows:
| Year Ending December 31, | Amortization Expense | |||
| 2024 (remainder) | $ | |||
Note 6 – Revenue
The following table sets forth revenue by geographic area:
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
| 2024 | 2023 | 2024 | 2023 | |||||||||||||
| United States | ||||||||||||||||
| Product revenue | $ | $ | $ | $ | ||||||||||||
| Grant revenue | ||||||||||||||||
| Total United States | ||||||||||||||||
| Rest of World | ||||||||||||||||
| Product revenue | ||||||||||||||||
| Grant revenue | ||||||||||||||||
| Total Rest of World | ||||||||||||||||
| Total | $ | $ | $ | $ | ||||||||||||
| Percentage of revenue by area: | ||||||||||||||||
| United States | % | % | % | % | ||||||||||||
| Rest of World | % | % | % | % | ||||||||||||
Changes in the Company’s deferred revenue balance for the nine months ended September 30, 2024 were as follows:
| Balance as of December 31, 2023 | $ | |||
| Revenue recognized included in deferred revenue balance at the beginning of the period | ( | ) | ||
| Balance as of September 30, 2024 | $ |
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
| 2024 | 2023 | 2024 | 2023 | |||||||||||||
| Numerator | ||||||||||||||||
| Net loss, as reported | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Denominator | ||||||||||||||||
| Weighted average shares, basic | ||||||||||||||||
| Dilutive effect of stock options, warrants and RSUs | ||||||||||||||||
| Shares used to compute diluted earnings per share | ||||||||||||||||
| Basic loss per share | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Diluted loss per share | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| 13 |
The
computation of diluted loss per share for the three and nine months ended September 30, 2024 and 2023, respectively, also excludes approximately
million shares of common stock and approximately
As a result of incurring a net loss for the three and nine months ended September 30, 2024 and 2023, respectively, 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 September 30, 2024, consisting of: (i) restricted stock units and (ii) options and warrants. The Company had potentially dilutive securities as of September 30, 2023, consisting of: (i) restricted stock units and (ii) options and warrants.
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 shares of common stock. The number of awards available for issuance under the Incentive Plan was at September 30, 2024.
Stock Options
Number of Options | Weighted Average Exercise Price | Weighted Average Fair Value | Weighted Average Remaining Contractual Life (Years) | |||||||||||||
| Outstanding at December 31, 2023 | $ | $ | ||||||||||||||
| Granted | ||||||||||||||||
| Expired | ||||||||||||||||
| Forfeited/Cancelled | ||||||||||||||||
| Exercised | ||||||||||||||||
| Outstanding at September 30, 2024 | $ | $ | ||||||||||||||
| Exercisable at September 30, 2024 | $ | $ | ||||||||||||||
The aggregate intrinsic value of outstanding options at September 30, 2024 was approximately $ 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. The Company uses the Black-Scholes model to value options granted. As of September 30, 2024, there were no unvested options and no unrecognized stock-based compensation expense related to options.
Restricted Stock Units
| Number of RSUs | Weighted Average Grant Date Fair Value | |||||||
| Unvested at December 31, 2023 | $ | |||||||
| Granted | ||||||||
| Vested | ( | ) | ||||||
| Forfeited/Cancelled | ( | ) | ||||||
| Unvested at September 30, 2024 | $ | |||||||
| 14 |
As of September 30, 2024, there was approximately $ million of unrecognized stock-based compensation expense related to outstanding RSUs which is expected to be recognized over a weighted-average period of 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 nine months ended September 30, 2024:
Number of Warrants | Weighted Average Exercise Price | Weighted Average Fair Value | Weighted Average Remaining Contractual Life (Years) | |||||||||||||
| Outstanding at December 31, 2023 | $ | $ | ||||||||||||||
| Granted | ||||||||||||||||
| Expired | ||||||||||||||||
| Forfeited/Cancelled | ||||||||||||||||
| Exercised | ||||||||||||||||
| Outstanding at September 30, 2024 | $ | $ | ||||||||||||||
The aggregate intrinsic value of outstanding warrants at September 30, 2024 was $.
The
total number of warrants exercisable at September 30, 2024 is
Stock-Based Compensation Expense
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
| 2024 | 2023 | 2024 | 2023 | |||||||||||||
| Cost of revenue | $ | $ | $ | $ | ||||||||||||
| Sales and marketing | ||||||||||||||||
| General and administrative | ||||||||||||||||
| Research and development | ( | ) | ||||||||||||||
| Total stock-based compensation expense | $ | $ | $ | $ | ||||||||||||
Note 9 – Income Taxes
For
the three months ended September 30, 2024, the Company recognized expense from income taxes of $
| 15 |
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 cancelable leases in the period incurred in accordance with the practical expedient elected.
The components of lease expense are summarized as follows:
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
| 2024 | 2023 | 2024 | 2023 | |||||||||||||
| Operating lease costs | $ | $ | $ | $ | ||||||||||||
| Short-term lease costs | ||||||||||||||||
| Total lease costs | $ | $ | $ | $ | ||||||||||||
As of September 30, 2024, the maturities of the Company’s lease liabilities are as follows:
Year Ending December 31, | ||||
| 2024 (remainder) | $ | |||
| 2025 | ||||
| 2026 | ||||
| 2027 | ||||
| 2028 | ||||
| Thereafter | ||||
| Total lease payments | ||||
| Less: imputed interest | ||||
| Present value of operating lease liabilities | ||||
| Less: current portion | ||||
| Long-term portion | $ | |||
Other information related to operating leases was as follows:
| Nine Months Ended September 30, 2024 | ||||
| Cash paid for operating leases included in operating cash flows | $ | |||
| Remaining lease term of operating leases | ||||
| Discount rate of operating leases | % | |||
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.
| 16 |
The Company is a defendant in two class action claims 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.
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 $
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 or nine months ended September 30, 2024.
Note 12 – Related Party Transactions
In
2023, the Company entered into 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 $
| 17 |
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Cautionary Note Regarding Forward-Looking Statements
This Quarterly Report on Form 10-Q contains “forward-looking statements” that involve risks and uncertainties. All statements other than statements of historical fact contained in this Quarterly Report and the documents incorporated by reference herein, including statements regarding future events, our future financial performance, business strategy, and plans and objectives of management for future operations, are forward-looking statements. We have attempted to identify forward-looking statements by terminology including “anticipates,” “believes,” “can,” “continue,” “could,” “estimates,” “expects,” “intends,” “may,” “plans,” “potential,” “predicts,” “should,” or “will” or the negative of these terms or other comparable terminology. Although we do not make forward-looking statements unless we believe we have a reasonable basis for doing so, we cannot guarantee their accuracy. These statements are only predictions and involve known and unknown risks, uncertainties and other factors and the documents incorporated by reference herein, which may affect our or our industry’s actual results, levels of activity, performance or achievements expressed or implied by these forward-looking statements. Moreover, we operate in a highly regulated, very competitive, and rapidly changing environment. New risks emerge from time to time, and it is not possible for us to predict all risk factors, nor can we address the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause our actual results to differ materially from those contained in any forward-looking statements.
These forward-looking statements are subject to certain risks and uncertainties that could cause our actual results to differ materially from those reflected in the forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those discussed under the heading “Risk Factors” in other documents we file with the SEC, including our Annual Report on form 10-K for the year ended December 31, 2023. The following discussion should be read in conjunction with the Annual Report on Form 10-K for the fiscal year ended December 31, 2023, filed with the SEC on March 14, 2024, and the audited financial statements and notes included therein.
As used in this Quarterly Report, the terms “we”, “us”, “our”, and “Co-Diagnostics” means Co-Diagnostics, Inc., a Utah corporation and its consolidated subsidiaries (the “Company”), unless otherwise indicated.
Executive Overview
The following management’s discussion and analysis of financial condition and results of operations describes the principal factors affecting the results of our operations, financial condition, and changes in financial condition. This discussion should be read in conjunction with the accompanying unaudited financial statements and notes thereto included elsewhere in this report. The information contained in this discussion is subject to a number of risks and uncertainties. We urge you to review carefully the section of this report entitled “Cautionary Note Regarding Forward-Looking Statements.”
Business Overview
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 (“Co-Primers®”) 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, hepatitis B and C, human papillomavirus, malaria, chikungunya, dengue, and the Zika virus. These initial diagnostic tests are cleared for use in clinical labs only and not for point-of-care or at-home use.
We 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 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. 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 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, and the Co-Dx PCR COVID-19 Test for over-the-counter (OTC) use. We have received acknowledgement from the FDA that the 510(k) application was received and is under review. Additionally, 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). 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.
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Technology
We 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.
In addition, continued development has demonstrated the unique properties of our CoPrimer 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 Polymorphism (“SNP”) detection and enrichment for next generation sequencing.
Our scientists use the complex mathematics of DNA/RNA PCR test design to engineer and optimize PCR tests and to automate algorithms that rapidly screen millions of possible options to pinpoint the optimum design. 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. CODX technologies are now protected by more than 20 granted or pending US and foreign patents, as well as certain trade secrets and copyrights. Ownership of our proprietary platform permits us the advantage of avoiding payment of patent royalties required by other PCR test systems, which may allow the sale of diagnostic PCR tests at a lower price than competitors, while enabling us to maintain profit margins.
Our proprietary test design process involves identifying the optimal locations on the target genes for amplification and pair the locations with the optimized primer and probe structure to achieve outputs that meet the design input requirements identified from market research. This is done by following planned and documented processes, procedures and testing. In other words, we use the data resulting from our tests to verify whether we succeeded in designing what we intended. Verification involves a series of testing that concludes that the product is ready to proceed to validation in an evaluation either in our laboratory or in an independent laboratory setting using initial production tests to confirm that the product as designed meets the user needs.
Using 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”).
In 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. 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.
RESULTS OF OPERATIONS
The Three Months Ended September 30, 2024 Compared to the Three Months ended September 30, 2023
Revenues
For the three months ended September 30, 2024, we generated revenues of $641,141, compared to revenues of $2,457,098 for the three months ended September 30, 2023. Grant revenue accounted for $434,265 of revenue for the three months ended September 30, 2024, compared to $2,320,565 for the three months ended September 30, 2023. The decrease in grant revenue was primarily due to the timing of the achievement of certain milestones under various grants the Company was awarded.
| 19 |
Cost of Revenues
We recorded cost of revenues of $297,403 for the three months ended September 30, 2024, compared to $255,772 for the three months ended September 30, 2023. The increase in cost of revenues is primarily due to higher inventory obsolescence costs recorded in the current quarter versus the prior year comparable period.
Expenses
We incurred total operating expenses of $10,578,675 for the three months ended September 30, 2024, compared to total operating expenses of $11,137,277 for the three months ended September 30, 2023. The decrease in operating expenses was primarily due to decreased stock-based compensation expense, and expense related to clinical trials for the Co-Dx PCR platform. These decreases were partially offset by increased legal expenses.
Our sales and marketing expenses for the three months ended September 30, 2024 were $1,059,745, compared to $1,904,395 for the three months ended September 30, 2023. The decrease was primarily a result of decreased stock-based compensation expense, tradeshow and travel expenses, and outside consulting and professional services expenses.
General and administrative expenses were $4,287,380 for the three months ended September 30, 2024, compared to $3,147,753 for the three months ended September 30, 2023. The increase in general and administrative expenses was primarily due to increased legal expenses, partially offset by decreases in stock-based compensation expense and professional services expenses.
Our research and development expenses were $4,880,315 for the three months ended September 30, 2024, compared to $5,788,789 for the three months ended September 30, 2023. The decrease 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 consulting and professional services expenses.
Other Income
For the three months ended September 30, 2024 we had total other income of $560,671, compared to total other income of $840,176 for the three months ended September 30, 2023. The decrease in other income is primarily due to a change in the fair value of contingent consideration liabilities and decreased realized gains from investments in marketable securities.
Net Loss
We realized a net loss for the three months ended September 30, 2024 of $9,696,455, compared to a net loss for the three months ended September 30, 2023 of $5,982,194. The increase in net loss was primarily the result of a decrease in grant revenue, partially offset by a decrease in operating expenses, as well as changes in the fair value of acquisition contingencies and income related to investments in marketable securities. Additionally, we recorded income tax expense of $22,189 for the three months ended September 30, 2024, compared to an income tax benefit of $2,113,581 for the three months ended September 30, 2023. The primary reason for the change in the provision for income taxes is a result of the Company now being in a full valuation allowance.
The Nine Months Ended September 30, 2024 Compared to the Nine Months ended September 30, 2023
Revenues
For the nine months ended September 30, 2024, we generated revenues of $3,765,835, compared to revenues of $3,256,861 for the nine months ended September 30, 2023. Grant revenue accounted for $3,145,112 of revenue for the nine months ended September 30, 2024, compared to $2,320,565 for the nine months ended September 30, 2023. The decrease in product revenue of $315,573 was primarily due to lower sales of our Logix Smart COVID-19 test throughout the world. The increase in grant revenue was primarily due to the achievement of certain milestones under various grants the Company was awarded.
| 20 |
Cost of Revenues
We recorded cost of revenues of $744,056 for the nine months ended September 30, 2024, compared to $1,217,108 for the nine months ended September 30, 2023. The decrease in cost of revenues of $473,052 is primarily due to lower inventory obsolescence reserves being recorded in the current year versus the prior year comparable period.
Expenses
We incurred total operating expenses of $31,196,065 for the nine months ended September 30, 2024, compared to total operating expenses of $32,920,793 for the nine months ended September 30, 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 expenses and legal expenses.
Our sales and marketing expenses for the nine months ended September 30, 2024 were $3,664,670, compared to $5,343,692 for the nine months ended September 30, 2023. The decrease was primarily a result of decreased stock-based compensation expense, tradeshow and travel expenses, website development expenses and personnel related expenses.
General and administrative expenses were $10,338,568 for the nine months ended September 30, 2024, compared to $9,875,613 for the nine months ended September 30, 2023. The increase in general and administrative expenses was primarily due to increased legal expenses, partially offset by decreases in stock-based compensation expense, bad debt expense, professional services expense and insurance expense.
Our research and development expenses were $16,172,684 for the nine months ended September 30, 2024, compared to $16,783,892 for the nine months ended September 30, 2023. The decrease 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, consulting and professional services expenses.
Other Income
For the nine months ended September 30, 2024, we had total other income of $1,632,013, compared to total other income of $3,612,918 for the nine months ended September 30, 2023. The decrease in other income is primarily due to a change in the fair value of contingent consideration liabilities, an increased loss related to the Company’s joint venture investment, and decreased realized gains from investments in marketable securities, partially offset by increased interest income.
Net Loss
We realized a net loss for the nine months ended September 30, 2024 of $26,607,816, compared to a net loss for the nine months ended September 30, 2023 of $20,656,410. The larger net loss was primarily the result of changes in the fair value of acquisition contingencies and income taxes, partially offset by an increase in grant revenue combined with a decrease in operating expenses. We recorded income tax expense of $65,543 for the nine months ended September 30, 2024, compared to an income tax benefit of $6,611,712 for the nine months ended September 30, 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.
Liquidity and Capital Resources
At September 30, 2024, we had cash and cash equivalents of $10,797,630. Additionally, we had $26,864,571 of marketable investment securities that could readily be converted into cash if needed. Additionally, our total current assets of September 30, 2024, were $40,103,158 compared to total current liabilities of $5,797,977.
Net cash used in operating activities during the nine months ended September 30, 2024 was $20,924,039, compared to $17,303,239 for the nine months ended September 30, 2023. The increase in cash used in operating activities was primarily due to a decrease in cash collections from customers and granting agencies and the impact of non-cash items.
Net cash provided by investing activities during the nine months ended September 30, 2024 was $16,804,791, primarily from maturities of marketable investment securities, compared to $5,773,590 during the nine months ended September 30, 2023.
Net cash used in financing activities was $0 for the nine months ended September 30, 2024, compared to $1,204,256 for the same period in the prior year. This is due to the repurchase of outstanding common shares during the prior period, compared to no such repurchases in the current period.
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Since 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.
We 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. 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. 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. The Company is subject to General Instruction I.B.6 of Form S-3 which limits the amounts that we may sell under the Equity Distribution Agreement over a 12-month period to an amount equal to or less than one-third of our public float. On October 18, 2024, the Company filed a Prospectus Supplement with the SEC reducing the amount available for sale under the Equity Distribution Agreement to $17.1 million. No shares have been sold under the distribution agreement as of September 30, 2024. We may not be able to secure financing in a timely manner or on favorable terms, if at all.
Off-Balance Sheet Arrangements
We have no off-balance sheet arrangements.
Item 3. Quantitative and Qualitative Disclosures about Market Risk
Not required under Regulation S-K for “smaller reporting companies.”
Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
We maintain “disclosure controls and procedures,” as defined in Rules 13a-15I and 15d-15(e) under the Exchange Act that are designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the company’s management, including its principal executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosure. Our management, with the participation of our Chief Executive Officer and our Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures as of September 30, 2024. Based on the evaluation of our disclosure controls and procedures as of September 30, 2024, our Chief Executive Officer and Chief Financial Officer concluded that, as of such date, our disclosure controls and procedures were effective.
Changes in Internal Control over Financial Reporting
There have been no changes in our internal control over financial reporting during the three months ended September 30, 2024, that have materially affected or, are reasonably likely to materially affect, our internal control over financial reporting.
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PART II – OTHER INFORMATION
Item 1. Legal Proceedings
There have been no material developments to the legal proceedings previously disclosed under Part I. Item 3 of our Annual Report on Form 10-K for the fiscal year ended December 31, 2023.
Item 1A. Risk Factors.
Not required under Regulation S-K for “smaller reporting companies.”
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
None.
Dividends
We have never declared or paid any cash dividends on our capital stock. The payment of dividends on our common stock in the future will depend on our earnings, capital requirements, operating and financial condition and such other factors as our board of directors may consider appropriate. We currently expect to use all available funds to finance the future development and expansion of our business and do not anticipate paying dividends on our common stock in the foreseeable future.
Pursuant to Section 16-10a-640 of the Utah Revised Business Corporation Act, no distribution may be made if, after giving it effect:
| (a) | the corporation would not be able to pay its debts as they become due in the usual course of business; or | |
| (b) | the corporation’s total assets would be less than the sum of its total liabilities plus, unless the articles of incorporation permit otherwise, the amount that would be needed, if the corporation were to be dissolved at the time of the distribution, to satisfy the preferential rights upon dissolution of shareholders whose preferential rights are superior to those receiving the distribution. |
Item 3. Defaults Upon Senior Securities
None.
Item 4. Mine Safety Disclosures
Not applicable.
Item 5. Other Information
Effective as of November 4, 2024, the Board of Directors of Co-Diagnostics, Inc. (the “Company”), approved an amendment (the “Amendment”) to the Company’s Amended and Restated Bylaws (the “Bylaws”). The Amendment modifies the Company’s Bylaws to eliminate the classification of the Board of Directors and provide that all members of the Board of Directors are elected annually. The Amendment also makes various conforming changes to the Bylaws to reflect the de-classification of the Board of Directors. The foregoing summary of the Amendment is qualified in its entirety by reference to the full text of the Amendment, a copy of which is attached hereto as Exhibit 3.1 and incorporated herein by reference.
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Item 6. Exhibits
Exhibit Index
(a) Exhibits
| Exhibit | Number Description | |
| 3.1* | Amendment to the Amended and Restated Bylaws | |
| 31.1* | Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | |
| 31.2* | Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | |
| 32.1* | Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 | |
| 32.2* | Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 | |
| 101.INS | Inline XBRL Instance Document | |
| 101.SCH | Inline XBRL Taxonomy Extension Schema Document | |
| 101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase Document | |
| 101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase Document | |
| 101.LAB | Inline XBRL Taxonomy Extension Label Linkbase Document | |
| 101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase Document | |
| 104 | Cover Page Interactive Data File |
* Filed herewith.
# Management Contract or Compensatory Plan or Arrangement
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| CO-DIAGNOSTICS, INC. | ||
| Date: November 7, 2024 | By: | /s/ Dwight H. Egan |
| Name: | Dwight H. Egan | |
| Title: | Chief Executive Officer and Principal Executive Officer | |
| Date: November 7, 2024 | By: | /s/ Brian Brown |
| Name: | Brian Brown | |
| Title: | Chief Financial Officer and Principal Financial and Accounting Officer | |
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