UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
(Amendment No. )
| Filed by the Registrant |
| Filed by a party other than the Registrant |
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| Preliminary Proxy Statement | |
| Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) | |
| Definitive Proxy Statement | |
| Definitive Additional Materials | |
| Soliciting Material under §240.14a-12 |
CO-DIAGNOSTICS, INC.
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
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2401 S. Foothill Drive, Suite D, Salt Lake City, Utah 84109
(801) 438-1036
www.codiagnostics.com
2020 PROXY STATEMENT AND
NOTICE OF ANNUAL MEETING
CO-DIAGNOSTICS, INC.
2401 S. Foothill Drive, Suite D
Salt Lake City, Utah 84109
(801) 438-1036
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Be Held Virtually at 10:00 A.M. (Mountain Time) on December 16, 2020Wednesday, August 31, 2022
NOTICE IS HEREBY GIVEN that the virtual-only Annual Meeting of Stockholders (the “Annual Meeting”) of Co-Diagnostics, Inc., a Utah corporation (“we” or the “Company”), will be held on December 16, 2020August 31, 2022 at 10:00 A.M. (Mountain Standard Time), on a virtual basis, for the following purposes, all of which are discussed in greater detail in the accompanying proxy statement:
| 1. | To elect the | |
| 2. | To approve an amendment to the Co-Diagnostics, Inc. 2015 Long Term Incentive Plan, as amended and restated (the “Plan”), increasing the number of common shares authorized for awards under the Plan by 6,000,000. | |
3. | To approve, on an advisory basis, the compensation of the Company’s named executive officers; | |
| 4. | To ratify the appointment of Haynie & Company as our independent registered public accounting firm for the fiscal year ending December 31, | |
| To transact such other business as may properly come before the meeting or any adjournment thereof. |
Only those stockholders of record as of the close of business on October 22, 2020,July 5, 2022, the record date for the Annual Meeting (the “Record Date”), will be entitled to vote at the Annual Meeting and any adjournments or postponements thereof.
The Annual Meeting will be a completely virtual meeting of stockholders, which will be conducted via live webcast. You will be able to attend the Annual Meeting online, vote and submit your questions during the Annual Meeting by visiting www.virtualshareholdermeeting.com/CODX2020CODX2022. We are pleased to utilize the virtual stockholder meeting technology (i) to provide ready access and cost savings for our stockholders and the Company and (ii) to promote social distancing pursuant to guidance provided by the Center for Disease Control and the U.S. Securities and Exchange Commission due to the novel coronavirus. The virtual meeting format allows attendance from any location in the world.
Even if you are planning on attending the Annual Meeting online, please promptly submit your proxy vote via the Internet, by telephone, or, if you received a printed form of proxy in the mail, by completing, dating, signing and returning the enclosed proxy, so your shares will be represented at the Annual Meeting. Instructions on voting your shares are on the proxy materials you received for the Annual Meeting. Even if you plan to attend the Annual Meeting online, it is strongly recommended you vote before the Annual Meeting date, to ensure that your shares will be represented at the Annual Meeting if you are unable to attend.
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You may revoke your proxy at any time prior to the Annual Meeting. If you attend the Annual Meeting and vote by ballot, your proxy will be revoked automatically and only your vote at the Annual Meeting will be counted. If your shares are held in the name of a bank, broker, or other holder of record, you must obtain a proxy, executed in your favor, from the holder of record in order to be able to vote in person at the Annual Meeting.
Details regarding admission to the meeting and the business to be conducted at the meeting are more fully described in the accompanying Notice of Annual Meeting of Stockholders and proxy statement.
We hope you will be able to attend the Annual Meeting. Whether or not you plan to attend the Annual Meeting, please promptly sign, date and return the enclosed proxy card or voting instruction card in the envelope provided, or submit your proxy by telephone or over the Internet (if those options are available to you) in accordance with the instructions on the enclosed proxy card or voting instruction card.
OUR BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE “FOR” EACH OF THE PROPOSALS.
The proxy statement accompanying this notice provides a more complete description of the business to be conducted at the Annual Meeting. We encourage you to read the proxy statement carefully and in its entirety.
| BY ORDER OF THE BOARD OF DIRECTORS, | |
| /s/ Dwight H. Egan | |
| Chairman of the Board and Chief Executive Officer | |
| Salt Lake City, Utah | |
YOU ARE RESPECTFULLY REQUESTED BY THE BOARD TO PROMPTLY SIGN, DATE AND RETURN THE ENCLOSED PROXY OR VOTE OVER THE INTERNET OR BY TELEPHONE. IF YOU GRANT A PROXY, YOU MAY REVOKE IT AT ANY TIME PRIOR TO THE MEETING OR VOTE AT THE MEETING. IF YOU RECEIVED THIS PROXY STATEMENT IN THE MAIL, A RETURN ENVELOPE IS ENCLOSED FOR YOUR CONVENIENCE. THIS WILL NOT PREVENT YOU FROM VOTING AT THE MEETING BUT WILL, HOWEVER, HELP TO ASSURE A QUORUM AND AVOID ADDED PROXY SOLICITATION COSTS.
This Notice of Annual Meeting of Stockholders, proxy statement and form of proxy are first being mailed to stockholders on or about November 3, 2020.July 20, 2022.
Important Notice Regarding the Availability of Proxy Materials for the
Co-Diagnostics, Inc. Annual Meeting of Stockholders to be Held at
10:00 A.M. (Mountain Standard Time) on Wednesday, December 16, 2020.
August 31, 2022: The notice of annual meeting of stockholders, Proxy Statement and Accompanyingaccompanying Annual Report are
available at www.proxyvote.com, a site that does not have “cookies” that identify visitors to the site and
on the Investor Relations portion of our web site at
https://codiagnostics.com/investors/.
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PROXY SUMMARY
This summary highlights certain information contained elsewhere in the accompanying proxy statement, but does not contain all of the information you should consider before voting your shares. For more complete information regarding the proposals to be voted upon at the Annual Meeting of Stockholders and our fiscal year 2019 performance, please review the entire proxy statement and our annual report on Form 10-K for the fiscal year ended December 31, 2019. Unless the context indicates otherwise, we use the terms “Co-Diagnostics,” the “Company,” “we,” “us,” “our,” and similar expressions in this summary to refer to Co-Diagnostics, Inc., a Utah corporation.
Annual Meeting
Voting Matters
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Director Nominees (see page 8)
The following table contains information about the five (5) candidates who have been nominated for election to the Board of Directors of Co-Diagnostics. Each nominee is currently a director of Co-Diagnostics.
| Name | Age | Director Since | Principal Occupation | |||
| Dwight H. Egan | 66 | 2013* | Chief Executive Officer and Chairman of the Board | |||
| Eugene Durenard, PhD | 51 | 2019 | Director | |||
| Edward L. Murphy | 55 | 2019 | Director | |||
| Richard S. Serbin | 76 | 2017 | Director | |||
| James B. Nelson | 67 | 2019 | Director |
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2401 S. Foothill Drive, Suite D
Salt Lake City, Utah 84109
(801) 438-1036
www.codiagnostics.com
PROXY STATEMENT FOR ANNUAL MEETING OF STOCKHOLDERS
This proxy statement (this “Proxy Statement”) is being furnished to holders of common stock, $0.001 par value per share, of Co-Diagnostics, Inc. (“Co-Diagnostics,” “the Company,” “we,” “our,” and “us”) of record as of the close of business on October 22, 2020July 5, 2022 (the “Record Date”) in connection with the solicitation of proxies by the Board of Directors of the Company (the “Board of Directors” or the “Board”) to be used at the 20202022 Annual Meeting of Stockholders (the “Annual Meeting”) to be held on December 16, 2020August 31, 2022 at 10:00 A.M. (Mountain Standard Time) on a virtual basis andor at any postponement or adjournment thereof. The Annual Meeting will be a completely “virtual meeting” of stockholders. You are invited to attend the Annual Meeting to vote on the proposals described in this Proxy Statement. However, you do not need to attend the meetingAnnual Meeting to vote your shares. Instead, you may simply complete, sign and return the enclosed proxy card if you received paper copies of the proxy materials or follow the instructions below to submit your proxy over the Internet.
Pursuant to Utah Code § 16-10a-720, the Company will make a stockholders’ list available for inspection upon request at the Company’s principal office at 2401 S. Foothill Drive, Suite D, Salt Lake City, Utah 84109, Attn: Reed L. Benson,Brian Brown, by any stockholder as of the Record Date or such stockholder’s agent or attorney, beginning November 5, 2020July 22, 2022, (two business days after this Proxy Statement is given) continuing through the Annual Meeting and any meeting adjournments thereof.
Our Board is asking you to vote your shares by completing, signing and returning the accompanying proxy card. If you attend the Annual Meeting in person, you may vote at the Annual Meeting even if you have previously returned a proxy card. Please note, however, that if your shares are held of record by a broker, bank or other nominee and you wish to vote at the Annual Meeting, you must obtain a proxy issued in your name from that record holder as described in more detail below.
Please read this Proxy Statement carefully then vote your shares promptly by telephone, by Internet or by signing, dating and returning your proxy card.
QUESTIONS AND ANSWERS ABOUT
THE PROXY MATERIALS AND THE ANNUAL MEETING
What is the purpose of the Annual Meeting?
At theThe Annual Meeting stockholders will act uponis being held for the purposes of obtaining stockholder approval for the following proposals described in this Proxy Statement.(the “Proposals”):
| 1. | To elect the two (2) Class I director nominees, each of whom are currently serving on our board of directors, each to serve until the 2025 annual meeting of stockholders or until their successors are duly elected and qualified, or until his or her earlier death, resignation, or removal; | |
| 2. | To approve an amendment to the Co-Diagnostics, Inc. 2015 Long Term Incentive Plan, as amended and restated (the “Plan”), increasing the number of common shares authorized for awards under the Plan by 6,000,000. | |
3. | To approve, on an advisory basis, the compensation of the Company’s named executive officers; | |
| 4. | To ratify the appointment of Haynie & Company as our independent registered public accounting firm for the fiscal year ending December 31, 2022; and | |
| 5. | To transact such other business as may properly come before the meeting or any adjournment thereof. |
Who is entitled to vote?
Only our stockholders of record at the close of business on the record date for the meeting, October 22, 2020,July 5, 2022, are entitled to vote at the Annual Meeting. As of the close of business on October 22, 2020,July 5, 2022, we had 28,269,20133,780,992 shares of common stock issued and outstanding.
How many votes do I have?
Each share of our common stock that the stockholder owns as of October 22, 2020July 5, 2022 entitles the stockholder to one vote.vote on each director nominee listed in Proposal 1, Proposal 2 , Proposal 3, Proposal 4, and any other matter that might properly come before the Annual Meeting or any adjournment thereof.
Can I access the proxy materials electronically?
Yes. This Proxy Statement and the accompanying Annual Report are available online at www.proxyvote.com, the Company’s website https://codiagnostics.com/investors and on the SEC’s website at www.sec.gov.
How can I attend the Annual Meeting?
We will be hosting the Annual Meeting live via the internet. There will not be a physical location for the Annual Meeting.
Our Annual Meeting allows stockholders to submit questions and comments before and during the meeting. After the meeting, we will spend up to 15 minutes answering stockholder questions. To the extent time doesn’t allow us to answer all of the submitted questions, we will answer them in writing on our investor relations portion of our website, at https://codiagnostics.com/investors/, soon after the meeting. If we receive substantially similar questions, we will group such questions together and provide a single response to avoid repetition.
Our virtual format allows stockholders from around the world to vote, participate and ask questions and for us to give thoughtful responses.
Any stockholder can listen to and participate in the Annual Meeting live via the internet at www.virtualshareholdermeeting.com/CODX2020CODX2022. Stockholders may begin submitting written questions through the internet portal at 9:45 A.M. (Mountain Standard Time) on December 16, 2020,August 31, 20221, and the webcast of the Annual Meeting will begin at 10:00 A.M. (Mountain Standard Time) that day.
Stockholders may also vote while connected to the Annual Meeting on the internet. You will need the 16-digit control number included on your voting instruction form or your proxy card (if you received a printed copy of the proxy materials) in order to be able to vote your shares or submit questions.
Instructions on how to connect and participate via the internet, including how to demonstrate proof of stock ownership, are posted at www.virtualshareholdermeeting.com/CODX2020CODX2022.
We will have technicians ready to assist you with any technical difficulties you may have accessing the virtual meeting. If you encounter any difficulties accessing the virtual meeting during the check-in or meeting time, please call the technical support number that will be posted on the virtual stockholder meeting login page.
If you do not have your control number, you will be able to listen to the meeting only — you will not be able to vote or submit questions.vote.
What is the difference between a stockholder of record and a beneficial owner of shares held in street name?
Stockholder of Record. If your shares are registered directly in your name with our transfer agent, VStock Transfer, you are considered the stockholder of record with respect to those shares, and we sent a Notice of Annual Meeting and a printed set of the proxy materials, together with a proxy card, directly to you.
Beneficial Owner of Shares Held in Street Name. If your shares are held in an account at a broker, bank or other nominee, then you are the beneficial owner of those shares held in “street name,” and a Notice of Annual Meeting and a printed set of the proxy materials, together with a voting instruction form, was forwarded to you by your broker, bank or other nominee who is considered the stockholder of record with respect to those shares. As a beneficial owner, you have the right to instruct your broker, bank or other nominee on how to vote the shares held in your account by following the instructions in the Notice of Annual Meeting and the voting instruction form you received.
How can I vote my shares?
The process for voting your shares depends on how your shares are held. Generally, as discussed above, you may hold shares as a “record holder” (that is, in your own name) or in “street name” (that is, through a nominee, such as a broker or bank). As explained above, if you hold shares in “street name,” you are considered to be the “beneficial owner” of those shares.
Voting by Record Holders. If you are a record holder, you may vote by proxy prior to the Annual Meeting or you may vote during the Annual Meeting in person. If you are a record holder and would like to vote your shares by proxy prior to the Annual Meeting, you have four ways to vote:
| 1. | By phone: 1-800-690-6903; |
| 2. | Website: www.proxyvote.com; |
| 3. | Vote by Mail: Mark, sign and date your proxy card and return it in the postage-paid envelope we have provided or return it to Vote Processing, c/o Broadridge Financial Solutions, Inc., 51 Mercedes Way, Edgewood, NY 11717; or |
| 4. | Virtual |
Please note that Internet proxy voting will close at 11:59 P.M. (Eastern Standard Time) on December 15, 2020.August 30, 2022. If you received a proxy card in the mail and wish to vote by completing and returning the proxy card via mail, please note that your completed proxy card must be received before the polls close for voting at the Annual Meeting.
Voting by beneficial owners of shares held in “street name.” If your shares are held in the name of a bank, broker or other holder of record (also known as “street name”), you have the right to direct your bank, broker or other nominee on how to vote your shares by using the voting instruction form provided to you by them, or by following their instructions for voting through the internet or by telephone. In order for your shares to be voted on all matters presented at the meeting, we urge all stockholders whose shares are held in street name by a bank, brokerage firm or other nominee to provide voting instructions to such record holder.
How are proxies voted?
All shares represented by valid proxies received prior to the Annual Meeting will be voted, and where a stockholder specifies by means of the proxy a choice with respect to any matter to be acted upon, the shares will be voted in accordance with the stockholder’s instructions.
What happens if I do not give specific voting instructions?
Stockholders of Record. If you are a stockholder of record and you sign and return a proxy card without giving specific voting instructions or you indicate when voting in person, on the Internet, by fax or by e-mail that you wish to vote as recommended by the Board, then the proxy holders will vote your shares in the manner recommended by the Board on all matters presented in this Proxy Statement and as the proxy holders may determine in their discretion with respect to any other matters properly presented for a vote at the Annual Meeting.
Beneficial Owners of Shares Held in Street Name. If you are a beneficial owner of shares held in street name and do not join and vote at the Annual Meeting or provide the broker, bank or other nominee that holds your shares with specific voting instructions, then the broker, bank or other nominee that holds your shares may generally vote on routine matters but cannot vote on non-routine matters. If the broker, bank or other nominee that holds your shares does not receive instructions from you on how to vote your shares on a non-routine matter, the broker, bank or other nominee that holds your shares will inform the inspector of election that it does not have the authority to vote on this matter with respect to your shares. This is generally referred to as a “broker non-vote.”
Is my vote confidential?
Proxy instructions, ballots and voting tabulations that identify individual stockholders are handled in a manner that protects your voting privacy. Your vote will not be disclosed either within Co-Diagnostics or to third parties, except: (1) as necessary to meet applicable legal requirements; (2) to allow for the tabulation of votes and certification of the vote; and (3) to facilitate a successful proxy solicitation. Occasionally, stockholders provide written comments on their proxy card, which are then forwarded to our management.
Which ballot measures are considered ‘‘routine’’ or ‘‘non-routine’’?
The ratification of the appointment of Haynie & Company as our independent registered public accounting firm for the fiscal year ending December 31, 20202022 (Proposal No. 2)4) is considered a “routine” matter. Your broker, therefore, may vote your shares in its discretion if you do not provide instructions on how to vote on this routine matter, and no broker non-votes are expected in connection with this proposal.
The approval of the election of directors (ProposalProposal No. 1) is1, Proposal No. 2, Proposal No. 3 and Proposal No. 5 are considered “non-routine” matter.matters. Accordingly, a broker may not vote on these proposals without instructions from its customer and broker non-votes may occur with respect to these proposals.
Can I change my vote or revoke my proxy after I return my proxy card or vote online?
Any proxy may be revoked at any time before it is exercised by filing an instrument revoking it with the Company’s Secretary or by submitting a duly executed proxy bearing a later date prior to the time of the Annual Meeting. Stockholders who have voted by proxy over the Internet, by fax or by e-mail or have executed and returned a proxy and who then attend the Annual Meeting and desire to vote in person are requested to notify the Secretary in writing prior to the time of the Annual Meeting. We request that all such written notices of revocation to the Company be addressed to the Secretary of the Company prior to the Annual Meeting at 2401 S. Foothill Drive, Suite D, Salt Lake City, Utah 84109. Stockholders may also revoke their proxy by entering a new vote over the Internet, by fax, or by e-mail.
What constitutes a quorum?
The presence at the Annual Meeting, virtually or by proxy, of the holders of a majoritythirty-three and one-third percent (33⅓%) of the outstanding shares of stock entitled to vote at the Annual Meeting will constitute a quorum at the Annual Meeting for the transaction of any business. If a quorum is established, each stockholder entitled to vote at the Annual Meeting will be entitled to one vote, virtually or by proxy, for each share of stock entitled to vote held by such stockholder as of the close of business on the Record Date.
Broker non-votes occur when shares held by a broker for a beneficial owner are not voted either because (i) the broker did not receive voting instructions from the beneficial owner or (ii) the broker lacked discretionary authority to vote the shares. Abstentions occur when shares present at the Annual Meeting are marked “abstain.” A broker is entitled to vote shares held for a beneficial owner on “routine” matters, such as the ratification of Haynie & Company as our independent registered public accounting firm for 2020,2022, without instructions from the beneficial owner of those shares. On the other hand, absent instructions from the beneficial owner of such shares, a broker is not entitled to vote shares held for a beneficial owner on “non-routine” matters. All the other proposals presented at the Annual Meeting are non-routine matters. Broker non-votes and abstentions are counted for purposes of determining whether a quorum is present but have no effect on the outcome of the matters voted upon except where brokers can exercise discretion on “routine” matters. Accordingly, we encourage you to provide voting instructions to your broker, whether or not you plan to attend the Annual Meeting.
What are the Board of Directors’ recommendations?
The recommendations of the Board of Directors are set forth under the description of each proposal in this Proxy Statement. In summary, the Board of Directors recommends that you vote:
| ● | “FOR” election of the directors named in this Proxy Statement as described in Proposal No. 1; | |
| ● | “FOR” an amendment to the Co-Diagnostics, Inc. 2015 Long Term Incentive Plan, as amended and restated (the “Plan”), increasing the number of common shares authorized for awards under the Plan by 6,000,000 as described in Proposal No. 2; | |
| ● | “FOR” approval of the resolution regarding compensation of our named executive officers in Proposal No. 3; |
| ● | “FOR” the ratification of the appointment of Haynie & Company as our independent registered public accounting firm for the fiscal year ending December 31, | |
| ● | “FOR” transacting such other business as may properly come before the meeting or any adjournment thereof. |
What vote is required to approve each proposal?
AllOther than Proposal 1, all proposals require the affirmative vote of a majority of votes cast. Proposal No. 1 requires a plurality of votes present. You may vote for, against or abstain from voting for the proposals.
Will abstentions and broker non-votes have an impact on the proposals contained in this Proxy Statement?
Abstentions and broker non-votes will be counted to determine whether there is a quorum present at the Annual Meeting but will not be considered votes cast for voting purposes and thus will have no effect on any of the proposals to be presented at the Annual Meeting.
Where can I find the voting results of the Annual Meeting?
We intend to announce preliminary voting results at the Annual Meeting and disclose final results in a Current Report on Form 8-K filed with the U.S. Securities and Exchange Commission (the “SEC” or the “Commission”) within four business days after the Annual Meeting.
Who pays the cost for soliciting proxies by the Board of Directors?
We will bear the cost of soliciting proxies, including the cost of preparing, printing and mailing the materials in connection with the solicitation of proxies. We will reimburse brokerage firms and other custodians, nominees and fiduciaries for reasonable expenses incurred by them in sending the proxy materials to the beneficial owners of our common stock. In addition to solicitations by mail, our officers and regular employees may, without being additionally compensated, solicit proxies personally and by mail, telephone, facsimile or electronic communication.
Who is Co-Diagnostics?
Co-Diagnostics, Inc., a Utah corporation (the “Company” or “CDI”), is developing robust and innovative molecular tools for detection of infectious diseases, liquid biopsy for cancer screening, and agricultural applications. We have developed and we manufacture and sell reagents used for diagnostic tests that function via the detection and/or analysis of nucleic acid molecules (DNA or RNA). 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”).
Our diagnostics systems enable very rapid, low-cost, molecular testing for organisms and genetic diseases by automating historically complex procedures in both the development and administration of tests. CDI’s technical advance involves a novel approach to Polymerase Chain Reaction (“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.
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. Because we own our platform, we are confident we will be able to accomplish this faster and more economically, allowing for significant margins while still positioning Co-Diagnostics to be a low-cost provider of molecular diagnostics and screening services.
In addition, continued development has demonstrated the unique properties of our CoPrimer technology that make them ideally suited to 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 gen sequencing.
Our scientists use the complex mathematics of DNA/RNA test design, to “engineer” a DNA/RNA test and to automate algorithms that rapidly screen millions of possible options to pinpoint the optimum design. Dr. Satterfield, our Chief Technology Officer, developed the Company’s intellectual property consisting of the predictive mathematical algorithms and proprietary reagents used in the testing process, which together represent a major advance in PCR testing systems. CDI technologies are now protected by seven 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 enables the sale of diagnostic tests at a lower price than competitors, while enabling us to maintain profit margins.
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.
We designed our tests by identifying the optimal locations on the target gene for amplification and paired the location 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, the data resulting from our tests verify that we succeeded in designing what we intended at the outset. Verification is a series of testing that concludes that the product is ready to proceed to validation in an evaluation either in our lab or in an independent laboratory setting using initial production tests to confirm that the product as designed meets the user needs.
Using its proprietary test design system and proprietary reagents, CDI has designed and obtained regulatory approval in the European Community and in India to sell PCR diagnostic tests for COVID-19, tuberculosis, hepatitis B and C, human papilloma virus, malaria, chikungunya, dengue, and the zika virus. In the United States, CDI has obtained Emergency Use Authorization (“EUA”) for its COVID-19 test from the U.S. Food and Drug Administration (FDA) and sells that test to qualified labs.
In addition to testing for infectious disease, the technology lends itself to identifying any section of a DNA or RNA strand that describe any type of genetic trait, which creates a number of significant applications. We, in conjunctions 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 spraying mosquito populations on the specific areas known to be breeding the mosquitos that carry deadly viruses.
Recent Developments
On January 23, 2020, we announced the completion of the principle design work for a PCR screening test for new coronavirus, COVID-19, intended to address potential need for detection of the virus. An outbreak of respiratory illness caused by the pneumonia-like COVID-19 has spread rapidly throughout the world since first being discovered in the Chinese city of Wuhan on December 31, 2019. China confirmed human-to-human transmission of the virus and the United States announced the first infection in this country, detected in a traveler returning from Wuhan. Our COVID-19 test features the Company’s patented CoPrimer™ technology, and was designed using our proprietary software system, following the guidelines published by the World Health Organization (WHO) and the Centers for Disease Control and Prevention (CDC).
On February 20, 2020, we announced that our Logix Smart™ COVID-19 Test technical file had been submitted for registration with the European Community, and that it was expected to be available late February as an in vitro diagnostic (“IVD”) for markets that accept a CE marking as valid regulatory approval. Subsequently, on February 24, 2020, we announced that our test obtained regulatory clearance to be sold as an in vitro diagnostic for the diagnosis of SARS-CoV-2 (COVID-19) in markets that accept CE-marking as valid regulatory approval, and became available for purchase from the Company’s Utah-based ISO-13485:2016 certified facility. The Declaration of Conformity for the Logix Smart COVID-19 test confirms that it meets the Essential Requirements of the European Community’s In-Vitro Diagnostic Medical Device Directive (IVDD 98/79/EC), permitting export and sales of the product as an IVD to commence immediately in the European Community. We shipped samples of the Research Use Only version of our test to distributors in various countries, which allowed future customers to confirm the quality and sensitivity of the product, and for us to accelerate the sales efforts of the COVID-19 test.
We commenced sales of the COVID-19 tests in February and March of 2020 to international customers and sold the tests in numerous countries around the world through an expanding distributor network.
On April 6, 2020, we announced that we had received an Emergency Use Authorization from the FDA allowing us to commence sales of our Logix Smart COVID-19 test to CLIA designated labs throughout the United States and we have been actively marketing to such labs since that time.
PROPOSAL NO. 1 – ELECTION OF DIRECTORS
The numberWe have a classified Board currently consisting of five members, all but one of whom are non-employee directors, that serve on the Board ofdivided into three classes (Class I, Class II and Class II). Directors is currently set at five (5) and may be fixed from time to time by the Board in the manner provided in our bylaws. In accordance with our bylaws, directorseach class are elected to serve untilfor three-year staggered terms that expire in successive years. Our Class I directors are up for election this year. Accordingly, we are holding an election for our Class I directors at the nextAnnual Meeting, with each Class I director elected to serve a three-year term.
The Board has nominated Edward L. Murphy and Richard S. Serbin, for election as a Class I directors, for a three-year term expiring at the annual meeting of stockholders to be held in 2025 or until their successors are duly elected and qualified, or until their earlier removal,death, resignation or death.removal. If a nominee declines to serve or becomes unavailable for any reason, or if any additional vacancy occurs before the election (although we know of no reason to anticipate that this will occur), the proxies may be voted for such substitute nominee as the Board may designate. Each nominee has consented to being named in the Proxy Statement and has agreed to serve if elected.
Director NomineesIf a quorum is present, the nominees for Class I directors receiving the highest number of votes will be elected as Class I directors. Abstentions and broker non-votes will be counted as shares present for the purpose of determining the presence of a quorum but will have no effect on the results of the vote. Biographical information, including the principal occupation of and other directorships held by each of the nominees for at least the past five years as well as the specific experience, qualifications, attributes and skills that led to the conclusion that they should serve as a member of the Board is provided elsewhere in this proxy statement in the section entitled “DIRECTORS AND OFFICERS” with respect to Class I nominees, as well as the Class II and Class III directors whose terms of office will continue after the Annual Meeting.
| Name | Age | Director Since | Principal Occupation | |||
| Dwight H. Egan | 66 | 2013* | Chief Executive Officer and Chairman of the Board | |||
| Eugene Durenard, PhD | 51 | 2019 | Director | |||
| Edward L. Murphy | 55 | 2019 | Director | |||
| Richard S. Serbin | 76 | 2017 | Director | |||
| James B. Nelson | 67 | 2019 | Director |
|
Vote Required
Pursuant to our bylaws, directors are elected by a plurality of the votes present at a meeting at which a quorum is present. The fivetwo nominees receiving the greatest number of votes will be elected.
Unless contrary instructions are given, shares represented by proxies solicited by the Board of Directors will be voted for the election of each of the nominees to the Board of Directors. If the person named as nominee should be unable or unwilling to stand for election at the time of the Annual Meeting, proxies will be voted for a replacement nominee designated by the Board of Directors or, in the event no such designation is made, proxies will be voted for a lesser number of nominees. At this time, the Board knows of no reason why the nominees listed above may not be able to serve as a director if elected. Ages of the nominees are reflected as of November 3, 2020.the mailing date of this proxy statement. Proxies cannot be voted for a greater number of persons than the nominees named herein.
BOARD RECOMMENDATION
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS
VOTE “FOR” EACH OF THE FOREGOING NOMINEES.
PROXIES SOLICITED BY THE BOARD OF DIRECTORS WILL BE VOTED
“FOR” EACH OF THE FOREGOING NOMINEES UNLESS STOCKHOLDERS SPECIFY A CONTRARY VOTE.
INFORMATION REGARDING THE BOARDDIRECTORS AND ITS COMMITTEESOFFICERS
SetThe following table sets forth belowthe names, ages and positions of our executive officers and directors.
| Name | Age | Position | ||
| Dwight Egan | 68 | Chief Executive Officer, President and Chairman of the Board | ||
| Brian Brown | 46 | Chief Financial Officer and Secretary | ||
| Eugene Durenard | 52 | Director | ||
| James Nelson | 69 | Director | ||
| Richard Serbin | 77 | Director | ||
| Ted Murphy | 57 | Director |
Our Board is biographicaldivided into three classes (Class I, Class II and Class III) with staggered three-year terms. Directors in each class are elected to serve for three-year staggered terms that expire in successive years. Officers serve at the discretion of our Board. The following is information foron the business experience of each director nominee listed above, includingexecutive officer now serving and a brief listingdiscussion of principal occupations for at least the past five years and other major affiliations. The following descriptions also outline the specific experience, qualifications, attributes and skills that qualify each personled to serve on the Board of Directors.
Directors’ conclusion that each one is qualified to serve.
Dwight H. Egan has been an officer and director since April 2013. Mr. Egan has been engaged in private investment business from February 1999 to
Class I Directors— up for election at the present. He was2022 Annual Meeting of Stockholders with a senior executiveterm expiring at Data Broadcasting Corporation, a leading providerthe 2025 annual meeting of wireless, real-time financial market data, news and sophisticated fixed-income portfolio analytics to 27,000 individual and professional investors from 1995 to 1999. He co-founded and served as CEO and Chairman of the board of Broadcast International, Inc. from 1984 to 1995, when Data Broadcasting Corporation acquired Broadcast International and created CBS MarketWatchstockholder if re-elected., a leading financial news site and participated in its initial public offering. We believe Mr. Egan’s prior experience in directing a public company and working with capital markets gives him valuable experience in advising the Board of Directors on matters of finance and operations.
Eugene Durenard, PhD, who joined our Board of Directors in June 2019, is the Founder and CEO of Hyperbolic Holdings, a Swiss-based holding, management consulting and strategy advisory company specialized in healthcare. Eugene has an investment and entrepreneurial experience spanning 20 years. For the last 7 years he has been working with family offices on direct investments and philanthropy focused on life sciences. He serves on the advisory board of several private companies in the biotech and MedTech sectors as well as an impact venture fund focused on healthcare. After an initial career in proprietary research and trading at Salomon Brothers and Credit Suisse in London, he co-founded Orion Investment Management in Bermuda specializing in quantitative asset and liability management for institutions and private clients. He subsequently sold it to Capital G Bank and co-headed their asset management. Eugene spent several years establishing personal connections with representatives of 40+ clusters of life science innovation, families operating healthcare businesses and industry leaders globally. He regularly visits labs and incubators, meets with leading scientists and innovators in order to keep abreast of current trends and developments. His advice is based on a thorough analysis that combines in-depth knowledge of science, competitive forces and financial expertise. He has published several articles in asset-liability management industry magazines as well as the book “Professional Automated Trading — Theory and Practice” (Wiley 2013). He has a PhD in Mathematics from Harvard University.
Edward L. Murphy, who joined has been a member of our Board of Directors insince June 2019,2019. Mr. Murphy currently serves as a Senior Vice Presidentsenior vice president and a partner of Dover Investments Ltd., a private investment firm. Throughout his career, Mr. Murphy’s duties have included investment analysis of various types of investment projects in real estate and financial services. Currently, Mr. Murphy serves on the board of directors of several Canadian publicly reporting companies that have interests in various industries. He has been a Director at Empire Minerals Corporation Inc. since January 2016, at Digicrypts Blockchain Solutions Inc. since June 2011, at Lakefield Marketing Corporation since February 2018, CEO/CFO and Director of Credo Resources Inc. since September 2019, and at the Mosport Park Entertainment Corporation since April 30, 1997. He served as a Director at Aurquest Resources from May 2003 to December 2017. We believe Mr. Murphy’s experience in the capital markets outside the United States and his involvement in investment analysis shall beis a benefit to the Board of Directors.
Richard S. Serbin, who joinedhas been a member of our Board of Directors insince May 2017,2017. Mr. Serbin currently serves as a consultant to many companies in the healthcare industry. He was the President of Corporate Development and In-House Legal Counsel at Life Science Institute, LLC, from June 1, 2013 to July 15, 2014. Mr. Serbin is a global strategy advisor, pharmacist and entrepreneur with credentials both in pharmacy and law, complemented by more than 40 years of service as an FDA regulatory attorney and patent attorney in the healthcare industry. He was appointed to the Advisory Board of Cure Pharmaceutical in January 2017 and has been a Member of Advisory Board at Prime Access, Inc. since September 2015. Mr. Serbin has been a Director at Rapid Nutrition Plc since November 18, 2014. He served as Director at Viropro Inc. from May 2013 to June 2014. He was Head of Business Advisory Board at Mazal Plant Pharmaceuticals Inc. from October 2006 to September 2007 and also served as its Member of Business Advisory Board. He served as Chief Executive Officer of Optigenex Inc. from July 2002 to September 15, 2005 and a director from July 2004 to September 2005. From January 1999 until July 2002 Mr. Serbin served as a consultant to various pharmaceutical companies. He served as the President of Bradley Pharmaceuticals. He served as Vice President of Corporate Development at Ortho Pharmaceuticals, a Johnson & Johnson subsidiary, and practiced Patent and FDA law at Revlon Johnson & Johnson and Schering-Plough. He served as Patent Attorney for Schering Plough Corporation and Chief FDA Counsel for Revlon Corporation and Johnson and Johnson Corporation. Subsequently, he worked at Revlon Corporation, as its Chief Food, Drug and Cosmetic Counsel. He founded Radius Scientific Corporation. He was J&J’s Vice President of Corporate Development, and later led a successful public offering venture based on technology developed at Stanford Medical School. Mr. Serbin spent a large portion of his career focusing on international markets and clients. While at J&J, Mr. Serbin served on the Board of Directors of 16 US and international subsidiary companies, including Ethicon, Ortho, J&J Consumer Products, Pittman-Moore, Mc Neil, and J&J Development Corporation. He worked on multiple international acquisitions and strategic relationships, and sat on the Board of Directors of several of its international subsidiaries, including those in India, Hong Kong, Japan, Taiwan, Germany, and England. Mr. Serbin has a B.S. and a B. Pharmacy from Rutgers University and Rutgers University College of Pharmacy, a J.D. degree from Seton Hall Law School and a MastersMaster’s Degree in Trade Regulations and Law from NYU Law School. We believe Mr. Serbin’s experience in business, law and medicine and knowledge gained as an advisor to the healthcare industry will beis critical to our Board of Directors as it commercializes itswe continue to commercialize our products.
Class II Directors - continuing directors with a term expiring at the 2023 annual meeting of stockholders.
Dwight Egan serves as our President and Chief Executive Officer and has been an officer and director of the Company since April 2013. Mr. Egan has been engaged in private investment business from February 1999 to the present. He was a senior executive at Data Broadcasting Corporation, a leading provider of wireless, real-time financial market data, news and sophisticated fixed- income portfolio analytics to 27,000 individual and professional investors from 1995 to 1999. He co-founded and served as CEO and Chairman of the Board of Broadcast International, Inc. from 1984 to 1995, when Data Broadcasting Corporation acquired Broadcast International and created CBS MarketWatch, a leading financial news site and participated in its initial public offering. Mr. Egan’s prior experience in executive leadership positions with public companies and working with capital markets qualifies him to serve as our Chairman, President and Chief Executive Officer.
Eugene Durenard has been a member of our Board of Directors since June 2019. Dr. Durenard is the Founder and CEO of Hyperbolic Holdings, a Swiss-based holding, management consulting and strategy advisory company specialized in healthcare. Dr. Durenard brings an investment and entrepreneurial experience spanning 20 years. For the last 7 years he has been working with family offices on direct investments and philanthropy focused on life sciences. He serves on the advisory board of several private companies in the biotech and MedTech sectors as well as an impact venture fund focused on healthcare. After an initial career in proprietary research and trading at Salomon Brothers and Credit Suisse in London, he co-founded Orion Investment Management in Bermuda specializing in quantitative asset and liability management for institutions and private clients. He subsequently sold it to Capital G Bank and co-headed their asset management. Dr. Durenard spent several years establishing personal connections with representatives of 40+ clusters of life science innovation, families operating healthcare businesses and industry leaders globally. He regularly visits labs and incubators, meets with leading scientists and innovators in order to keep abreast of current trends and developments. His advice is based on a thorough analysis that combines in-depth knowledge of science, competitive forces and financial expertise. He has published several articles in asset-liability management industry magazines as well as the book “Professional Automated Trading — Theory and Practice” (Wiley 2013). He has a PhD in Mathematics from Harvard University. Dr. Durenard brings a thorough multi-asset class investment and entrepreneurial experience spanning 20 years to the Company’s Board of Directors.
Class III Directors - continuing directors with a term expiring at the 2024 annual meeting of stockholders.
James B. Nelsonhas been a member of our Board of Directors since June 2019. Mr. Nelson is the retired Chairman and CEO of Sunworks, Inc., a NASDAQ traded commercial, agriculture, and residential solar Integrator which he helped found in October 2010. Mr. Nelson currently serves as strategic advisor to three other publicly traded companies. Jim has spent most of his career working in private equity as a general partner with Peterson Partners and with Millennial Capital Partners. In addition to his investment and financial responsibilities, he served as CEO of two of his firms’ portfolio companies. Prior to his years in private equity, Mr. Nelson served as Vice President of Marketing at Banana Republic, where he managed company-wide marketing, as well as the company’s international expansion initiative. He was also general manager for Banana Republic’s catalog division. He was Vice President of Marketing and Corporate Development at Saga Corporation, a multi-billion-dollar food service company. Jim began his executive career over 35 years ago at Bain and Company, a business strategy consulting firm, where he managed teams of consultants on four continents. Mr. Nelson received his MBA from Brigham Young University, where he graduated summa cum laude and was named the Outstanding Master of Business Administration Graduate. We believe Mr. Nelson’s advice to the Board of Directors from his experiences as a chief executive officer and strategic advisor shall beis useful to the Board of Directors.
Our directors generally serve until the next annual or special meeting of stockholders held for the purpose of electing directors. Our officers generally serve at the discretionThe following is a brief summary of the Boardbackground of Directors. Mr.each of our executive officers.
Dwight Egan is an employee of the Company and serves as our President and Chief Executive Officer.
Director Independence
After reviewing all relevant relationshipsOfficer and considering NASDAQ’s requirements for independence,has been an officer and director of the Company since April 2013. Mr. Egan has been engaged in private investment business from February 1999 to the present. He was a senior executive at Data Broadcasting Corporation, a leading provider of wireless, real-time financial market data, news and sophisticated fixed- income portfolio analytics to 27,000 individual and professional investors from 1995 to 1999. He co-founded and served as CEO and Chairman of the Board of Directors concluded that Messrs. Durenard, Murphy, NelsonBroadcast International, Inc. from 1984 to 1995, when Data Broadcasting Corporation acquired Broadcast International and Serbin are independentcreated CBS MarketWatch, a leading financial news site and participated in its initial public offering. Mr. Egan’s prior experience in executive leadership positions with public companies and working with capital markets qualifies him to serve as our Chairman, President and Chief Executive Officer.
Brian Brown became our Chief Financial Officer in February 2021. From July 2020 until February 2021, Mr. Brown served as the Chief Financial Officer of A-Core Concrete Cutting, Inc. where his duties included overseeing the company’s accounting and finance departments, mergers and acquisitions and responsibility for financial forecasting and budgeting. From August 2019 to December 2019, Mr. Brown served as the Vice President of Accounting, Treasury and Investor Relations at Sportsman’s Warehouse Holdings, Inc., a public company reporting on Nasdaq Global Select under the symbol SPWH, where his duties included overseeing the company’s accounting, treasury and investor relations departments, preparing the company’s annual, quarterly and current reports with the SEC, rules adopted pursuantoverseeing all aspects of the company’s annual audit, including, but not limited to, the requirementspreparation and review of audit support schedules, preparation of financial statements and footnotes, and providing support to the Sarbanes-Oxley Actcompany’s independent auditors. From October 2009 to August 2019, Mr. Brown served as the Director of 2002 (the “Sarbanes-Oxley Act”)Finance of Sportsman’s Warehouse Holdings, Inc. where he assisted with the company’s initial public offering in April 2014 as well as effecting private and secondary public offerings, acquisitions of a group of retail stores and preparing the company’s periodic and current reports with the SEC and complying with the Sarbanes Oxley Act. From May 2005 to October 2009, Mr. Brown served as the Corporate Controller of Franklin Covey Products where he developed and maintained the company’s internal controls over financial reporting structure in accordance with Rule 5605(a)(2)the control standards required under Section 404 of the Marketplace RulesSarbanes Oxley Act. From July 2001 to May 2005, Mr. Brown served as an Assurance Senior at KPMG, LLP where he provided audit services to various clients in multiple industries. Mr. Brown holds a Bachelor of Arts in Accounting and Masters of Professional Accountancy from the NASDAQ. No director or executive officerUniversity of the CompanyUtah. Mr. Brown is related to any other director or executive officer of the Company by blood, marriage or adoption. In making its independence determination, the Board of Directors considered all relevant transactions, relationships, or arrangements, including those discloseda licensed CPA in this Proxy Statement under the section titled “Transactions with Certain Related Persons.”Utah.
Involvement in Certain Legal Proceedings
To the best of our knowledge, none of our directors or executive officers have, during the past ten years,has been involved in any legalbankruptcy or criminal proceedings described in subparagraph (f)(other than traffic and other minor offenses) or been subject to any of the items set forth under Item 401401(f) of Regulation S-K.S-K, nor have there been any judgments or injunctions brought against any of our directors or executive officers during the last ten years that we consider material to the evaluation of the ability and integrity of any director or executive officer.
Board and Committee Matters
Our Board of Directors has five members. The Chairman of the Board and our Chief Executive Officer, Dwight Egan, is a member of the Board and is a full-time employee of the Company, Eugene Durenard, Edward Murphy, James Nelson and Richard Serbin are non-employee directors, and the Board has determined that these persons (who constitute a majority of the Board) are “independent directors” under the criteria set forth in Rule 5605(a)(2) of the Nasdaq Listing Rules. The Board met seven times during the year ended December 31, 2021. All directors attended more than seventy-five percent (75%) of the meetings of the Board and committee meetings of which such director was a member held during 2021.
We maintain an audit committee of the Board of Directors,board, a compensation committee of the Board of Directors andboard, a corporate governance committee of the board, and a nominating committee of the Board of Directors,board, each of which is discussed below. We have notOur board has determined that Messrs. Durenard, Nelson, Murphy and Serbin are “independent” under the definition of independence in the Marketplace Rules of the NASDAQ listing requirements. Our Board of Directors may from time to time establish other standing committees. In addition, from time to time, special committees may be established under the direction of our Board of Directors when necessary to address specific issues.
The following table sets forth a description of the three permanent Board committees and the chairpersons and members of those committees, all of whom are independent directors:
| Committee | Independent Chairperson | Independent Members | ||||||
| Audit Committee | Eugene Durenard | Edward Murphy | James Nelson | Richard S. Serbin | ||||
| Compensation Committee | Richard S. Serbin | Edward Murphy | Eugene Durenard | James Nelson | ||||
| Governance Committee | James Nelson | Edward Murphy | Eugene Durenard | Richard S. Serbin | ||||
| Nominating Committee | Edward Murphy | James Nelson | Eugene Durenard | Richard S. Serbin | ||||
Audit Committee and Financial Expert
Our Audit Committee currently is comprised of Messrs. Durenard, Nelson, Murphy and Serbin with Mr. Durenard serving as chairperson of the audit committee. The functions of the Audit Committee include engaging an independent registered public accounting firm to audit our annual financial statements, reviewing the independence of our auditors, the financial statements and the auditors’ report, and reviewing management’s administration of our system of internal control over financial reporting and disclosure controls and procedures. The Board of Directors has adopted a written audit committee charter. A current copy of the Audit Committee charter is available to security holders on our website at www.codiagnostics.com. Our board has determined that all of our directors that are serving on the Audit Committee are “independent” under the definition of independence in the Marketplace Rules of the NASDAQ listing standards. The Audit Committee met four times during the year ended December 31, 2021. All committee members attended more than seventy-five percent (75%) of the meetings of the Audit Committee held during 2021.
Our Board of Directors has determined that Mr. Durenard meets the requirements of an “audit committee financial expert” as defined in applicable SEC regulations.
Compensation Committee
Our Compensation Committee currently includes Messrs. Serbin, Nelson, Murphy and Durenard with Mr. Serbin serving as chairperson of the compensation committee. The functions of the Compensation Committee include reviewing and approving corporate goals relevant to compensation for executive officers, evaluating the effectiveness of our compensation practices, evaluating and approving the compensation of our chief executive officer and other executives, recommending compensation for board members, and reviewing and making recommendations regarding incentive compensation and other employee benefit plans. The Board of Directors has adopted a written compensation committee charter. A current copy of the Compensation Committee charter is available to shareholders on our website at www.codiagnostics.com. Our board has determined that all of our directors serving on the Compensation Committee are “independent” under the definition of independence in the Marketplace Rules of the NASDAQ listing standards. The Compensation Committee met four times during the year ended December 31, 2021. All committee members attended more than seventy-five percent (75%) of the meetings of the Compensation Committee held during 2021.
Corporate Governance Committee
Our Corporate Governance Committee currently includes Messrs. Nelson, Murphy, Durenard and Serbin with Mr. Nelson serving as chairperson of the Corporate Governance Committee. Among other items, the committee is tasked by the Board of Directors to: develop and recommend to the Board the Corporate Governance Guidelines of the Company and oversee compliance therewith and evaluate and provide successor planning for the Chief Executive Officer and other executive officers. A current copy of the Corporate Governance committee charter is available to shareholders on our website at www.codiagnostics.com. Our board has determined all directors serving on the Corporate Governance committee are “independent” under the definition of independence in the Marketplace Rules of the NASDAQ listing standards. The Corporate Governance met four times during the year ended December 31, 2021. All committee members attended more than seventy-five percent (75%) of the meetings of the Corporate Governance Committee held during 2021.
Nominating Committee
The nominating committee reviews the qualifications for candidates for the Board of Directors and assists in identifying, interviewing, and recruiting candidates for the Board of Directors.
OutsideOur Nominating Committee was split from the Corporate Governance Committee in 2022 and currently includes Messrs. Nelson, Murphy, Durenard and Serbin with Mr. Murphy serving as chairperson of the process providedNominating Committee. The Nominating Committee has been established by Rule 14a-8the Board, among other things to: assist the Board in effecting Board organization, membership and function including identifying qualified Board nominees; assist the Board in effecting the organization, membership and function of Board committees including the composition of Board committees and recommending qualified candidates therefor; evaluate and provide successor planning for the Chief Executive Officer and other executive officers; and develop criteria for Board membership, such as independence, term limits, age limits and ability of former employees to serve on the Board and the evaluation of candidates’ qualifications for nominations to the Board and its committees as well as removal therefrom. The Nominating Committee was formed as a separate committee in 2022 and therefore held no meetings in 2021. All Nominating Committee meetings were held as part of the Exchange Act,Corporate Governance Committee meetings in 2021.
Board Nominations
In considering Board candidates, the Board seeks individuals of proven judgment and competence who have strong reputations in their respective fields. Although we do not have a formal diversity policy, concerning stockholderthe Board considers such factors as experience, education, employment history, special talents or personal attributes, anticipated participation in Board activities, and geographic and diversity factors. The process for identifying and evaluating nominees would include detailed consideration of the recommendations and opinions of members of our Board, our executive officers, and our stockholders. There would be no difference in the process of evaluation of candidates for board of director membershiprecommended by a stockholder and our bylaws do not provide for stockholders to submit proposals or director nominees for consideration at our annual meetings.those recommended by other sources.
Our Board views that such a formal policy is not necessaryAmended and Restated Bylaws (the “Bylaws”) set forth procedures for shareholders to recommend nominees to the Company’s Board. Nominations of persons for election to the board of directors to be considered by the stockholders may be made at an annual meeting of stockholders (i) pursuant to the Company’s notice of meeting, (ii) by or at the presentdirection of the board of directors, or (iii) by any stockholder of the Company who (A) was a stockholder of record at the time of giving of the notice, (B) is entitled to vote with respect to such matter at the meeting, and (C) complies with the notice procedures set forth in the Bylaws.
The following is a summary of key provisions from our Bylaws. For nominations to be properly brought before an annual meeting by a stockholder, the stockholder making such nominations must have given the Board of Directors willingness to consider candidates recommended by stockholders. Stockholders may recommend candidates bytimely notice in writing to our Secretarythe secretary of the Company. To be timely, a stockholder’s notice shall be delivered to the secretary at ourthe principal offices: 2401 S. Foothill Drive, Suite D, Salt Lake City, Utah 84109,executive offices of the Company not later than the close of business on the 75th day nor earlier than the close of business on the 125th day prior to the first anniversary of the preceding year’s annual meeting; provided, however, that in the event that the date of the annual meeting is more than 30 days before or more than 60 days after such anniversary date, notice by the stockholder to be timely must be so delivered not later than the close of business on the later of (x) the 75th day prior to the scheduled date of such annual meeting or (y) the 15th day following the day on which public announcement of the date of such meeting is first made by the Company. To be in proper form, a stockholder’s notice to the secretary must: set forth, as to the stockholder giving the candidate’snotice and the beneficial owner, if any, on whose behalf the nomination or proposal is made (A) the name contactand address of such stockholder, as they appear on the Company’s books, and of such beneficial owner, if any, (B) the class or series and number of shares of the Company that are, directly or indirectly, owned beneficially and of record by such stockholder and such beneficial owner, if any, as of the date of such notice, and (C) any other information biographical datarelating to such stockholder and qualificationsbeneficial owner, if any, that would be required to be disclosed in a proxy statement or other filings required to be made in connection with solicitations of proxies for, as applicable, the proposal and/or for the election of directors in a contested election pursuant to Section 14 of the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder (the “Exchange Act”).
The notice shall set forth, as to each person, if any, whom the stockholder proposes to nominate for election or reelection as a director (A) all information relating to such person that would be required to be disclosed in a proxy statement or other filings required to be made in connection with solicitations of proxies for election of directors in a contested election pursuant to Section 14 of the Exchange Act (including such person’s written consent to being named in the proxy statement as a nominee and to serving as a director if elected) and (B) a description of all direct and indirect compensation and other monetary agreements, arrangements and understandings during the past three years, and any other relationships, between or among such stockholder and beneficial owner, if any, and their respective affiliates and associates, or others acting in concert therewith, on the one hand, and each proposed nominee, and his or her respective affiliates and associates, or others acting in concert therewith, on the other hand, including, without limitation all information that would be required to be disclosed pursuant to Rule 14a-8404 promulgated under Regulation S-K if the stockholder making the nomination and any beneficial owner on whose behalf the nomination is made, if any, or any affiliate or associate thereof or person acting in concert therewith, were the “registrant” for purposes of Exchange Act. See “Stockholder Proposals For Our 2021 Annual Meeting.”such rule and the nominee were a director or executive officer of such registrant; and with respect to each nominee for election or reelection to the board of directors, include the completed and signed questionnaire, representation, and agreement required by the Bylaws. The Company may require any proposed nominee to furnish such other information as may reasonably be required by the Company to determine the eligibility of such proposed nominee to serve as an independent director of the Company or that could be material to a reasonable stockholder’s understanding of the independence, or lack thereof, of such nominee.
Communication with the Board of Directors
We have not, to date, developed a formal process for stockholdershareholder communications with the Boardboard of Directors.directors. We believe our current informal process, in which any communication sent to the Boardboard of Directors,directors, either generally or in care of the Chief Executive Officer, Secretarychief executive officer, secretary or other corporate officer or director, is forwarded to all members of the Boardboard of Directors,directors, has served the Board of Director’sboard’s and the stockholders’shareholders’ needs.
Conflicts of Interests
On an annual basis, each director and executive officer is obligated to complete a director and officer questionnaire that requires disclosure of any transactions with our company, including related person transactions reportable under SEC rules, in which the director or executive officer, or any member of his or her immediate family, have a direct or indirect material interest. Under our company’s standards of conduct for employees, all employees, including the executive officers, are expected to avoid conflicts of interest. Pursuant to our code of ethics for the Chief Executive Officerchief executive officer and senior finance officers (as discussed below), such officers are prohibited from engaging in any conflict of interest unless a specific exception has been granted by the Board of Directors.board. All of our directors are subject to general fiduciary standards to act in the best interests of our company and our stockholders.shareholders. Conflicts of interest involving an executive officer or a director are generally resolved by the Board of Directors.board.
ComplianceBoard Diversity Matrix
The Company is committed to diversity and inclusion, and believes it is important that the Board is composed of individuals representing the diversity of our communities. The Company seeks nominees with a broad diversity of experience, professions, skills and backgrounds. The Board Diversity Matrix set forth below reports self-identified diversity statistics for the Board, as constituted prior to the Annual Meeting, in the format required by Nasdaq’s rules.
| Board Diversity Matrix as of June 30, 2022 | ||||||||
| Total Number of Directors | 5 | |||||||
| Part I: Gender Identify | Female | Male | Non-Binary | Did Not Disclose Gender | ||||
| Directors | 0 | 5 | 0 | 0 | ||||
| Part II: Demographic Background | ||||||||
| African American or Black | 0 | 0 | 0 | 0 | ||||
| Alaskan Native or American Indian | 0 | 0 | 0 | 0 | ||||
| Asian | 0 | 0 | 0 | 0 | ||||
| Hispanic or Latinx | 0 | 0 | 0 | 0 | ||||
| Native Hawaiian or Pacific Islander | 0 | 0 | 0 | 0 | ||||
| White | 0 | 5 | 0 | 0 | ||||
| Two or More Races or Ethnicities | 0 | 0 | 0 | 0 | ||||
| LGBTQ+ | 0 | |||||||
| Did Not Disclose Demographic or Background | 0 | |||||||
Role of the Board in Risk Oversight
Risk is inherent with every business, and how well a business manages risk can ultimately determine its success. Management is responsible for the day-to-day management of the risks that we face, while our Board of Directors, as a whole and through its committees, has responsibility for the oversight of risk management. In its risk oversight role, our Board of Directors is responsible for satisfying itself that the risk management processes designed and implemented by management are adequate and functioning as designed.
Our Board of Directors does not have a standing risk management committee, but rather administers this oversight function directly through our Board of Directors as a whole, as well as through various standing committees of the Board of Directors that address risks inherent in their respective areas of oversight. In particular, our Board of Directors is responsible for monitoring and assessing strategic risk exposure, including a determination of the nature and level of risk appropriate for us. Our Audit Committee has the responsibility to consider and discuss our major financial risk exposures and the steps our management has taken to monitor and control these exposures, including guidelines and policies to govern the process by which risk assessment and management is undertaken. The Audit Committee also monitors oversight of the performance of our internal audit function. Our Corporate Governance/Nominating Committee monitors the effectiveness of our corporate governance guidelines, including whether they are successful in preventing illegal or improper liability-creating conduct. Our Compensation Committee assesses and monitors whether any of our compensation policies and programs have the potential to encourage excessive risk-taking or promote behaviors contra to our Code of Business Conduct. Additionally, the Nominating Committee monitors and evaluates individual performance of board members and their qualifications to be members of the board and its committees.
Delinquent Section 16(a) of the Exchange ActReports
Section 16(a) of the Exchange Act requires our directors and executive officers, and persons who own more than 10% of our common stock, to file with the SEC initial reports of ownership and reports of changes in ownership of our common stock and other equity securities. Executive officers, directors and greater than 10% stockholdersshareholders are required by SEC regulations to furnish us with copies of all Section 16(a) forms they file.
To our knowledge, and based on representations from ourThe Company prepares these reports for its directors and executive officers duringwho request it on the year ended December 31, 2019, our directors, executive officersbasis on information obtained from them and greater than 10% stockholders complied with allthe Company’s records. The Company believes that applicable Section 16(a) filing requirements.
Committeesrequirements were met during 2021 by its directors and Meetings of the Board of Directors of the Company
The Board of Directors meets on a quarterly basis but may have additional meetings. The Board of Directors held seven meetings during the year ended December 31, 2019 and took seven separate actions by unanimous consent. For the year ended December 31, 2019, all of our current directors attended at least 75% of the total number of board meetings or committee meetings on which they served during their period of service.
The Board of Directors has established an audit committee (the “Audit Committee”), the Compensation Committee and the Corporate Governance and Nominating (“Nominating”) Committee.
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M Member C Chairperson Financial Expert
Each of the committees has adopted a written charter, all of which are available in the Investor Relations section of our website at www.codiagnostics.com.
Audit Committee and Financial Expert
The duties and responsibilities of the Audit Committee are set forth in the charter of the Audit Committee adopted by the Board of Directors. The Audit Committee generally assists the Board of Directors in its oversight of the relationship with our independent registered public accounting firm, financial statement and disclosure matters, the internal audit function, and our compliance with legal and regulatory requirements. In accordance with its charter, the Audit Committee meets as often as it determines necessary, and at least four times each year.
Management has the primary responsibility for our financial statements and the reporting process, and our independent registered public accounting firm is responsible for auditing the financial statements and expressing an opinion as to their conformity with accounting principles generally accepted in the United States. The Audit Committee also monitors our financial reporting process and internal control system, retains and pre-approves audit and any non-audit services to be performed by our independent registered accounting firm, directly consults with our independent registered public accounting firm, reviews and appraises the efforts of our independent registered public accounting firm, and provides an open avenue of communication among our independent registered public accounting firm, financial and senior management and the Board of Directors. The Audit Committee has the authority to retain independent legal, accounting, and other advisors.
Our audit committee currently is comprised of Messrs. Durenard, Nelson, Murphy and Serbin with Mr. Durenard serving as chairman of the audit committee. The functions of the audit committee include engaging an independent registered public accounting firm to audit our annual financial statements, reviewing the independence of our auditors, the financial statements and the auditors’ report, and reviewing management’s administration of our system of internal control over financial reporting and disclosure controls and procedures. The Board of Directors has adopted a written audit committee charter. A current copy of the audit committee charter is available to security holders on our website at www.codiagnostics.com. Our board has determined that all of our directors that are serving on the audit committee are “independent” under the definition of independence in the Marketplace Rules of the NASDAQ listing standards.
Our Board of Directors has determined that Mr. Durenard meets the requirements of an “audit committee financial expert” as defined in applicable SEC regulations. The identification of a person as an audit committee financial expert does not impose on such person any duties, obligations or liability that are greater than those that are imposed on such person as a member of the Audit Committee and the Board of Directors in the absence of such identification. Moreover, the identification of a person as an audit committee financial expert for purposes of the regulations of the SEC does not affect the duties, obligations or liability of any other member of the Audit Committee or the Board of Directors. Finally, a person who is determined to be an audit committee financial expert will not be deemed an “expert” for purposes of Section 11 of the Securities Act of 1933, as amended.
Compensation Committee
The duties and responsibilities of the Compensation Committee are set forth in the charter of the Compensation Committee adopted by the Board of Directors. The Compensation Committee is generally responsible for discharging the Board of Directors responsibilities relating to the compensation of our executive officers, and other compensation matters. The Compensation Committee annually reviews the compensation of the Chief Executive Officer, other executive officers, and other employees, reviews and administers executive and equity compensation plans, other compensation and benefits plans, including perquisites, and establishes stock ownership guidelines. The Compensation Committee is also responsibleexcept that due to an inadvertent administrative error, one Form 4 for developing a management succession plan and overseeing management evaluations. In accordance with its charter, the Compensation Committee meets as often as it determines necessary, and at least four times each year.
Our compensation committee currently includes Messrs. Serbin, Nelson, andEugene Durenard with Mr. Serbin serving as chairman of the compensation committee. The functions of the compensation committee include reviewing and approving corporate goals relevant to compensation for executive officers, evaluating the effectiveness of our compensation practices, evaluating and approving the compensation of our chief executive officer and other executives, recommending compensation for board members, and reviewing and making recommendations regarding incentive compensation and other employee benefit plans. The Board of Directors has adopted a written compensation committee charter. A current copy of the compensation committee charter is available to stockholders on our website at www.codiagnostics.com. Our board has determined that both of our directors serving on the compensation committee are “independent” under the definition of independence in the Marketplace Rules of the NASDAQ listing standards.was filed late.
Although the Compensation Committee does not delegate any of its authority for determining executive compensation, the Compensation Committee may engage compensation consultants, independent legal counsel or other advisers in connection with its responsibilities. Additionally, the Compensation Committee periodically reviews our compensation strategy and its effect on the achievement of the Company’s goals with the Chief Executive Officer. The Compensation Committee exercises complete discretion in making all compensation decisions regarding cash compensation and equity awards for all of our executive officers.
Corporate Governance and Nominating Committee
The duties and responsibilities of the Nominating Committee are set forth in the charter of the Nominating Committee adopted by the Board of Directors. The Nominating Committee is responsible for identifying individuals qualified to serve on the Board of Directors and recommending individuals to be nominated by the Board of Directors for election by stockholders or appointed by the Board of Directors to fill vacancies. Among its duties and responsibilities, the Nominating Committee is responsible for shaping corporate governance, reviewing and assessing the Guidelines, recommending Board compensation, and overseeing the annual evaluation of the Board of Directors. The Nominating Committee has the authority to retain compensation or other consultants as well as search firms for director candidates. In accordance with its charter, the Nominating Committee meets as often as it determines necessary, and at least four times each year.
Our corporate governance and nominating committee currently include Messrs. Nelson, Murphy and Serbin with Mr. Nelson serving as chairman of the corporate governance and nominating committee. The functions of the corporate governance and nominating committee is identifying and recommending candidates to fill vacancies on the Board of Directors. Among its duties and responsibilities, the corporate governance and nominating committee periodically evaluates and assesses the performance of the officers and directors; reviews the qualifications of candidates for director positions; assists in identifying, interviewing and recruiting candidates for the Board of Directors and reviews the composition of each committee of the Board of Directors. A current copy of the corporate governance and nominating committee charter is available to stockholders on our website at www.codiagnostics.com. Our board has determined all directors serving on the corporate governance and nominating committee are “independent” under the definition of independence in the Marketplace Rules of the NASDAQ listing standards.
The process followed by the Nominating Committee to identify and evaluate candidates includes (i) requesting recommendations from the Board of Directors, the Chief Executive Officer, and other parties, (ii) meeting to evaluate biographical information and background material relating to potential candidates and their qualifications, and (iii) interviewing selected candidates. The Nominating Committee also considers recommendations for nomination to the Board of Directors submitted by stockholders. A stockholder who desires to recommend a prospective nominee for the Board of Directors should notify the Secretary of the Company or any member of the Nominating Committee in writing with supporting material the stockholder considers appropriate. The Nominating Committee has the authority and ability to retain compensation or other consultants and search firms to identify or evaluate director candidates.
In evaluating the suitability of candidates to serve on the Board, including stockholder nominees, the Nominating Committee seeks candidates who are independent, as defined by the Sarbanes-Oxley Act, related SEC rules and NASDAQ listing standards, and who meet certain selection criteria established by the Nominating Committee. The selection criteria include many factors, including a candidate’s general understanding of elements relevant to the success of a publicly traded company in the current business environment, understanding of our business, and educational and professional background. The Nominating Committee also considers a candidate’s judgment, competence, anticipated participation in Board activities, experience, geographic location and special talents or personal attributes. The guidelines provide that the composition of the Board should encompass a broad range of skills, expertise, industry knowledge, diversity, and contacts relevant to our business. Moreover, with respect to incumbent directors, the Nominating Committee also considers past performance, including attendance at meetings and participation in and contributions to the activities of the Board, and the director’s ability to make contributions after any significant change in circumstances (including changes in employment or professional status).
Code of Ethics
We have adopted a Codecode of Ethics as defined in Item 406 of Regulation S-K, which code applies to all of our directors and employees, includingethics for our principal executive officer, principal financial officer, principal accounting officercontroller, or controller, and persons performing similar functions. All directors, officers, and other employees are expected to be familiar with the Code of Ethics and to adhere to the principles and procedures set forth therein. The Code of Ethics forms the foundation of a comprehensive program that requires compliance with all corporate policies and procedures and seeks to foster an open relationship among colleagues that contributes to good business conduct and an abiding belief in the integrity of our employees. Our policies and procedures cover all areas of professional conduct, including employment policies, conflicts of interest, intellectual property, and the protection of confidential information, as well as strict adherence to all laws and regulations applicable to the conduct of our business.
Directors, officers, and other employees are required to report any conduct that they believe in good faith to be an actual or apparent violation of the Code of Ethics. A copy of the Codecode of Ethicsethics is included on our website at www.codiagnostics.com. We intend to satisfy the disclosure requirements of Form 8-K regarding any amendment to, or a waiver from, any provision of our Code of Ethics by posting such amendment or waiver on our website.www.codiagnostics.com.
Family Relationships
There are no family relationships among our directors and executive officers.
EXECUTIVE AND BOARD COMPENSATION
We are an “emerging growth company” as defined in the Jumpstart Our Business Startups Act of 2012 and a “smaller reporting company” as defined in the rules and regulations of the SEC. As an emerging growth company and as a smaller reporting company we may take advantage of specified reduced disclosure and other requirements that are otherwise applicable, in general, to public companies that are not emerging growth companies or smaller reporting companies. Accordingly, this Report includes reduced disclosure about our executive compensation arrangements.
Corporate Governance GuidelinesSummary Compensation Table
The Guidelines are designed to help ensure effective corporate governance and cover topics including, but not limited to, board composition and selection, director qualification standards, retirement policy, director responsibilities, selectiontable below summarizes the total compensation paid or earned by each of the lead director,named executive sessionsofficers in their respective capacities for the fiscal years ended December 31, 2021 and 2020. We have omitted in this report certain columns otherwise required to be included because there was no compensation made with respect to such columns, as permitted by applicable SEC regulations.
| Name and Principal Position | Year | Salary | Bonus (1) | Stock Awards (2) | All Other Comp (3) | Total Compensation | ||||||||||||||||||
| Dwight Egan President & Chief Executive Officer | 2021 | $ | 350,000 | $ | 638,459 | $ | 1,208,750 | $ | 26,793 | $ | 2,224,002 | |||||||||||||
| 2020 | $ | 309,375 | $ | 350,000 | $ | 786,750 | $ | 17,500 | $ | 1,463,625 | ||||||||||||||
| Brian Brown Chief Financial Officer and Secretary | 2021 | $ | 209,731 | $ | 475,014 | $ | 1,441,600 | $ | 26,793 | $ | 2,153,138 | |||||||||||||
| Reed Benson (4) Former Chief Financial Officer and Secretary | 2021 | $ | 136,250 | $ | 154,682 | $ | - | $ | 26,793 | $ | 317,725 | |||||||||||||
| 2020 | $ | 211,458 | $ | 225,000 | $ | 288,475 | $ | 17,500 | $ | 742,433 | ||||||||||||||
| (1) | Bonuses for the year ended December 31, 2021 include accrued bonus payments of $281,597 to Mr. Egan and $223,248 to Mr. Brown that were paid in February 2022. Bonuses for the year ended December 31, 2020 include accrued bonus payments of $272,500 to Mr. Egan and $180,000 to Mr. Benson that were paid in February 2021. |
| (2) | The amounts reported in this column represent the aggregate grant date fair value of the restricted stock units, or RSUs, granted under our 2015 Plan as computed in accordance with FASB ASC Topic 718. Note that the amounts reported in this column reflect the accounting value for these equity awards and do not correspond to the actual economic value that may be received from the equity awards as the RSUs vest over three years. |
| (3) | Company profit sharing payments to the Company’s 401 K Plan. |
| (4) | Mr. Benson is no longer an executive officer of the Company as of August 2021. |
Outstanding Equity Awards at Fiscal Year-End 2021
The following table contain certain information concerning outstanding equity awards for the Named Executive Officers as of non-management directors, communications from stockholdersDecember 31, 2021.
| Option Awards | Stock Awards | |||||||||||||||||||||||||||||||
| Number of Securities Underlying Unexercised Options (#) | Option Exercise | Option Expiration | Number of Shares or Units of Stock That Have Not | Market Value of Shares or Units of Stock That Have Not Vested | Number of Unearned Shares, Units or Other Rights That Have Not | Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not | ||||||||||||||||||||||||||
| Name | Exercisable | Unexercisable | Price | Date | Vested (#) | ($)(1) | Vested (#) | Vested ($) | ||||||||||||||||||||||||
| Dwight Egan | 50,000 | - | $ | 2.63 | 09/20/28 | - | - | - | - | |||||||||||||||||||||||
| 50,000 | - | $ | 1.10 | 09/02/29 | - | - | - | - | ||||||||||||||||||||||||
| - | - | - | - | 154,167 | $ | 1,376,711 | - | - | ||||||||||||||||||||||||
| Brian Brown | - | - | - | - | 103,333 | $ | 922,764 | - | - | |||||||||||||||||||||||
| Reed Benson | 41,666 | - | $ | 1.10 | 09/02/29 | - | - | - | - | |||||||||||||||||||||||
| - | - | - | - | 18,332 | $ | 163,705 | - | - | ||||||||||||||||||||||||
| (1) | Based on $8.93 per share which was the closing price of our common stock on December 31, 2021. |
We do not have written employment agreements with any of our executive officers. All of our executive officers serve on an at-will basis. The base salaries, bonuses and equity awards for our named executive officers were determined by our compensation committee after reviewing a number of factors, including: company performance, achievement of goals, the responsibilities associated with the position, the seniority of the executive’s position, the base salary level in prior years, and our financial position; and for executive officers other than our Chief Executive Officer, recommendations made by our Chief Executive Officer.
Potential Payments Upon Termination or Change of Control
There is no compensation payable to the Board, Board committees, director orientation and continuing education, director compensation, management succession, annual evaluationsnamed executive officers upon voluntary termination, retirement, involuntary not-for-cause termination, termination following a change of control or in the event of disability or death of the Board and its committees, and public interactions. The Guidelines are reviewed by the Nominating Committee and revised when appropriate. The full text of the Guidelines is available on our website.executive.
Director Compensation
We use a combination of cash and stock-based incentive compensation to attract and retain qualified candidates to serve on the board of directors. In setting director compensation, we consider the significant amount of time that directors expend in fulfilling their duties as well as the skill-level required by our members of the Board.
Our non-employee directors generally receive fees of $35,000 per year, paid quarterly, $10,000 per year for serving as chairman of any Board committee and $5,000 for serving as a member of other Board committees. In addition, each director receives an initial grant of stock options to purchase 25,000 shares (thereafter annual grants of 25,000 options or equivalent value restricted stock units) of our common stock with an exercise price equal to the fair market value of the stock on the date of grant. The board approved and the non-employee directors accepted the 2019 compensation set forth in the director summary compensation table below. In addition, non-employee directors may be entitled to receive special awards of stock options from time to time as determined by the board. The chairman of the board and the chairman of each of the audit and compensation committees receive no additional fees for serving in such capacities. There is no additional compensation for meeting attendance. Directors who are employees of the Company receive no additional compensation for serving as directors. All stock options granted to outside directors are immediately exercisable and expire ten years from the date of grant. Directors are reimbursed for ordinary expenses incurred in connection with attending board and committee meetings.
Director Summary Compensation Table
We use a combination of cash and stock-based incentive compensation to attract and retain qualified candidates to serve on its board of directors. In setting director compensation, we consider the significant amount of time that directors expend in fulfilling their duties as well as the skill-level required by our members of the board.
Director Summary Compensation Table
The table below summarizes the compensation paid or accrued by us to each of our non-employee directors for the fiscal year ended December 31, 2021.
| Name | Fees Earned or Paid in Cash | Stock Awards: Value of Restricted Stock Units (1) | Total | |||||||||
| Richard Serbin | $ | 100,000 | $ | 413,250 | $ | 513,250 | ||||||
| James Nelson | $ | 100,000 | $ | 413,250 | $ | 513,250 | ||||||
| Edward Murphy | $ | 100,000 | $ | 413,250 | $ | 513,250 | ||||||
| Eugene Durenard | $ | 100,000 | $ | 413,250 | $ | 513,250 | ||||||
| (1) | The amounts reported in this column represent the aggregate grant date fair value of the restricted stock units, or RSUs, granted under our 2015 Plan as computed in accordance with FASB ASC Topic 718. Note that the amounts reported in this column reflect the accounting value for these equity awards and do not correspond to the actual economic value that may be received from the equity awards. The RSUs vested immediately upon grant. |
Our non-employee directors generally receive feescash compensation of $35,000$75,000 per year, paid quarterly, $10,000 per year for serving as chairman of any Board committee and $5,000 for serving as a member of other Board committees. In addition, each director receives an initial grant of stock options to purchase 25,000 shares (thereafter annual grants of 25,000 options or equivalent value restricted stock units) of our common stock with an exercise price equal to the fair market value of the stock on the date of grant.quarterly. The board approved and the non-employee directors accepted the 2018also each received 37,500 RSU’s vesting 1/3rd equally in January 2021, 2022, and 2019 compensation set forth in the director summary compensation table below.2023. In addition, non-employee directors may be entitled to receive special awards of stock options or RSUs from time to time as determined by the board. During 2021, the non-employee directors were also each awarded an additional $25,000 bonus. The chairman of the board and the chairmanchairperson of each of the audit, corporate governance/nomination, and compensation committees receive no additional fees for serving in such capacities, except as shown above.capacities. There is no additional compensation for meeting attendance. Directors who are employees of the Company receive no additional compensation for serving as directors. All stock options granted to outside directors are immediately exercisable and expire ten years from the date of grant or 30 days after the date they cease to be directors. Directors are reimbursed for ordinary expenses incurred in connection with attending board and committee meetings.
The table below summarizes the compensation paid or accrued by us to our directors for the fiscal year ended December 31, 2019.Equity Compensation Plan Information
| (a) | (b) | (c) | (d) | (e) | ||||||||||||
| Name | Fees Earned or Paid in Cash | Options/Awards ($) | Restricted Stock Units ($) | Total ($) | ||||||||||||
| Dwight H. Egan (1) | $ | — | — | $ | — | $ | — | |||||||||
| Frank Kiesner (2) | 27,500 | $ | — | — | 27,500 | |||||||||||
| Richard Serbin | 55,000 | 17,750 | — | 72,750 | ||||||||||||
| Edward J. Borkowski (3) | 27,500 | — | — | 27,500 | ||||||||||||
| James B. Nelson | 18,333 | 27,500 | 45,833 | |||||||||||||
| Edward L. Murphy | 12,000 | 17,750 | 29,750 | |||||||||||||
| Eugene Durenard, PhD | 27,500 | 17,750 | — | 45,250 | ||||||||||||
| Plan Category | (a) Number of Shares to be Issued upon Exercise of Outstanding Options and Rights | (b) Weighted-average Exercise Price of Outstanding Options and Rights | (c) Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (Excluding Securities Referenced in Column (a)) | |||||||||
| Equity compensation plans approved by stockholders | 2,378,778 | (1) | $ | 2.12 | (2) | 2,095,266 | ||||||
| Equity compensation plans not approved by stockholders | - | $ | - | - | ||||||||
| Total | 2,378,778 | (1) | $ | 2.12 | (2) | 2,095,266 | ||||||
| (1) | |
| (2) | |
BENEFICIAL OWNERSHIP OF COMMON STOCK BY CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERSEquity Incentive Plans
The following table sets forth certain information, asUnder our Amended and Restated 2015 Long-term Incentive Plan (the “2015 Plan”), the board of directors may issue incentive stock-based awards to employees, directors and consultants of the Record Date, with respect to the holdings of (i) each person who is the beneficial owner of 5% or more of our common stock, (ii) each of our directors, (iii) each named executive officer, and (iv) all of our current directors and executive officers as a group.
Beneficial ownership of our common stock is determinedcompany. Options awarded generally expire ten years after being granted. Any stock-based awards granted vest in accordance with the Rule 13d-3vesting schedule determined by the board of directors. Should an employee’s director’s or consultant’s relationship with the company terminate before the vesting period is completed, the unvested portion of each grant is forfeited. We continue to maintain and grant awards under the Securities Exchange Act2015 Plan which will remain in effect its expiration by its terms.
The purpose of 1934, as amended,our incentive plan is to advance the interests of our stockholders by enhancing our ability to attract, retain and includes any sharesmotivate persons who are expected to make important contributions to the company by providing them with both equity ownership opportunities and performance-based incentives intended to align their interests with those of common stock over which a person exercises sole or shared voting or investment power, or of which a person has a rightour stockholders. These plans are designed to acquire ownership of at any time within 60 days through the exercise, exchange or conversion of another security. Except as otherwise indicated, we believe that the persons named in this table have sole votingprovide us with flexibility to select from among various equity-based compensation methods, and investment power with respect to all shares of common stock held by them. Applicable percentage ownership in the following table is based on 28,269,201 shares of common stock outstanding as of the Record Date plus, for each person, any shares of common stock of the Company that such person has the right to acquire within 60 days of the Record Date through the exercise, exchange or conversion of another security. Any shares of common stock not outstanding which are subject to such options, warrants, rights or conversion privileges are deemed to be outstanding for the purpose of computing the percentage of outstanding common stock ownedable to address changing accounting and tax rules and corporate governance practices by such person but are not be deemed to be outstanding for the purpose of computing the percentage of commons stock by any other person.
To the best of our knowledge, except as otherwise indicated, each of the persons named in the table has sole voting and investment power with respect to the shares of our common stock beneficially owned by such person, except to the extent such power may be shared with a spouse. To our knowledge, none of the shares listed below are held under a voting trust or similar agreement, except as noted. To our knowledge, there is no arrangement, including any pledge by any person of securities of the Company, the operation of which may at a subsequent date result in a change in control of the Company.
| Name(1) | Title | Common Shares Beneficially Owned | Percent of Class | |||||||
| Officers and Directors | ||||||||||
| Dwight H. Egan | Chief Executive Officer, President and Chairman | 300,000 | (3) | 1.05 | % | |||||
| Reed L. Benson | Chief Financial Officer and Secretary | 250,000 | (4) | * | ||||||
| Edward L. Murphy | Director | 50,000 | (5) | * | ||||||
| Eugene Durenard, PhD | Director | - | * | |||||||
| James B. Nelson | Director | 50,000 | (6) | * | ||||||
| Richard S. Serbin | Director | 20,445 | (7) | * | ||||||
| Officers and Directors as a Group (6 persons) | 670,445 | (8) | 2.32 | % | ||||||
| 5% or Greater Stockholders | ||||||||||
| Reagents, LLC (9) | 1,746,796 | 6.18 | % | |||||||
* less than 1%
optimally utilizing stock-based awards.
TRANSACTIONS WITH CERTAIN RELATED PERSONSCertain Relationships and Related Transactions
The Company acquired the exclusive rights to the CoPrimer technology pursuant to a license agreement dated April 2014, between us and DNA Logix, Inc., which was assigned to Dr. Satterfield prior to our acquisition of DNA Logix, Inc. Pursuant to the license the Company was to pay Dr. Satterfield minimum royalty payments of $30,000 per month until the Company receives an equity funding of at least $4,000,000, at which time the payments increase to $60,000 per month for the remainder of the year. The payment terms were orally modified to maintain the monthly royalties at $30,000 per month through December 2016. On March 1, 2017, the Company entered into an amendment effective January 1, 2017, to its Exclusive License Agreement for its CoPrimer (“License”) technology with Dr. Satterfield, a former member of our Board of Directors. The amendment provides in part that all royalties under the License cease as of January 1, 2017, and we began in January 2017 to pay $700,000 of accrued royalties at the rate of $10,000 per month. In 20182021 and 2019,2020, we paid Dr. Satterfield $100,000$150,000 and $110,000,$120,000, respectively, in payment of the accrued royalties.
The Company entered into a consulting arrangement with itsemploys two persons who are related to current or former director, Frank Kiesner, for consulting services duringexecutive officers. Seth Egan is the Company’s Director of Sales and Marketing, and is the son of Dwight Egan, the Company’s President and Chief Executive Officer. Andrew Benson is the Company’s Director of Investor Relations, and is the son of Reed Benson, the Company’s former Chief Financial Officer and Secretary. During the year ended December 31, 2019. Pursuant2021, the total compensation paid to or earned by these persons, including salaries, bonuses, and the consulting agreement, we paid Mr. Kiesner a one-time feegrant date fair value of $35,000.
The Company entered into a consulting arrangement with its director, Richard S. Serbin, for consulting services duringequity awards which vest over three years, was $1,512,457 and $1,285,790, respectively. During the year ended December 31, 2019. Pursuant2020, the total compensation paid to or earned by these persons, including salaries, bonuses, and the grant date fair value of equity awards which vest over three years, was $1,113,440 and $1,109,303, respectively.
STOCK OWNERSHIP
The following table sets forth certain information, as of June 30, 2022, with respect to the consulting agreement, we paid Mr. Serbinholdings of (1) each person who is the beneficial owner of more than 5% of our Common Stock, (2) each of our directors, (3) each named executive officer, and (4) all of our current directors and executive officers as a one-time fee of $30,000.group.
Beneficial ownership of the common stock is determined in accordance with the rules of the Securities and Exchange Commission and includes any shares of common stock over which a person exercises sole or shared voting or investment power, or of which a person has a right to acquire ownership at any time within 60 days of June 30, 2022. Except as otherwise indicated, we believe that the persons named in this table have sole voting and investment power with respect to all shares of common stock held by them. Applicable percentage ownership in the following table is based on 34,313,432 shares of common stock plus, for each individual, any securities that individual has the right to acquire within 60 days of June 30, 2022.
To the best of our knowledge, except as otherwise indicated, each of the persons named in the table has sole voting and investment power with respect to the shares of our common stock beneficially owned by such person, except to the extent such power may be shared with a spouse. To our knowledge, none of the shares listed below are held under a voting trust or similar agreement, except as noted. To our knowledge, there is no arrangement, including any pledge by any person of securities of the Company, the operation of which may at a subsequent date result in a change in control of the Company. The information in the tables below is based on information known to us or ascertained by us from public filings made by the stockholders. Except as otherwise indicated in the table below, addresses of the director, executive officers and named beneficial owners are in care of Co-Diagnostics, Inc., 2401 S. Foothill Drive, Suite D, Salt Lake City, Utah 84109.
| Number of Shares Beneficially Owned | Percentage of Class (1) | |||||||
| 5% Stockholders | ||||||||
| Vanguard Group (1) | 1,871,914 | 5.5 | % | |||||
| Named Executive Officers and Directors | ||||||||
| Dwight Egan (2) | 146,141 | * | ||||||
| Reed Benson (3) | 44,836 | * | ||||||
| Brian Brown | 32,256 | * | ||||||
| Edward Murphy (4) | 75,000 | * | ||||||
| Eugene Durenard | 12,500 | * | ||||||
| James Nelson (5) | 62,500 | * | ||||||
| Richard Serbin (6) | 35,445 | * | ||||||
| All Directors and Executive Officers as a Group (7 persons) | 408,678 | 1.2 | % | |||||
*Represents beneficial ownership of less than 1%.
| (1) | Information obtained from Schedule 13G/A filed with the SEC on February 2, 2022. Vanguard Group has an address of 100 Vanguard Blvd, Malvern, PA, 19355. |
| (2) | Includes exercisable options to acquire 100,000 shares of common stock. |
| (3) | Includes exercisable options to acquire 41,666 shares of common stock. |
| (4) | Includes exercisable options to acquire 50,000 shares of common stock. |
| (5) | Includes exercisable options to acquire 50,000 shares of common stock. |
| (6) | Includes exercisable options to acquire 20,445 shares of common stock. |
PROPOSAL 2 – TO APPROVE AN AMENDMENT TO THE AMENDED AND RESTATED 2015 LONG TERM INCENTIVE PLAN TO INCREASE THE NUMBER OF AUTHORIZED SHARES OF COMMON STOCK AVAILABLE FOR ISSUANCE UNDER THE PLAN FROM 6,000,000 TO 12,000,000
The Board has approved an amendment to the amended and restated Co-Diagnostics, Inc. 2015 Long Term Incentive Plan (the “Plan”) and is submitting this amendment to the Company’s shareholders for approval.
The Board believes that stock-based incentives are essential to attract and retain the services of individuals who are likely to make significant contributions to our success, to encourage ownership of our common stock by employees, directors and certain of our consultants, and to promote our success by providing both rewards for exceptional performance and long-term incentives for future contributions to the Company.
The Plan currently authorizes the issuance of up to 6,000,000 shares of common stock. Of those shares, 4,908,234 have been issued or are subject to outstanding awards, leaving only 1,091,766 shares available for future awards. The Board of Directors does not believe that the number of shares available for future issuance under the Plan is sufficient in light of our compensation strategy and objectives. Accordingly, the Board is proposing to increase the number of shares available under the Plan by 6,000,000 shares, increasing the percentage ratio of the amount of shares available for future award under the Plan to approximately 20% of outstanding shares as of June 30, 2022. We expect the additional shares to cover approximately 3 years of additional awards. We manage our long-term shareholder dilution, in part, by controlling the number of equity incentive awards granted annually. The Board carefully monitors our annual net burn rate, total dilution, and equity expense in order to maximize shareholder value by granting what it believes are an appropriate number of equity incentive awards to attract, reward, and retain employees. Burn rate is a measure of the speed at which companies use shares available for grant under their equity compensation plans and is an important factor for investors concerned about shareholder dilution. The burn rate is defined as, in a given fiscal year, the number of equity shares granted subject to time-based awards plus performance-based equity awards that were earned and vested, divided by the weighted average number of shares outstanding. In recommending to our shareholders to increase the number of shares to be authorized under the Plan, the Board considered our burn rate for the past three fiscal years as shown below:
| Calendar Year 2021 | Calendar Year 2020 | Calendar Year 2019 | ||||||||||
| Time-based equity awards | 1,217,500 | 699,500 | 890,000 | |||||||||
| Performance-based awards earned and vested | 461,829 | 103,935 | 627,516 | |||||||||
| Weighted average common shares outstanding | 29,903,686 | 28,000,341 | 16,756,912 | |||||||||
Our directors and executive officers have an interest in the amendment of the Plan because they are eligible for awards under the Plan.
The Board recommends that shareholders approve amendment of the Plan in order to allow the Company to continue to offer stock options and alternative equity awards to employees, directors and consultants as part of its overall compensation package. The material features of the Plan are summarized below.
The affirmative vote of the holders of a majority of the common shares voted on the proposal and represented at the annual meeting in person or by proxy is required to approve the amendment to the Plan. The Board of Directors recommends that you vote FOR this proposal.
Summary of the Plan
Certain provisions of the Plan are summarized below. A copy of the Plan is attached to this proxy statement as Appendix I and is incorporated herein by reference. The following summary of the material terms of the Plan does not purport to be a complete description of the Plan and is qualified in its entirety by reference to the complete copy of the Plan in Appendix I. Because this summary may not contain all of the information that is important to you, you should review the Proxy Statement, including Appendix I, before deciding how to vote.
Purpose
The purpose of the Plan is to attract and retain key executive and managerial employees of the Company; attract and retain directors, independent contractors, and consultants; motivate awardees by means of appropriate incentives to achieve long-range goals; provide incentive compensation opportunities that are competitive with those of comparable corporations; and further identify participant’s interests with those of the Company’s other shareholders through compensation alternatives based on the Company’s common stock; and thereby promote the long-term financial interest of the Company, including the growth in value of the Company’s equity and enhancement of long-term shareholder return.
Term
The Plan was effective as of January 1, 2015. The Plan terminates on December 31, 2025, the tenth anniversary of the Plan’s effective date.
Administration.
The authority to manage and control the operation and administration of the Plan is vested in the Board. The Board, in its discretion, may delegate any or all of its authority, powers and discretion under this Plan to the Compensation Committee.
Participation
Participants under the Plan are limited to employees, officers, non-employee directors, consultants, independent contractors or advisors providing services to the Company or its subsidiaries. We estimate that approximately 136 persons are currently eligible to participate in the Plan, which includes 130 employees, 2 named-executive officers and 4 non-employee directors.
Awards
The Plan provides for the grant of nonqualified stock options, incentive stock options, restricted stock (including performance shares), restricted stock units (including performance share units), stock appreciation rights (SARs). Under the Plan, the maximum number of shares of common stock which may be issued, subject to adjustment as described below, is 6,000,000 shares of common stock. If awards under the Plan expire or otherwise terminate without being exercised, the shares not acquired pursuant to such awards again become available for issuance under the Plan in accordance with its terms. However, under the following circumstances, shares will not again be available for issuance under the Plan: (i) shares unissued due to a “net exercise” of a stock option, (ii) any shares withheld or shares tendered to satisfy tax withholding obligations with respect to a stock option or SAR, (iii) shares covered by a SAR that is not settled in shares upon exercise and (iv) shares repurchased using stock option exercise proceeds.
Transferability
Performance Awards, Incentive Stock Options with or without tandem Stock Appreciation Rights, and, during the period of restriction, Restricted Stock Unit or Restricted Stock awarded under the Plan are not assignable or transferable except as designated by the Participant by will or by the laws of descent and distribution. Incentive Stock Options may be exercised during the lifetime of the Participant only by the Participant or his guardian or legal representative.
Adjustments to Number of Shares Subject to the Plan
In the event of any change in the outstanding shares of stock of the Company by reason of any stock dividend, split, spinoff, recapitalization, merger, consolidation, combination, extraordinary dividend, exchange of shares or other similar change, the aggregate number of shares of stock with respect to which awards may be made under the Plan, the terms and the number of shares of any outstanding awards, and the purchase price of a share of Stock under awards, may be equitably adjusted by the Board in its sole discretion.
Business Combinations.
In the event that, while any awards are outstanding under the Plan, there shall occur a Change in Control, as defined under the Plan, then, with respect to such awards outstanding immediately prior to the consummation of such transaction and without the necessity of any action by the Board: (1) If provision is made in writing in connection with such transaction for the continuance and/or assumption of the awards, or the substitution for such awards of new awards with appropriate adjustment as to the number and kind of shares or other securities deliverable with respect thereto the awards, or the new awards substituted therefor, shall continue, subject to such adjustment, in the manner and under the terms provided in the respective agreements. (2) In the event provision is not made in connection with such transaction for the continuance and/or assumption of the awards, or for the substitution of equivalent awards, then (i) each holder of an outstanding option shall be entitled, immediately prior to the effective date of such transaction, to purchase the full number of shares that he or she would otherwise have been entitled to purchase during the entire remaining term of the option; (ii) the holder of any right or unit shall be entitled, immediately prior to the effective date of such transaction, to exercise such right to the extent the related option is or becomes exercisable at such time in accordance with its terms; (iii) all restrictions on any award of Restricted Shares shall lapse, and (iv) any restriction or risk of forfeiture imposed under the Plan shall lapse immediately prior to the effective date of such transaction. The unexercised portion of any option or right shall be deemed canceled and terminated as of the effective date of such transaction.
Amendment and Termination of Plan
The Board may at any time and in any way amend, suspend or terminate the Plan. No amendment of the Plan and, except as provided in the Plan, no action by the Board shall, without further approval of the stockholders of the Company, increase the total number of shares of Stock with respect to which awards may be made under the Plan, materially increase the benefits accruing to Participants under the Plan or materially modify the requirements as to eligibility for participation in the Plan, if stockholder approval of such amendment is a condition of Securities and Exchange Commission Rule 16b-3 or its successor rule or statute, the Code or any exchange or market system on which the Stock is listed at the time such amendment is adopted.
Federal Income Tax Consequences of the Plan
The federal income tax consequences of grants under the Plan will depend on the type of grant. The following description provides only a general description of the application of federal income tax laws to grants under the Plan. This discussion is intended for the information of stockholders considering how to vote at the Annual Meeting and not as tax guidance to grantees, as the consequences may vary with the types of grants made, the identity of the grantees and the method of payment or settlement. The summary does not address the effects of other federal taxes (including possible “golden parachute” excise taxes) or taxes imposed under state, local, or foreign tax laws.
From the grantees’ standpoint, as a general rule, ordinary income will be recognized at the time of delivery of shares of our common stock or payment of cash under the Plan. Future appreciation on shares of our common stock held beyond the ordinary income recognition event will be taxable as capital gain when the shares of our common stock are sold. The tax rate applicable to capital gain will depend upon how long the grantee holds the shares. We, as a general rule, will be entitled to a tax deduction that corresponds in time and amount to the ordinary income recognized by the grantee, and we will not be entitled to any tax deduction with respect to capital gain income recognized by the grantee.
Exceptions to these general rules arise under the following circumstances:
| ● | If shares of our common stock, when delivered, are subject to a substantial risk of forfeiture by reason of any employment or performance-related condition, ordinary income taxation and our tax deduction will be delayed until the risk of forfeiture lapses, unless the grantee makes a special election to accelerate taxation under section 83(b) of the Code. | |
| ● | If an employee exercises a stock option that qualifies as an ISO, no ordinary income will be recognized, and we will not be entitled to any tax deduction, if shares of our common stock acquired upon exercise of the stock option are held until the later of (A) one year from the date of exercise and (B) two years from the date of grant. However, if the employee disposes of the shares acquired upon exercise of an ISO before satisfying both holding period requirements, the employee will recognize ordinary income at the time of the disposition equal to the difference between the fair market value of the shares on the date of exercise (or the amount realized on the disposition, if less) and the exercise price, and we will be entitled to a tax deduction in that amount. The gain, if any, in excess of the amount recognized as ordinary income will be long-term or short-term capital gain, depending upon the length of time the employee held the shares before the disposition. | |
| ● | A grant may be subject to a 20% tax, in addition to ordinary income tax, at the time the grant becomes vested, plus interest, if the grant constitutes deferred compensation under section 409A of the Code and the requirements of section 409A of the Code are not satisfied. |
Section 162(m) of the Code generally disallows a publicly held corporation’s tax deduction for compensation paid to its chief executive officer or certain other officers in excess of $1 million in any year. Qualified performance-based compensation is excluded from the $1 million deductibility limit, and therefore remains fully deductible by the corporation that pays it. We intend that options and SARs granted under the Plan will be qualified performance-based compensation. Stock units, stock awards, dividend equivalents, and other stock-based awards granted under the Plan may be designated as qualified performance-based compensation if the Committee conditions such grants on the achievement of specific performance goals in accordance with the requirements of section 162(m) of the Code.
We have the right to require that grantees pay to us an amount necessary for us to satisfy our federal, state or local tax withholding obligations with respect to grants. We may withhold from other amounts payable to a grantee an amount necessary to satisfy these obligations. The Committee may permit a grantee to satisfy our withholding obligation with respect to grants paid in shares of our common stock by having shares withheld, at the time the grants become taxable, provided that the number of shares withheld does not exceed the individual’s minimum applicable withholding tax rate for federal, state and local tax liabilities.
Historical Awards under the Plan
The following table sets forth information with respect to restricted stock, restricted stock units and stock options granted pursuant to the current version of the Plan to our named executive officers, the director nominees and the other groups set forth below as of December 31, 2021.
| Name and Principal Position | Stock, RSUs and Options Granted | |||
Dwight Egan President, Chief Executive Officer and Chairman of the Board | 500,000 | |||
Brian Brown Chief Financial Officer and Secretary | 130,000 | |||
Reed Benson Former Chief Financial Officer and Secretary | 277,500 | |||
Richard Serbin Director | 124,945 | |||
James Nelson Director | 87,500 | |||
Edward Murphy Director | 87,500 | |||
Eugene Durenard Director | 97,500 | |||
| All named-executive officers as a group (3 persons) | 907,500 | |||
| All nominees for election as a director as a group (2 persons) | 212,445 | |||
| All employees (other than named executive officers) as a group (130 persons) | 3,115,391 | |||
Market Value
The closing stock price of or common stock on The NASDAQ Capital Market on July 8, 2022 was $5.98 per share.
PROPOSAL NO. 3 – ADVISORY VOTE ON EXECUTIVE COMPENSATION (“SAY-ON-PAY”)
Background
The Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank Act”) requires that stockholders have the opportunity to cast an advisory (non-binding) vote on executive compensation (a so-called “say-on-pay” vote), as well as an advisory vote with respect to whether future “say-on-pay” votes will be held every one, two or three years (a so-called “say-on-frequency” vote).
Our executive compensation programs are designed to attract, motivate and retain our named executive officers (“NEOs”), who are critical to our success. Under these programs, our NEOs are rewarded for the achievement of both specific financial and strategic goals, which are expected to result in increased stockholder value. Please read the tables and narrative disclosure that follow for additional details about our executive compensation programs, including information about the year ended December 31, 2021 compensation of our NEOs.
The Compensation Committee regularly reviews the compensation programs for our NEOs to ensure that they achieve the desired goals of aligning our executive compensation structure with our stockholders’ interests and with current market practices. This includes establishing corporate target goals and objectives based on our strategic and operating plans. We closely monitor the compensation programs and pay levels of executives at other similarly situated companies, so that we may ensure that our compensation programs are within the norm of market practices. This enables us to retain our executive officers in a competitive market for executive talent.
We believe that our executive compensation programs have been effective at motivating the achievement of positive results, appropriately aligning pay and performance, and enabling us to attract and retain talented executives within our industry.
Recommendation
We request stockholder approval of our compensation of our NEOs for the year ended December 31, 2021 as disclosed in this Proxy Statement pursuant to the SEC’s compensation disclosure rules (which disclosure includes the compensation tables, and the narrative disclosures that accompany the compensation tables within the Executive Compensation section of this Proxy Statement). This vote is not intended to address any specific item of compensation, but rather the overall compensation of our NEOs and the philosophy, policies and practices described in this Proxy Statement.
Accordingly, we ask that you vote “FOR” the following resolution at our Annual Meeting:
“RESOLVED, that the stockholders of Co-Diagnostics, Inc., (the “Company”) approve, on an advisory basis, the compensation of the named executive officers, as disclosed in the Company’s Proxy Statement for the Annual Meeting of Stockholders pursuant to the compensation disclosure rules of the Securities and Exchange Commission, including the Summary Compensation Table and the other related tables and disclosure within the Executive Compensation section of this Proxy Statement.”
The vote solicited for Proposal No.3 is advisory, and therefore is not binding on the Company, our Board of Directors or our Compensation Committee, nor will its outcome require the Company, our Board of Directors or our Compensation Committee to take any action. Moreover, the outcome of the vote will not be construed as overruling any decision by the Company, the Board of Directors or the Compensation Committee. However, our Compensation Committee, which is responsible for designing and administering our executive compensation programs, values the opinions expressed by our stockholders in their vote on this Proposal and will consider the outcome of this vote when making future compensation decisions for our NEOs.
We currently intend to include a stockholder advisory resolution on our executive compensation program at our annual meeting of stockholders each year.
PROXIES SOLICITED BY THE BOARD OF DIRECTORS WILL BE VOTED “FOR” PROPOSAL NO. 3 UNLESS STOCKHOLDERS SPECIFY A CONTRARY VOTE.
PROPOSAL NO. 4 – RATIFICATION OF HAYNIE & COMPANY AS THE COMPANY’S INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR THE FISCAL YEAR ENDING DECEMBER 31, 2022
The Audit Committee appointed Haynie & Company (“Haynie”) to serve as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2022, and further directed that the selection of the independent registered public accounting firm be submitted for ratification by the stockholders at the Annual Meeting. Stockholders are asked to ratify the appointment of Haynie at the Annual Meeting. Representatives of Haynie are expected to be available during the Annual Meeting, will have an opportunity to make a statement if they desire to do so, and are expected to be available to respond to appropriate questions from stockholders.
Accounting Fees and Services
The following table presents aggregate fees for professional services rendered by our independent auditors for the respective periods.
| Years Ended December 31, | ||||||||
| 2021 | 2020 | |||||||
| Audit fees | $ | 113,100 | $ | 115,000 | ||||
| Audit related fees | - | - | ||||||
| Other consulting fees | - | - | ||||||
| Tax fees | - | 1,000 | ||||||
| Total fees | $ | 113,100 | $ | 116,000 | ||||
Audit fees consist of fees for professional services provided in connection with the audit of our annual consolidated financial statements, review of our quarterly consolidated financial statements and our offerings.
Tax fees included fees associated with tax compliance and tax consultations.
The audit committee has adopted a policy that requires advance approval of all services performed by the independent auditor when fees are expected to exceed $15,000. The audit committee has delegated to the audit committee chairperson, Mr. Durenard, the authority to approve services, subject to ratification by the audit committee at its next committee meeting. All fees incurred were pre-approved by the audit committee.
Vote Required
Approval of the ratification of the appointment of Haynie as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2022 requires the affirmative vote of a majority of the votes cast at the Annual Meeting. If the appointment of Haynie is ratified, the Audit Committee, in its sole discretion, may change the appointment at any time during the year if it determines that such a change would be in the best interests of the Company and its stockholders. Conversely, if stockholders fail to ratify the appointment, the Audit Committee will reconsider the appointment.
BOARD RECOMMENDATION
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE “FOR” PROPOSAL NO. 4.
PROXIES SOLICITED BY THE BOARD OF DIRECTORS WILL BE VOTED “FOR” PROPOSAL NO. 4 UNLESS STOCKHOLDERS SPECIFY A CONTRARY VOTE.
AUDIT COMMITTEE REPORT
The Audit Committee has reviewed and discussed the audited consolidated financial statements of the Company with management. The Audit Committee has discussed with the independent registered public accounting firm the matters required to be discussed by Auditing Standard No. 1301, Communications with Audit Committees. The Audit Committee has received the written disclosures and the letter from the independent registered public accounting firm required by applicable requirements of the Public Company Accounting Oversight Board regarding the independent accountant’s communications with the Audit Committee concerning independence, and has discussed with the independent accountant the independent accountant’s independence. Based on the review and discussions referred to above in this report, the Audit Committee recommended to the Board of Directors that the audited financial statements be included in the Company’s Annual Report on Form 10-K for the year ended December 31, 20192021 filed with the Commission on March 30, 2020.24, 2022.
The Audit Committee
Eugene Durenard, PhD (Chairman)
Edward L. Murphy
Richard S. Serbin
James B. Nelson
INFORMATION REGARDING THE EXECUTIVE OFFICERS OF THE COMPANY
Set forth below is biographical information with respect to each current executive officer of the Company. In addition to the executive officer listed below, Mr. Egan, who serves as director of the Company, is executive officer of the Company.
Reed L. Benson has been Chief Financial Officer and Secretary from November 2014 to the present and a director from November 2014 to May 2017. Since September, 2008 to the present, he is engaged in the private practice of law. From October 2004 to September 2008 he was employed as Chief Financial Officer, Secretary, and General Counsel and member of Board of Directors of Broadcast International, Inc., a publicly traded communications services company. From 2001 to October 2004, he was in the private practice of law where his practice focused on tax and business-related matters. From July 1995 to January 2001 he was secretary and general counsel for Data Broadcasting Corporation, a provider of market information to individual investors. Mr. Benson received his J.D. degree from the University of Utah School of Law in 1976 and a Bachelor of Science Degree in Accounting from the University of Utah in 1971. Mr. Benson became a Certified Public Accountant in 1974. Mr. Benson’s experience in finance, accounting and business consulting, together with his role as our CFO and prior public company directorship, provide Mr. Benson with expertise enabling critical input to our company.
Brent Satterfield has been our Chief Science Officer since April 2013. Dr. Satterfield has been employed by the Company from January 31, 2015 to the present. Prior to that he was the sole stockholder and owner of DNA Logix, Inc. from January 2013 to January 31, 2015, and in DNA Logix he developed and patented the technology now owned by the Company. He founded Co-Diagnostics in April 2013 and is the first in his field to use engineering mathematics to design new DNA testing technology. From 2006 to 2008, he was employed by Arcxis Biotechnologies where he developed new diagnostic platforms for groups such as the Department of Homeland Security, the National Biodefense Analysis and Countermeasures Center, the United States Army Medical Research Institute of Infectious Disease, Sandia National Laboratories, the California Department of Public Health and numerous others. Under fellowship from the Department of Homeland Security, he received his Ph.D. in 2007 in Bioengineering with an emphasis in entrepreneurship and intellectual property law from Arizona State University in a dual-enrollment program with UC Berkeley. Dr. Satterfield’s experience with the science underlying all of the Company’s products and technology gives him valuable experience in advising the board on the status of the products and our positioning in the diagnostic testing industry.
PROPOSAL NO. 2 – RATIFICATION OF HAYNIE & COMPANY AS THE COMPANY’S INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR THE FISCAL YEAR ENDING DECEMBER 31, 2020
The Audit Committee appointed Haynie & Company (“Haynie”) to serve as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2020, and further directed that the selection of the independent registered public accounting firm be submitted for ratification by the stockholders at the Annual Meeting. Stockholders are asked to ratify the appointment of Haynie at the Annual Meeting. Representatives of Haynie are expected to be available during the Annual Meeting, will have an opportunity to make a statement if they desire to do so, and are expected to be available to respond to appropriate questions from stockholders.
| 2019 | 2018 | |||||||
| Audit fees | $ | 69,000 | $ | 66,000 | ||||
| Audit-related fees | - | - | ||||||
| Tax fees | 3,000 | 3,000 | ||||||
| All other fees | - | - | ||||||
| Total | $ | 72,000 | $ | 69,000 | ||||
Accounting Fees and Services
Fees for professional services provided by our current independent auditors for each of the last two fiscal years, in each of the following categories, are as follows:
Audit fees included fees associated with the annual audit and reviews of our annual and quarterly reports for 2019 and our annual report for 2018. All audit fees incurred during 2019 were pre-approved by the audit committee. All audit fees incurred during 2018 were pre-approved by our Board of Directors.
Tax fees included fees associated with tax compliance and tax consultations. All tax fees incurred during 2019 were pre-approved by the audit committee. All tax fees incurred during 2018 were pre-approved by our Board of Directors.
The audit committee has adopted a policy that requires advance approval of all services performed by the independent auditor when fees are expected to exceed $15,000. The audit committee has delegated to the audit committee chairman, Mr. Durenard has authority to approve services, subject to ratification by the audit committee at its next committee meeting.
Vote Required
Approval of the ratification of the appointment of Haynie as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2020 requires the affirmative vote of a majority of the votes cast at the Annual Meeting. If the appointment of Haynie is ratified, the Audit Committee, in its sole discretion, may change the appointment at any time during the year if it determines that such a change would be in the best interests of the Company and its stockholders. Conversely, if stockholders fail to ratify the appointment, the Audit Committee will reconsider the appointment.
BOARD RECOMMENDATION
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE “FOR” PROPOSAL NO. 2.
PROXIES SOLICITED BY THE BOARD OF DIRECTORS WILL BE VOTED “FOR” PROPOSAL NO. 2 UNLESS STOCKHOLDERS SPECIFY A CONTRARY VOTE.
Executive Compensation
The table below summarizes the total compensation paid or earned by each of the named executive officers in their respective capacities for the fiscal years ended December 31, 2019, 2018 and 2017. When setting total compensation for each of the named executive officers, the compensation committee reviewed tally sheets which show the executive’s current compensation, including equity and non-equity-based compensation. We have omitted in this report certain columns otherwise required to be included because there was no compensation made with respect to such columns, as permitted by applicable SEC regulations.
| Name and | Salary | Bonus | Awards | Other | Total | |||||||||||||||||||
| Principal Position | Year | ($) | ($) | ($) | Compensation | ($) | ||||||||||||||||||
| Dwight H. Egan | 2019 | $ | 275,000 | $ | 20,000 | $ | 165,000 | $ | — | $ | 460,000 | |||||||||||||
| President & Chief Executive Officer | 2018 | 275,000 | 12,500 | 186,000 | — | 463,500 | ||||||||||||||||||
| 2017 | 195,000 | 15,000 | — | — | 210,000 | |||||||||||||||||||
| Reed L Benson | 2019 | $ | 200,000 | $ | 15,000 | $ | 137,500 | $ | — | $ | 352,500 | |||||||||||||
| Chief Financial Officer and Secretary | 2018 | 200,000 | 10,000 | 155,000 | — | 365,000 | ||||||||||||||||||
| 2017 | 195,000 | 10,000 | — | — | 205,000 | |||||||||||||||||||
| Brent Satterfield | 2019 | $ | 237,500 | $ | — | $ | — | $ | — | $ | 237,500 | |||||||||||||
| Chief Technology Officer (1) | 2018 | 237,500 | — | — | — | 237,500 | ||||||||||||||||||
| 2017 | 159,300 | — | — | — | 159,300 | |||||||||||||||||||
Other Compensation
We do not have any non-qualified deferred compensation plan.
Outstanding Equity Awards at Fiscal Year-End
| Option Awards | Stock Awards | |||||||||||||||||||||||||||||||
| Name | Number of Securities Underlying Unexercised Options (#) Exercisable | Number of Securities Underlying Unexercised Options (#) Unexercisable | Option Exercise Price ($) | Option Expiration Date | Number of Shares or Units of Stock that have not Vested (#) | Market Value of shares or Units of Stock that have not Vested ($) | Number of Unearned shares, units or other rights that have not vested (#) | Market or payout value of unearned shares, units or other rights that have not vested ($) | ||||||||||||||||||||||||
| (a) | (b) | (c) | (d) | (e) | (f) | (g) | (h) | (i) | ||||||||||||||||||||||||
| Dwight H. Egan | 100,000 | 50,000 | 2.63 | 01/15/2023 | — | — | — | — | ||||||||||||||||||||||||
| 50,000 | 100,000 | 1.10 | 09/03/2024 | |||||||||||||||||||||||||||||
| Reed L. Benson | 83,333 | 41,667 | 2.63 | 01/15/2023 | — | — | — | — | ||||||||||||||||||||||||
| 41,666 | 83,333 | 1.10 | 09/03/2024 | |||||||||||||||||||||||||||||
Potential Payments Upon Termination or Change of Control
There is no compensation payable to the named executive officers upon voluntary termination, retirement, involuntary not-for-cause termination, termination following a change of control or in the event of disability or death of the executive.
Compensation Committee Interlocks and Insider Participation in Compensation Decisions
None of our executive officers served as a member of the compensation committee or as a director of any other company.
STOCKHOLDER COMMUNICATIONS WITH THE BOARD OF DIRECTORS
Stockholders and other interested parties may make their concerns known confidentially to the Board of Directors or the independent directors by sending an email to the Company’s Secretary. Each communication should specify the applicable addressee or addressees to be contacted as well as the general topic of the communication. We will initially receive and process communications before forwarding them to the addressee. We generally will not forward to the directors a communication that we determine is primarily commercial in nature or related to an improper or irrelevant topic, or that requests general information about the Company.
ANNUAL REPORTS
A copy of the Company’s Annual Report to Stockholders for the year ended December 31, 20192021 accompanies this Proxy Statement and is also posted on www.proxyvote.com and on the SEC’s website www.sec.gov.
Upon receipt of a written request, the Company will furnish to any stockholder without charge a copy of the Company’s Annual Report on Form 10-K for the year ended December 31, 20192021 without exhibits required to be filed under the Exchange Act. Such written requests should be directed to 2401 S. Foothill Drive, Suite D, Salt Lake City, Utah 84109. The Annual Report on Form 10-K is not part of the proxy solicitation materials.
DELIVERY OF DOCUMENTS TO STOCKHOLDERS SHARING AN ADDRESS
Under rules adopted by the SEC, we are permitted to deliver a single copy of the notice of Internet availability of the proxy materials or proxy materials to any household at which two or more stockholders reside if we believe the stockholders are members of the same family, unless we have received contrary instructions from one or more of the security holders. This process, called “householding,” allows us to reduce the number of copies of these materials we must print and mail. Even if householding is used, each stockholder will continue to be entitled to submit a separate proxy or voting instructions.
Certain banks, brokers, broker-dealers and other similar organizations acting as nominee record holders may be participating in the practice of “householding” proxy materials. If you are a beneficial owner of our shares and would prefer to receive separate copies of a proxy statement or annual report for other stockholders in your household, either now or in the future, please contact your bank, broker, broker-dealer or other similar organization serving as your nominee. Beneficial owners of our shares sharing an address who are receiving multiple copies of the proxy materials and who wish to receive a single copy of these materials in the future will need to contact their bank, broker, broker-dealer or other similar organization serving as their nominee to request that only a single copy of each document be mailed to all stockholders at the shared address in the future.
If you are eligible for householding, but you and other stockholders of record with whom you share an address currently receive multiple copies of our annual report and/or proxy statement, or if you hold stock in more than one account, and in either case you wish to receive only a single copy of each of these documents for your household, please contact Broadridge Financial Solutions, Inc., Householding Department, in writing at 51 Mercedes Way, Edgewood, New York 11717; or by telephone: (866) 540-7095. If you participate in householding and wish to receive a separate copy of this proxy statement, or if you do not wish to participate in householding and prefer to receive separate copies of our annual report and/or proxy statement in the future, please contact Broadridge Financial Solutions, Inc., Householding Department as indicated above.
STOCKHOLDER PROPOSALS FOR
OUR 20212023 ANNUAL MEETING
Stockholder proposals intendedStockholders interested in submitting a proposal for inclusion in our proxy statement for next year’s annual meeting must do so in compliance with our Bylaws and applicable SEC rules and regulations. Under Rule 14a-8 adopted by the SEC, to be considered for inclusion in next year’sour proxy statement and form of proxymaterials for presentation at the 2021 Annual Meeting of Stockholdersour 2023 annual meeting, a stockholder proposal, including nominations for directors, must comply with Exchange Act Rule 14a-8, as amended. The deadline for submitting such proposals is May 3, 2020, unlessbe received in writing by our Corporate Secretary no later than 5:00 p.m. MST on March 23, 2023. If the date of the 2021 Annual Meetingour 2023 annual meeting is moved more than 30 days before or after the one-year anniversary date of this year’s meeting, the Annual Meeting,deadline for inclusion of proposals in which case proposals mustour proxy statement will instead be submitted a reasonable time before we begin to print and mail our proxy materials fornext year. Any such proposals will also need to comply with the 2021 Annual Meeting. The submissionvarious provisions of Rule 14a-8, which governs the basis on which such stockholder proposals can be included or excluded from Company-sponsored proxy materials.
If a stockholder desires to submit a proposal, doesincluding nominations for directors, for consideration at the 2023 annual meeting, but not guaranteehave the proposal included with our proxy solicitation materials relating to the 2023 annual meeting, the stockholder must comply with the procedures set forth in our governing documents. Our Bylaws require that, it willfor business to be properly brought before an annual meeting by a stockholder, such stockholder must have given timely notice thereof, along with other specified material, in proper written form to the Company. To be timely, a stockholder’s notice pertaining to an annual meeting shall be delivered to the Corporate Secretary at the principal executive offices of the Company not less than seventy-five (75) or more than one-hundred and twenty-five (125) days prior to the first anniversary of the date of the preceding year’s annual meeting; provided, however, that in the event that the date of the annual meeting is more than thirty (30) days before or more than sixty (60) days after the previous year’s annual meeting, notice by the stockholder to be timely must be so delivered not earlier than the close of business on the later of the 75th day prior to the scheduled date of such annual meeting or the 15th day following the day on which public announcement of the date of such meeting is first made by the Company.
Any stockholder who wishes to make such a proposal should obtain a copy of the Bylaws, which contain these and other requirements with respect to stockholder proposals and director nominations, including certain information that must be included inconcerning the stockholder and each proposal and nominee. Our Bylaws were filed with the SEC as an exhibit to our proxy statement.
Stockholder proposals should be addressedCurrent Report on Form 8-K, filed on February 1, 2022. You may also obtain a copy by writing to the Companyour Corporate Secretary, at Co-Diagnostics, Inc., 2401 S. Foothill Drive, Suite D, Salt Lake City, Utah 84109, Attn: Corporate Secretary. The specific requirements for submitting stockholder proposals are set forth in Section 14a-8 of the Exchange Act. Outside of the process provided by Rule 14a-8 of the Exchange Act, our bylaws do not provide for stockholders to submit proposals or director nominees for consideration at our annual meetings.84109.
OTHER MATTERS
Management does not know of any other matters which are likely to be brought before the meeting. However, in the event that any other matters properly come before the meeting, the persons named in the enclosed proxy will vote said proxy in accordance with their judgment in said matters.
YOUR VOTE IS IMPORTANT! WE URGE YOU TO SIGN AND DATE THE ENCLOSED PROXY CARD AND RETURN IT TODAY IN THE ENCLOSED POSTAGE-PAID ENVELOPE.
| BY ORDER OF THE BOARD OF DIRECTORS, | |
| /s/ Dwight H. Egan | |
| Chairman of the Board and Chief Executive Officer | |
| Salt Lake City, Utah | |
APPENDIX 1
CO-DIAGNOSTICS, INC. 2015 LONG TERM INCENTIVE PLAN, AS AMENDED AND RESTATED
