Quarterly Report for Quarter Ending September 30, 2025 (Form 10-Q)

Management's Discussion and Analysis of Financial Condition and Results of Operations

Cautionary Note Regarding Forward-Looking Statements

This Quarterly Report on Form 10-Q contains "forward-looking statements" that involve risks and uncertainties. All statements other than statements of historical fact contained in this Quarterly Report and the documents incorporated by reference herein, including statements regarding future events, our future financial performance, business strategy, and plans and objectives of management for future operations, are forward-looking statements. We have attempted to identify forward-looking statements by terminology including "anticipates," "believes," "can," "continue," "could," "estimates," "expects," "intends," "may," "plans," "potential," "predicts," "should," or "will" or the negative of these terms or other comparable terminology. Although we do not make forward-looking statements unless we believe we have a reasonable basis for doing so, we cannot guarantee their accuracy. These statements are only predictions and involve known and unknown risks, uncertainties and other factors and the documents incorporated by reference herein, which may affect our or our industry's actual results, levels of activity, performance or achievements expressed or implied by these forward-looking statements. Moreover, we operate in a highly regulated, very competitive, and rapidly changing environment. New risks emerge from time to time, and it is not possible for us to predict all risk factors, nor can we address the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause our actual results to differ materially from those contained in any forward-looking statements.

These forward-looking statements are subject to certain risks and uncertainties that could cause our actual results to differ materially from those reflected in the forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those discussed under the heading "Risk Factors" in other documents we file with the SEC, including our Annual Report on form 10-K for the year ended December 31, 2024. The following discussion should be read in conjunction with the Annual Report on Form 10-K for the fiscal year ended December 31, 2024, filed with the SEC on March 27, 2025, and the audited financial statements and notes included therein.

As used in this Quarterly Report, the terms "we", "us", "our", and "Co-Diagnostics" means Co-Diagnostics, Inc., a Utah corporation and its consolidated subsidiaries (the "Company"), unless otherwise indicated.

Executive Overview

The following management's discussion and analysis of financial condition and results of operations describes the principal factors affecting the results of our operations, financial condition, and changes in financial condition. This discussion should be read in conjunction with the accompanying unaudited financial statements and notes thereto included elsewhere in this report. The information contained in this discussion is subject to a number of risks and uncertainties. We urge you to review carefully the section of this report entitled "Cautionary Note Regarding Forward-Looking Statements."

Business Overview

Co-Diagnostics, Inc., a Utah corporation (the "Company" or "CODX"), develops, manufactures and sells reagents used for diagnostic tests that function via the detection and/or analysis of nucleic acid molecules (DNA or RNA), including robust and innovative molecular tools for detection of infectious diseases. 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, proprietary approach to polymerase chain reaction ("PCR") test design of primer and probe structure ("Co-Primers®") that dramatically reduces one of the key vexing issues of PCR amplification: the exponential growth of primer-dimer amplification (false positives) which adversely interferes with identification of the target DNA/RNA. Using our proprietary test design system and reagents, we have designed and obtained regulatory approval to sell PCR diagnostic tests for the detection of COVID-19, influenza, tuberculosis, hepatitis B and C, human papillomavirus, malaria, chikungunya, dengue, and the Zika virus. These initial diagnostic tests are cleared for use in clinical labs only and not for point-of-care or at-home use

We are currently developing a unique, groundbreaking portable diagnostic device and test system designed for point-of-care and at-home use. The system is comprised of our PCR instrument that we refer to as the Co-Dx™ PCR Pro™ instrument, our patent-pending diagnostic test cup system and a mobile application to be installed on the user's mobile device. We refer to the system as the "Co-Dx™ PCR platform which has been designed to bring affordable, reliable polymerase chain reaction ("PCR") testing to patients in point-of-care and at-home settings. The Co-Dx PCR platform is subject to U.S. Food and Drug Administration ("FDA") review and is not available for sale at the time of this filing. In June 2024, we completed our first FDA application for 510(k) clearance for the Co-Dx™ PCR Pro™ instrument, the Co-Dx PCR COVID-19 Test, and the Co-Dx PCR mobile app for over-the-counter (OTC) use. Following productive engagement with the FDA related to the regulatory submission, the Company withdrew its 510(k) application. The decision to withdraw the submission was based on discussions with the FDA regarding the ability to detect a potential deterioration of one component of the test, related to shelf-life stability. Following dialogue with the FDA and exploring the various courses of action available, we determined that the best long-term solution would be to submit a version of the test that has been enhanced to address the matter raised in the 510(k) review process. The Company plans to submit the next iteration of the Co-Dx PCR COVID-19 test for 510(k) OTC clearance, following the collection of clinical evaluation data to support the new test's performance. A new submission also allows the Company to incorporate more recent Co-Dx PCR platform developments into the tests, which Co-Dx believes will also help create greater operational and manufacturing efficiencies, such as consolidating manufacturing processes to utilize the next generation of test kits and instruments across all tests on the at-home and point-of-care Co-Dx PCR platform. There is no guarantee that our Co-Dx PCR platform will receive the necessary regulatory approvals for commercialization, or that, if regulatory approval is received, we will be able to successfully commercialize this platform. On October 27, 2025, we entered into an agreement with Arabian Eagle Manufacturing to form a joint venture to research, develop, manufacture, assemble, distribute, and commercialize Co-Dx technologies and intellectual property, including our upcoming PCR point-of-care platform, within the Kingdom of Saudi Arabia and 18 other countries through the Middle East and North Africa.

Technology

We believe our proprietary and patented molecular diagnostics technology is paving the way for innovation in disease detection and life sciences research through our enhanced detection of genetic material. For various reasons, including owning our own platform, we believe we will be able to accomplish this faster and more economically than some competitors, allowing for significant margins while still positioning ourselves as a low-cost provider of molecular diagnostics and screening services. For example, we were the first US-based company to receive a CE-marking for a COVID-19 test in early 2020, as we worked to help slow the spread of the pandemic through our global network of distributors covering clinical labs in more than 50 countries. Our Logix Smart® COVID-19 test was designed, developed, submitted for regulatory approval and ready to be used as an in vitro diagnostic or IVD in countries that accept CE marking for regulatory clearance in a period of just over 30 days. This is a real-world example of how CODX technology can be used in an evolving epidemic or pandemic to get diagnostic tools in the hands of medical professionals in a timely manner. It can be similarly used to design a test for mutated strains of SARS-CoV-2 or other viruses should they not be detectable using currently available tests.

In addition, continued development has demonstrated the unique properties of our Co-Primers technology that we believe makes it ideally suited for a variety of applications where specificity is key to optimal results, including multiplexing several targets, enhanced Single Nucleotide Polymorphism ("SNP") detection and enrichment for next generation sequencing.

Our scientists use the complex mathematics of DNA/RNA PCR test design to engineer and optimize PCR tests and to automate algorithms that rapidly screen millions of possible options to pinpoint the optimum design. The intellectual property we use in our business consists of the predictive mathematical algorithms and patented molecular structure used in the testing process, which together represent a major advance in PCR testing systems. CODX technologies are now protected by more than 20 granted or pending US and foreign patents, as well as certain trade secrets and copyrights. Ownership of our proprietary platform permits us the advantage of avoiding payment of patent royalties required by other PCR test systems, which may allow for 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 pairing 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's needs.

Using our proprietary test design system and reagents, we have designed and obtained regulatory approval in the European Community and in India to sell PCR diagnostic tests for the detection of COVID-19, influenza, tuberculosis, hepatitis B and C, human papillomavirus, malaria, chikungunya, dengue, and the Zika virus. In the United States, we obtained Emergency Use Authorization ("EUA") for our Logix Smart® COVID-19 detection test from the FDA, and we sell that test to qualified labs. In addition, our COVID-19 detection test and certain of our other suite of COVID-19 products have been cleared for sale in countries such as the United Kingdom, Australia, India, and Mexico by the regulatory bodies in those countries and have been registered for sale in many more countries. In connection with the sale of our tests we may sell diagnostic equipment from other manufacturers, including an OEM's PCR instrument which we refer to here as the "Co-Dx Box".

In addition to testing for infectious disease, Co-Primers technology lends itself to identifying any section of a DNA or RNA strand that describes any type of genetic trait, which creates several significant applications. We, in conjunction with our customers, have designed and licensed tests that identify genetic traits in plant and animal genomes. We also have commercialized three multiplexed tests to test mosquitos for the presence of diseases they carry, which enables municipalities to concentrate their efforts in managing mosquito populations in specific areas where mosquitos carrying deadly viruses are known to breed.

RESULTS OF OPERATIONS

The Three Months Ended September 30, 2025 Compared to the Three Months ended September 30, 2024

Revenues

For the three months ended September 30, 2025, we generated revenues of $0.1 million, compared to revenues of $0.6 million for the three months ended September 30, 2024. The decrease in revenue was due to lower grant revenues recognized in the current period.

Cost of Revenues

We recorded cost of revenues of approximately $0.03 million for the three months ended September 30, 2025, compared to $0.3 million for the three months ended September 30, 2024. Included within cost of revenues is a decrease of approximately $0.04 million for the three months ended September 30, 2025, and an increase of approximately $0.1 million for the three months ended September 30, 2024, related to reserves against certain raw materials and finished goods inventories.

Expenses

Total operating expenses were $7.1 million for the three months ended September 30, 2025 compared to total operating expenses of $10.6 million for the three months ended September 30, 2024. The decrease in operating expenses was primarily due to decreased legal expense, stock-based compensation expense, personnel related expense, and expense related to development of the Co-Dx PCR platform.

Sales and marketing expenses for the three months ended September 30, 2025 were $0.6 million compared to $1.1 million for the three months ended September 30, 2024. The decrease was primarily a result of decreased stock-based compensation expense, consulting and professional services expenses, and personnel related expenses.

General and administrative expenses for the three months ended September 30, 2025 were $1.8 million compared to $4.3 million for the three months ended September 30, 2024. The decrease resulted primarily from lower legal expense and stock-based compensation expense.

Research and development expenses for the three months ended September 30, 2025 were $4.5 million compared to $4.9 million for the three months ended September 30, 2024. The decrease was primarily a result of decreased expenses related to development of the Co-Dx PCR platform, and personnel related expenses, partially offset by an increase in stock-based compensation expense.

Other Income or Expense

Other expense was $0.04 million for the three months ended September 30, 2025, compared to other income of $0.6 million for the three months ended September 30, 2024. The decrease was primarily a result of lower interest income and realized gains from investments in marketable securities.

Net Loss

We realized a net loss for the three months ended September 30, 2025 of $5.9 million, compared to $9.7 million for the three months ended September 30, 2024. The smaller net loss was primarily the result of lower operating expenses and a benefit from income taxes, partially offset by decreased grant revenues and lower interest income and realized gains on investments. The income tax benefit recognized during the three months ended September 30, 2025 relates primarily to new United States tax legislation which was signed into law on July 4, 2025, which resulted in the Company being eligible for certain federal and state tax refunds related to prior years. The Company expects to receive these refunds by the end of the year.

The Nine Months Ended September 30, 2025 Compared to the Nine Months ended September 30, 2024

Revenues

For the nine months ended September 30, 2025, we generated revenues of $0.4 million, compared to revenues of $3.8 million for the nine months ended September 30, 2024. The decrease in revenue was due to lower product and grant revenues recognized in the nine month current period.

Cost of Revenues

We recorded cost of revenues of approximately $0.1 million for the nine months ended September 30, 2025, compared to $0.7 million for the nine months ended September 30, 2024. Included within cost of revenues is a decrease of approximately $0.1 million for the nine months ended September 30, 2025, and a decrease of approximately $0.2 million for the nine months ended September 30, 2024, related to reserves against certain raw materials and finished goods inventories.

Expenses

Total operating expenses were $23.9 million for the nine months ended September 30, 2025 compared to total operating expenses of $31.2 million for the nine months ended September 30, 2024. The decrease in operating expenses was primarily due to decreased legal expenses, stock-based compensation expense, and personnel related expenses.

Sales and marketing expenses for the nine months ended September 30, 2025 were $1.8 million compared to $3.7 million for the nine months ended September 30, 2024. The decrease was primarily a result of decreased stock-based compensation expense, tradeshow and travel expenses, consulting and professional services expenses, and personnel related expenses.

General and administrative expenses for the nine months ended September 30, 2025 were $7.2 million compared to $10.3 million for the nine months ended September 30, 2024. Decreases in legal expense, stock-based compensation expense and consulting and professional services expense were partially offset by increased expenses related to transaction advisory services and fees.

Research and development expenses for the nine months ended September 30, 2025 were $14.0 million compared to $16.2 million for the nine months ended September 30, 2024. The decrease was primarily a result of decreased expenses related to development of the Co-Dx PCR platform, personnel related expenses, and stock-based compensation expense, partially offset by increases in professional services expense.

Other Income

Other income was $1.3 million for the nine months ended September 30, 2025, compared to other income of $1.6 million for the nine months ended September 30, 2024. Decreases in interest income were partially offset by increases in realized gains from investments in marketable securities and increases in the change in the fair value of contingent consideration liabilities.

Net Loss

We realized a net loss for the nine months ended September 30, 2025 of $21.2 million, compared to $26.6 million for the nine months ended September 30, 2024. The smaller net loss was primarily the result of decreases in operating expenses and a benefit from income taxes, partially offset by decreases in grant revenues. The income tax benefit recognized during the nine months ended September 30, 2025 relates primarily to new United States tax legislation which was signed into law on July 4, 2025, which resulted in the Company being eligible for certain federal and state tax refunds related to prior years. The Company expects to receive these refunds by the end of the year.

Liquidity and Capital Resources

During and subsequent to the third quarter of 2025, the Company took several actions to strengthen its liquidity position and enhance financial flexibility. In October 2025, the Company terminated its Amended and Restated Equity Distribution Agreement with Piper Sandler & Co. and Clear Street, LLC, under which limited sales of common stock had previously been made, and entered into a new Equity Distribution Agreement with Maxim Group LLC to establish an at-the-market ("ATM") equity offering program permitting sales of up to $10.0 million of common stock from time to time. In addition, the Company completed two registered direct offerings with institutional investors - one in September 2025 for gross proceeds of approximately $3.8 million and another in October 2025 for gross proceeds of approximately $7.0 million, in each case before deducting placement agent fees and offering expenses. The Company intends to use the net proceeds from these equity financings for working capital and general corporate purposes.

At September 30, 2025, we had cash and cash equivalents of $11.4 million. Additionally, our total current assets at September 30, 2025, were $14.1 million compared to total current liabilities of $3.7 million.

Net cash used in operating activities during the nine months ended September 30, 2025 was $22.9 million, compared to $20.9 million for the nine months ended September 30, 2024. The increase in cash used in operating activities was primarily due to a higher usage of cash to pay accounts payable and accrued liabilities related to higher legal expenses, along with decreases in product revenue, grant funding, net interest income, and realized gains on investments.

Net cash provided by investing activities was $26.6 million for the nine months ended September 30, 2025, compared to $16.8 million during the nine months ended September 30, 2024. The increase in cash provided by investing activities is primarily due to the timing of the redemption of certain investments as they matured.

Net cash provided by financing activities was $4.8 million for the nine months ended September 30, 2025, compared to $0 for the nine months ended September 30, 2024. The cash provided by financing activities during 2025 relates to issuances of common stock under the ATM and through a registered direct offering.

Since commencing sales of our Logix Smart COVID-19 test in March 2020, we have used our cash generated from those sales to fund the purchase of inventories and the development of our Co-Dx PCR Platform, and to pay our operating expenses.

Our available capital resources may be consumed more rapidly than currently expected and we may need or want to raise additional financing for strategic opportunities. It is anticipated that the Company will continue to generate operating losses and use cash in operations in the near term. If needed, we expect additional investment capital to come from additional issuances of our common stock or other equity-based securities with existing and new investors similar to those that have provided funding in the past or debt financing.

On September 18, 2025, the Company completed a registered direct offering of 9,619,000 shares of its common stock to two institutional investors at an offering price of $0.40 per share, resulting in gross proceeds of approximately $3.8 million before deducting placement agent fees and other offering expenses. The shares were offered and sold pursuant to the Company's effective shelf Registration Statement on Form S-3 (File No. 333-270628). Maxim Group LLC acted as placement agent for the transaction. The Company intends to use the net proceeds from the offering for working capital and general corporate purposes. See Note 13 - Registered Direct Offering to the condensed consolidated financial statements for additional information regarding this transaction.

In October 2025, the Company terminated its Amended and Restated Equity Distribution Agreement with Piper Sandler & Co. and Clear Street, LLC, under which it had previously sold an aggregate of 4,550,245 shares of common stock for net proceeds of approximately $1.7 million. Concurrently, the Company entered into a new Equity Distribution Agreement with Maxim Group LLC to establish an at-the-market ("ATM") equity offering program, under which the Company may offer and sell shares of its common stock having an aggregate offering price of up to $10.0 million from time to time. On October 20, 2025, the Company filed a prospectus supplement with the SEC relating to the new ATM program, registering up to approximately $4.1 million of shares under the shelf registration statement. The Company expects that any proceeds from sales under the new ATM program, if utilized, would provide additional financial flexibility to support its working capital requirements and general corporate purposes. There can be no assurance as to the timing or amount of any sales under the new ATM program. See Note 12 - At the Market Agreement to the condensed consolidated financial statements for additional information regarding this transaction.

Subsequent to quarter end, on October 29, 2025, the Company completed a registered direct offering of its common stock and pre-funded warrants to two institutional investors for gross proceeds of approximately $7.0 million, before deducting placement agent fees and other offering expenses. The Company intends to use the net proceeds from the offering for working capital and general corporate purposes. See Note 15 - Subsequent Events to the condensed consolidated financial statements for additional information regarding this transaction.

Although we are seeking to obtain additional equity and/or debt financing, such funding is not assured and may not be available to us on favorable or acceptable terms and may involve significant restrictive covenants. Any additional equity financing, if available to us at all, will most likely be dilutive to our current stockholders. If we are not able to obtain additional debt or equity financing on a timely basis, the impact on us will be material and adverse. These uncertainties create substantial doubt about our ability to continue as a going concern. The condensed consolidated financial statements do not include any adjustments that might result from the outcome of these uncertainties.

Forward-Looking Statements

This Liquidity and Capital Resources discussion contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including statements regarding the Company's liquidity runway, anticipated use of proceeds, potential sales under the at-the-market program, and the Company's financing plans and capital needs. Forward-looking statements are based on current expectations and assumptions and are subject to risks and uncertainties that could cause actual results to differ materially, including those described under "Risk Factors" and elsewhere in this Quarterly Report on Form 10-Q. There can be no assurance regarding the timing, amount, or terms of any future securities offerings or sales under the at-the-market program, or that such transactions will be available on acceptable terms or at all. The Company undertakes no obligation to update any forward-looking statements, except as required by law

Off-Balance Sheet Arrangements

We have no off-balance sheet arrangements.