Co-Diagnostics Inc

Previous wording

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

Current wording

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.

Previous wording

For the three months ended June 30, 2024, we generated revenues of $2,656,840, compared to revenues of $197,806 for the three months ended June 30, 2023. Grant revenue accounted for $2,495,738 of revenue for the three months ended June 30, 2024, compared to $0 for the three months ended June 30, 2023. The increase in grant revenue was primarily due to the achievement of certain milestones under various grants the Company was awarded.

Current wording

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.

Previous wording

We recorded cost of revenues of $212,148 for the three months ended June 30, 2024, compared to $459,095 for the three months ended June 30, 2023. The decrease in cost of revenues of $246,947 is primarily due to lower inventory obsolescence reserves recorded in the current quarter.

Current wording

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.

Previous wording

We incurred total operating expenses of $10,124,654 for the three months ended June 30, 2024, compared to total operating expenses of $11,733,150 for the three months ended June 30, 2023. The decrease in operating expenses was primarily due to decreased stock-based compensation expense, bad debt expense, and expense related to clinical trials for the Co-Dx PCR platform. These decreases were partially offset by increased legal expenses.

Current wording

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.

Previous wording

Our sales and marketing expenses for the three months ended June 30, 2024 were $1,041,243, compared to $1,732,966 for the three months ended June 30, 2023. The decrease was primarily a result of decreased stock-based compensation expense, tradeshow and travel expenses, and website development expenses.

Current wording

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.

Previous wording

General and administrative expenses were $6,051,188 for the six months ended June 30, 2024, compared to $6,727,860 for the six months ended June 30, 2023. The decrease in general and administrative expenses was primarily due to decreases in stock-based compensation expense, bad debt expense, and insurance expense, partially offset by increased legal and professional services expenses.

Current wording

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.

Previous wording

Our research and development expenses were $5,612,691 for the three months ended June 30, 2024, compared to $5,981,043 for the three months ended June 30, 2023. The decrease was primarily a result of decreased expenses related to clinical trials for the Co-Dx PCR platform and stock-based compensation expense, partially offset by increases in personnel related expenses.

Current wording

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.

Previous wording

For the three months ended June 30, 2024 we had total other income of $101,234, compared to total other income of $837,294 for the three months ended June 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, partially offset by increased interest income.

Current wording

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.

Previous wording

We realized a net loss for the three months ended June 30, 2024 of $7,599,318, compared to a net loss for the three months ended June 30, 2023 of $8,918,825. The smaller net loss was primarily the result of an increase in grant revenue, combined with 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 $20,590 for the three months ended June 30, 2024, compared to an income tax benefit of $2,238,320 for the three months ended June 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.

Current wording

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.

Previous wording

For the six months ended June 30, 2024, we generated revenues of $3,124,694, compared to revenues of $799,763 for the six months ended June 30, 2023. Grant revenue accounted for $2,710,847 of revenue for the six months ended June 30, 2024, compared to $0 for the six months ended June 30, 2023. The decrease in product revenue of $385,916 was primarily due to lower sales of our Logix Smart COVID-19 throughout the world. The increase in grant revenue was primarily due to the achievement of certain milestones under various grants the Company was awarded.

Current wording

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.

Previous wording

We recorded cost of revenues of $446,653 for the six months ended June 30, 2024, compared to $961,336 for the six months ended June 30, 2023. The decrease in cost of revenues of $514,683 is primarily due to lower inventory obsolescence reserves being recorded in the current year.

Current wording

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.

Previous wording

We incurred total operating expenses of $20,617,390 for the six months ended June 30, 2024, compared to total operating expenses of $21,783,516 for the six months ended June 30, 2023. The decrease in operating expenses was primarily due to decreased stock-based compensation expense, bad debt expense and expense related to clinical trials for the Co-Dx PCR platform. These decreases were partially offset by increased personnel related expenses and legal expenses.

Current wording

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.

Previous wording

Our sales and marketing expenses for the six months ended June 30, 2024 were $2,604,925, compared to $3,439,297 for the six months ended June 30, 2023. The decrease was primarily a result of decreased stock-based compensation expense, tradeshow and travel expenses, and website development expenses.

Current wording

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.

Previous wording

General and administrative expenses were $3,132,385 for the three months ended June 30, 2024, compared to $3,713,895 for the three months ended June 30, 2023. The decrease in general and administrative expenses was primarily due to decreases in stock-based compensation expense, bad debt expense, and insurance expense, partially offset by increased legal and professional services expenses.

Current wording

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.

Previous wording

Our research and development expenses were $11,292,369 for the six months ended June 30, 2024, compared to $10,995,103 for the six months ended June 30, 2023. The primary increase in expenses was a result of increased personnel related expenses, partially offset by decreased expenses related to clinical trials for the Co-Dx PCR platform and stock-based compensation expense.

Current wording

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.

Previous wording

For the six months ended June 30, 2024 we had total other income of $1,071,342, compared to total other income of $2,772,742 for the six months ended June 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.

Current wording

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.

Previous wording

We realized a net loss for the six months ended June 30, 2024 of $16,911,361, compared to a net loss for the six months ended June 30, 2023 of $14,674,216. 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 $43,354 for the six months ended June 30, 2024, compared to an income tax benefit of $4,498,131 for the six months ended June 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.

Current wording

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.

Previous wording

At June 30, 2024, we had cash and cash equivalents of $13,858,866. Additionally, we had $31,020,811 of marketable investment securities that could readily be converted into cash if needed. Additionally, our total current assets of June 30, 2024, were $48,219,239 compared to total current liabilities of $5,305,385.

Current wording

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.

Previous wording

Net cash used in operating activities during the six months ended June 30, 2024 was $13,694,532, compared to $11,538,068 for the six months ended June 30, 2023. The increase in cash used in operating activities was primarily due to increased operating expenses and the impact of non-cash items.

Current wording

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.

Previous wording

Net cash provided by investing activities during the six months ended June 30, 2024 was $12,636,520, primarily from maturities of marketable investment securities, compared to $3,433,041 during the six months ended June 30, 2023.

Current wording

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.

Previous wording

Net cash used in financing activities was $0 for the six months ended June 30, 2024, compared to $1,037,930 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.

Current wording

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.

Previous wording

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. No shares have been sold under the distribution agreement as of June 30, 2024. We may not be able to secure financing in a timely manner or on favorable terms, if at all.

Current wording

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.