Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Mar. 31, 2020 | May 13, 2020 | |
Cover [Abstract] | ||
Entity Registrant Name | Co-Diagnostics, Inc. | |
Entity Central Index Key | 0001692415 | |
Document Type | 10-Q | |
Document Period End Date | Mar. 31, 2020 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business | true | |
Entity Emerging Growth Company | true | |
Entity Ex Transition Period | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 27,457,133 | |
Document Fiscal Period Focus | Q1 | |
Document Fiscal Year Focus | 2020 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets (Unaudited) - USD ($) | Mar. 31, 2020 | Dec. 31, 2019 |
Current Assets | ||
Cash and cash equivalents | $ 17,369,323 | $ 893,138 |
Accounts receivables, net | 1,055,738 | 131,382 |
Inventory | 686,078 | 197,168 |
Prepaid expenses | 499,327 | 362,566 |
Total current assets | 19,610,466 | 1,584,254 |
Other Assets | ||
Property and equipment, net | 276,454 | 186,832 |
Investment in joint venture | 593,421 | 434,240 |
Total other assets | 869,875 | 631,072 |
Total assets | 20,480,341 | 2,215,326 |
Current Liabilities | ||
Accounts payable | 132,516 | 5,959 |
Accrued expenses | 496,524 | 200,788 |
Accrued expenses (related party) | 120,000 | 120,000 |
Deferred revenue | 444,332 | 1,323 |
Total current liabilities | 1,193,372 | 328,070 |
Long-term Liabilities, net of current portion | ||
Accrued expenses-long-term (related party) | 120,000 | 150,000 |
Total long-term liabilities, net of current portion | 120,000 | 150,000 |
Total liabilities | 1,313,372 | 478,070 |
STOCKHOLDERS' EQUITY (DEFICIT): | ||
Convertible preferred stock, $0.001 par value; 5,000,000 shares authorized, 0 and 25,600 shares issued and outstanding as of March 31, 2020 and December 31, 2019, respectively | 26 | |
Common stock, $0.001 par value, 100,000,000 shares authorized; 27,451,064 and 17,342,922 shares issued and outstanding, as of March 31, 2020 and December 31, 2019, respectively. | 27,451 | 17,343 |
Additional paid-in capital | 45,172,525 | 26,687,701 |
Accumulated deficit | (26,033,007) | (24,967,814) |
Total stockholders' equity | 19,166,969 | 1,737,256 |
Total liabilities and stockholders' equity | $ 20,480,341 | $ 2,215,326 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares | Mar. 31, 2020 | Dec. 31, 2019 |
Statement of Financial Position [Abstract] | ||
Preferred stock, par value | $ 0.001 | $ 0.001 |
Preferred stock, shares authorized | 5,000,000 | 5,000,000 |
Preferred stock, shares issued | 25,600 | |
Preferred stock, shares outstanding | 25,600 | |
Common stock, par value | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 100,000,000 | 100,000,000 |
Common stock, shares issued | 27,451,064 | 17,342,922 |
Common stock, shares outstanding | 27,451,064 | 17,342,922 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations (Unaudited) - USD ($) | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Income Statement [Abstract] | ||
Net sales | $ 1,548,528 | $ 3,400 |
Cost of sales | 481,740 | 452 |
Gross profit | 1,066,788 | 2,948 |
Operating expenses: | ||
Sales and marketing | 268,483 | 256,103 |
Administrative and general | 1,459,484 | 640,363 |
Research and development | 400,022 | 347,306 |
Depreciation and amortization | 20,748 | 13,668 |
Total operating expenses | 2,148,737 | 1,257,440 |
Loss from operations | (1,081,949) | (1,254,492) |
Other expense: | ||
Interest income | 7,575 | 408 |
Interest expense | (106,427) | |
Gain on disposition of assets | 850 | |
Gain (loss) on equity method investment in joint venture | 9,181 | (8,728) |
Total other expense | 16,756 | (113,897) |
Loss before income taxes | (1,065,193) | (1,368,389) |
Provision for income taxes | ||
Net loss | $ (1,065,193) | $ (1,368,389) |
Basic and diluted income (loss) per common share | $ (0.05) | $ (0.09) |
Weighted average common shares outstanding, basic and diluted | 22,820,450 | 16,066,633 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Cash flows from operating activities: | ||
Net loss | $ (1,065,193) | $ (1,368,389) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Depreciation and amortization | 20,748 | 13,668 |
Stock based compensation | 432,823 | 87,794 |
Accretion of notes payable discount | 91,428 | |
Gain on disposition of assets | (850) | |
Loss (gain) of equity method investment | (9,181) | 8,728 |
Changes in assets and liabilities: | ||
(Increase) in accounts and other receivables | (924,356) | (21,637) |
(Increase) in prepaid and other assets | (136,761) | (33,724) |
(Increase) in inventory | (488,910) | |
Increase in deferred revenue | 443,009 | |
Increase (decrease) in accounts payable and accrued expenses | 392,293 | (145,900) |
Net cash used in operating activities | (1,335,528) | (1,368,882) |
Cash flows from investing activities: | ||
Purchase of property and equipment | (100,370) | |
Investment in joint venture | (150,000) | (72,000) |
Net cash used in investing activities | (250,370) | (72,000) |
Cash flows from financing activities: | ||
Proceeds from sale of common stock | 19,520,005 | 5,496,002 |
Proceeds from sale of preferred stock | 1,000,000 | |
Payment of offering costs | (1,457,922) | (592,764) |
Net cash provided by financing activities | 18,062,083 | 5,903,238 |
Net increase in cash | 16,476,185 | 4,462,356 |
Cash and cash equivalents beginning of period | 893,138 | 950,237 |
Cash and cash equivalents end of period | 17,369,323 | 5,412,593 |
Supplemental disclosure of cash flow information: | ||
Interest paid | 15,000 | |
Income taxes paid |
Condensed Consolidated Statem_3
Condensed Consolidated Statement of Stockholders' Equity (Unaudited) - USD ($) | Convertible Preferred Stock [Member] | Common Stock [Member] | Additional Paid-In- Capital [Member] | Accumulated Deficit | Total |
Beginning balance at Dec. 31, 2018 | $ 12,923 | $ 17,622,433 | $ (18,694,167) | $ (1,058,811) | |
Beginning balance, shares at Dec. 31, 2018 | 12,923,383 | ||||
Public Offering, net of offering costs | $ 3,926 | 4,899,312 | 4,903,238 | ||
Public Offering, net of offering costs, shares | 3,925,716 | ||||
Stock-based compensation expense | 87,794 | 87,794 | |||
Stock-based compensation expense, shares | |||||
Conversion of Preferred Stock to Common | $ (2) | $ 167 | (165) | ||
Conversion of Preferred Stock to Common, shares | (2,000) | 166,667 | |||
Issuance of Preferred Stock | $ 30 | 2,999,970 | 3,000,000 | ||
Issuance of preferred stock, shares | 30,000 | ||||
Net loss | (1,368,389) | (1,368,389) | |||
Ending balance at Mar. 31, 2019 | $ 28 | $ 17,016 | 25,609,344 | (20,062,556) | 5,563,832 |
Ending balance, shares at Mar. 31, 2019 | 28,000 | 170,015,766 | |||
Beginning balance at Dec. 31, 2019 | $ 26 | $ 17,343 | 26,687,701 | (24,967,814) | 1,737,256 |
Beginning balance, shares at Dec. 31, 2019 | 25,600 | 17,342,922 | |||
Public Offering, net of offering costs | $ 7,243 | 18,004,840 | 18,012,083 | ||
Public Offering, net of offering costs, shares | 7,242,954 | ||||
Issuance of Common Stock for warrant exercises | $ 720 | 49,280 | 50,000 | ||
Issuance of Common Stock for warrant exercises, shares | 719,492 | ||||
Stock-based compensation expense | $ 12 | 432,811 | 432,823 | ||
Stock-based compensation expense, shares | 12,363 | ||||
Conversion of Preferred Stock to Common | $ (26) | $ 2,133 | (2,107) | ||
Conversion of Preferred Stock to Common, shares | (25,600) | 2,133,333 | |||
Net loss | (1,065,193) | (1,065,193) | |||
Ending balance at Mar. 31, 2020 | $ 27,451 | $ 45,172,525 | $ (26,033,007) | $ 19,166,969 | |
Ending balance, shares at Mar. 31, 2020 | 27,451,064 |
Condensed Consolidated Statem_4
Condensed Consolidated Statement of Stockholders' Equity (Parenthetical) - USD ($) | Mar. 31, 2020 | Mar. 31, 2019 |
Statement of Stockholders' Equity [Abstract] | ||
Public offering net of costs | $ 1,457,922 | $ 592,764 |
Overview and Basis of Presentat
Overview and Basis of Presentation | 3 Months Ended |
Mar. 31, 2020 | |
Accounting Policies [Abstract] | |
Overview and Basis of Presentation | NOTE 1 – OVERVIEW AND BASIS OF PRESENTATION The accompanying unaudited condensed consolidated financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and with the instructions to Form 10-Q as they are prescribed for smaller reporting companies. Accordingly, they do not include all the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary to make the financial statements not misleading have been included. Operating results for the three-month periods ended March 31, 2020 are not necessarily indicative of the results that may be expected for the year ending December 31, 2020. These statements should be read in conjunction with the Company’s audited financial statements and related notes for the year ended December 31, 2019, included in the Company’s Annual Report on Form 10-K filed on March 30, 2020. Certain 2019 financial statement amounts have been reclassified to conform to 2020 presentations. Description of Business Co-Diagnostics, Inc., a Utah corporation (“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 newest technical advance involves a novel approach to Polymerase Chain Reaction (“PCR”) test design (“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 wider 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 and RNA test design, to “engineer” a DNA 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 generating a profit margin. 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 a clinical evaluation setting using initial production tests to confirm that the product as designed meets the user needs. CDI’s diagnostics systems enable very rapid, low-cost, sophisticated molecular testing for organisms and genetic diseases by greatly automating historically complex procedures in both the development and administration of tests. 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 FDA and may sell that test to qualified labs. In addition to testing for infectious disease, the technology lends itself to identifying any section of a DNA strand that describe any type of genetic trait, which creates a number of significant applications. We are active in designing and licensing tests that identify genetic traits in plant and animal genomes. We also have a number of 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. Use of Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the financial statements and the accompanying notes. Such estimates include receivables and other long-lived assets, legal and regulatory contingencies, income taxes, share based arrangements, and others. These estimates and assumptions are based on management’s best estimates and judgments. Actual amounts and results could differ from those estimates. |
Significant Accounting Policies
Significant Accounting Policies | 3 Months Ended |
Mar. 31, 2020 | |
Accounting Policies [Abstract] | |
Significant Accounting Policies | NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES Accounts Receivable Trade accounts receivable are carried at original invoice amount less an estimate made for doubtful receivables based on a review of all outstanding amounts on a monthly basis. Management determines the allowance for doubtful accounts by identifying troubled accounts and by using historical experience applied to an aging of accounts. Trade receivables are written off when deemed uncollectible. Recoveries of trade receivables previously written off are recorded when collected. At March 31, 2020, total accounts receivable was $1,097,738 with an allowance for uncollectable accounts of $42,000 resulting in a net amount of $1,055,738. Equity-Method Investments Our equity method investments are initially recorded at costs and are included in other long-term assets in the accompanying condensed consolidated balance sheet. We adjust the carrying value of our investment based on our share of the earnings or losses in the periods which they are reported by the investee until the carrying amount is zero. The earnings or losses are included in other expense in the accompanying condensed consolidated statements of operations. Inventory Inventory is stated at the lower of cost or net-realizable value. Inventory cost is determined on a first-in first-out basis that approximates average cost in accordance with ASC 330-10-30-12. At March 31, 2020 we had $686,078 in inventory of which $251,872 was finished goods, $182,085 was raw materials and $252,121 was work-in-process. Provisions are made to reduce slow-moving, obsolete, or unusable inventories to their estimated useful or scrap values. The Company establishes reserves for this purpose. Revenue Recognition The Company generates revenue from product sales and license sales. The Company recognizes revenue when all of the following criteria are satisfied: (i) identification of the promised goods or services in the contract; (ii) determination of whether the promised goods or services are performance obligations, including whether they are distinct in the context of the contract; (iii) measurement of the transaction price, including the constraint on variable consideration; (iv) allocation of the transaction price to the performance obligations; and (v) recognition of revenue when, or as the Company satisfies each performance obligation. The Company constrains revenue by giving consideration to factors that could otherwise lead to a probable reversal of revenue. The Company records any payments received from customers prior to the Company fulfilling its performance obligation(s) as deferred revenue. Earnings (Loss) per Share Basic earnings or loss per common share is computed by dividing net income or loss applicable to common shareholders by the weighted average number of shares outstanding during each period. As the Company experienced net losses during the three months ended March 31, 2020, and 2019, respectively, no common stock equivalents have been included in the diluted earnings per common share calculations as the effect of such common stock equivalents would be anti-dilutive. For the three months ended March 31, 2020, there were 2,320,907 potentially dilutive shares consisting of 2,121,817 for outstanding options and 199,090 for outstanding warrants. For the three months ended March 31, 2019, there were 1,679,575 potentially dilutive shares consisting of: (i) 1,172,707 for outstanding options, (ii) 483,535 for outstanding warrants and (iii) 23,333 for issued and outstanding shares of convertible preferred stock. Research and Development Research and development costs are expensed when incurred. The Company expensed $400,022 and $347,306 of research and development costs for the three months ended March 31, 2020 and 2019, respectively. Recent Accounting Pronouncements From time to time, new accounting pronouncements are issued by the Financial Accounting Standards Board (“FASB”) that are adopted by the Company as of the specified effective date. If not discussed, management believes that the impact of recently issued standards, which are not yet effective, will not have a material impact on the Company’s financial statements upon adoption. As an emerging growth company (“EGC”), the Company has elected to take advantage of the benefits of the extended transition period provided for in Section 7(a)(2)(B) of the Securities Act of 1933, as amended, for complying with new or revised accounting standards which allows the Company to defer adoption of certain accounting standards until those standards would otherwise apply to private companies. In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842), which requires recognition of leased assets and liabilities on the balance sheet and disclosing key information about leasing arrangements. This update is effective for annual periods and interim periods with those periods beginning after December 15, 2020, for public EGC companies like us. The Company expects to use the modified retrospective transition method with the option to recognize a cumulative-effect adjustment at the date of adoption. The Company expects its balance sheet will be impacted as it records right-of-use assets and lease liabilities on its consolidated balance sheet, but does not expect the adoption of this standard will have a material impact on its consolidated statements of operations and cash flows. In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments-Credit Losses (Topic 326), which requires the measurement and recognition of expected credit losses for certain financial instruments, which includes the Company’s accounts receivable. ASU 2016-13 replaces the existing incurred loss impairment model with an expected loss methodology, which will result in more timely recognition of credit losses. The update is effective for annual periods and interim periods with those periods beginning after December 15, 2021, for public EGC companies like us, but the Company may adopt it on January 1, 2021. The standard requires a cumulative effect adjustment to the balance sheet as of the beginning of the first reporting period in which the guidance is effective. The Company is evaluating the impact of the adoption of ASU 2016-13 on its consolidated financial statements. |
Equity
Equity | 3 Months Ended |
Mar. 31, 2020 | |
Equity [Abstract] | |
Equity | NOTE 3 – EQUITY 2020 On January 28, 2020, we completed the sale of 3,448,278 shares of the Company’s common stock, par value $0.001 per share, at a purchase price of $1.45 per share in a registered direct offering. The aggregate gross proceeds for the sale of the shares was $5,000,003 and we received net proceeds of $4,517,102 after deducting offering costs of $482,901. On February 13, 2020, we completed the sale of 3,324,676 shares of the Company’s common stock, par value $0.001 per share, at a purchase price of $3.08 per share in a registered direct offering. The aggregate gross proceeds for the sale of the shares was $10,240,002 and we received net proceeds of $9,612,561 after deducting offering costs of $627,441. On March 2, 2020, we completed the sale of 470,000 shares of the Company’s common stock, par value $0.001 per share, at a purchase price of $9.00 per share in a registered direct offering. The aggregate gross proceeds for the sale of the shares was $4,230,000 and we received net proceeds of $3,882,420 after deducting offering costs of $347,580. On March 5, 2020 we received $50,000 from the exercise of 25,000 unregistered warrants at an exercise price of $2.00 per share and issued 25,000 shares of our common stock. During the three months ended March 31 2020, we issued an aggregate of 2,133,333 shares of our common stock in conversion of 2,560,000 shares of our Series A Preferred Stock at a conversion price calculated by multiplying the number of preferred shares being converted by $100 and dividing the result by $1.20. During the three months ended March 31 2020, we issued an aggregate of 694,492 shares of our common stock in relation to the cashless exercise of 759,445 previously issued unregistered warrants. During the three months ended March 31, 2020 we issued 12,363 shares valued at $31,193 to 2 companies for investment relations services rendered. 2019 On January 30, 2019, we entered into a securities purchase agreement with accredited investors pursuant to which such investors purchased from an aggregate of 30,000 shares of Series A Convertible Preferred Stock of the Company for an aggregate purchase price of $3,000,000. The purchase price was paid by the investors with $1.0 million in cash and the conversion of a $2.0 million promissory note of the Company issued to the investors. The investors may not convert the Series A Preferred Stock to the extent that such conversion would result in beneficial ownership by the investors and their affiliates of more than 4.99% of the issued and outstanding common stock of the Company. On February 4, 2019, we completed the sale of an aggregate of 3,925,716 shares of the Company’s common stock, par value $0.001 per share, at a purchase price of $1.40 per share in a registered direct offering. The aggregate gross proceeds for the sale of the shares of common stock was $5,496,002 and we received net proceeds of $4,903,238 after offering costs of $592,764. On March 7, 2019, we issued an aggregate of 166,667 shares of our common stock in relation to 2,000 shares of our Series A Preferred Stock being converted to common stock at a conversion price calculated by multiplying the number of preferred shares being converted by $100 and dividing the result by $1.20. |
Stock-Based Compensation
Stock-Based Compensation | 3 Months Ended |
Mar. 31, 2020 | |
Share-based Payment Arrangement, Disclosure [Abstract] | |
Stock-Based Compensation | NOTE 4 – STOCK-BASED COMPENSATION Stock Incentive Plans The Co-Diagnostics, Inc. 2015 Long Term Incentive Plan reserves an aggregate of 6,000,000 shares of common stock issuable upon the grant of awards under the plan. The number of unissued stock options authorized under the plan at March 31, 2020 was 3,878,183. Stock Options The Company uses a Black-Scholes model to value granted stock options which requires various judgmental assumptions including the estimated volatility, risk-free interest rate and expected option term. In determining the expected volatility our computation is based the stock prices of 3 comparable companies and is based on a combination of historical and market-based implied volatility. The risk-free interest rate was based on the yield curve of a zero-coupon U.S. Treasury bond on the date the option was granted with a maturity equal to the expected term of the option. The fair values for the options granted were estimated at the date of grant using the Black Scholes option-pricing model with the following weighted average assumptions: Three Months Ended Risk free interest rate 1.56 % Expected life (in years) 10.0 Expected volatility 63.27 % Expected dividend yield 0.00 % Stock price $ 3.96 We recognized $401,630 and $87,794 of stock-based compensation expense, related to stock options for the three months ended March 31, 2020 and 2019, respectively, which is included in administrative and general expenses. The following table summarizes option activity during the year ended December 31, 2019 and the three months ended March 31, 2020, respectively. Options Weighted Weighted Weighted Outstanding at January 1, 2019 1,172,707 $ 2.23 $ 1.09 8.72 Options granted 890,000 1.07 0.52 9.66 Expired — — — — Forfeited options (40,890 ) (3.85 ) (1.59 ) (8.04 ) Exercised — — — — Outstanding at December 31, 2019 2,021,817 $ 1.69 $ 0.83 8.73 Options granted 100,000 3.96 2.80 9.87 Expired — — — — Forfeited options — — — — Exercised — — — — Outstanding at March 31, 2020 2,121,817 $ 1.79 $ 0.92 8.54 The intrinsic value of options outstanding at March 31, 2020 and 2019 was $7,516,828 and $133,300, respectively. There were 810,000 and 566,667 of unvested option included the table above as of March 31, 2020 and 2019, respectively. Warrants The Company estimates the fair value of issued warrants on the date of issuance as determined using a Black-Scholes pricing model. The Company amortizes the fair value of issued warrants using a vesting schedule based on the terms and conditions of each warrant. The Black-Scholes valuation model requires various judgmental assumptions including the estimated volatility, risk-free interest rate and expected warrant term. In determining the expected volatility, our computation is based on the stock prices of three comparable companies and on a combination of historical and market-based implied volatility. The risk-free interest rate is based on the yield curve of a zero-coupon U.S. Treasury bond on the date the warrant was issued with a maturity equal to the expected term of the warrant. The following table summarizes warrant activity during the year ended December 31, 2019 and the three months ended March 31, 2020, respectively. Warrants Weighted Weighted Weighted Outstanding at January 1, 2019 483,535 4.92 1.99 3.29 Warrants issued 500,000 1.53 1.46 5.00 Expired — — — — Forfeited warrants — — — — Exercised — — — — Outstanding at December 31, 2019 983,535 $ 1.44 $ 1.03 3.34 Warrants issued — — — — Expired — — — — Forfeited warrants — — — — Exercised (784,445 ) (1.28 ) (1.19 ) (2.90 ) Outstanding at March 31, 2020 199,090 $ 2.09 $ 0.38 3.85 The intrinsic value of options exercised in the three months ended March 31, 2020 was $4,973,058. Total unrecognized stock-based compensation was $337,953 at March 31, 2020 for options granted. The Company expects to recognize the aggregate amount of this compensation expense over the next years in accordance with contractual provisions and vesting as follows: Year Amount 2020 $ 247,772 2021 90,181 Total $ 337,953 |
Related Party Transactions
Related Party Transactions | 3 Months Ended |
Mar. 31, 2020 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | NOTE 5 – RELATED PARTY TRANSACTIONS The Company acquired the exclusive rights to the CoPrimer technology pursuant to an exclusive license agreement, dated April 2014 (the “Exclusive License Agreement”), between the Company and DNA Logix, Inc., which was assigned to Dr. Brent Satterfield, one of our current executive officers, prior to our acquisition of DNA Logix, Inc. On March 1, 2017, the Company entered into an amendment to its Exclusive License Agreement for its Cooperative Primers (“License”) technology with Dr. Satterfield. The amendment provides in part that all accrued royalties under the License cease as of January 1, 2017, and we began in January 2017 to pay to Dr. Satterfield $700,000 of accrued royalties at the rate of $10,000 per month. At March 31, 2020, the aggregate balance of this related party liability was $240,000. |
Lease Obligations
Lease Obligations | 3 Months Ended |
Mar. 31, 2020 | |
Leases [Abstract] | |
Lease Obligations | NOTE 6 – LEASE OBLIGATIONS Our offices are located at 2401 S. Foothill Dr., Suite D, Salt Lake City, Utah 84109-1479. In February 2020, the Company entered into a 4-year lease agreement for its office space and in March 2020, the Company entered into an addendum with our landlord for additional space. The new aggregate space consists of approximately 13,687 square feet and expires in February 2024. For the three months ended March 31, 2020 and 2019, the Company expensed $51,818 and $45,582, respectively, for rent. The Company’s ongoing lease obligation as of March 31, 2020 is as follows: Year Amount Remainder of 2020 $ 233,415 2021 311,220 2022 331,220 2023 311,220 2024 51,870 Total $ 1,218,945 |
Subsequent Events
Subsequent Events | 3 Months Ended |
Mar. 31, 2020 | |
Subsequent Events [Abstract] | |
Subsequent Events | NOTE 7 – SUBSEQUENT EVENTS On April 8, 2020, we issued 6,069 shares of our common stock for services rendered pursuant to a consulting agreement. The Company evaluated subsequent events pursuant to ASC Topic 855 and has determined that there are no other events that need to be reported. |
Significant Accounting Polici_2
Significant Accounting Policies (Policies) | 3 Months Ended |
Mar. 31, 2020 | |
Accounting Policies [Abstract] | |
Accounts Receivable | Accounts Receivable Trade accounts receivable are carried at original invoice amount less an estimate made for doubtful receivables based on a review of all outstanding amounts on a monthly basis. Management determines the allowance for doubtful accounts by identifying troubled accounts and by using historical experience applied to an aging of accounts. Trade receivables are written off when deemed uncollectible. Recoveries of trade receivables previously written off are recorded when collected. At March 31, 2020, total accounts receivable was $1,097,738 with an allowance for uncollectable accounts of $42,000 resulting in a net amount of $1,055,738. |
Equity-Method Investments | Equity-Method Investments Our equity method investments are initially recorded at costs and are included in other long-term assets in the accompanying condensed consolidated balance sheet. We adjust the carrying value of our investment based on our share of the earnings or losses in the periods which they are reported by the investee until the carrying amount is zero. The earnings or losses are included in other expense in the accompanying condensed consolidated statements of operations. |
Inventory | Inventory Inventory is stated at the lower of cost or net-realizable value. Inventory cost is determined on a first-in first-out basis that approximates average cost in accordance with ASC 330-10-30-12. At March 31, 2020 we had $686,078 in inventory of which $251,872 was finished goods, $182,085 was raw materials and $252,121 was work-in-process. Provisions are made to reduce slow-moving, obsolete, or unusable inventories to their estimated useful or scrap values. The Company establishes reserves for this purpose. |
Revenue Recognition | Revenue Recognition The Company generates revenue from product sales and license sales. The Company recognizes revenue when all of the following criteria are satisfied: (i) identification of the promised goods or services in the contract; (ii) determination of whether the promised goods or services are performance obligations, including whether they are distinct in the context of the contract; (iii) measurement of the transaction price, including the constraint on variable consideration; (iv) allocation of the transaction price to the performance obligations; and (v) recognition of revenue when, or as the Company satisfies each performance obligation. The Company constrains revenue by giving consideration to factors that could otherwise lead to a probable reversal of revenue. The Company records any payments received from customers prior to the Company fulfilling its performance obligation(s) as deferred revenue. |
Earnings (Loss) per Share | Earnings (Loss) per Share Basic earnings or loss per common share is computed by dividing net income or loss applicable to common shareholders by the weighted average number of shares outstanding during each period. As the Company experienced net losses during the three months ended March 31, 2020, and 2019, respectively, no common stock equivalents have been included in the diluted earnings per common share calculations as the effect of such common stock equivalents would be anti-dilutive. For the three months ended March 31, 2020, there were 2,320,907 potentially dilutive shares consisting of 2,121,817 for outstanding options and 199,090 for outstanding warrants. For the three months ended March 31, 2019, there were 1,679,575 potentially dilutive shares consisting of: (i) 1,172,707 for outstanding options, (ii) 483,535 for outstanding warrants and (iii) 23,333 for issued and outstanding shares of convertible preferred stock. |
Research and Development | Research and Development Research and development costs are expensed when incurred. The Company expensed $400,022 and $347,306 of research and development costs for the three months ended March 31, 2020 and 2019, respectively. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements From time to time, new accounting pronouncements are issued by the Financial Accounting Standards Board (“FASB”) that are adopted by the Company as of the specified effective date. If not discussed, management believes that the impact of recently issued standards, which are not yet effective, will not have a material impact on the Company’s financial statements upon adoption. As an emerging growth company (“EGC”), the Company has elected to take advantage of the benefits of the extended transition period provided for in Section 7(a)(2)(B) of the Securities Act of 1933, as amended, for complying with new or revised accounting standards which allows the Company to defer adoption of certain accounting standards until those standards would otherwise apply to private companies. In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842), which requires recognition of leased assets and liabilities on the balance sheet and disclosing key information about leasing arrangements. This update is effective for annual periods and interim periods with those periods beginning after December 15, 2020, for public EGC companies like us. The Company expects to use the modified retrospective transition method with the option to recognize a cumulative-effect adjustment at the date of adoption. The Company expects its balance sheet will be impacted as it records right-of-use assets and lease liabilities on its consolidated balance sheet, but does not expect the adoption of this standard will have a material impact on its consolidated statements of operations and cash flows. In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments-Credit Losses (Topic 326), which requires the measurement and recognition of expected credit losses for certain financial instruments, which includes the Company’s accounts receivable. ASU 2016-13 replaces the existing incurred loss impairment model with an expected loss methodology, which will result in more timely recognition of credit losses. The update is effective for annual periods and interim periods with those periods beginning after December 15, 2021, for public EGC companies like us, but the Company may adopt it on January 1, 2021. The standard requires a cumulative effect adjustment to the balance sheet as of the beginning of the first reporting period in which the guidance is effective. The Company is evaluating the impact of the adoption of ASU 2016-13 on its consolidated financial statements. |
Stock-Based Compensation (Table
Stock-Based Compensation (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Share-based Payment Arrangement, Disclosure [Abstract] | |
Schedule of Fair Value of Options Weighted Average Assumptions | The fair values for the options granted were estimated at the date of grant using the Black Scholes option-pricing model with the following weighted average assumptions: Three Months Ended Risk free interest rate 1.56 % Expected life (in years) 10.0 Expected volatility 63.27 % Expected dividend yield 0.00 % Stock price $ 3.96 |
Schedule of Option Activity | The following table summarizes option activity during the year ended December 31, 2019 and the three months ended March 31, 2020, respectively. Options Weighted Weighted Weighted Outstanding at January 1, 2019 1,172,707 $ 2.23 $ 1.09 8.72 Options granted 890,000 1.07 0.52 9.66 Expired — — — — Forfeited options (40,890 ) (3.85 ) (1.59 ) (8.04 ) Exercised — — — — Outstanding at December 31, 2019 2,021,817 $ 1.69 $ 0.83 8.73 Options granted 100,000 3.96 2.80 9.87 Expired — — — — Forfeited options — — — — Exercised — — — — Outstanding at March 31, 2020 2,121,817 $ 1.79 $ 0.92 8.54 |
Schedule of Warrant Activity | The following table summarizes warrant activity during the year ended December 31, 2019 and the three months ended March 31, 2020, respectively. Warrants Weighted Weighted Weighted Outstanding at January 1, 2019 483,535 4.92 1.99 3.29 Warrants issued 500,000 1.53 1.46 5.00 Expired — — — — Forfeited warrants — — — — Exercised — — — — Outstanding at December 31, 2019 983,535 $ 1.44 $ 1.03 3.34 Warrants issued — — — — Expired — — — — Forfeited warrants — — — — Exercised (784,445 ) (1.28 ) (1.19 ) (2.90 ) Outstanding at March 31, 2020 199,090 $ 2.09 $ 0.38 3.85 |
Schedule of Unrecognized Stock-based Compensation | The Company expects to recognize the aggregate amount of this compensation expense over the next years in accordance with contractual provisions and vesting as follows: Year Amount 2020 $ 247,772 2021 90,181 Total $ 337,953 |
Lease Obligations (Tables)
Lease Obligations (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Leases [Abstract] | |
Schedule of ongoing lease obligation | The Company’s ongoing lease obligation as of March 31, 2020 is as follows: Year Amount Remainder of 2020 $ 233,415 2021 311,220 2022 331,220 2023 311,220 2024 51,870 Total $ 1,218,945 |
Significant Accounting Polici_3
Significant Accounting Policies (Details Narrative) - USD ($) | 3 Months Ended | ||
Mar. 31, 2020 | Mar. 31, 2019 | Dec. 31, 2019 | |
Accounts receivable | $ 1,097,738 | ||
Allowance for uncollectable accounts | 42,000 | ||
Accounts receivable, net | 1,055,738 | $ 131,382 | |
Inventory | 686,078 | $ 197,168 | |
Inventory finished goods | 251,872 | ||
Inventory raw materials | 182,085 | ||
Inventory work in process | $ 252,121 | ||
Potentially dilutive shares | 2,320,907 | 1,679,575 | |
Research and development cost | $ 400,022 | $ 347,306 | |
Options [Member] | |||
Potentially dilutive shares | 2,121,817 | 1,172,707 | |
Warrant [Member] | |||
Potentially dilutive shares | 199,090 | 483,535 | |
Convertible Preferred Stock [Member] | |||
Potentially dilutive shares | 23,333 |
Equity (Details Narrative)
Equity (Details Narrative) - USD ($) | Mar. 05, 2020 | Mar. 02, 2020 | Feb. 13, 2020 | Jan. 28, 2020 | Mar. 07, 2019 | Feb. 04, 2019 | Jan. 30, 2019 | Mar. 31, 2020 | Mar. 31, 2019 | Dec. 31, 2019 |
Class of Stock [Line Items] | ||||||||||
Number of common stock issued | 470,000 | 3,324,676 | 3,448,278 | 3,925,716 | ||||||
Common stock, par value | $ 0.001 | $ 0.001 | $ 0.001 | $ 0.001 | $ 0.001 | $ 0.001 | ||||
Sale of common stock purchase price per shares | $ 9 | $ 3.08 | $ 1.45 | $ 1.40 | ||||||
Number of common stock issued, value | $ 4,230,000 | $ 10,240,002 | $ 5,000,003 | $ 5,496,002 | $ 18,012,083 | $ 4,903,238 | ||||
Issuance of common stock gross proceeds | 3,882,420 | 9,612,561 | 4,517,102 | 4,903,238 | $ 19,520,005 | $ 5,496,002 | ||||
Proceeds from issuance of initial public offering | $ 347,580 | $ 627,441 | $ 482,901 | $ 592,764 | ||||||
Warrants exercisable price per share | $ 2 | |||||||||
Number of warrants exercised | 784,445 | |||||||||
Investor [Member] | ||||||||||
Class of Stock [Line Items] | ||||||||||
Purchase price | $ 1,000,000 | |||||||||
Promissory note | $ 2,000,000 | |||||||||
Equity ownership percentage | 4.99% | |||||||||
Two Companies [Member] | ||||||||||
Class of Stock [Line Items] | ||||||||||
Number of shares issued for services | 12,363 | |||||||||
Value of shares issued for services | $ 31,193 | |||||||||
Series A Convertible Preferred Stock [Member] | ||||||||||
Class of Stock [Line Items] | ||||||||||
Number of common stock issued | 2,000 | |||||||||
Number of conversion of shares issued | 2,560,000 | |||||||||
Conversion of preferred stock | 100 | 100 | ||||||||
Conversion of preferred stock, price per shares | $ 1.20 | $ 1.20 | ||||||||
Series A Convertible Preferred Stock [Member] | Investor [Member] | ||||||||||
Class of Stock [Line Items] | ||||||||||
Number of common stock issued | 30,000 | |||||||||
Number of common stock issued, value | $ 3,000,000 | |||||||||
Warrants [Member] | ||||||||||
Class of Stock [Line Items] | ||||||||||
Number of common stock issued | 25,000 | 694,492 | ||||||||
Stock issued during period, warrant exercised value | $ 50,000 | |||||||||
Number of warrants exercised | 759,445 | |||||||||
Common Stock [Member] | ||||||||||
Class of Stock [Line Items] | ||||||||||
Number of common stock issued | 25,000 | 166,667 | 7,242,954 | 3,925,716 | ||||||
Number of common stock issued, value | $ 7,243 | $ 3,926 | ||||||||
Number of conversion of shares issued | 2,133,333 | 166,667 |
Stock-based Compensation (Detai
Stock-based Compensation (Details Narrative) - USD ($) | 3 Months Ended | ||
Mar. 31, 2020 | Mar. 31, 2019 | Dec. 31, 2019 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Stock based compensation | $ 432,823 | $ 87,794 | |
Unrecognized stock-based compensation | 337,953 | ||
Stock Options [Member] | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Stock based compensation | 401,630 | 87,794 | |
Intrinsic value of options outstanding | $ 7,516,828 | $ 133,300 | |
Unvested option shares outstanding | 810,000 | 566,667 | |
Intrinsic value of options exercised | $ 4,973,058 | ||
2015 Long-term Incentive Plan [Member] | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Aggregate number of common shares reserved | 6,000,000 | ||
Unissued common stock options authorized shares | 3,878,183 |
Stock-based Compensation - Sche
Stock-based Compensation - Schedule of Fair Value of Options Weighted Average Assumptions (Details) | 3 Months Ended |
Mar. 31, 2020$ / shares | |
Share-based Payment Arrangement [Abstract] | |
Risk free interest rate | 1.56% |
Expected life (in years) | 10 years |
Expected volatility | 63.27% |
Expected dividend yield | 0.00% |
Stock price | $ 3.96 |
Stock-based Compensation - Sc_2
Stock-based Compensation - Schedule of Option Activity (Details) - $ / shares | 3 Months Ended | 12 Months Ended |
Mar. 31, 2020 | Dec. 31, 2019 | |
Share-based Payment Arrangement [Abstract] | ||
Options Outstanding, Beginning | 2,021,817 | 1,172,707 |
Options Outstanding, Option granted | 100,000 | 890,000 |
Options Outstanding, Expired | ||
Options Outstanding, Forfeited options | (40,890) | |
Options Outstanding, Exercised | ||
Options Outstanding, Ending | 2,121,817 | 2,021,817 |
Weighted Average Exercise Price Outstanding, Beginning | $ 1.69 | $ 2.23 |
Weighted Average Exercise Price Options granted | 3.96 | 1.07 |
Weighted Average Exercise Price Expired | ||
Weighted Average Exercise Price Forfeited options | (3.85) | |
Weighted Average Exercise Price Exercised | ||
Weighted Average Exercise Price Outstanding, Ending | 1.79 | 1.69 |
Weighted Average Fair Value Outstanding, Beginning | 0.83 | 1.09 |
Weighted Average Fair Value Options granted | 2.80 | 0.52 |
Weighted Average Fair Value Expired | ||
Weighted Average Fair Value Forfeited options | (1.59) | |
Weighted Average Fair Value Exercised | ||
Weighted Average Fair Value Outstanding, Ending | $ 0.92 | $ 0.83 |
Weighted-average Remaining Contractual Life (years) Outstanding, Beginning | 8 years 8 months 23 days | 8 years 8 months 19 days |
Weighted-average Remaining Contractual Life (years) Options granted | 9 years 10 months 14 days | 9 years 7 months 28 days |
Weighted-average Remaining Contractual Life (years) Options Forfeited options | 8 years 15 days | |
Weighted-average Remaining Contractual Life (years) Outstanding, Ending | 8 years 6 months 14 days | 8 years 8 months 23 days |
Stock-based Compensation - Sc_3
Stock-based Compensation - Schedule of Warrant Activity (Details) - $ / shares | 3 Months Ended | 12 Months Ended |
Mar. 31, 2020 | Dec. 31, 2019 | |
Share-based Payment Arrangement [Abstract] | ||
Warrant Outstanding, Beginning | 983,535 | 483,535 |
Warrant Outstanding, Warrants issued | 500,000 | |
Warrant Outstanding, Expired | ||
Warrant Outstanding, Forfeited warrants | ||
Warrant Outstanding, Exercised | (784,445) | |
Warrant Outstanding, Ending | 199,090 | 983,535 |
Weighted Average Exercise Price, Beginning | $ 1.44 | $ 4.92 |
Weighted Average Exercise Price, Warrant issued | 1.53 | |
Weighted Average Exercise Price, Expired | ||
Weighted Average Exercise Price, Forfeited warrants | ||
Weighted Average Exercise Price, Exercised | (1.28) | |
Weighted Average Exercise Price, Ending | 2.09 | 1.44 |
Weighted Average Fair Value, Beginning | 1.03 | 1.99 |
Weighted Average Fair Value, Warrant issued | 1.46 | |
Weighted Average Fair Value, Expired | ||
Weighted Average Fair Value, Forfeited warrants | ||
Weighted Average Fair Value, Exercised | (1.19) | |
Weighted Average Fair Value, Ending | $ 0.38 | $ 1.03 |
Weighted-average Remaining Contractual Life (Years), Beginning | 3 years 4 months 2 days | 3 years 3 months 15 days |
Weighted-average Remaining Contractual Life (Years), Warrants issued | 5 years | |
Weighted-average Remaining Contractual Life (Years), Exercised | 2 years 10 months 25 days | |
Weighted-average Remaining Contractual Life (Years), Ending | 3 years 10 months 6 days | 3 years 4 months 2 days |
Stock-based Compensation - Sc_4
Stock-based Compensation - Schedule of Unrecognized Stock-based Compensation (Details) | Mar. 31, 2020USD ($) |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Total | $ 337,953 |
2020 [Member] | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Total | 247,772 |
2021 [Member] | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Total | $ 90,181 |
Related Party Transactions (Det
Related Party Transactions (Details Narrative) - USD ($) | 3 Months Ended | |
Mar. 31, 2020 | Jan. 01, 2017 | |
Exclusive License Agreement [Member] | ||
Accrued royalties | $ 700,000 | |
Dr. Satterfield [Member] | ||
Increase in Royalties Payable, per month | $ 10,000 | |
Dr. Brent Satterfield [Member] | ||
Due to related party | $ 240,000 |
Lease Obligations (Details Narr
Lease Obligations (Details Narrative) | 3 Months Ended | |
Mar. 31, 2020USD ($)a | Mar. 31, 2019USD ($) | |
Leases [Abstract] | ||
Area of land | a | 13,687 | |
Rent expenses | $ | $ 51,818 | $ 45,582 |
Lease Obligations - Schedule of
Lease Obligations - Schedule of ongoing lease obligation (Details) | Mar. 31, 2020USD ($) |
Leases [Abstract] | |
Remainder of 2020 | $ 233,415 |
2021 | 311,220 |
2022 | 331,220 |
2023 | 311,220 |
2024 | 51,870 |
Total | $ 1,218,945 |
Subsequent Events (Details Narr
Subsequent Events (Details Narrative) | Apr. 08, 2020shares |
Consulting Agreement [Member] | Subsequent Event [Member] | |
Number of stock issued during period services, shares | 6,069 |