UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM
For
the quarterly period ended
OR
For the transition period from __________ to __________
Commission
File No.
(Exact Name of Registrant as Specified in Its Charter)
| (State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification Number) |
(Address of principal executive offices and zip code)
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
| The
|
Indicate
by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject
to such filing requirements for the past 90 days.
Indicate
by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted and posted pursuant
to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or such shorter period that the registrant
was required to submit and post such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| Large accelerated filer | ☐ | Accelerated filer | ☐ |
| ☒ | Smaller reporting company | ||
| Emerging growth company |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate
by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐
As of August 9, 2023, there were shares of common stock, par value $0.001 per share, outstanding.
CO-DIAGNOSTICS, INC. AND SUBSIDIARIES
TABLE OF CONTENTS
| 2 |
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
CO – DIAGNOSTICS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
| June 30, 2023 | December 31, 2022 | |||||||
| Assets | ||||||||
| Current assets | ||||||||
| Cash and cash equivalents | $ | $ | ||||||
| Marketable investment securities | ||||||||
| Accounts receivable, net | ||||||||
| Inventory, net | ||||||||
| Income taxes receivable | ||||||||
| Prepaid expenses and other current assets | ||||||||
| Note receivable | ||||||||
| Total current assets | ||||||||
| Property and equipment, net | ||||||||
| Deferred tax asset | ||||||||
| 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, current | ||||||||
| Operating lease liability, current | ||||||||
| Contingent consideration liabilities, current | ||||||||
| Deferred revenue | ||||||||
| Total current liabilities | ||||||||
| Long-term liabilities | ||||||||
| Income taxes payable | ||||||||
| Deferred tax liability | ||||||||
| 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 June 30, 2023 and December 31, 2022, respectively | ||||||||
| Common stock, $ par value; shares authorized; shares issued and shares outstanding as of June 30, 2023 and shares issued and shares outstanding as of December 31, 2022 | ||||||||
| Treasury stock, at cost; and shares held as of June 30, 2023 and December 31, 2022, respectively | ( | ) | ( | ) | ||||
| Additional paid-in capital | ||||||||
| Accumulated other comprehensive income | ||||||||
| Accumulated earnings | ||||||||
| 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 INCOME (LOSS)
(Unaudited)
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
| 2023 | 2022 | 2023 | 2022 | |||||||||||||
| Revenue | $ | $ | $ | $ | ||||||||||||
| Cost of revenue | ||||||||||||||||
| Gross profit | ( | ) | ( | ) | ||||||||||||
| Operating expenses | ||||||||||||||||
| Sales and marketing | ||||||||||||||||
| General and administrative | ||||||||||||||||
| Research and development | ||||||||||||||||
| Depreciation and amortization | ||||||||||||||||
| Total operating expenses | ||||||||||||||||
| Income (loss) from operations | ( | ) | ( | ) | ( | ) | ||||||||||
| Other income, net | ||||||||||||||||
| Interest income | ||||||||||||||||
| Realized gain on investments | ||||||||||||||||
| (Loss) on disposition of assets | ( | ) | ( | ) | ||||||||||||
| Gain on remeasurement of acquisition contingencies | ||||||||||||||||
| Gain (loss) on equity method investment in joint venture | ( | ) | ( | ) | ( | ) | ||||||||||
| Total other income, net | ||||||||||||||||
| Income (loss) before income taxes | ( | ) | ( | ) | ( | ) | ||||||||||
| Income tax provision (benefit) | ( | ) | ( | ) | ( | ) | ||||||||||
| Net income (loss) | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ||||||
| Other comprehensive income (loss) | ||||||||||||||||
| Change in net unrealized gains on marketable securities, net of tax | $ | $ | $ | $ | ||||||||||||
| Total other comprehensive income | $ | $ | $ | $ | ||||||||||||
| Comprehensive income (loss) | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ||||||
| Earnings (loss) per common share: | ||||||||||||||||
| Basic | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ||||||
| Diluted | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ||||||
| Weighted average shares outstanding: | ||||||||||||||||
| Basic | ||||||||||||||||
| Diluted | ||||||||||||||||
See accompanying notes to unaudited condensed consolidated financial statements
| 4 |
CO – DIAGNOSTICS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
| Six Months Ended June 30, | ||||||||
| 2023 | 2022 | |||||||
| Cash flows from operating activities | ||||||||
| Net (loss) income | $ | ( | ) | $ | ||||
| Adjustments to reconcile net income to cash (used in) provided by operating activities: | ||||||||
| Depreciation and amortization | ||||||||
| Stock-based compensation expense | ||||||||
| Change in fair value of acquisition contingencies | ( | ) | ( | ) | ||||
| Non-cash lease expense | ||||||||
| (Gain) loss from equity method investment | ( | ) | ||||||
| Loss on disposition of assets | ||||||||
| Deferred income taxes | ( | ) | ( | ) | ||||
| Bad debt 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) provided by operating activities | ( | ) | ||||||
| Cash flows from investing activities | ||||||||
| Purchases of property and equipment | ( | ) | ( | ) | ||||
| Proceeds from maturities of marketable investment securities | ||||||||
| Purchases of marketable securities | ( | ) | ( | ) | ||||
| Net cash (used in) provided by investing activities | ( | ) | ||||||
| Cash flows from financing activities | ||||||||
| Proceeds from exercise of options and warrants | ||||||||
| 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 | ||||||||
| Interest paid | $ | $ | ||||||
| Income taxes paid | $ | $ | ||||||
| Supplemental disclosure of non-cash investing and financing transactions | ||||||||
| Inventory moved to property, plant and equipment | $ | $ | ||||||
| Right-of-use assets obtained in exchange for new operating lease liabilities | $ | $ | ||||||
| Business acquisition measurement period adjustments | $ | $ | ||||||
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 | Total Stockholders’ | ||||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Stock | Capital | Income | Earnings | 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 | $ | $ | $ | ( | ) | $ | $ | $ | $ | |||||||||||||||||||||||||||
| Convertible Preferred Stock | Common Stock | Treasury | Additional Paid-in | Accumulated Other Comprehensive | Accumulated | Total Stockholders’ | ||||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Stock | Capital | Income | Earnings | Equity | ||||||||||||||||||||||||||||
| Balance as of December 31, 2021 | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||
| Common stock issued for option exercises | - | |||||||||||||||||||||||||||||||||||
| Common stock issued for warrant exercises | - | |||||||||||||||||||||||||||||||||||
| Stock-based compensation | - | |||||||||||||||||||||||||||||||||||
| Net income | - | - | ||||||||||||||||||||||||||||||||||
| Balance as of March 31, 2022 | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||
| Common stock issued for option exercises | - | |||||||||||||||||||||||||||||||||||
| Stock-based compensation | - | |||||||||||||||||||||||||||||||||||
| Common stock issued for acquisitions | - | |||||||||||||||||||||||||||||||||||
| Repurchases of common stock | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||||||
| Net loss | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||||||
| Balance as of June 30, 2022 | $ | $ | $ | ( | ) | $ | $ | $ | $ | |||||||||||||||||||||||||||
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”), develops, manufactures and sells reagents used for diagnostic tests that function via the detection and/or analysis of nucleic acid molecules (DNA or RNA), including robust and innovative molecular tools for detection of infectious diseases and agricultural applications. In connection with the sale of our tests we may sell diagnostic equipment from other manufacturers as self-contained lab systems (which we refer to as the “MDx Device”). We are also developing a unique, groundbreaking portable PCR device and proprietary test cups (the “Co-Dx PCR Home™ platform”) that have been designed to bring affordable, reliable polymerase chain reaction (“PCR”) to patients in point-of-care and at-home settings. This platform is subject to U.S. Food and Drug Administration (“FDA”) review and is not available for sale at the time of this filing. There is no guarantee the Co-Dx PCR Home 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.
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 for interim financial information and with the instructions to Form 10-Q as they are prescribed for smaller reporting companies. Accordingly, they do not include all the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary to make the financial statements not misleading have been included. Operating results for the three and six months ended June 30, 2023 are not necessarily indicative of the results that may be expected for the year ending December 31, 2023. These statements should be read in conjunction with the Company’s audited financial statements and related notes for the year ended December 31, 2022, included in the Company’s Annual Report on Form 10-K filed on March 16, 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.
Cash and Cash Equivalents
Cash and cash equivalents consist of cash on hand, money market funds and highly liquid investments with an original maturity date of 90 days or less from the date of purchase. The fair value of cash equivalents approximated their carrying value as of June 30, 2023 and December 31, 2022. The Company has its cash and cash equivalents with large creditworthy financial institutions and the balance exceeded federally insured limits. The Company has not experienced any losses in such accounts, and management believes the Company is not exposed to any significant credit risk on cash and cash equivalents.
Marketable Investment Securities
The Company’s marketable investment securities are comprised of investments in certificates of deposit and U.S. Treasury bills and notes. The Company designates investments in debt securities as available-for-sale. Available-for-sale debt securities with original maturities of three months or less from the date of purchase are classified within cash and cash equivalents. Available-for-sale debt securities with original maturities longer than three months are available to fund current operations and are classified as marketable investment securities, within current assets on the condensed consolidated balance sheets. The Company may sell these securities at any time for use in its current operations or for other purposes, even prior to maturity. Available-for-sale debt securities are reported at fair value with the related unrealized gains and losses included in accumulated other comprehensive income (loss), a component of stockholders’ equity, net of tax. Realized gains and losses on the sale of marketable investment securities are determined using the average cost method on a first-in, first-out basis and recorded in total other income (expense), net in the condensed consolidated statements of operations and comprehensive income (loss).
The available-for-sale debt securities are subject to a periodic impairment review. For investments in an unrealized loss position, the Company writes down the amortized cost basis of the investment if it is more likely than not that the Company will be required or will intend to sell the investment before recovery of its amortized cost basis. For investments not likely to be sold before recovery of the amortized cost basis, the Company determines whether a credit loss exists by considering information about the collectability of the instrument, current market conditions, and reasonable and supportable forecasts of economic conditions. The Company recognizes an allowance for credit losses up to the amount of the unrealized loss when appropriate. Allowances for credit losses and write-downs are recognized in total other income (expense), net, and unrealized losses not related to credit losses are recognized in accumulated other comprehensive income (loss). There are no allowances for credit losses recorded for the periods presented.
| 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 June 30, 2023, total accounts receivable was $
Equity-Method Investments
The Company’s equity method investments are initially recorded at cost and are included in other long-term assets in the accompanying condensed consolidated balance sheet. The Company adjusts the carrying value of its investment based on our share of the earnings or losses in the periods which they are reported by the investee until the carrying amount is zero. The earnings or losses are included in other income (expense) in the accompanying condensed consolidated statements of operations.
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, 2023, the Company had $
Intangible Assets
Indefinite-lived intangible assets are not amortized, but rather tested for impairment at least annually on December 31, or more often if and when circumstances indicate that the carrying value may not be recoverable. Finite-lived intangible assets are amortized over their useful lives.
Long-lived Assets
Long-lived assets, such as property and equipment, are stated at cost less accumulated depreciation and amortization. Depreciation is provided using the straight-line method over the estimated useful lives of the property, generally from three to five years. Repairs and maintenance costs are expensed as incurred except when such repairs significantly add to the useful life or productive capacity of the asset, in which case the repairs are capitalized.
The Company reviews its long-lived assets, including property and equipment, finite-lived intangible assets, and right-of-use (ROU) assets, for impairment whenever an event or change in facts and circumstances indicates that their carrying amounts may not be recoverable. Recoverability of these assets is measured by comparing the carrying amount to the estimated undiscounted future cash flows expected to be generated. If the carrying amount exceeds the undiscounted cash flows, the assets are determined to be impaired and an impairment charge is recognized as the amount by which the carrying amount exceeds fair value.
Business Combinations
The Company estimates the fair value of assets acquired and liabilities assumed in a business combination. Goodwill as of the acquisition date is measured as the excess of consideration transferred over the net of the acquisition date fair values of the assets acquired and the liabilities assumed. Such valuations require management to make significant estimates and assumptions, especially with respect to intangible assets. Management’s estimates of fair value are based upon assumptions believed to be reasonable, but which are inherently uncertain and unpredictable, and as a result, actual results may differ from estimates.
Leases
The Company adopted ASC 842, Leases (“ASC 842”) effective January 1, 2022. Under ASC 842, the Company determines if an arrangement is or contains a lease at inception by assessing whether the arrangement contains an identified asset and whether it has the right to control the identified asset. Right-of-use (ROU) assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent the Company’s obligation to make lease payments arising from the lease. Lease liabilities are recognized at the lease commencement date based on the present value of future lease payments over the lease term. ROU assets are based on the measurement of the lease liability and also include any lease payments made prior to or on lease commencement and exclude lease incentives and initial direct costs incurred, as applicable.
As the implicit rate in the Company’s leases is generally unknown, the Company uses its incremental borrowing rate based on the information available at the lease commencement date in determining the present value of future lease payments. The Company considers its credit risk, term of the lease, total lease payments and adjusts for the impacts of collateral, as necessary, when calculating its incremental borrowing rates. The Company evaluates renewal options at lease inception and on an ongoing basis and includes renewal options that it is reasonably certain to exercise in its expected lease terms when classifying leases and measuring lease liabilities. Lease costs for the Company’s operating leases are recognized on a straight-line basis within operating expenses and cost of revenue over the reasonably assured lease term.
The Company has elected to not separate lease and non-lease components for leases of office space and, as a result, accounts for any lease and non-lease components for office space as a single lease component, to the extent they are fixed. Non-lease components that are not fixed are expensed as incurred as variable lease payments. The Company’s office leases typically include non-lease components such as common-area maintenance costs. The Company has also elected to not apply the recognition requirement to any leases within its existing classes of assets with a term of 12 months or less.
Revenue Recognition
The Company generates revenue from product sales and license sales. The Company recognizes revenue 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.
| 8 |
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.
Deferred Revenue
Deferred revenue primarily consists of payments received from customers related to product sales or from granting agencies for services to be rendered under research grants, prior to the Company fulfilling its performance obligation of providing the product or performing research activities under the grant agreement. When this occurs, the Company records a contract liability as deferred revenue. Deferred revenue is recognized as revenue as the related performance obligations are satisfied.
Research and Development
Research
and development costs are expensed when incurred. For the three and six months ended June 30, 2023, the Company expensed $
The Company has granted stock-based awards, including restricted stock, stock options, stock warrants and restricted stock units (“RSUs”), to its employees, certain consultants and members of its board of directors. The Company records stock-based compensation based on the grant date fair value of the awards and recognizes the fair value of those awards as expense using the straight-line method over the requisite service period of the award. The Company estimates the grant date fair value of stock options using the Black-Scholes option-pricing model. When an award is forfeited prior to the vesting date, the Company recognizes an adjustment for the previously recognized expense in the period of the forfeiture.
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.
Basic net income or loss per common share is computed by dividing net income or loss applicable to common shareholders by the weighted average number of shares outstanding during each period.
Diluted net income or loss per share is computed by dividing net income or loss attributable to common stockholders by the weighted-average number of shares of common stock outstanding during the period increased by common shares that could be issued upon conversion or exercise of other outstanding securities to the extent those additional common shares would be dilutive. The dilutive effect of potentially dilutive securities is reflected in diluted net income or loss per share by application of the treasury stock method. During periods when the Company is in a net loss position, basic net loss per share is the same as diluted net loss per share as the effects of potentially dilutive securities are anti-dilutive.
Comprehensive Income (Loss)
Comprehensive income is comprised of unrealized gains and losses on marketable investment securities, net of income taxes.
Concentrations Risk and Significant Customers
The
Company had certain customers which are each responsible for generating
Three
customers 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.
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:
| June 30, 2023 | ||||||||||||||||||||||||
| Adjusted Cost | Allowance for Credit Losses | Total Unrealized Gains / (Losses) | Fair Value | Cash and Cash Equivalents | Marketable Investment Securities | |||||||||||||||||||
| Cash and cash equivalents | $ | $ | $ | $ | $ | $ | ||||||||||||||||||
| Level 1: | ||||||||||||||||||||||||
| Money market funds | ||||||||||||||||||||||||
| Subtotal | ||||||||||||||||||||||||
| Level 2: | ||||||||||||||||||||||||
| U.S. treasury securities | ||||||||||||||||||||||||
| Subtotal | ||||||||||||||||||||||||
| Total | $ | $ | $ | $ | $ | $ | ||||||||||||||||||
| December 31, 2022 | ||||||||||||||||||||||||
| Adjusted Cost | Allowance for Credit Losses | Total Unrealized Gains / (Losses) | Fair Value | Cash and Cash Equivalents | Marketable Investment Securities | |||||||||||||||||||
| Cash and cash equivalents | $ | $ | $ | $ | $ | $ | ||||||||||||||||||
| Level 1: | ||||||||||||||||||||||||
| Money market funds | ||||||||||||||||||||||||
| Subtotal | ||||||||||||||||||||||||
| Level 2: | ||||||||||||||||||||||||
| U.S. treasury securities | ||||||||||||||||||||||||
| Subtotal | ||||||||||||||||||||||||
| Total | $ | $ | $ | $ | $ | $ | ||||||||||||||||||
Marketable investment securities held as of June 30, 2023 mature over the next 12 months.
| 10 |
Note 4 – Intangible Assets, Net
Intangible assets, net consisted of the following:
| June 30, 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 | $ | $ | ( | ) | $ | |||||||||||
| December 31, 2022 | ||||||||||||||||
| 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) |
The expected future annual amortization expense of the Company’s intangible assets held as of June 30, 2023 is as follows:
| Year Ending December 31, | Amortization Expense | |||
| 2023 (remainder) | ||||
| 2024 | ||||
| Total | $ | |||
Note 5 – Fair Value Measurements
The Company measures and records certain financial assets and liabilities at fair value on a recurring basis. Fair value is based on the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.
The following three levels of inputs are used to measure the fair value of financial assets and liabilities:
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.
| 11 |
The following table summarizes the assets and liabilities measured at fair value on a recurring basis as of June 30, 2023 and December 31, 2022, by level within the fair value hierarchy:
| June 30, 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 | $ | $ | $ | $ | ||||||||||||
| December 31, 2022 | ||||||||||||||||
| (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 | $ | $ | $ | $ | ||||||||||||
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, 2023 and December 31, 2022.
In connection with the acquisitions of Idaho Molecular, Inc. (IdMo) and Advanced Conceptions, Inc. (ACI) on December 31, 2021, the Company recorded a liability for contingent consideration in the form of shares of common stock and warrants to purchase common stock. The fair value of contingent consideration is calculated using a discounted probability weighted valuation model. Discount rates used in such calculations are a significant assumption that are not observed in the market, and therefore, the resulting fair value represents a Level 3 measurement.
The changes for Level 3 items measured at fair value on a recurring basis are as follows:
| Fair value as of December 31, 2022 | $ | |||
| Change in fair value of contingent consideration issued for business acquisitions | ( | ) | ||
| Fair value as of June 30, 2023 | $ |
| 12 |
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:
| June 30, 2023 | December 31, 2022 | |||||||
| 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 6 – Revenue
The following table sets forth revenue by geographic area:
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
| 2023 | 2022 | 2023 | 2022 | |||||||||||||
| United States | $ | $ | $ | $ | ||||||||||||
| Rest of World | ||||||||||||||||
| Total | $ | $ | $ | $ | ||||||||||||
| Percentage of revenue by area: | ||||||||||||||||
| United States | % | % | % | % | ||||||||||||
| Rest of World | % | % | % | % | ||||||||||||
Deferred Revenue
Changes in the Company’s deferred revenue balance for the six months ended June 30, 2023 were as follows:
| Balance as of December 31, 2022 | $ | |||
| Increase due to prepayments from customers | ||||
| Increase due to prepayments from grants received | ||||
| Balance as of June 30, 2023 | $ |
| 13 |
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
| 2023 | 2022 | 2023 | 2022 | |||||||||||||
| Numerator | ||||||||||||||||
| Net income (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 earnings (loss) per share | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ||||||
| Diluted earnings (loss) per share | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ||||||
For the three and six months ended June 30, 2022, potentially dilutive securities of and were excluded from the calculation because their effect would have been anti-dilutive. The computation of basic and diluted earnings (loss) per share for the three and six months ended June 30, 2023 and 2022, respectively, also excludes the approximately shares of common stock and approximately 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, 2023, potentially dilutive securities are included in the calculation of diluted earnings (loss) per share because such effect would be anti-dilutive. The Company had potentially dilutive securities as of June 30, 2023, consisting of: (i) restricted stock units and (ii) options.
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 June 30, 2023.
Stock Options
| Number of Options | Weighted Average Exercise Price | Weighted Average Fair Value | Weighted Average Remaining Contractual Life (Years) | |||||||||||||
| Outstanding at December 31, 2022 | $ | $ | ||||||||||||||
| Granted | ||||||||||||||||
| Expired | ||||||||||||||||
| Forfeited/Cancelled | ||||||||||||||||
| Exercised | ||||||||||||||||
| Outstanding at June 30, 2023 | $ | $ | ||||||||||||||
| Exercisable at June 30, 2023 | $ | $ | ||||||||||||||
The aggregate intrinsic value of outstanding options at June 30, 2023 was approximately $ million.
| 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, 2023, 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, 2022 | $ | |||||||
| Granted | ||||||||
| Vested | ( | ) | ||||||
| Forfeited/Cancelled | ( | ) | ||||||
| Unvested at June 30, 2023 | $ | |||||||
As of June 30, 2023, 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 six months ended June 30, 2023:
| Number of Warrants | Weighted Average Exercise Price | Weighted Average Fair Value | Weighted Average Remaining Contractual Life (Years) | |||||||||||||
| Outstanding at December 31, 2022 | $ | $ | ||||||||||||||
| Granted | ||||||||||||||||
| Expired | ||||||||||||||||
| Forfeited/Cancelled | ||||||||||||||||
| Exercised | ||||||||||||||||
| Outstanding at June 30, 2023 | $ | $ | ||||||||||||||
| 15 |
There were no warrants exercised during the six months ended June 30, 2023. The intrinsic value of warrants exercised during the six months ended June 30, 2022 was approximately $ million. The aggregate intrinsic value of outstanding warrants at June 30, 2023 was approximately $.
The
total number of warrants exercisable at June 30, 2023 is
Stock-Based Compensation Expense
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
| 2023 | 2022 | 2023 | 2022 | |||||||||||||
| 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 June 30, 2023, the Company recognized a benefit from income taxes of $
Note 10 – Commitments and Contingencies
Lease Obligations
The
Company leases office space under non-cancellable operating leases and leases cancellable with one month notice. The Company expenses
the cancellable leases in the period incurred in accordance with the practical expedient elected. During the six months ended June 30,
2023, the Company amended two operating leases to extend the lease term and entered into one new operating lease. As a result, the Company
recognized additional operating lease liabilities and corresponding operating right-of-use assets of $
For the three and six months ended June 30, 2023, components of lease expense are summarized as follows:
Three Months Ended June 30, 2023 | Six Months Ended June 30, 2023 | |||||||
| Operating lease costs | $ | $ | ||||||
| Short-term lease costs | ||||||||
| Total lease costs | $ | $ | ||||||
As of June 30, 2023, the maturities of the Company’s lease liabilities are as follows:
| Year Ending December 31, | ||||
| 2023 (remainder) | $ | |||
| 2024 | ||||
| 2025 | ||||
| 2026 | ||||
| Thereafter | ||||
| Total lease payments | ||||
| Less: imputed interest | ||||
| Present value of operating lease liabilities | ||||
| Less: current portion | ||||
| Long-term portion | $ | |||
| 16 |
Other information related to operating leases was as follows:
Six Months Ended June 30, 2023 | ||||
| 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.
The Company is a defendant in two class action claims and three derivative actions claiming that the Company promulgated false and misleading press releases to increase the price of our stock to improperly benefit the officers and directors of the Company. The plaintiffs demand compensatory damages sustained as a result of the Company’s alleged wrongdoing in an amount to be proven at trial. The Company is also a party to two commercial litigation lawsuits in which plaintiffs are claiming they are owned certain remuneration based on alleged agreements with the Company. The Company believes these lawsuits are without merit and intends to defend the cases vigorously. The Company is unable to estimate a range of loss, if any, that could result were there to be an adverse final decision in these cases. As of the date of this report, the Company does not believe it is probable that these cases will result in an unfavorable outcome; however, if an unfavorable outcome were to occur in these cases, it is possible that the impact could be material to the Company’s results of operations in the period(s) in which any such outcome becomes probable and estimable.
Note 11 – Share Repurchase Program
In
March 2022, the Company’s Board of Directors authorized a share repurchase program that would allow the Company to repurchase up
to $
For accounting purposes, common stock repurchased under the stock repurchase program is recorded based upon the transaction date of the applicable trade. Such repurchased shares are held in treasury and are presented using the cost method. These shares are not retired and are considered issued but not outstanding. The following table shows the changes in treasury stock for the periods presented:
| Six Months Ended | ||||
| June 30, 2023 | ||||
| Balance, beginning of period | ||||
| Repurchases of common stock | ||||
| Balance, end of period | ||||
Note 12 – Subsequent Events
None.
| 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.
We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends that we believe may affect our financial condition, results of operations, business strategy, short term and long-term business operations, and financial needs. 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 in this Quarterly Report, and in particular, the risks discussed below and under the heading “Risk Factors” in other documents we file with the SEC. The following discussion should be read in conjunction with the Annual Report on Form 10-K for the fiscal year ended December 31, 2022, filed with the SEC on March 16, 2023, and the audited financial statements and notes included therein.
You should not place undue reliance on any forward-looking statement, each of which applies only as of the date of this Quarterly Report. Except as required by law, we undertake no obligation to update or revise publicly any of the forward-looking statements after the date of this Quarterly Report to conform our statements to actual results or changed expectations.
You are advised, however, to consult any further disclosures we make on related subjects in our periodic and current reports filed with the SEC. You should understand that it is not possible to predict or identify all risk factors. Consequently, you should not consider this list to be a complete set of all potential risks or uncertainties.
Important factors that could cause actual results to differ materially from those in the forward-looking statements include, without limitation:
| ● | the results of clinical trials and the regulatory approval process; |
| ● | market acceptance of any products that may be approved for commercialization; |
| ● | our ability to protect our intellectual property rights; |
| ● | the impact of any infringement actions or other litigation brought against us; |
| ● | competition from other providers and products; |
| ● | our ability to develop and commercialize new and improved products and services; |
| ● | changes in government regulation; |
| ● | and other factors (including the risks contained in the section entitled “Risk Factors” in other documents we file with the SEC) relating to our industry, our operations and results of operations. |
Should one or more of these risks or uncertainties materialize, or should the underlying assumptions prove incorrect, actual results may differ significantly from those anticipated, believed, estimated, expected, intended or planned.
Factors or events that could cause our actual results to differ may emerge from time to time, and it is not possible for us to predict all of them. We cannot guarantee future results, levels of activity, performance or achievements. Except as required by applicable law, including the securities laws of the United States, we do not intend to update any of the forward-looking statements to conform these statements to actual results.
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” for a summary of the risks and uncertainties associated with an investment in our securities.
| 18 |
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 and agricultural applications. In connection with the sale of our tests we may sell diagnostic equipment from other manufacturers as self-contained lab systems (which we refer to as the “MDx Device”). We are also developing a unique, groundbreaking portable PCR device and proprietary test cups (the “Co-Dx PCR Home platform”) that have been designed to bring affordable, reliable polymerase chain reaction (“PCR”) to patients in point-of-care and at-home settings. This platform is subject to U.S. Food and Drug Administration (“FDA”) review and is not available for sale at the time of this filing. There is no guarantee that our Co-Dx PCR Home 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.
Our diagnostics systems enable dependable, low-cost, molecular testing for organisms and genetic diseases by automating or simplifying historically complex procedures in both the development and administration of tests. CODX’s technical advance involves a novel, patented approach to PCR test design of primer and probe structure (“CoPrimers™”) that eliminates one of the key vexing issues of PCR amplification: the exponential growth of primer-dimer pairs (false positives and false negatives) which adversely interferes with identification of the target DNA/RNA.
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.
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. Dr. Brent Satterfield, our founder, developed 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 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.
We may either sell or lease the MDx Device to labs and diagnostic centers, through sale or lease agreements, and sell the reagents that comprise our proprietary tests to those laboratories and testing facilities.
Using our proprietary test design system and proprietary reagents, we have designed and obtained regulatory approval in the European Community and/or 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 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, are active in designing and licensing 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.
| 19 |
RESULTS OF OPERATIONS
The Three Months Ended June 30, 2023 Compared to the Three Months ended June 30, 2022
Revenues
For the three months ended June 30, 2023, we generated revenues of $197,806, compared to revenues of $5,023,226 for the three months ended June 30, 2022. The decrease in revenue of $4,825,420 was primarily due to lower sales of our Logix Smart COVID-19 test developed in response to the COVID-19 pandemic.
Cost of Revenues
We recorded cost of revenues of $459,095 for the three months ended June 30, 2023, compared to $915,432 for the three months ended June 30, 2022. The decrease in revenues combined with a larger percentage of fixed product production costs, as well as costs related to expired inventory, resulted in a lower cost of revenues and lower gross margin percentage.
Expenses
We incurred total operating expenses of $11,733,150 for the three months ended June 30, 2023, compared to total operating expenses of $8,254,832 for the three months ended June 30, 2022. The increase in operating expenses was primarily due to increased personnel expenses, including stock-compensation expense, and additional investment in research and development. These increases were partially offset by decreased expenses experienced in conjunction with our decrease in revenues, such as third-party sales commissions, reflected in sales and marketing and variable compensation.
Our sales and marketing expenses for the three months ended June 30, 2023 were $1,732,966, compared to $1,472,225 for the three months ended June 30, 2022. The increase was primarily a result of increased stock-based compensation expense and tradeshow expense, partially offset by decreased variable compensation, such as bonuses and commissions, and decreased third-party sales commissions.
General and administrative expenses increased from $2,468,421 for the three months ended June 30, 2022 to $3,713,895 for the three months ended June 30, 2023. The increase in general and administrative expenses was primarily due to increased insurance expense and professional, legal, and advisory fees, increased stock-based compensation expense, and increased bad debt expense, partially offset by decreased variable compensation expense.
Our research and development expenses increased from $3,889,844 for the three months ended June 30, 2022 to $5,981,043 for the three months ended June 30, 2023. The primary increase in expenses was a result of increases in personnel related expenses, increases in expenses related to development and clinical trials of the Co-Dx PCR Home platform, and increased stock-based compensation expense.
| 20 |
Other Income (expense)
For the three months ended June 30, 2023 we had total other income of $837,294, compared to total other income of $719,228 for the three months ended June 30, 2022. The primary components of other income include a change in the fair value of contingent consideration liabilities recorded in conjunction with the acquisitions of IdMo and ACI and interest income and realized gains from investments in marketable securities.
Net Income (loss)
We realized a net loss for the three months ended June 30, 2023 of $8,918,825, compared to a net loss for the three months ended June 30, 2022 of $2,686,303. The larger net loss was primarily the result of a decrease in revenues, combined with an increase of operating expenses, partially offset by changes in the fair value of acquisition contingencies and income related to investments in marketable securities. Additionally, we recorded an income tax benefit of $2,238,,320 for the three months ended June 30, 2023, compared to an income tax benefit of $741,507 for the three months ended June 30, 2022.
The Six Months Ended June 30, 2023 Compared to the Six Months ended June 30, 2022
Revenues
For the six months ended June 30, 2023, we generated revenues of $799,763, compared to revenues of $27,722,270 for the six months ended June 30, 2022. The decrease in revenue of $26,922,507 was primarily due to lower sales of our Logix Smart COVID-19 test developed in response to the COVID-19 pandemic.
Cost of Revenues
We recorded cost of revenues of $961,336 for the six months ended June 30, 2023, compared to $4,197,383 for the six months ended June 30, 2022. The decrease in revenues combined with a larger percentage of fixed product production costs, as well as costs related to expired inventory, resulted in a lower cost of revenues and lower gross margin percentage.
Expenses
We incurred total operating expenses of $21,783,516 for the six months ended June 30, 2023, compared to total operating expenses of $17,847,766 for the six months ended June 30, 2022. The increase in operating expenses was primarily due to increased personnel expenses, including stock-compensation expense, and additional investment in research and development. These increases were partially offset by decreased expenses experienced in conjunction with our decrease in revenues, such as third-party sales commissions reflected in sales and marketing and variable compensation.
Our sales and marketing expenses for the six months ended June 30, 2023 were $3,439,297, compared to $4,124,373 for the six months ended June 30, 2022. The decrease was primarily a result of decreased variable compensation, such as bonuses and commissions, and decreased third-party sales commissions, partially offset by increased stock-based compensation expense and tradeshow expense.
General and administrative expenses increased from $5,390,616 for the six months ended June 30, 2022 to $6,727,860 for the six months ended June 30, 2023. The increase in general and administrative expenses was primarily due to increased insurance expense and professional, legal, and advisory fees, increased stock-based compensation expense, and increased bad debt expense, partially offset by decreased variable compensation expense.
Our research and development expenses increased from $7,661,171 for the six months ended June 30, 2022 to $10,995,103 for the six months ended June 30, 2023. The primary increase in expenses was a result of increases in personnel related expenses, increases in expenses related to development and clinical trials of the Co-Dx PCR Home platform, and increased stock-based compensation expense.
| 21 |
Other Income (expense)
For the six months ended June 30, 2023 we had total other income of $2,772,742, compared to total other income of $3,995,751 for the six months ended June 30, 2022. The primary components of other income include a change in the fair value of contingent consideration liabilities recorded in conjunction with the acquisitions of IdMo and ACI and interest income and realized gains from investments in marketable securities.
Net Income (loss)
We realized a net loss for the six months ended June 30, 2023 of $14,674,216, compared with net income for the six months ended June 30, 2022 of $9,028,292. The larger net loss was primarily the result of a decrease in revenues, combined with an increase of operating expenses, partially offset by changes in the fair value of acquisition contingencies and income related to investments in marketable securities. Additionally, we recorded an income tax benefit of $4,498,131 for the six months ended June 30, 2023, compared to income tax expense of $644,580 for the six months ended June 30, 2022.
Liquidity and Capital Resources
At June 30, 2023, we had cash and cash equivalents of $13,830,846. Additionally, we had $55,307,146 of marketable investment securities that could readily be converted into cash if needed. Additionally, our total current assets of June 30, 2023, were $77,385,400 compared to total current liabilities of $5,115,655.
Net cash used in operating activities during the six months ended June 30, 2023 was $10,708,797, compared to cash provided by operating activities of $9,460,222 for the six months ended June 30, 2022. The decrease in cash from operating activities was primarily due to decreased revenues and the impact of non-cash items.
Net cash provided by investing activities during the six months ended June 30, 2023 was $2,603,770, primarily from maturities of marketable investment securities, compared to cash used in investing activities of $9,600,444 during the six months ended June 30, 2022.
Net cash used in financing activities was $1,037,930 for the six months ended June 30, 2023, compared to net cash used in financing activities of $2,421,607 for the same period in the prior year. This decrease is due to the repurchase of fewer outstanding common shares during the first six months of the year, compared to the same period of the prior year.
Since commencing sales of our Logix Smart COVID-19 test in March 2020, we have used cash generated from those sales to fund the procurement and production of inventory and to pay our operating expenses. We have increased our work force primarily in the area of research and development to develop the Co-Dx PCR Home platform and complete development of additional tests to enable us to use our distributor network to sell other products throughout the world and remain profitable in the future. In March 2022 our board of directors authorized the repurchase of up to $30.0 million of the company’s outstanding common stock. We have no obligation to repurchase any shares under the repurchase program and may suspend or discontinue it at any time without prior notice. As of June 30, 2023 we have repurchased 4,559,479 outstanding common shares under the repurchase program for a total of $15.2 million.
Additionally, in March 2023, we filed a shelf registration statement on Form S-3 (the “Shelf Registration Statement”) with the SEC registering the sale, from time-to-time of up to $150 million of our securities. In connection with the Shelf Registration Statement, we filed an equity distribution agreement prospectus covering the offering, issuance and sale of up to a maximum of $50 million shares of our common stock that may be issued and sold under an equity distribution agreement with Piper Sandler & Co. We are under no obligation to sell any securities under the Shelf Registration Statement or the equity distribution agreement with Piper Sandler & Co.
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.
If needed, we expect additional investment capital to come from (i) additional issuances of our common stock with existing and new investors or (ii) the private placement of other securities with investors similar to those that have provided funding in the past. We may not be able to secure such financing in a timely manner or on favorable terms, if at all.
| 22 |
The foregoing estimates, expectations and forward-looking statements are subject to change as we make strategic operating decisions from time to time and as our revenue and expenses fluctuate from period to period.
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 June 30, 2023. Based on the evaluation of our disclosure controls and procedures as of June 30, 2023, our Chief Executive Officer and Chief Financial Officer concluded that, as of such date, our disclosure controls 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 June 30, 2023, that have materially affected or, are reasonably likely to materially affect, our internal control over financial reporting.
| 23 |
PART II – OTHER INFORMATION
Item 1. Legal Proceedings
Co-Diagnostics, Inc. v. Pantheon International Advisors Ltd. (Third Judicial District Court, Salt Lake County, State of Utah, Civil No. 210902609, filed on May 14, 2021).
The Company filed a complaint against Pantheon International Advisors (“Pantheon”) asking the court to declare that the Company has no ongoing contractual business relationship with Pantheon, no monies owing, nor does Pantheon have any interest, right, title or claim to any stock issued by the Company or ownership of any kind in the Company. Pantheon was served with a 30-Day Summons on September 9, 2021 to which it failed to respond, and a default judgement against Pantheon International Advisors was entered by the Court on November 28, 2021. The time to appeal from the judgment or seek to vacate the judgment has passed.
After learning that the Company had initiated suit in Utah, and after learning of Company’s intent to serve it with process of that suit, on May 24, 2021, Pantheon filed a claim against the Company in the Royal Courts of Justice Group, Queens Bench Division, Claim No. QB-21-002245, stating that the Company owes Pantheon $2,860,809.79 for alleged breach of contract for failing to make payments purportedly due under a contract allegedly entered into on October 18, 2018. The Company is being represented locally in the UK by Freshfields Bruckhaus Deringer LLP in that matter. On March 4, 2022, the Company filed a jurisdictional challenge to the UK suit, alleging that there was no 2018 agreement, and that the Company is not subject to jurisdiction in the UK. The oral argument and presentation of evidence on solely the jurisdictional claim took place on November 9, 2022, with the court taking the matter of jurisdiction over the Company under advisement. The court has now ruled on the Company’s jurisdictional challenge and denied the motion to dismiss the lawsuit. The Company intends to vigorously defend against the UK claims and will seek to the full extent possible to enforce its rights under the Declaratory Judgment already obtained in Utah but there can be no assurances as to the outcome.
There have been no other 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, 2022.
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. |
Share Repurchase Program
| Period | (a) Total number of shares purchased (1) | (b) Average price paid per share (1) | (c ) Total number of shares purchased as part of publicly announced plans or programs (1) | (d) Maximum number (or approximate dollar value) of shares that may yet be purchased under the plans or programs (1) | |||||||||||||
| 04/01/23 – 04/30/23 | 368,809 | $ | 1.51 | 368,809 | $ | 14,750,204 | |||||||||||
| 05/01/23 – 05/31/23 | - | $ | - | - | $ | 14,750,204 | |||||||||||
| 06/01/23 – 06/30/23 | - | $ | - | - | $ | 14,750,204 | |||||||||||
| Total | 368,809 | $ | 1.51 | 368,809 | $ | 14,750,204 | |||||||||||
| (1) | In March 2022 the company announced that its board of directors authorized the repurchase of up to $30.0 million of the company’s outstanding common stock. The extent to which the company repurchases its shares, and the timing of such repurchases, will depend upon a variety of factors, including trading volume, market conditions, legal requirements, business conditions and other factors. The repurchase program may be discontinued at any time, and the program does not obligate the company to acquire any specific number of shares of its common stock. |
Item 3. Defaults Upon Senior Securities
None.
Item 4. Mine Safety Disclosures
Not applicable.
Item 5. Other Information
None.
| 24 |
Item 6. Exhibits
Exhibit Index
(a) Exhibits
* Filed herewith.
# Management Contract or Compensatory Plan or Arrangement
| 25 |
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: August 10, 2023 | By: | /s/ Dwight H. Egan |
| Name: | Dwight H. Egan | |
| Title: | Chief Executive Officer, President and Principal Executive Officer | |
| Date: August 10, 2023 | By: | /s/ Brian Brown |
| Name: | Brian Brown | |
| Title: | Chief Financial Officer and Principal Financial and Accounting Officer | |
| 26 |
Exhibit 10.1
COMMERCIAL LEASE AGREEMENT
This Commercial Lease Agreement (hereinafter, the “Lease”) is a legal and binding contract. Before signing, read the entire document, including the general printed provisions and any attachments. If you have any questions, consult your attorney and/or accountant before signing.
This Lease is made and entered into effective as of the 1st day of June, 2023 (the “Effective Date”), by and between the following parties:
| Landlord(s): | Ozone Biotech, LLC (“Landlord”) | |
| Address for Notices: | 3165 South | |
| SLC, Utah 84115 | ||
| Tenant(s): | CO-DIAGNOSTICS, INC. | |
| Address for Notices: | 2401 South FOOTHILL DRIVE | |
| Salt Lake City, Utah 84109 |
In consideration of the rents, covenants and agreements hereinafter set forth. Landlord and Tenant mutually agree as follows:
1. Premises. Landlord hereby leases to Tenant and Tenant hereby leases from Landlord, the following properties: 3165 South 300 West, and 3175 South 300 West Salt Lake City, Utah (the “Premises”) and associated parking with the buildings. The Premises consists of approximately 14,889 square feet of Office, Laboratory and Garage space, and this estimate of square footage shall be used for all calculations under this Lease. Tenant is granted exclusive use of the premise subject to Landlord reserving the exclusive rights to Kirk Ririe’s current office consisting of approximately 175 SF in the 3165 South 300 West Building. Landlord shall have right to utilize other areas within the leased premise on a non-exclusive basis that does not materially conflict with Tenant’s use.
2. Term of Lease. This Lease shall begin upon execution of this Lease and shall be for an initial term of forty-three months (“Initial Term”) beginning June 1, 2023 and ending December 31, 2026.
3. Delivery of Possession. Tenant currently occupies the Premises.
4. Monthly Gross Rent. Tenant shall pay “Monthly Gross Rent” to Landlord, in advance and without prior demand, invoice or notice on or before the first day of each calendar month during the Term of this Lease, as follows:
| Initial Monthly Gross Rent Month’s 1-12 | $ | 30,000.00 |
Payment shall be made by direct bank deposit, and Landlord shall provide Tenant with information needed to set up the direct bank deposit.
5. Annual Increases. Monthly Gross Rent, as defined below, shall be increased every 12 months by the then current Consumer Price Index (CPI) rate for the prior 12 months. The CPI will be calculated on the difference between June of the prior year and May of the current year. The adjustment will be the increase in the CPI using the All Urban Consumers (CPI-U), U.S. City Average, CPI—All Items Index as published by the Bureau of Labor Statistics of the United States Department of Labor.
6. Additional Expenses. Landlord shall pay all Real Property Taxes, Utilities and Insurance of the property. Tenant shall pay all other expenses not specifically identified as paid by Landlord, directly to any vendors providing services.
7. Late Charges. If Tenant fails to pay any amounts or charges of any character which are payable under this Lease, Landlord, at Landlord’s election, may assess and collect a late fee charge equal to 10% of each payment of rent not received within five business days from the date such rent payment is due. In addition, Landlord shall be eligible to charge interest at a rate of 18% per annum on any payments later than 30 days.
| Page 1 of 4 |
8. Holding Over. If Tenant does not promptly vacate the premise upon Termination, then Monthly Gross Rent due shall be twice the prior Month’s Amount for each month that Tenant fails to vacate the Premise, with doubling of Monthly Gross Rent continuing until Tenant vacates the Premise.
9. Utilities. The following utilities on the Property are Landlord paid and included in the Gross Rent: gas, electric, water, and sewer. Unless stated to the contrary elsewhere in this Lease, Tenant shall pay for all other utilities used by Tenant on the Premises (i.e., telephone, internet, etc.).
10. Landlord’s Responsibility for Maintenance and Repairs. Landlord shall, during the term of this Lease, keep in good order condition, and repair, the exterior walls, and the roof. Landlord shall incur no expense nor have any obligation of any kind whatsoever in connection with maintenance of the Premises other than specifically set forth in this paragraph.
11. Fire and Other Casualty.
a. If the Premises are damaged or destroyed by fire or other casualty, Landlord shall, subject to the limitations in subsection (b) of this Section 10. and to the limits of the insurance proceeds it actually receives as a result of such casualty, promptly and diligently proceed to repair, rebuild or replace the Premises, so as to restore the Premises to the condition in which the Premises existed immediately prior to such damage or destruction. If Landlord carries on any restoration or repair at the Premises pursuant to this Section 12. and Tenant continues to occupy any other portion of the Premises, Landlord shall take all such steps as may be reasonable and practicable to prevent interference with Tenant’s use and enjoyment of the portion of the Premises which Tenant continues to occupy. Landlord shall perform its obligations under this Section 10. in a manner which will achieve restoration of any damage as soon as practicable, giving due regard to the nature and scope of the damage, subject to the occurrence of Permitted Delay. Notwithstanding the foregoing, if the Premises is damaged or destroyed by fire or other casualty, Tenant may elect (but shall not be required) to repair, rebuild or restore minor damage to the Premises, provided that: (i) Tenant notifies Landlord of its election within ten (10) business days following the casualty event, (ii) Tenant promptly and diligently completes such repairs and (iii) such repairs do not exceed $10,000.00. Tenant will promptly provide Landlord with documents evidencing the payment and completion of such repairs.
b. Any provision of this Section 10. to the contrary notwithstanding, if either (i) the cost to repair the damage to the Premises (other than alterations and personal property owned by Tenant) is not fully covered by the insurance carried by Landlord, or (ii) all or any portion of the Premises is damaged by fire or other casualty and the time period reasonably determined by Landlord to be required for the actual restoration or repair of the Premises will exceed two hundred seventy (270) days from the date the casualty occurs or (iii) the Premises is damaged by fire or other casualty within twelve (12) months preceding the end of the Term (which includes any renewal of the Term then properly exercised by Tenant) to an extent exceeding twenty-five percent (25%) of the then current value of the Premises, then Landlord and Tenant each shall have the right, to be exercised by giving written notice (which notice shall set forth with specificity the basis for giving the notice) within thirty (30) days after the occurrence of the casualty, to terminate this Lease. Termination shall be effective on a date specified in the written notice, which date shall be not less than thirty (30) nor more than sixty (60) days after the date the notice is given. Upon such termination, the term of this Lease shall end as if the date of termination were the date originally specified for expiration of the Term.
c. If a casualty prevents Tenant from fully occupying the Premises, Rent shall abate, for so long as such full occupancy is prevented, in proportion to the amount of the Premises not usable by Tenant as a result of the casualty; provided that if the casualty occurred as a result of the act or negligence of Tenant, there shall be no such abatement.
12. Tenant’s Responsibility for Maintenance and Repairs. Tenant shall, during the term of this Lease, keep in good order condition, and repair, any part of the Premises not specifically included within Landlord’s responsibility above. Tenant’s responsibility shall include, for example and not limited to: (a) the interior of the Premises and every part thereof, structural or nonstructural; (b) repair of the HVAC system that require repair and not replacement,; (c) interior plumbing and electrical; (d) all other items not specifically listed as Landlord Responsibility in item 10 above.
| Page 2 of 4 |
13. Alterations and Improvements. Tenant shall not make any alterations, improvements additions, or utility installations (including power panels) in or about the Premises without the prior written approval of the Landlord. All Tenant Alterations and Improvements shall become Landlord property upon termination of the lease.
14. Signage. Tenant shall not install, erect, display, paint, or attach any sign to the exterior of the building without the written, consent of the Landlord, and any sign authorized by Landlord shall be removed and the sign space restored to its original condition upon termination of the Lease.
15. Tenant’s Insurance. Tenant covenants and agrees that from and after the date of delivery of the Premises from Landlord to Tenant, Tenant will carry and maintain, at its sole cost and expense, liability insurance in the commercial general liability form (or reasonable equivalent thereto) covering the Premises and Tenant’s use thereof against claims for personal injury or death, property damage and product liability occurring upon, in or about the Premises, such insurance to be written on an occurrence basis (not a claims made basis), with combined single limit coverage of not less than $1,000,000.00 and with a general aggregate limit of not less than $3,000,000.00 for each policy year. Tenant shall furnish Landlord with a certificate of such policy and whenever required shall satisfy Landlord that such policy is in full force and effect. Such policy shall name Landlord as an additional insured and shall be primary and non-contributing with any insurance carried by Landlord. The policy shall further provide that it shall not be cancelled or altered without 30 days prior written notice to Landlord. Tenant shall furnish evidence of renewal of such insurance policies within 10 days before expiration of any such policy.
16. Permitted and Prohibited Use. Tenant shall use the Property as office, laboratory and warehouse space for its existing biotechnology business and for no other use without the Landlords prior written approval.
17. Assignment and Sublease. Tenant shall not assign, mortgage or hypothecate this Lease or any interest in this Lease, or permit the use of the Premises by any person or persons other than Tenant, or sublet the Premises, or any part of the Premises, unless specifically agreed to by Landlord in advance in writing. Any transfer of this Lease from Tenant by merger, consolidation, or liquidation shall constitute an assignment for purposes of this Lease. Any attempted assignment or subletting without Landlord’s consent shall be void and shall at the option of the Landlord terminate this Lease.
18. Quiet Enjoyment. Landlord hereby covenants to Tenant that, subject to Tenant’s compliance with the terms and provisions of this Lease, Tenant shall peaceably and quietly hold and enjoy the full possession and use of the Premises during the term of this Lease.
19. Default by Tenant. Upon the occurrence of any of the following events, Tenant shall be in default of its obligations under this Lease (a) Tenant fails to pay any sum due hereunder on or before the same is due; (b) Tenant fails to perform any other term, condition or covenant to be performed by it pursuant to this Lease within 10 days after written notice of such default has been given to Tenant by Landlord; (c) Tenant or any guarantor of this Lease becomes bankrupt or insolvent or files a petition in bankruptcy court as a debtor; (d) Tenant abandons or vacates the Premises; or (e) Tenant assigns or subleases the Premises or encumbers its interest in this Lease without written consent of Landlord (collectively “Events of Default”). Upon the occurrence of any Event of Default, Landlord, in addition to all other rights and remedies provided by law or in equity or otherwise provided in this Lease, may, without further notice or demand of any kind to Tenant or any other person, retake the Premises, accelerate all payments due under this Lease and collect by suit or otherwise, all such amounts due and terminate this Lease. Tenant’s payment obligations shall survive any such termination.
20. Chronic Default by Tenant. In order to discourage chronic non-compliance with any provision of this Lease, Tenant shall be conclusively deemed to have incurably defaulted under this Lease at such time as Tenant has triggered an Event of Default for the second time during any twelve-month period, regardless of whether any such Event of Default is or has been cured by Tenant.
21. Default by Landlord. Landlord will not be in default under this Lease unless Landlord fails to perform an obligation required of it within 30 days after written Notice by Tenant to Landlord specifying the respects in which Landlord has failed to perform such obligation; provided, however, that if the nature of Landlord’s obligation is such that more than 30 days are reasonably required for performance or cure, Landlord will not be in default if Landlord commences performance within such thirty (30) day period and thereafter diligently prosecutes the same to completion. Tenant’s rights in case of Landlord’s default are limited to reimbursement of its actual damages directly incurred as a result of such default. In no event will Tenant have the right to terminate this Lease or to withhold the payment of Rent or other charges provided for herein as a result of Landlord’s default.
| Page 3 of 4 |
22. Independent Obligations. Notwithstanding anything to the contrary in this Lease, Tenant’s obligation to pay is independent from any of Landlord’s obligations under this Lease. Tenant will pay amounts due hereunder without any deduction, diminution, abatement, counterclaim or offset for any reason whatsoever. Acceptance of a lower amount than due shall not be deemed an accord or satisfaction, and Landlord reserves all rights to receive full payment of the amount owed.
23. Construction of Lease. This Lease shall be construed without regard to the identity of the person who drafted it or the party who caused it to be drafted. It shall be deemed their joint work product, and each and every provision of this Lease shall be construed as though all parties hereto participated equally in the drafting hereof. As a result of the foregoing, any rule of construction that a document is to be construed against the drafting party shall not be applicable.
24. Attorney’s Fees to Prevailing Party. In the event either Landlord or Tenant commences litigation to enforce any of the terms and conditions of this Lease, the unsuccessful party to the litigation will pay all costs and expenses, including reasonable attorney’s fees and actual costs of litigation, incurred by the successful party. In the case where Landlord recovers some, but not all, of any claimed damages from Tenant, Landlord shall still be deemed the successful party for the purposes of this paragraph.
25. Complete Agreement. This Lease contains all of the agreements and conditions made between the parties to the Lease related to the Premises in any way. There are no oral agreements that supplement the provisions of this Lease. All oral agreements not incorporated herein are cancelled and superseded by this Lease. This Lease may not be modified orally or in any other manner than by an agreement in writing signed by all the parties to this Lease.
| Accepted and agreed: | ||||
| Tenant: | Landlord: | |||
| By: | By: | |||
| Brian Brown, CFO | Kirk Ririe | |||
| for Tenant | Agent for Landlord | |||
| Date: | Date: | |||
| Page 4 of 4 |
EXHIBIT 31.1
CERTIFICATION OF THE CHIEF EXECUTIVE OFFICER
PURSUANT TO SECTION 302 OF THE SARBANES OXLEY ACT OF 2002
AND RULE 13a-14 OF THE EXCHANGE ACT OF 1934
I, Dwight H. Egan, certify that:
| 1. | I have reviewed this Quarterly Report on Form 10-Q of Co-Diagnostics, Inc.; |
| 2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
| 3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
| 4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
| a. | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; | |
| b. | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepting accounting principles; | |
| c. | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and | |
| d. | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting. |
| 5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
| a. | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and | |
| b. | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
| Date: August 10, 2023 | By: | /s/ Dwight H. Egan |
| Dwight H. Egan | ||
| Chief Executive Officer, President and Principal Executive Officer |
EXHIBIT 31.2
CERTIFICATION OF THE CHIEF FINANCIAL OFFICER
PURSUANT TO SECTION 302 OF THE SARBANES OXLEY ACT OF 2002
AND RULE 13a-14 OF THE EXCHANGE ACT OF 1934
I, Brian Brown, certify that:
| 1. | I have reviewed this Quarterly Report on Form 10-Q of Co-Diagnostics, Inc.; |
| 2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
| 3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
| 4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
| a. | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; | |
| b. | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepting accounting principles; | |
| c. | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and | |
| d. | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting. |
| 5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
| a. | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and | |
| b. | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
| Date: August 10, 2023 | By: | /s/ Brian Brown |
| Brian Brown | ||
| Chief Financial Officer and Principal Financial and Accounting Officer |
EXHIBIT 32.1
CERTIFICATION OF THE CHIEF EXECUTIVE OFFICER
PURSUANT TO 18 U.S. C. SECTION 1350
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of Co-Diagnostics, Inc. (the “Company”) on Form 10-Q for the period ended June 30, 2023, as filed with the Securities and Exchange Commission on the date hereof, I, Dwight H. Egan, Chief Executive Officer of the Company, hereby certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to my knowledge:
| (1) | The Form 10-Q fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and | |
| (2) | The information contained in the Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of the Company. |
| Date: August 10, 2023 | By: | /s/ Dwight H. Egan |
| Dwight H. Egan | ||
| Chief Executive Officer, President and Principal Executive Officer |
EXHIBIT 32.2
CERTIFICATION OF THE CHIEF FINANCIAL OFFICER
PURSUANT TO 18 U.S. C. SECTION 1350
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of Co-Diagnostics, Inc. (the “Company”) on Form 10-Q for the period ended June 30, 2023, as filed with the Securities and Exchange Commission on the date hereof, I, Brian Brown, Chief Financial Officer of the Company, hereby certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to my knowledge:
| (1) | The Form 10-Q fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and | |
| (2) | The information contained in the Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of the Company. |
| Date: August 10, 2023 | By: | /s/ Brian Brown |
| Brian Brown | ||
| Chief Financial Officer and Principal Financial and Accounting Officer |
Condensed Consolidated Balance Sheets (Unaudited) (Parenthetical) - $ / shares |
Jun. 30, 2023 |
Dec. 31, 2022 |
|---|---|---|
| Statement of Financial Position [Abstract] | ||
| Convertible preferred stock, par value | $ 0.001 | $ 0.001 |
| Convertible preferred stock , shares authorized | 5,000,000 | 5,000,000 |
| Convertible preferred stock, shares issued | 0 | 0 |
| Convertible preferred stock, shares outstanding | 0 | 0 |
| Common stock, par value | $ 0.001 | $ 0.001 |
| Common stock, shares authorized | 100,000,000 | 100,000,000 |
| Common stock, shares issued | 35,348,350 | 34,754,265 |
| Common stock, shares outstanding | 30,788,871 | 30,872,607 |
| Treasury stock, shares | 4,559,479 | 3,881,658 |
Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) (Unaudited) - USD ($) |
3 Months Ended | 6 Months Ended | ||
|---|---|---|---|---|
Jun. 30, 2023 |
Jun. 30, 2022 |
Jun. 30, 2023 |
Jun. 30, 2022 |
|
| Income Statement [Abstract] | ||||
| Revenue | $ 197,806 | $ 5,023,226 | $ 799,763 | $ 27,722,270 |
| Cost of revenue | 459,095 | 915,432 | 961,336 | 4,197,383 |
| Gross profit | (261,289) | 4,107,794 | (161,573) | 23,524,887 |
| Operating expenses | ||||
| Sales and marketing | 1,732,966 | 1,472,225 | 3,439,297 | 4,124,373 |
| General and administrative | 3,713,895 | 2,468,421 | 6,727,860 | 5,390,616 |
| Research and development | 5,981,043 | 3,889,844 | 10,995,103 | 7,661,171 |
| Depreciation and amortization | 305,246 | 424,342 | 621,256 | 671,606 |
| Total operating expenses | 11,733,150 | 8,254,832 | 21,783,516 | 17,847,766 |
| Income (loss) from operations | (11,994,439) | (4,147,038) | (21,945,089) | 5,677,121 |
| Other income, net | ||||
| Interest income | 191,892 | 61,671 | 394,264 | 73,064 |
| Realized gain on investments | 411,190 | 829,272 | ||
| (Loss) on disposition of assets | (48,740) | (142,161) | ||
| Gain on remeasurement of acquisition contingencies | 359,405 | 812,822 | 1,397,077 | 4,192,712 |
| Gain (loss) on equity method investment in joint venture | (125,193) | (106,525) | 152,129 | (127,864) |
| Total other income, net | 837,294 | 719,228 | 2,772,742 | 3,995,751 |
| Income (loss) before income taxes | (11,157,145) | (3,427,810) | (19,172,347) | 9,672,872 |
| Income tax provision (benefit) | (2,238,320) | (741,507) | (4,498,131) | 644,580 |
| Net income (loss) | (8,918,825) | (2,686,303) | (14,674,216) | 9,028,292 |
| Other comprehensive income (loss) | ||||
| Change in net unrealized gains on marketable securities, net of tax | 107,366 | 285,987 | ||
| Total other comprehensive income | 107,366 | 285,987 | ||
| Comprehensive income (loss) | $ (8,811,459) | $ (2,686,303) | $ (14,388,229) | $ 9,028,292 |
| Earnings (loss) per common share: | ||||
| Basic | $ (0.31) | $ (0.08) | $ (0.50) | $ 0.28 |
| Diluted | $ (0.31) | $ (0.08) | $ (0.50) | $ 0.27 |
| Weighted average shares outstanding: | ||||
| Basic | 29,088,159 | 32,472,251 | 29,284,175 | 32,509,664 |
| Diluted | 29,088,159 | 32,472,251 | 29,284,175 | 33,253,612 |
Condensed Consolidated Statements of Stockholders' Equity (Unaudited) - USD ($) |
Preferred Stock [Member]
Convertible Preferred Stock [Member]
|
Common Stock [Member] |
Treasury Stock, Common [Member] |
Additional Paid-in Capital [Member] |
AOCI Attributable to Parent [Member] |
Retained Earnings [Member] |
Total |
|---|---|---|---|---|---|---|---|
| Balance at Dec. 31, 2021 | $ 33,820 | $ 80,271,999 | $ 54,169,279 | $ 134,475,100 | |||
| Balance, shares at Dec. 31, 2021 | 33,819,862 | ||||||
| Stock-based compensation | $ 69 | 1,375,028 | 1,375,097 | ||||
| Stock-based compensation, shares | 68,750 | ||||||
| Net income (loss) | 11,714,595 | 11,714,595 | |||||
| Common stock issued for option exercises | $ 45 | 49,956 | 50,001 | ||||
| Common stock issued for option exercises, shares | 45,456 | ||||||
| Common stock issued for warrant exercises | $ 50 | 99,950 | 100,000 | ||||
| Common stock issued for warrant exercises, shares | 50,000 | ||||||
| Balance at Mar. 31, 2022 | $ 33,984 | 81,796,933 | 65,883,874 | 147,714,793 | |||
| Balance, shares at Mar. 31, 2022 | 33,984,068 | ||||||
| Balance at Dec. 31, 2021 | $ 33,820 | 80,271,999 | 54,169,279 | 134,475,100 | |||
| Balance, shares at Dec. 31, 2021 | 33,819,862 | ||||||
| Net income (loss) | 9,028,292 | ||||||
| Balance at Jun. 30, 2022 | $ 34,313 | (2,599,478) | 83,838,533 | 63,197,571 | 144,470,941 | ||
| Balance, shares at Jun. 30, 2022 | 34,313,432 | ||||||
| Balance at Mar. 31, 2022 | $ 33,984 | 81,796,933 | 65,883,874 | 147,714,793 | |||
| Balance, shares at Mar. 31, 2022 | 33,984,068 | ||||||
| Stock-based compensation | $ 215 | 1,533,069 | 1,533,284 | ||||
| Stock-based compensation, shares | 215,583 | ||||||
| Repurchases of common stock | (2,599,478) | (2,599,478) | |||||
| Net income (loss) | (2,686,303) | (2,686,303) | |||||
| Common stock issued for option exercises | $ 25 | 27,844 | 27,869 | ||||
| Common stock issued for option exercises, shares | 25,335 | ||||||
| Common stock issued for acquisitions | $ 89 | 480,687 | 480,776 | ||||
| Common stock issued for acquisitions, shares | 88,446 | ||||||
| Balance at Jun. 30, 2022 | $ 34,313 | (2,599,478) | 83,838,533 | 63,197,571 | 144,470,941 | ||
| Balance, shares at Jun. 30, 2022 | 34,313,432 | ||||||
| Balance at Dec. 31, 2022 | $ 34,754 | (14,211,866) | 88,472,935 | 293,140 | 39,931,031 | 114,519,994 | |
| Balance, shares at Dec. 31, 2022 | 34,754,265 | ||||||
| Stock-based compensation | $ 69 | 2,168,673 | 2,168,742 | ||||
| Stock-based compensation, shares | 68,750 | ||||||
| Repurchases of common stock | (482,196) | (482,196) | |||||
| Other comprehensive income, net of tax | 178,621 | 178,621 | |||||
| Net income (loss) | (5,755,391) | (5,755,391) | |||||
| Balance at Mar. 31, 2023 | $ 34,823 | (14,694,062) | 90,641,608 | 471,761 | 34,175,640 | 110,629,770 | |
| Balance, shares at Mar. 31, 2023 | 34,823,015 | ||||||
| Balance at Dec. 31, 2022 | $ 34,754 | (14,211,866) | 88,472,935 | 293,140 | 39,931,031 | 114,519,994 | |
| Balance, shares at Dec. 31, 2022 | 34,754,265 | ||||||
| Net income (loss) | $ (14,674,216) | ||||||
| Common stock issued for option exercises, shares | |||||||
| Balance at Jun. 30, 2023 | $ 35,348 | (15,249,796) | 92,810,883 | 579,127 | 25,256,815 | $ 103,432,377 | |
| Balance, shares at Jun. 30, 2023 | 35,348,350 | ||||||
| Balance at Mar. 31, 2023 | $ 34,823 | (14,694,062) | 90,641,608 | 471,761 | 34,175,640 | 110,629,770 | |
| Balance, shares at Mar. 31, 2023 | 34,823,015 | ||||||
| Stock-based compensation | $ 525 | 2,169,275 | 2,169,800 | ||||
| Stock-based compensation, shares | 525,335 | ||||||
| Repurchases of common stock | (555,734) | (555,734) | |||||
| Other comprehensive income, net of tax | 107,366 | 107,366 | |||||
| Net income (loss) | (8,918,825) | (8,918,825) | |||||
| Balance at Jun. 30, 2023 | $ 35,348 | $ (15,249,796) | $ 92,810,883 | $ 579,127 | $ 25,256,815 | $ 103,432,377 | |
| Balance, shares at Jun. 30, 2023 | 35,348,350 |
Overview and Basis of Presentation |
6 Months Ended |
|---|---|
Jun. 30, 2023 | |
| Accounting Policies [Abstract] | |
| Overview and Basis of Presentation | Note 1 – Overview and Basis of Presentation
Description of Business
Co-Diagnostics, Inc., a Utah corporation (the “Company” or “CODX”), develops, manufactures and sells reagents used for diagnostic tests that function via the detection and/or analysis of nucleic acid molecules (DNA or RNA), including robust and innovative molecular tools for detection of infectious diseases and agricultural applications. In connection with the sale of our tests we may sell diagnostic equipment from other manufacturers as self-contained lab systems (which we refer to as the “MDx Device”). We are also developing a unique, groundbreaking portable PCR device and proprietary test cups (the “Co-Dx PCR Home™ platform”) that have been designed to bring affordable, reliable polymerase chain reaction (“PCR”) to patients in point-of-care and at-home settings. This platform is subject to U.S. Food and Drug Administration (“FDA”) review and is not available for sale at the time of this filing. There is no guarantee the Co-Dx PCR Home 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.
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 for interim financial information and with the instructions to Form 10-Q as they are prescribed for smaller reporting companies. Accordingly, they do not include all the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary to make the financial statements not misleading have been included. Operating results for the three and six months ended June 30, 2023 are not necessarily indicative of the results that may be expected for the year ending December 31, 2023. These statements should be read in conjunction with the Company’s audited financial statements and related notes for the year ended December 31, 2022, included in the Company’s Annual Report on Form 10-K filed on March 16, 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.
|
Summary of Significant Accounting Policies |
6 Months Ended |
|---|---|
Jun. 30, 2023 | |
| Accounting Policies [Abstract] | |
| Summary of Significant Accounting Policies | 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.
Cash and Cash Equivalents
Cash and cash equivalents consist of cash on hand, money market funds and highly liquid investments with an original maturity date of 90 days or less from the date of purchase. The fair value of cash equivalents approximated their carrying value as of June 30, 2023 and December 31, 2022. The Company has its cash and cash equivalents with large creditworthy financial institutions and the balance exceeded federally insured limits. The Company has not experienced any losses in such accounts, and management believes the Company is not exposed to any significant credit risk on cash and cash equivalents.
Marketable Investment Securities
The Company’s marketable investment securities are comprised of investments in certificates of deposit and U.S. Treasury bills and notes. The Company designates investments in debt securities as available-for-sale. Available-for-sale debt securities with original maturities of three months or less from the date of purchase are classified within cash and cash equivalents. Available-for-sale debt securities with original maturities longer than three months are available to fund current operations and are classified as marketable investment securities, within current assets on the condensed consolidated balance sheets. The Company may sell these securities at any time for use in its current operations or for other purposes, even prior to maturity. Available-for-sale debt securities are reported at fair value with the related unrealized gains and losses included in accumulated other comprehensive income (loss), a component of stockholders’ equity, net of tax. Realized gains and losses on the sale of marketable investment securities are determined using the average cost method on a first-in, first-out basis and recorded in total other income (expense), net in the condensed consolidated statements of operations and comprehensive income (loss).
The available-for-sale debt securities are subject to a periodic impairment review. For investments in an unrealized loss position, the Company writes down the amortized cost basis of the investment if it is more likely than not that the Company will be required or will intend to sell the investment before recovery of its amortized cost basis. For investments not likely to be sold before recovery of the amortized cost basis, the Company determines whether a credit loss exists by considering information about the collectability of the instrument, current market conditions, and reasonable and supportable forecasts of economic conditions. The Company recognizes an allowance for credit losses up to the amount of the unrealized loss when appropriate. Allowances for credit losses and write-downs are recognized in total other income (expense), net, and unrealized losses not related to credit losses are recognized in accumulated other comprehensive income (loss). There are no allowances for credit losses recorded for the periods presented.
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, 2023, total accounts receivable was $4,510,545 with an allowance for uncollectable accounts of $3,413,152 resulting in a net amount of $1,097,393. At December 31, 2022, total accounts receivable was $6,552,249 with an allowance for uncollectable accounts of $3,098,526 resulting in a net amount of $3,453,723.
Equity-Method Investments
The Company’s equity method investments are initially recorded at cost and are included in other long-term assets in the accompanying condensed consolidated balance sheet. The Company adjusts the carrying value of its investment based on our share of the earnings or losses in the periods which they are reported by the investee until the carrying amount is zero. The earnings or losses are included in other income (expense) in the accompanying condensed consolidated statements of operations.
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, 2023, the Company had $4,691,068 in inventory, comprised of $842,087 of finished goods, and $3,848,981 of raw materials. At December 31, 2022, the Company had $5,310,473 in inventory, of which $1,327,264 was finished goods and $3,983,209 was raw materials. The Company establishes reserves to reduce slow-moving, obsolete, or unusable inventories to their estimated useful or scrap values.
Intangible Assets
Indefinite-lived intangible assets are not amortized, but rather tested for impairment at least annually on December 31, or more often if and when circumstances indicate that the carrying value may not be recoverable. Finite-lived intangible assets are amortized over their useful lives.
Long-lived Assets
Long-lived assets, such as property and equipment, are stated at cost less accumulated depreciation and amortization. Depreciation is provided using the straight-line method over the estimated useful lives of the property, generally from three to five years. Repairs and maintenance costs are expensed as incurred except when such repairs significantly add to the useful life or productive capacity of the asset, in which case the repairs are capitalized.
The Company reviews its long-lived assets, including property and equipment, finite-lived intangible assets, and right-of-use (ROU) assets, for impairment whenever an event or change in facts and circumstances indicates that their carrying amounts may not be recoverable. Recoverability of these assets is measured by comparing the carrying amount to the estimated undiscounted future cash flows expected to be generated. If the carrying amount exceeds the undiscounted cash flows, the assets are determined to be impaired and an impairment charge is recognized as the amount by which the carrying amount exceeds fair value.
Business Combinations
The Company estimates the fair value of assets acquired and liabilities assumed in a business combination. Goodwill as of the acquisition date is measured as the excess of consideration transferred over the net of the acquisition date fair values of the assets acquired and the liabilities assumed. Such valuations require management to make significant estimates and assumptions, especially with respect to intangible assets. Management’s estimates of fair value are based upon assumptions believed to be reasonable, but which are inherently uncertain and unpredictable, and as a result, actual results may differ from estimates.
Leases
The Company adopted ASC 842, Leases (“ASC 842”) effective January 1, 2022. Under ASC 842, the Company determines if an arrangement is or contains a lease at inception by assessing whether the arrangement contains an identified asset and whether it has the right to control the identified asset. Right-of-use (ROU) assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent the Company’s obligation to make lease payments arising from the lease. Lease liabilities are recognized at the lease commencement date based on the present value of future lease payments over the lease term. ROU assets are based on the measurement of the lease liability and also include any lease payments made prior to or on lease commencement and exclude lease incentives and initial direct costs incurred, as applicable.
As the implicit rate in the Company’s leases is generally unknown, the Company uses its incremental borrowing rate based on the information available at the lease commencement date in determining the present value of future lease payments. The Company considers its credit risk, term of the lease, total lease payments and adjusts for the impacts of collateral, as necessary, when calculating its incremental borrowing rates. The Company evaluates renewal options at lease inception and on an ongoing basis and includes renewal options that it is reasonably certain to exercise in its expected lease terms when classifying leases and measuring lease liabilities. Lease costs for the Company’s operating leases are recognized on a straight-line basis within operating expenses and cost of revenue over the reasonably assured lease term.
The Company has elected to not separate lease and non-lease components for leases of office space and, as a result, accounts for any lease and non-lease components for office space as a single lease component, to the extent they are fixed. Non-lease components that are not fixed are expensed as incurred as variable lease payments. The Company’s office leases typically include non-lease components such as common-area maintenance costs. The Company has also elected to not apply the recognition requirement to any leases within its existing classes of assets with a term of 12 months or less.
Revenue Recognition
The Company generates revenue from product sales and license sales. The Company recognizes revenue 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.
Deferred Revenue
Deferred revenue primarily consists of payments received from customers related to product sales or from granting agencies for services to be rendered under research grants, prior to the Company fulfilling its performance obligation of providing the product or performing research activities under the grant agreement. When this occurs, the Company records a contract liability as deferred revenue. Deferred revenue is recognized as revenue as the related performance obligations are satisfied.
Research and Development
Research and development costs are expensed when incurred. For the three and six months ended June 30, 2023, the Company expensed $5,981,043 and $10,995,103 of research and development costs, respectively. For the three and six months ended June 30, 2022, the Company expensed $3,889,844 and $7,661,171, respectively.
The Company has granted stock-based awards, including restricted stock, stock options, stock warrants and restricted stock units (“RSUs”), to its employees, certain consultants and members of its board of directors. The Company records stock-based compensation based on the grant date fair value of the awards and recognizes the fair value of those awards as expense using the straight-line method over the requisite service period of the award. The Company estimates the grant date fair value of stock options using the Black-Scholes option-pricing model. When an award is forfeited prior to the vesting date, the Company recognizes an adjustment for the previously recognized expense in the period of the forfeiture.
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.
Basic net income or loss per common share is computed by dividing net income or loss applicable to common shareholders by the weighted average number of shares outstanding during each period.
Diluted net income or loss per share is computed by dividing net income or loss attributable to common stockholders by the weighted-average number of shares of common stock outstanding during the period increased by common shares that could be issued upon conversion or exercise of other outstanding securities to the extent those additional common shares would be dilutive. The dilutive effect of potentially dilutive securities is reflected in diluted net income or loss per share by application of the treasury stock method. During periods when the Company is in a net loss position, basic net loss per share is the same as diluted net loss per share as the effects of potentially dilutive securities are anti-dilutive.
Comprehensive Income (Loss)
Comprehensive income is comprised of unrealized gains and losses on marketable investment securities, net of income taxes.
Concentrations Risk and Significant Customers
The Company had certain customers which are each responsible for generating 10% or more of the total revenue for the three and six months ended June 30, 2023. Three customers accounted for approximately 44% of total revenue for the three months ended June 30, 2023, and two customers accounted for approximately 33% of total revenue for the six months ended June 30, 2023. One customer accounted for approximately 55% of total revenue for the three months ended June 30, 2022, and two customers accounted for approximately 46% of total revenue for the six months ended June 30, 2022.
Three customers accounted for more than 10% of accounts receivable at June 30, 2023 and one customer accounted for more than 10% of accounts receivable at December 31, 2022. These customers together accounted for approximately 77% and 37% of accounts receivable at June 30, 2023 and December 31, 2022, 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.
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Cash, Cash Equivalents, and Financial Instruments |
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| Cash and Cash Equivalents [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Cash, Cash Equivalents, and Financial Instruments | 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:
Marketable investment securities held as of June 30, 2023 mature over the next 12 months.
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Intangible Assets, Net |
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Jun. 30, 2023 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Goodwill and Intangible Assets Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Intangible Assets, Net | Note 4 – Intangible Assets, Net
Intangible assets, net consisted of the following:
The expected future annual amortization expense of the Company’s intangible assets held as of June 30, 2023 is as follows:
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Fair Value Measurements |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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| Fair Value Disclosures [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Fair Value Measurements | Note 5 – Fair Value Measurements
The Company measures and records certain financial assets and liabilities at fair value on a recurring basis. Fair value is based on the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.
The following three levels of inputs are used to measure the fair value of financial assets and liabilities:
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, 2023 and December 31, 2022, by level within the fair value hierarchy:
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, 2023 and December 31, 2022.
In connection with the acquisitions of Idaho Molecular, Inc. (IdMo) and Advanced Conceptions, Inc. (ACI) on December 31, 2021, the Company recorded a liability for contingent consideration in the form of shares of common stock and warrants to purchase common stock. The fair value of contingent consideration is calculated using a discounted probability weighted valuation model. Discount rates used in such calculations are a significant assumption that are not observed in the market, and therefore, the resulting fair value represents a Level 3 measurement.
The changes for Level 3 items measured at fair value on a recurring basis are as follows:
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:
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.
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Revenue |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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| Revenue from Contract with Customer [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Revenue | Note 6 – Revenue
The following table sets forth revenue by geographic area:
Deferred Revenue
Changes in the Company’s deferred revenue balance for the six months ended June 30, 2023 were as follows:
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Earnings (Loss) Per Share |
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| Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Earnings (Loss) Per Share |
For the three and six months ended June 30, 2022, potentially dilutive securities of and were excluded from the calculation because their effect would have been anti-dilutive. The computation of basic and diluted earnings (loss) per share for the three and six months ended June 30, 2023 and 2022, respectively, also excludes the approximately shares of common stock and approximately 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, 2023, potentially dilutive securities are included in the calculation of diluted earnings (loss) per share because such effect would be anti-dilutive. The Company had potentially dilutive securities as of June 30, 2023, consisting of: (i) restricted stock units and (ii) options.
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Stock-Based Compensation |
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| Share-Based Payment Arrangement [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 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 shares of common stock. The number of awards available for issuance under the Incentive Plan was at June 30, 2023.
Stock Options
The aggregate intrinsic value of outstanding options at June 30, 2023 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 June 30, 2023, there were no unvested options and no unrecognized stock-based compensation expense related to options.
Restricted Stock Units
As of June 30, 2023, 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 six months ended June 30, 2023:
There were no warrants exercised during the six months ended June 30, 2023. The intrinsic value of warrants exercised during the six months ended June 30, 2022 was approximately $ million. The aggregate intrinsic value of outstanding warrants at June 30, 2023 was approximately $.
The total number of warrants exercisable at June 30, 2023 is 20,000. The ability to exercise the approximately 465,000 warrants issued in connection with acquisitions in prior years is contingent upon the achievement of certain development and revenue milestones on or before January 1, 2027. There was no unrecognized stock-based compensation expense related to warrants.
Stock-Based Compensation Expense
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Income Taxes |
6 Months Ended |
|---|---|
Jun. 30, 2023 | |
| Income Tax Disclosure [Abstract] | |
| Income Taxes | Note 9 – Income Taxes
For the three months ended June 30, 2023, the Company recognized a benefit from income taxes of $2,238,320, representing an effective tax rate of 20.1%. For the six months ended June 30, 2023, the Company recognized a benefit from income taxes of $4,498,131, representing an effective tax rate of 23.5%. The Company’s effective tax rate will generally differ from the U.S. Federal statutory rate of 21.0% due to state taxes, permanent items, and discrete items. For the three months ended June 30, 2022, the Company recognized a benefit from income taxes of $741,507. For the six months ended June 30, 2022, the Company recognized expense from income taxes of $644,580.
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Commitments and Contingencies |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2023 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Commitments and Contingencies Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Commitments and Contingencies | Note 10 – Commitments and Contingencies
Lease Obligations
The Company leases office space under non-cancellable operating leases and leases cancellable with one month notice. The Company expenses the cancellable leases in the period incurred in accordance with the practical expedient elected. During the six months ended June 30, 2023, the Company amended two operating leases to extend the lease term and entered into one new operating lease. As a result, the Company recognized additional operating lease liabilities and corresponding operating right-of-use assets of $3,063,782.
For the three and six months ended June 30, 2023, components of lease expense are summarized as follows:
As of June 30, 2023, the maturities of the Company’s lease liabilities are as follows:
Other information related to operating leases was as follows:
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 two class action claims and three derivative actions claiming that the Company promulgated false and misleading press releases to increase the price of our stock to improperly benefit the officers and directors of the Company. The plaintiffs demand compensatory damages sustained as a result of the Company’s alleged wrongdoing in an amount to be proven at trial. The Company is also a party to two commercial litigation lawsuits in which plaintiffs are claiming they are owned certain remuneration based on alleged agreements with the Company. The Company believes these lawsuits are without merit and intends to defend the cases vigorously. The Company is unable to estimate a range of loss, if any, that could result were there to be an adverse final decision in these cases. As of the date of this report, the Company does not believe it is probable that these cases will result in an unfavorable outcome; however, if an unfavorable outcome were to occur in these cases, it is possible that the impact could be material to the Company’s results of operations in the period(s) in which any such outcome becomes probable and estimable.
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Share Repurchase Program |
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Jun. 30, 2023 | ||||||||||||||||||||||||||
| Equity [Abstract] | ||||||||||||||||||||||||||
| Share Repurchase Program | Note 11 – Share Repurchase Program
In March 2022, the Company’s Board of Directors authorized a share repurchase program that would allow the Company to repurchase up to $30.0 million of CODX common stock. The repurchase program does not obligate the Company to acquire any particular number of common shares, and the repurchase program may be suspended or discontinued at any time at the Company’s discretion. The timing and amount of any share repurchases under the share repurchase program will be determined by Co-Diagnostics’ management at its discretion based on ongoing assessments of the capital needs of the business, the market price of the Company’s common stock, corporate and regulatory requirements, and general market conditions.
For accounting purposes, common stock repurchased under the stock repurchase program is recorded based upon the transaction date of the applicable trade. Such repurchased shares are held in treasury and are presented using the cost method. These shares are not retired and are considered issued but not outstanding. The following table shows the changes in treasury stock for the periods presented:
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Subsequent Events |
6 Months Ended |
|---|---|
Jun. 30, 2023 | |
| Subsequent Events [Abstract] | |
| Subsequent Events | Note 12 – Subsequent Events
None. |
Summary of Significant Accounting Policies (Policies) |
6 Months Ended |
|---|---|
Jun. 30, 2023 | |
| Accounting Policies [Abstract] | |
| Reclassifications | 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.
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| Cash and Cash Equivalents | Cash and Cash Equivalents
Cash and cash equivalents consist of cash on hand, money market funds and highly liquid investments with an original maturity date of 90 days or less from the date of purchase. The fair value of cash equivalents approximated their carrying value as of June 30, 2023 and December 31, 2022. The Company has its cash and cash equivalents with large creditworthy financial institutions and the balance exceeded federally insured limits. The Company has not experienced any losses in such accounts, and management believes the Company is not exposed to any significant credit risk on cash and cash equivalents.
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| Marketable Investment Securities | Marketable Investment Securities
The Company’s marketable investment securities are comprised of investments in certificates of deposit and U.S. Treasury bills and notes. The Company designates investments in debt securities as available-for-sale. Available-for-sale debt securities with original maturities of three months or less from the date of purchase are classified within cash and cash equivalents. Available-for-sale debt securities with original maturities longer than three months are available to fund current operations and are classified as marketable investment securities, within current assets on the condensed consolidated balance sheets. The Company may sell these securities at any time for use in its current operations or for other purposes, even prior to maturity. Available-for-sale debt securities are reported at fair value with the related unrealized gains and losses included in accumulated other comprehensive income (loss), a component of stockholders’ equity, net of tax. Realized gains and losses on the sale of marketable investment securities are determined using the average cost method on a first-in, first-out basis and recorded in total other income (expense), net in the condensed consolidated statements of operations and comprehensive income (loss).
The available-for-sale debt securities are subject to a periodic impairment review. For investments in an unrealized loss position, the Company writes down the amortized cost basis of the investment if it is more likely than not that the Company will be required or will intend to sell the investment before recovery of its amortized cost basis. For investments not likely to be sold before recovery of the amortized cost basis, the Company determines whether a credit loss exists by considering information about the collectability of the instrument, current market conditions, and reasonable and supportable forecasts of economic conditions. The Company recognizes an allowance for credit losses up to the amount of the unrealized loss when appropriate. Allowances for credit losses and write-downs are recognized in total other income (expense), net, and unrealized losses not related to credit losses are recognized in accumulated other comprehensive income (loss). There are no allowances for credit losses recorded for the periods presented.
|
| Accounts Receivable | 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, 2023, total accounts receivable was $4,510,545 with an allowance for uncollectable accounts of $3,413,152 resulting in a net amount of $1,097,393. At December 31, 2022, total accounts receivable was $6,552,249 with an allowance for uncollectable accounts of $3,098,526 resulting in a net amount of $3,453,723.
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| Equity-Method Investments | Equity-Method Investments
The Company’s equity method investments are initially recorded at cost and are included in other long-term assets in the accompanying condensed consolidated balance sheet. The Company adjusts the carrying value of its investment based on our share of the earnings or losses in the periods which they are reported by the investee until the carrying amount is zero. The earnings or losses are included in other income (expense) in the accompanying condensed consolidated statements of operations.
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| Inventory | 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, 2023, the Company had $4,691,068 in inventory, comprised of $842,087 of finished goods, and $3,848,981 of raw materials. At December 31, 2022, the Company had $5,310,473 in inventory, of which $1,327,264 was finished goods and $3,983,209 was raw materials. The Company establishes reserves to reduce slow-moving, obsolete, or unusable inventories to their estimated useful or scrap values.
|
| Intangible Assets | Intangible Assets
Indefinite-lived intangible assets are not amortized, but rather tested for impairment at least annually on December 31, or more often if and when circumstances indicate that the carrying value may not be recoverable. Finite-lived intangible assets are amortized over their useful lives.
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| Long-lived Assets | Long-lived Assets
Long-lived assets, such as property and equipment, are stated at cost less accumulated depreciation and amortization. Depreciation is provided using the straight-line method over the estimated useful lives of the property, generally from three to five years. Repairs and maintenance costs are expensed as incurred except when such repairs significantly add to the useful life or productive capacity of the asset, in which case the repairs are capitalized.
The Company reviews its long-lived assets, including property and equipment, finite-lived intangible assets, and right-of-use (ROU) assets, for impairment whenever an event or change in facts and circumstances indicates that their carrying amounts may not be recoverable. Recoverability of these assets is measured by comparing the carrying amount to the estimated undiscounted future cash flows expected to be generated. If the carrying amount exceeds the undiscounted cash flows, the assets are determined to be impaired and an impairment charge is recognized as the amount by which the carrying amount exceeds fair value.
|
| Business Combinations | Business Combinations
The Company estimates the fair value of assets acquired and liabilities assumed in a business combination. Goodwill as of the acquisition date is measured as the excess of consideration transferred over the net of the acquisition date fair values of the assets acquired and the liabilities assumed. Such valuations require management to make significant estimates and assumptions, especially with respect to intangible assets. Management’s estimates of fair value are based upon assumptions believed to be reasonable, but which are inherently uncertain and unpredictable, and as a result, actual results may differ from estimates.
|
| Leases | Leases
The Company adopted ASC 842, Leases (“ASC 842”) effective January 1, 2022. Under ASC 842, the Company determines if an arrangement is or contains a lease at inception by assessing whether the arrangement contains an identified asset and whether it has the right to control the identified asset. Right-of-use (ROU) assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent the Company’s obligation to make lease payments arising from the lease. Lease liabilities are recognized at the lease commencement date based on the present value of future lease payments over the lease term. ROU assets are based on the measurement of the lease liability and also include any lease payments made prior to or on lease commencement and exclude lease incentives and initial direct costs incurred, as applicable.
As the implicit rate in the Company’s leases is generally unknown, the Company uses its incremental borrowing rate based on the information available at the lease commencement date in determining the present value of future lease payments. The Company considers its credit risk, term of the lease, total lease payments and adjusts for the impacts of collateral, as necessary, when calculating its incremental borrowing rates. The Company evaluates renewal options at lease inception and on an ongoing basis and includes renewal options that it is reasonably certain to exercise in its expected lease terms when classifying leases and measuring lease liabilities. Lease costs for the Company’s operating leases are recognized on a straight-line basis within operating expenses and cost of revenue over the reasonably assured lease term.
The Company has elected to not separate lease and non-lease components for leases of office space and, as a result, accounts for any lease and non-lease components for office space as a single lease component, to the extent they are fixed. Non-lease components that are not fixed are expensed as incurred as variable lease payments. The Company’s office leases typically include non-lease components such as common-area maintenance costs. The Company has also elected to not apply the recognition requirement to any leases within its existing classes of assets with a term of 12 months or less.
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| Revenue Recognition | Revenue Recognition
The Company generates revenue from product sales and license sales. The Company recognizes revenue 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.
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| Deferred Revenue | Deferred Revenue
Deferred revenue primarily consists of payments received from customers related to product sales or from granting agencies for services to be rendered under research grants, prior to the Company fulfilling its performance obligation of providing the product or performing research activities under the grant agreement. When this occurs, the Company records a contract liability as deferred revenue. Deferred revenue is recognized as revenue as the related performance obligations are satisfied.
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| Research and Development | Research and Development
Research and development costs are expensed when incurred. For the three and six months ended June 30, 2023, the Company expensed $5,981,043 and $10,995,103 of research and development costs, respectively. For the three and six months ended June 30, 2022, the Company expensed $3,889,844 and $7,661,171, respectively.
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| Stock-based Compensation |
The Company has granted stock-based awards, including restricted stock, stock options, stock warrants and restricted stock units (“RSUs”), to its employees, certain consultants and members of its board of directors. The Company records stock-based compensation based on the grant date fair value of the awards and recognizes the fair value of those awards as expense using the straight-line method over the requisite service period of the award. The Company estimates the grant date fair value of stock options using the Black-Scholes option-pricing model. When an award is forfeited prior to the vesting date, the Company recognizes an adjustment for the previously recognized expense in the period of the forfeiture.
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| Income Taxes | 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.
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| Net Income (Loss) per Share |
Basic net income or loss per common share is computed by dividing net income or loss applicable to common shareholders by the weighted average number of shares outstanding during each period.
Diluted net income or loss per share is computed by dividing net income or loss attributable to common stockholders by the weighted-average number of shares of common stock outstanding during the period increased by common shares that could be issued upon conversion or exercise of other outstanding securities to the extent those additional common shares would be dilutive. The dilutive effect of potentially dilutive securities is reflected in diluted net income or loss per share by application of the treasury stock method. During periods when the Company is in a net loss position, basic net loss per share is the same as diluted net loss per share as the effects of potentially dilutive securities are anti-dilutive.
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| Comprehensive Income (Loss) | Comprehensive Income (Loss)
Comprehensive income is comprised of unrealized gains and losses on marketable investment securities, net of income taxes.
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| Concentrations Risk and Significant Customers | Concentrations Risk and Significant Customers
The Company had certain customers which are each responsible for generating 10% or more of the total revenue for the three and six months ended June 30, 2023. Three customers accounted for approximately 44% of total revenue for the three months ended June 30, 2023, and two customers accounted for approximately 33% of total revenue for the six months ended June 30, 2023. One customer accounted for approximately 55% of total revenue for the three months ended June 30, 2022, and two customers accounted for approximately 46% of total revenue for the six months ended June 30, 2022.
Three customers accounted for more than 10% of accounts receivable at June 30, 2023 and one customer accounted for more than 10% of accounts receivable at December 31, 2022. These customers together accounted for approximately 77% and 37% of accounts receivable at June 30, 2023 and December 31, 2022, respectively.
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| Recently Issued Accounting Standards | 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. |
Cash, Cash Equivalents, and Financial Instruments (Tables) |
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Jun. 30, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Cash and Cash Equivalents [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Cash, Cash Equivalents and Marketable Investment Securities | The following table shows the Company’s cash, cash equivalents, and marketable investment securities by significant investment category:
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Intangible Assets, Net (Tables) |
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Jun. 30, 2023 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Goodwill and Intangible Assets Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Intangible Assets, Net | Intangible assets, net consisted of the following:
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| Schedule of Future Amortization Expense | The expected future annual amortization expense of the Company’s intangible assets held as of June 30, 2023 is as follows:
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Fair Value Measurements (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Fair Value Assets and Liabilities | The following table summarizes the assets and liabilities measured at fair value on a recurring basis as of June 30, 2023 and December 31, 2022, by level within the fair value hierarchy:
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| Schedule of Changes in the Fair Value Measurement | The changes for Level 3 items measured at fair value on a recurring basis are as follows:
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| Schedule of Contingent Consideration Common Stock and Warrants |
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Revenue (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Revenue from Contract with Customer [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Summary of Revenue by Geographic Area | The following table sets forth revenue by geographic area:
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| Schedule of Deferred Revenue | Changes in the Company’s deferred revenue balance for the six months ended June 30, 2023 were as follows:
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Earnings (Loss) Per Share (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Basis and Diluted Earnings Per Share |
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Stock-Based Compensation (Tables) |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2023 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Share-Based Payment Arrangement [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Option Activity |
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| Schedule of Outstanding Restricted Stock Units and Related Party |
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| Schedule of Warrant Activity | The following table summarizes warrant activity during the six months ended June 30, 2023:
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| Schedule of Recognized Stock-based Compensation Expense |
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Commitments and Contingencies (Tables) |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2023 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Commitments and Contingencies Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Lease Expense | For the three and six months ended June 30, 2023, components of lease expense are summarized as follows:
|
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| Schedule of Maturities on Company Lease Liabilities | As of June 30, 2023, the maturities of the Company’s lease liabilities are as follows:
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| Schedule of Other Information Related to Operating Lease | Other information related to operating leases was as follows:
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Share Repurchase Program (Tables) |
6 Months Ended | |||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2023 | ||||||||||||||||||||||||||
| Equity [Abstract] | ||||||||||||||||||||||||||
| Schedule of Treasury Stock |
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Schedule of Intangible Assets, Net (Details) - USD ($) |
6 Months Ended | 12 Months Ended | ||
|---|---|---|---|---|
Jun. 30, 2023 |
Dec. 31, 2022 |
|||
| Finite-Lived Intangible Assets [Line Items] | ||||
| Intangible assets, gross | $ 27,195,000 | $ 27,195,000 | ||
| Less accumulated amortization | (640,000) | (426,667) | ||
| Intangible assets, net | $ 26,555,000 | $ 26,768,333 | ||
| In Process Research and Development [Member] | ||||
| Finite-Lived Intangible Assets [Line Items] | ||||
| Estimated useful lives in years, term | [1] | Indefinite | Indefinite | |
| Intangible assets, gross | $ 26,101,000 | $ 26,101,000 | ||
| Less accumulated amortization | ||||
| Intangible assets, net | 26,101,000 | 26,101,000 | ||
| Noncompete Agreements [Member] | ||||
| Finite-Lived Intangible Assets [Line Items] | ||||
| Intangible assets, gross | 1,094,000 | 1,094,000 | ||
| Less accumulated amortization | (640,000) | (426,667) | ||
| Intangible assets, net | $ 454,000 | $ 667,333 | ||
| Estimated useful lives in years | [1] | 2 years 8 months 12 days | 2 years 8 months 12 days | |
| ||||
Schedule of Future Amortization Expense (Details) |
Jun. 30, 2023
USD ($)
|
|---|---|
| Goodwill and Intangible Assets Disclosure [Abstract] | |
| 2023 (remainder) | $ 151,332 |
| 2024 | 302,668 |
| Total | $ 454,000 |
Schedule of Changes in the Fair Value Measurement (Details) |
6 Months Ended |
|---|---|
|
Jun. 30, 2023
USD ($)
| |
| Fair Value Disclosures [Abstract] | |
| Fair value as of December 31, 2022 | $ 2,732,356 |
| Change in fair value of contingent consideration issued for business acquisitions | (1,397,077) |
| Fair value as of June 30, 2023 | $ 1,335,279 |
Schedule of Contingent Consideration Common Stock and Warrants (Details) |
Jun. 30, 2023 |
Dec. 31, 2022 |
|---|---|---|
| Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||
| Expected term | 3 years 6 months | 4 years |
| Measurement Input, Share Price [Member] | ||
| Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||
| Warrants measurement input | 1.11 | 2.52 |
| Measurement Input Strike Price [Member] | ||
| Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||
| Warrants measurement input | 9.13 | 9.13 |
| Measurement Input, Price Volatility [Member] | ||
| Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||
| Warrants measurement input | 1.5700 | 0.7500 |
| Measurement Input, Risk Free Interest Rate [Member] | ||
| Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||
| Warrants measurement input | 0.0430 | 0.0410 |
Summary of Revenue by Geographic Area (Details) - USD ($) |
3 Months Ended | 6 Months Ended | ||
|---|---|---|---|---|
Jun. 30, 2023 |
Jun. 30, 2022 |
Jun. 30, 2023 |
Jun. 30, 2022 |
|
| Disaggregation of Revenue [Line Items] | ||||
| Revenue geographic area | $ 197,806 | $ 5,023,226 | $ 799,763 | $ 27,722,270 |
| UNITED STATES | ||||
| Disaggregation of Revenue [Line Items] | ||||
| Revenue geographic area | $ 137,230 | $ 4,499,354 | $ 530,384 | $ 18,725,742 |
| UNITED STATES | Revenue Benchmark [Member] | Geographic Concentration Risk [Member] | ||||
| Disaggregation of Revenue [Line Items] | ||||
| Percentage of revenue | 69.00% | 90.00% | 66.00% | 68.00% |
| Rest of World [Member] | ||||
| Disaggregation of Revenue [Line Items] | ||||
| Revenue geographic area | $ 60,576 | $ 523,872 | $ 269,379 | $ 8,996,528 |
| Rest of World [Member] | Revenue Benchmark [Member] | Geographic Concentration Risk [Member] | ||||
| Disaggregation of Revenue [Line Items] | ||||
| Percentage of revenue | 31.00% | 10.00% | 34.00% | 32.00% |
Schedule of Deferred Revenue (Details) |
6 Months Ended |
|---|---|
|
Jun. 30, 2023
USD ($)
| |
| Revenue from Contract with Customer [Abstract] | |
| Deferred revenue, beginning balance | |
| Increase due to prepayments from customers | 18,120 |
| Increase due to prepayments from grants received | 239,879 |
| Deferred revenue, ending balance | $ 257,999 |
Schedule of Basis and Diluted Earnings Per Share (Details) - USD ($) |
3 Months Ended | 6 Months Ended | ||||
|---|---|---|---|---|---|---|
Jun. 30, 2023 |
Mar. 31, 2023 |
Jun. 30, 2022 |
Mar. 31, 2022 |
Jun. 30, 2023 |
Jun. 30, 2022 |
|
| Earnings Per Share [Abstract] | ||||||
| Net income (loss), as reported | $ (8,918,825) | $ (5,755,391) | $ (2,686,303) | $ 11,714,595 | $ (14,674,216) | $ 9,028,292 |
| Weighted average shares, basic | 29,088,159 | 32,472,251 | 29,284,175 | 32,509,664 | ||
| Dilutive effect of stock options, warrants and RSUs | 743,948 | |||||
| Shares used to compute diluted earnings per share | 29,088,159 | 32,472,251 | 29,284,175 | 33,253,612 | ||
| Basic earnings (loss) per share | $ (0.31) | $ (0.08) | $ (0.50) | $ 0.28 | ||
| Diluted earnings (loss) per share | $ (0.31) | $ (0.08) | $ (0.50) | $ 0.27 | ||
Schedule of Outstanding Restricted Stock Units and Related Party (Details) - Restricted Stock Units (RSUs) [Member] |
6 Months Ended |
|---|---|
|
Jun. 30, 2023
$ / shares
shares
| |
| Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |
| Number of Restricted Stock Units, Outstanding Beginning | shares | 2,426,725 |
| Weighted Average Grant Date Fair Value, Outstanding Beginning | $ / shares | $ 6.95 |
| Number of Restricted Stock Units, Granted | shares | 1,918,750 |
| Weighted Average Grant Date Fair Value, Granted | $ / shares | $ 1.93 |
| Number of Restricted Stock Units, Vested | shares | (594,085) |
| Weighted Average Grant Date Fair Value, Vested | $ / shares | $ 7.17 |
| Number of Restricted Stock Units, Forfeited/Cancelled | shares | (48,696) |
| Weighted Average Grant Date Fair Value, Forfeited/Cancelled | $ / shares | $ 6.15 |
| Number of Restricted Stock Units, Outstanding Ending | shares | 3,702,694 |
| Weighted Average Grant Date Fair Value, Outstanding Ending | $ / shares | $ 4.33 |
Stock-Based Compensation (Details Narrative) - USD ($) |
6 Months Ended | ||
|---|---|---|---|
Jun. 30, 2023 |
Jun. 30, 2022 |
Aug. 31, 2022 |
|
| Warrant [Member] | |||
| Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |||
| Aggregate intrinsic value of options outstanding | $ 0 | ||
| Intrinsic value of warrants exercised | $ 300,000 | ||
| Warrants exercisable | 20,000 | ||
| Warrants to purchase a common stock | 465,000 | ||
| Stock Options [Member] | |||
| Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |||
| Aggregate intrinsic value of options outstanding | $ 100,000 | ||
| Restricted Stock Units (RSUs) [Member] | |||
| Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |||
| Unrecognized stock-based compensation | $ 13,800,000 | ||
| Unrecognized stock-based compensation recognition period | 2 years | ||
| 2015 Long Term Incentive Plan [Member] | |||
| Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |||
| Number of common shares availalble for issuance | 4,340,736 | 12,000,000 | |
Income Taxes (Details Narrative) - USD ($) |
3 Months Ended | 6 Months Ended | ||
|---|---|---|---|---|
Jun. 30, 2023 |
Jun. 30, 2022 |
Jun. 30, 2023 |
Jun. 30, 2022 |
|
| Income Tax Disclosure [Abstract] | ||||
| Income tax expense (benefit) | $ 2,238,320 | $ 741,507 | $ 4,498,131 | $ (644,580) |
| Effective income tax rate reconciliation, percent | 20.10% | 23.50% | ||
| Effective income tax rate reconciliation, percent | 21.00% | |||
| Income tax expense (benefit) | $ (2,238,320) | $ (741,507) | $ (4,498,131) | $ 644,580 |
Schedule of Lease Expense (Details) - USD ($) |
3 Months Ended | 6 Months Ended |
|---|---|---|
Jun. 30, 2023 |
Jun. 30, 2023 |
|
| Commitments and Contingencies Disclosure [Abstract] | ||
| Operating lease costs | $ 62,847 | $ 150,454 |
| Short-term lease costs | 48,301 | 156,979 |
| Total lease costs | $ 111,148 | $ 307,433 |
Schedule of Maturities on Company Lease Liabilities (Details) - USD ($) |
Jun. 30, 2023 |
Dec. 31, 2022 |
|---|---|---|
| Commitments and Contingencies Disclosure [Abstract] | ||
| 2023 (remainder) | $ 467,651 | |
| 2024 | 966,451 | |
| 2025 | 987,252 | |
| 2026 | 682,806 | |
| Thereafter | 542,512 | |
| Total lease payments | 3,646,672 | |
| Less: imputed interest | 416,085 | |
| Present value of operating lease liabilities | 3,230,587 | |
| Less: current portion | 772,515 | $ 297,209 |
| Long-term portion | $ 2,458,072 | $ 50,708 |
Schedule of Other Information Related to Operating Lease (Details) |
6 Months Ended |
|---|---|
|
Jun. 30, 2023
USD ($)
| |
| Commitments and Contingencies Disclosure [Abstract] | |
| Cash paid for operating leases included in operating cash flows | $ 281,421 |
| Remaining lease term of operating leases | 4 years |
| Discount rate of operating leases | 6.20% |
Commitments and Contingencies (Details Narrative) |
Jun. 30, 2023
USD ($)
|
|---|---|
| Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | |
| Operating lease liabilities | $ 3,230,587 |
| Lease Amendment [Member] | |
| Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | |
| Operating lease liabilities | $ 3,063,782 |
Schedule of Treasury Stock (Details) |
6 Months Ended |
|---|---|
|
Jun. 30, 2023
shares
| |
| Equity [Abstract] | |
| Treasury stock, Beginning Balance | 3,881,658 |
| Repurchases of common stock | 677,821 |
| Treasury stock, Ending Balance | 4,559,479 |
Share Repurchase Program (Details Narrative) $ in Millions |
Mar. 31, 2022
USD ($)
|
|---|---|
| Equity [Abstract] | |
| Stock repurchase program authorized amount | $ 30.0 |