Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2020 | Nov. 13, 2020 | |
Cover [Abstract] | ||
Entity Registrant Name | Co-Diagnostics, Inc. | |
Entity Central Index Key | 0001692415 | |
Document Type | 10-Q | |
Document Period End Date | Sep. 30, 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 | 28,269,201 | |
Document Fiscal Period Focus | Q3 | |
Document Fiscal Year Focus | 2020 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets (Unaudited) - USD ($) | Sep. 30, 2020 | Dec. 31, 2019 |
Current assets | ||
Cash and cash equivalents | $ 21,230,362 | $ 893,138 |
Marketable investment securities | 6,050,000 | |
Accounts receivable, net | 10,640,417 | 131,382 |
Inventory | 10,726,982 | 197,168 |
Prepaid expenses | 384,642 | 362,566 |
Deferred tax asset | 2,914,781 | |
Total current assets | 51,947,184 | 1,584,254 |
Property and equipment, net | 538,279 | 196,832 |
Investment in joint venture | 2,165,037 | 434,240 |
Total assets | 54,650,500 | 2,215,326 |
Current liabilities | ||
Accounts payable | 250,465 | 5,959 |
Accrued expenses | 786,063 | 200,788 |
Accrued expenses (related party) | 120,000 | 120,000 |
Deferred revenue | 657,925 | 1,323 |
Total current liabilities | 1,814,453 | 328,070 |
Accrued expenses-long-term (related party) | 60,000 | 150,000 |
Total liabilities | 1,874,453 | 478,070 |
Commitments and contingencies (Note 8) | ||
Stockholders' equity | ||
Convertible preferred stock, $0.001 par value; 5,000,000 shares authorized; 0 and 25,600 shares issued and outstanding as of September 30, 2020 and December 31, 2019, respectively | 26 | |
Common Stock, $0.001 par value; 100,000,000 shares authorized; 28,161,259 and 17,342,922 shares issued and outstanding as of September 30, 2020 and December 31, 2019, respectively | 28,161 | 17,343 |
Additional paid-in capital | 48,044,352 | 26,687,701 |
Accumulated earnings (deficit) | 4,703,534 | (24,967,814) |
Total stockholders' equity | 52,776,047 | 1,737,256 |
Total liabilities and stockholders' equity | $ 54,650,500 | $ 2,215,326 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Unaudited) (Parenthetical) - $ / shares | Sep. 30, 2020 | Dec. 31, 2019 |
Statement of Financial Position [Abstract] | ||
Convertible preferred stock, par value | $ 0.001 | $ 0.001 |
Convertible preferred stock , shares authorized | 5,000,000 | 5,000,000 |
Convertible preferred stock, shares issued | 0 | 25,600 |
Convertible preferred stock, shares outstanding | 0 | 25,600 |
Common stock, par value | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 100,000,000 | 100,000,000 |
Common stock, shares issued | 28,161,259 | 17,342,922 |
Common stock, shares outstanding | 28,161,259 | 17,342,922 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations (Unaudited) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Income Statement [Abstract] | ||||
Revenue | $ 21,818,753 | $ 41,434 | $ 47,407,555 | $ 106,408 |
Cost of revenue | 5,821,281 | 20,365 | 12,278,326 | 59,626 |
Gross profit | 15,997,472 | 21,069 | 35,129,229 | 46,782 |
Operating expenses | ||||
Sales and marketing | 798,474 | 262,360 | 1,457,148 | 770,539 |
Administrative and general | 2,203,417 | 1,060,763 | 5,853,935 | 2,508,895 |
Research and development | 921,889 | 331,027 | 2,072,160 | 990,923 |
Depreciation and amortization | 35,490 | 17,006 | 81,456 | 46,768 |
Total operating expenses | 3,959,270 | 1,671,156 | 9,464,699 | 4,317,125 |
Income (loss) from operations | 12,038,202 | (1,650,087) | 25,664,530 | (4,270,343) |
Other income (expense) | ||||
Interest income | 29,992 | 12,207 | 75,740 | 32,255 |
Interest expense | (10) | (106,437) | ||
Gain on disposition of assets | 850 | |||
Gain (loss) on equity method investment in joint venture | 748,557 | (109,876) | 1,016,297 | (116,876) |
Total other income (expense) | 778,549 | (97,679) | 1,092,037 | (190,208) |
Income (loss) before income taxes | 12,816,751 | (1,747,766) | 26,756,567 | (4,460,551) |
Income tax provision (benefit) | (2,914,781) | (2,914,781) | ||
Net income (loss) | $ 15,731,532 | $ (1,747,766) | $ 29,671,348 | $ (4,460,551) |
Earnings (loss) per common share: | ||||
Basic | $ 0.56 | $ (0.10) | $ 1.13 | $ (0.27) |
Diluted | $ 0.53 | $ (0.10) | $ 1.07 | $ (0.27) |
Weighted average shares outstanding: | ||||
Basic | 28,084,267 | 17,328,787 | 26,172,439 | 16,809,085 |
Diluted | 29,597,792 | 17,328,787 | 27,621,531 | 16,809,085 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) | 9 Months Ended | |
Sep. 30, 2020 | Sep. 30, 2019 | |
Cash flows from operating activities | ||
Net income (loss) | $ 29,671,348 | $ (4,460,551) |
Adjustments to reconcile net income (loss) to cash used in operating activities: | ||
Depreciation and amortization | 81,456 | 46,768 |
Stock-based compensation expense | 2,167,376 | 570,632 |
Accretion of notes payable discount | 91,428 | |
Gain on disposition of assets | (850) | |
Loss (gain) from equity method investment | (1,016,297) | 116,876 |
Deferred income taxes | (2,914,781) | |
Changes in assets and liabilities: | ||
Accounts and other receivable | (10,509,035) | (39,433) |
Prepaid and other assets | (22,076) | (12,993) |
Inventory | (10,647,034) | 800 |
Deferred revenue | 739,781 | 4,386 |
Accounts payable and accrued expenses | 656,602 | (229,913) |
Net cash provided by (used in) operating activities | 8,207,340 | (3,912,850) |
Cash flows from investing activities | ||
Purchases of property and equipment | (305,683) | (77,026) |
Purchases of marketable investment securities | (9,310,000) | |
Proceeds from maturities of marketable investment securities | 3,260,000 | |
Investment in joint venture | (714,500) | (319,440) |
Net cash used in investing activities | (7,070,183) | (396,466) |
Cash flows from financing activities | ||
Proceeds from sale of common stock | 19,470,005 | 5,496,002 |
Proceeds from sale of preferred stock | 1,000,000 | |
Proceeds from exercise of options and warrants | 1,187,984 | |
Payment of offering costs | (1,457,922) | (592,764) |
Net cash provided by financing activities | 19,200,067 | 5,903,238 |
Net increase in cash and cash equivalents | 20,337,224 | 1,593,922 |
Cash and cash equivalents at beginning of period | 893,138 | 950,237 |
Cash and cash equivalents at end of period | 21,230,362 | 2,544,159 |
Supplemental disclosure of cash flow information | ||
Interest paid | 15,000 | |
Income taxes paid | ||
Supplemental disclosure of non-cash investing and financing transactions | ||
Inventory moved to property, plant and equipment | 117,220 | |
Warrants issued for services | 379,487 | |
Conversion of preferred stock to common | 440,000 | |
Conversion of debt for preferred stock | $ 2,000,000 |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Stockholders' Equity (Unaudited) - USD ($) | Convertible Preferred Stock [Member] | Common Stock [Member] | Additional Paid-in-Capital [Member] | Accumulated Deficit [Member] | 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 Income (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 | 17,015,766 | |||
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 | ||||
Net Income (loss) | (4,460,551) | ||||
Ending balance at Sep. 30, 2019 | $ 26 | $ 17,337 | 26,471,350 | (23,154,718) | 3,333,995 |
Ending balance, shares at Sep. 30, 2019 | 25,600 | 17,336,922 | |||
Beginning balance at Mar. 31, 2019 | $ 28 | $ 17,016 | 25,609,344 | (20,062,556) | 5,563,832 |
Beginning balance, shares at Mar. 31, 2019 | 28,000 | 17,015,766 | |||
Stock-based compensation expense | 505,970 | 505,970 | |||
Stock-based compensation expense, shares | |||||
Issuance of common stock for services | $ 100 | 80,300 | 80,400 | ||
Issuance of common stock for services, shares | 100,000 | ||||
Net Income (loss) | (1,344,396) | (1,344,396) | |||
Ending balance at Jun. 30, 2019 | $ 28 | $ 17,116 | 26,195,614 | (21,406,952) | 4,805,806 |
Ending balance, shares at Jun. 30, 2019 | 28,000 | 17,115,766 | |||
Stock-based compensation expense | $ 21 | 275,934 | 275,955 | ||
Stock-based compensation expense, shares | 21,156 | ||||
Issuance of common stock for services | $ (2) | $ 200 | (198) | ||
Issuance of common stock for services, shares | (2,400) | 200,000 | |||
Net Income (loss) | (1,747,766) | (1,747,766) | |||
Ending balance at Sep. 30, 2019 | $ 26 | $ 17,337 | 26,471,350 | (23,154,718) | 3,333,995 |
Ending balance, shares at Sep. 30, 2019 | 25,600 | 17,336,922 | |||
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 | ||||
Common stock issued for warrant exercises | $ 720 | 49,280 | 50,000 | ||
Common stock issued 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 Income (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 | ||||
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 | |||
Conversion of preferred stock to common, shares | 2,133,333 | ||||
Net Income (loss) | 29,671,348 | ||||
Ending balance at Sep. 30, 2020 | $ 28,161 | 48,044,352 | 4,703,534 | 52,776,047 | |
Ending balance, shares at Sep. 30, 2020 | 28,161,259 | ||||
Beginning balance at Mar. 31, 2020 | $ 27,451 | 45,172,525 | (26,033,007) | 19,166,969 | |
Beginning balance, shares at Mar. 31, 2020 | 27,451,064 | ||||
Common stock issued for option and warrant exercises | $ 530 | 862,935 | 863,465 | ||
Common stock issued for option and warrant exercises, shares | 530,289 | ||||
Stock-based compensation expense | $ 10 | 691,409 | 691,419 | ||
Stock-based compensation expense, shares | 9,689 | ||||
Net Income (loss) | 15,005,009 | 15,005,009 | |||
Ending balance at Jun. 30, 2020 | $ 27,991 | 46,726,869 | (11,027,998) | 35,726,862 | |
Ending balance, shares at Jun. 30, 2020 | 27,991,042 | ||||
Common stock issued for option exercises | $ 108 | 274,410 | 274,518 | ||
Common stock issued for option exercises, shares | 108,334 | ||||
Stock-based compensation expense | $ 62 | 1,043,073 | 1,043,135 | ||
Stock-based compensation expense, shares | 61,883 | ||||
Net Income (loss) | 15,731,532 | 15,731,532 | |||
Ending balance at Sep. 30, 2020 | $ 28,161 | $ 48,044,352 | $ 4,703,534 | $ 52,776,047 | |
Ending balance, shares at Sep. 30, 2020 | 28,161,259 |
Condensed Consolidated Statem_4
Condensed Consolidated Statements of Stockholders' Equity (Unaudited) (Parenthetical) - USD ($) | Mar. 31, 2020 | Mar. 31, 2019 |
Statement of Stockholders' Equity [Abstract] | ||
Public offering costs | $ 1,457,922 | $ 592,764 |
Overview and Basis of Presentat
Overview and Basis of Presentation | 9 Months Ended |
Sep. 30, 2020 | |
Accounting Policies [Abstract] | |
Overview and Basis of Presentation | Note 1 – Overview and Basis of Presentation Description of Business Co-Diagnostics, Inc., a Utah corporation (the “Company” or “CDI”), is developing robust and innovative molecular tools for detection of infectious diseases, liquid biopsy for cancer screening, and agricultural applications. The Company develops, manufactures and sells 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 these tests, the Company may sell diagnostic equipment and supplies from other manufacturers. Unaudited Condensed Consolidated Financial Statements The accompanying unaudited condensed consolidated financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and with the instructions to Form 10-Q as they are prescribed for smaller reporting companies. Accordingly, they do not include all the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary to make the financial statements not misleading have been included. Operating results for the three and nine months ended September 30, 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. 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. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 9 Months Ended |
Sep. 30, 2020 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | Note 2 – Summary of Significant Accounting Policies Marketable Investment Securities The Company’s marketable investment securities are comprised of investments in certificates of deposit. The Company determines the appropriate classification of its marketable investment securities at the time of purchase and reevaluates such designation at each balance sheet date. The Company has classified and accounted for its marketable investment securities as available-for-sale securities as the Company may sell these securities at any time for use in its current operations or for other purposes, even prior to maturity. As a result, the Company classifies its marketable investment securities, including securities with stated maturities beyond twelve months, within current assets in the condensed consolidated balance sheets. Accounts Receivable Trade accounts receivable are recorded at the invoiced amount (net of allowance) and do not bear interest. The Company maintains an allowance for doubtful accounts for amounts the Company does not expect to collect. In establishing the required allowance, management considers historical losses, current market condition, customers’ financial condition, the age of receivables, and current payment patterns. Account balances are written off against the allowance once the receivable is deemed uncollectible. Recoveries of trade receivables previously written off are recorded when collected. At September 30, 2020 total accounts receivable was $11,495,417 with an allowance for uncollectable accounts of $855,000 resulting in a net amount of $10,640,417. Equity-Method Investments Our equity method investments are initially recorded at cost 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 income (expense) in the accompanying condensed consolidated statements of operations. Inventory Inventory is stated at the lower of cost or net-realizable value. Inventory cost is determined on a first-in first-out basis that approximates average cost in accordance with ASC 330-10-30-12. At September 30, 2020, we had $10,726,982 in inventory, of which $1,740,378 was finished goods and $8,986,604 was raw materials. Provisions are made to reduce low-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. Deferred Revenue Deferred revenue primarily consists of payments received from customers prior to the Company fulfilling its performance obligation of providing the product. When this occurs, the Company records a contract liability as deferred revenue. Deferred revenue is recognized as revenue as the related performance obligations are satisfied. Income Taxes The Company accounts for income taxes in accordance with the liability method of accounting for income taxes. Under this method, d Valuation allowances are provided when it is more-likely-than-not that some or all of the deferred income tax assets may not be realized. In assessing the need for a valuation allowance, the Company has considered its historical levels of income, expectations of future taxable income and ongoing tax planning strategies. Developing the provision for income taxes, including the effective tax rate and analysis of potential tax exposure items, if any, requires significant judgment and expertise in federal and state income tax laws, regulations and strategies, including the determination of deferred income tax assets and liabilities and any estimated valuation allowances deemed necessary to value deferred income tax assets. Judgments and tax strategies are subject to audit by various taxing authorities. While the Company believes it has no significant uncertain income tax positions in the consolidated financial statements, adverse determinations by these taxing authorities could have a material adverse effect on the consolidated financial positions, result of operations, or cash flows. Concentrations Risk and Significant Customers The Company had certain customers which are each responsible for generating 10% or more of the total revenue for the three and nine months ended September 30, 2020. Three customers together accounted for approximately 64% of total revenue for the three months ended September 30, 2020 and two customers together accounted for 42% of total revenue for the nine months ended September 30, 2020. Two customers each accounted for more than 10% of accounts receivable at September 30, 2020. These two customers together accounted for approximately 66% of accounts receivable at September 30, 2020. Net Income (Loss) per Share Basic net income or loss per common share is computed by dividing net income or loss applicable to common shareholders by the weighted average number of shares outstanding during each period. Diluted net income or loss per share is computed by dividing net income or loss attributable to common stockholders by the weighted-average number of shares of common stock outstanding during the period increased by common shares that could be issued upon conversion or exercise of other outstanding securities to the extent those additional common shares would be dilutive. The dilutive effect of potentially dilutive securities is reflected in diluted net income or loss per share by application of the treasury stock method. During periods when the Company is in a net loss position, basic net loss per share is the same as diluted net loss per share as the effects of potentially dilutive securities are anti-dilutive 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) (“ASU 2016-13, 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 upon election on January 1, 2021. The standard requires a cumulative effect adjustment to the balance sheet as of the beginning of the first early 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 and when it plans to adopt it. In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740) (“ASU 2019-12”), which removes certain exceptions for investments, intraperiod allocations and interim calculations and adds guidance to reduce complexity in accounting for income taxes. ASU 2019-12 is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020; early adoption is permitted. The Company is still assessing the amendments of ASU 2019-12 and the impact the amendments will have on the Company’s consolidated financial statements and related disclosures. |
Fair Value Measurements
Fair Value Measurements | 9 Months Ended |
Sep. 30, 2020 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements | Note 3 – Fair Value Measurements The Company measures and records certain financial assets at fair value on a recurring basis. Fair value is based on the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The Company’s financial instruments that are measured at fair value on a recurring basis consist of money market funds. The following three levels of inputs are used to measure the fair value of financial instruments: Level 1: Quoted market prices in active markets for identical assets or liabilities. Level 2: Observable market-based inputs or unobservable inputs that are corroborated by market data. Level 3: Unobservable inputs that are not corroborated by market data. The Company’s financial instruments that are measured at fair value on a recurring basis consist of certificates of deposit. The following table summarizes the assets measured at fair value on a recurring basis as of September 30, 2020 by level within the fair value hierarchy: September 30, 2020 (Level 1) (Level 2) (Level 3) Total Marketable investment securities: Certificates of deposit $ - $ 6,050,000 $ - $ 6,050,000 |
Revenue
Revenue | 9 Months Ended |
Sep. 30, 2020 | |
Revenue from Contract with Customer [Abstract] | |
Revenue | Note 4 – Revenue The following table sets forth revenue by geographic area: Three Months Ended Nine Months Ended 2020 2019 2020 2019 United States $ 14,054,316 $ 41,434 $ 28,151,446 $ 106,408 Rest of World 7,764,437 - 19,256,109 - Total $ 21,818,753 $ 41,434 $ 47,407,555 $ 106,408 Percentage of revenue by area: United States 64 % 100 % 59 % 100 % Rest of World 36 % 0 % 41 % 0 % Deferred Revenue Changes in the Company’s deferred revenue balance for the nine months ended September 30, 2020 were as follows: Balance as of December 31, 2019 $ 1,323 Revenue recognized that was included in deferred revenue balance at the beginning of the period (1,323 ) Increase due to prepayments from customers 657,925 Balance as of September 30, 2020 $ 657,925 The Company expects to perform its performance obligation and recognize the deferred revenue as revenue during the year ended December 31, 2020. |
Stockholders' Equity
Stockholders' Equity | 9 Months Ended |
Sep. 30, 2020 | |
Equity [Abstract] | |
Stockholders' Equity | Note 4 – Stockholders’ Equity Common Stock and Preferred Stock 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. During the nine months ended September 30, 2020, the Company issued an aggregate of 2,133,333 shares of common stock upon conversion of all of the Company’s convertible preferred stock outstanding as of December 31, 2019. During the nine months ended September 30, 2020, the Company issued 829,492 shares of common stock upon the exercise of warrants and received $270,000. During the nine months ended September 30, 2020, the Company issued 528,623 shares of common stock upon the exercise of options and received $917,984. During the nine months ended September 30, 2020, the Company issued 83,935 shares of common stock for services provided by third parties primarily related to investment relations services. Earnings per Share The following table reconciles the numerator and the denominator used to calculate basic and diluted earnings per share for three and nine months ended September 30, 2020: Three Months Ended Nine Months Ended Numerator Net income, as reported $ 15,731,532 $ 29,671,348 Denominator Weighted average shares, basic 28,084,267 26,172,439 Dilutive effect of stock options and warrants 1,513,525 1,449,092 Shares used to compute diluted earnings per share 29,597,792 27,621,531 Basic earnings per share $ 0.56 $ 1.13 Diluted earnings per share $ 0.53 $ 1.07 50,000 options were excluded from the computation of diluted earnings per share because the effect would have been anti-dilutive. As a result of incurring a net loss for the three and nine months ended September 30, 2019, no potentially dilutive securities are included in the calculation of diluted earnings per share because such effect would be anti-dilutive. The Company had potentially dilutive securities as of September 30, 2019, consisting of: (i) 2,021,817 options, (ii) 953,535 warrants and (iii) 2,133,333 for issued and outstanding shares of convertible preferred stock. |
Stock-Based Compensation
Stock-Based Compensation | 9 Months Ended |
Sep. 30, 2020 | |
Share-based Payment Arrangement, Disclosure [Abstract] | |
Stock-Based Compensation | Note 5 – Stock-Based Compensation Stock Incentive Plans The Co-Diagnostics, Inc. 2015 Long Term Incentive Plan (the “Incentive Plan”) reserves an aggregate of 6,000,000 shares of common stock issuable upon the grant of awards under the Incentive Plan. The number of awards available for issuance under the Incentive Plan was 3,828,183 at September 30, 2020. Stock Options The following table summarizes option activity during the nine months ended September 30, 2020: Number of Options Weighted Average Exercise Price Weighted Average Fair Value Weighted Average Remaining Contractual Life (Years) Outstanding at December 31, 2019 2,021,817 $ 1.69 $ 0.83 Granted 150,000 8.14 4.75 Expired - - - Forfeited/Cancelled - - - Exercised (528,623 ) 1.74 0.88 Outstanding at September 30, 2020 1,643,194 $ 2.26 $ 1.21 8.50 The total intrinsic value of options exercised during the nine months ended September 30, 2020 was approximately $8.3 million. The aggregate intrinsic value of outstanding options at September 30, 2020 was $15,476,739. There were 296,667 of unvested options as of September 30, 2020. Stock-based compensation cost is measured at the grant date based on the fair value of the award granted and recognized as expense over the vesting period using the straight-line method. The Company uses the Black-Scholes model to value options granted. The following weighted average assumptions were used in estimating the grant date fair value of options: Nine months ended 2020 2019 Risk-free interest rate 1.05 % 1.56 % Expected life (years) 7.3 10.0 Expected volatility 62.82 % 63.65 % Expected dividend yield None None As of September 30, 2020, there were 296,667 of unvested options and $339,951 of unrecognized stock-based compensation expense. The unrecognized stock-based compensation expense is expected to be recognized over 2.5 years. Warrants The Company has issued warrants related to past financings and as compensation to third parties for services provided. The Company estimates the fair value of issued warrants on the date of issuance as determined using a Black-Scholes pricing model. The Company amortizes the fair value of issued warrants using a vesting schedule based on the terms and conditions of each warrant if granted for services. The following table summarizes warrant activity during nine months ended September 30, 2020 Number of Warrants Weighted Average Exercise Price Weighted Average Fair Value Weighted Average Remaining Contractual Life (Years) Outstanding at December 31, 2019 983,535 $ 1.44 $ 1.03 Granted 20,000 16.49 15.19 Expired - - - Forfeited/Cancelled - - - Exercised (894,445 ) 1.37 1.05 Outstanding at September 30, 2020 109,090 $ 2.06 $ 1.17 3.37 The intrinsic value of warrants exercised during the nine months ended September 30, 2020 was approximately $9.4 million. The aggregate intrinsic value of outstanding options warrants at September 30, 2020 was approximately $1.3 million. All outstanding warrants are exercisable at September 30, 2020 and there was no unrecognized stock-based compensation expense related to warrants. Stock Issued for Services The Company has issued restricted stock to third parties for services provided. The grant date fair value of the restricted stock granted is determined using the closing market price of the Company’s common stock on the grant date with the associated compensation expense amortized over the vesting period of the stock awards. The Company has issued 83,935 of restricted stock for services during the nine months ended September 30, 2020. Stock-Based Compensation Expense The Company recognized stock-based compensation expense related to the types of awards discussed above as follows: Three Months Ended Nine Months Ended 2020 2019 2020 2019 Options $ 158,344 $ 253,798 $ 831,541 $ 468,076 Warrants - - 303,802 - Stock 914,790 22,135 1,032,033 102,556 Total stock-based compensation expense $ 1,073,134 $ 275,933 $ 2,167,376 $ 570,632 |
Income Taxes
Income Taxes | 9 Months Ended |
Sep. 30, 2020 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Note 6 – Income Taxes The following table summarizes our benefit from income taxes and our effective tax rates for the three and nine months ended September 30, 2020 and 2019: Three Months Ended Nine Months Ended 2020 2019 2020 2019 Income (loss) before income taxes $ 12,816,751 $ (1,747,766 ) $ 26,756,567 $ (4,460,551 ) Income tax provision (benefit) (2,914,781 ) - (2,914,781 ) - Effective tax rate -22.7 % 0.0 % -10.9 % 0.0 % For the three months ended September 30, 2020, the Company recognized a benefit from income taxes of $2,914,781, representing an effective tax rate of (22.7%) which was lower than the statutory federal tax rate due primarily to the release of the valuation allowance during the quarter and the tax benefits related to tax-deductible stock-based compensation expense. For the three months ended September 30, 2019, no benefit from income taxes was recorded due to the Company being in a full valuation allowance position, resulting in an effective tax rate of 0.0%. For the nine months ended September 30, 2020, the Company recognized a benefit from income taxes of $2,914,781, representing an effective tax rate of (10.9%), which was lower than the statutory federal tax rate due primarily to stock-based compensation adjustments, non-deductible lobbying expenses and state taxes, partially offset by research and development credits. For the nine months ended September 30, 2019, no benefit from income taxes was recorded due to the Company being in a full valuation allowance position, resulting in an effective tax rate of 0.0%. As of each reporting date, management considers new evidence, both positive and negative, that could affect its view of the future realization of deferred tax assets. As of September 30, 2020, in part because in the current year the Company achieved three years of cumulative pre-tax income, management determined that there is sufficient positive evidence to conclude that it is more likely than not that its deferred tax assets, which are primarily made up of federal and state net operating losses, are realizable. Therefore, during the third quarter, the valuation allowance was fully released which resulted in a decrease to income tax expense for the period the release is recorded. The impact of a tax position is recognized in the financial statements if that position is more likely than not of being sustained on audit, based on the technical merits of the position. As of September 30, 2020, and 2019, the Company did not have any significant uncertain tax positions. The Company includes any interest and penalties associated with unrecognized tax benefits within the provision for income taxes. The Company does not expect a material change to the total amount of unrecognized tax benefits in the next twelve months. The Coronavirus Aid, Relief and Economic Security (“CARES”) Act was signed into law on March 27, 2020. The income tax provisions of the CARES Act include temporary changes to income-based tax laws, including the ability to utilize net operating losses, interest expense deductions, alternative minimum tax credit refunds, charitable contributions, and depreciation of qualified improvement property. The income tax provisions of the CARES Act did not have a material impact on our condensed consolidated financial statements for the nine months ended September 30, 2020. |
Related Party Transactions
Related Party Transactions | 9 Months Ended |
Sep. 30, 2020 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | Note 7 – 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, a current executive officer, prior to the Company’s 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 the Company began in January 2017 to pay to Dr. Satterfield $700,000 of accrued royalties at the rate of $10,000 per month. At September 30, 2020, the aggregate balance of this related party liability was $180,000. |
Commitments and Contingencies
Commitments and Contingencies | 9 Months Ended |
Sep. 30, 2020 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Note 8 – Commitments and Contingencies Lease Obligations The Company’s 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 at a monthly rate of $28,825 and expires in February 2024. For the three and nine months ended September 30, 2020 the Company expensed $86,588 and $225,374, respectively, for rent. For the three and nine months ended September 30, 2019, the Company expensed $42,259 and $132,879, respectively, for rent. The Company’s future minimum lease payments were as follows as of September 30, 2020: Year Ending December 31, 2020 (remainder) $ 86,362 2021 345,900 2022 345,900 2023 345,900 2024 57,653 Total lease payments $ 1,181,715 Litigation Liabilities for loss contingencies arising from claims, assessments, litigation, fines, and penalties and other sources are recorded when it is probable that a liability has been incurred and the amount can be reasonably estimated. Legal costs incurred in connection with loss contingencies are expensed as incurred. In July and September, securities class action complaints were filed by certain stockholders of the Company against the Company claiming that the Company promulgated false and misleading press releases to increase the price of our stock to improperly benefit the officers and directors of the Company. The plaintiffs demand compensatory damages sustained as a result of the Company’s alleged wrongdoing in an amount to be proven at trial. The Company believes these lawsuits are without merit and intends to defend the cases vigorously. The Company is unable to estimate a range of loss, if any, that could result were there to be an adverse final decision in these cases. As of the date of this report, the Company does not believe it is probable that these cases will result in an unfavorable outcome; however, if an unfavorable outcome were to occur in these cases, it is possible that the impact could be material to the Company’s results of operations in the period(s) in which any such outcome becomes probable and estimable. |
Subsequent Events
Subsequent Events | 9 Months Ended |
Sep. 30, 2020 | |
Subsequent Events [Abstract] | |
Subsequent Events | Note 9 – Subsequent Events The Company evaluated subsequent events pursuant to ASC Topic 855 and has determined that there are no events that need to be reported. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 9 Months Ended |
Sep. 30, 2020 | |
Accounting Policies [Abstract] | |
Marketable Investment Securities | Marketable Investment Securities The Company’s marketable investment securities are comprised of investments in certificates of deposit. The Company determines the appropriate classification of its marketable investment securities at the time of purchase and reevaluates such designation at each balance sheet date. The Company has classified and accounted for its marketable investment securities as available-for-sale securities as the Company may sell these securities at any time for use in its current operations or for other purposes, even prior to maturity. As a result, the Company classifies its marketable investment securities, including securities with stated maturities beyond twelve months, within current assets in the condensed consolidated balance sheets. |
Accounts Receivable | Accounts Receivable Trade accounts receivable are recorded at the invoiced amount (net of allowance) and do not bear interest. The Company maintains an allowance for doubtful accounts for amounts the Company does not expect to collect. In establishing the required allowance, management considers historical losses, current market condition, customers’ financial condition, the age of receivables, and current payment patterns. Account balances are written off against the allowance once the receivable is deemed uncollectible. Recoveries of trade receivables previously written off are recorded when collected. At September 30, 2020 total accounts receivable was $11,495,417 with an allowance for uncollectable accounts of $855,000 resulting in a net amount of $10,640,417. |
Equity-method Investments | Equity-Method Investments Our equity method investments are initially recorded at cost 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 income (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 September 30, 2020, we had $10,726,982 in inventory, of which $1,740,378 was finished goods and $8,986,604 was raw materials. Provisions are made to reduce low-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. |
Deferred Revenue | Deferred Revenue Deferred revenue primarily consists of payments received from customers prior to the Company fulfilling its performance obligation of providing the product. When this occurs, the Company records a contract liability as deferred revenue. Deferred revenue is recognized as revenue as the related performance obligations are satisfied. |
Income Taxes | Income Taxes The Company accounts for income taxes in accordance with the liability method of accounting for income taxes. Under this method, d Valuation allowances are provided when it is more-likely-than-not that some or all of the deferred income tax assets may not be realized. In assessing the need for a valuation allowance, the Company has considered its historical levels of income, expectations of future taxable income and ongoing tax planning strategies. Developing the provision for income taxes, including the effective tax rate and analysis of potential tax exposure items, if any, requires significant judgment and expertise in federal and state income tax laws, regulations and strategies, including the determination of deferred income tax assets and liabilities and any estimated valuation allowances deemed necessary to value deferred income tax assets. Judgments and tax strategies are subject to audit by various taxing authorities. While the Company believes it has no significant uncertain income tax positions in the consolidated financial statements, adverse determinations by these taxing authorities could have a material adverse effect on the consolidated financial positions, result of operations, or cash flows. |
Concentrations Risk and Significant Customers | Concentrations Risk and Significant Customers The Company had certain customers which are each responsible for generating 10% or more of the total revenue for the three and nine months ended September 30, 2020. Three customers together accounted for approximately 64% of total revenue for the three months ended September 30, 2020 and two customers together accounted for 42% of total revenue for the nine months ended September 30, 2020. Two customers each accounted for more than 10% of accounts receivable at September 30, 2020. These two customers together accounted for approximately 66% of accounts receivable at September 30, 2020. |
Net Income (loss) Per Share | Net Income (Loss) per Share Basic net income or loss per common share is computed by dividing net income or loss applicable to common shareholders by the weighted average number of shares outstanding during each period. Diluted net income or loss per share is computed by dividing net income or loss attributable to common stockholders by the weighted-average number of shares of common stock outstanding during the period increased by common shares that could be issued upon conversion or exercise of other outstanding securities to the extent those additional common shares would be dilutive. The dilutive effect of potentially dilutive securities is reflected in diluted net income or loss per share by application of the treasury stock method. During periods when the Company is in a net loss position, basic net loss per share is the same as diluted net loss per share as the effects of potentially dilutive securities are anti-dilutive |
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) (“ASU 2016-13, 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 upon election on January 1, 2021. The standard requires a cumulative effect adjustment to the balance sheet as of the beginning of the first early 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 and when it plans to adopt it. In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740) (“ASU 2019-12”), which removes certain exceptions for investments, intraperiod allocations and interim calculations and adds guidance to reduce complexity in accounting for income taxes. ASU 2019-12 is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020; early adoption is permitted. The Company is still assessing the amendments of ASU 2019-12 and the impact the amendments will have on the Company’s consolidated financial statements and related disclosures. |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Fair Value Disclosures [Abstract] | |
Summary of Assets Measured at Fair Value On Recurring Basis | The Company’s financial instruments that are measured at fair value on a recurring basis consist of certificates of deposit. The following table summarizes the assets measured at fair value on a recurring basis as of September 30, 2020 by level within the fair value hierarchy: September 30, 2020 (Level 1) (Level 2) (Level 3) Total Marketable investment securities: Certificates of deposit $ - $ 6,050,000 $ - $ 6,050,000 |
Revenue (Tables)
Revenue (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Revenue from Contract with Customer [Abstract] | |
Summary of Revenue by Geographic Area | The following table sets forth revenue by geographic area: Three Months Ended Nine Months Ended 2020 2019 2020 2019 United States $ 14,054,316 $ 41,434 $ 28,151,446 $ 106,408 Rest of World 7,764,437 - 19,256,109 - Total $ 21,818,753 $ 41,434 $ 47,407,555 $ 106,408 Percentage of revenue by area: United States 64 % 100 % 59 % 100 % Rest of World 36 % 0 % 41 % 0 % |
Schedule of Deferred Revenue | Changes in the Company’s deferred revenue balance for the nine months ended September 30, 2020 were as follows: Balance as of December 31, 2019 $ 1,323 Revenue recognized that was included in deferred revenue balance at the beginning of the period (1,323 ) Increase due to prepayments from customers 657,925 Balance as of September 30, 2020 $ 657,925 |
Stockholders' Equity (Tables)
Stockholders' Equity (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Equity [Abstract] | |
Schedule of Basic and Diluted Earnings Per Share | The following table reconciles the numerator and the denominator used to calculate basic and diluted earnings per share for three and nine months ended September 30, 2020: Three Months Ended Nine Months Ended Numerator Net income, as reported $ 15,731,532 $ 29,671,348 Denominator Weighted average shares, basic 28,084,267 26,172,439 Dilutive effect of stock options and warrants 1,513,525 1,449,092 Shares used to compute diluted earnings per share 29,597,792 27,621,531 Basic earnings per share $ 0.56 $ 1.13 Diluted earnings per share $ 0.53 $ 1.07 |
Stock-Based Compensation (Table
Stock-Based Compensation (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Share-based Payment Arrangement, Disclosure [Abstract] | |
Schedule of Option Activity | The following table summarizes option activity during the nine months ended September 30, 2020: Number of Options Weighted Average Exercise Price Weighted Average Fair Value Weighted Average Remaining Contractual Life (Years) Outstanding at December 31, 2019 2,021,817 $ 1.69 $ 0.83 Granted 150,000 8.14 4.75 Expired - - - Forfeited/Cancelled - - - Exercised (528,623 ) 1.74 0.88 Outstanding at September 30, 2020 1,643,194 $ 2.26 $ 1.21 8.50 |
Schedule of Fair Value of Options Weighted Average Assumptions | The following weighted average assumptions were used in estimating the grant date fair value of options: Nine months ended 2020 2019 Risk-free interest rate 1.05 % 1.56 % Expected life (years) 7.3 10.0 Expected volatility 62.82 % 63.65 % Expected dividend yield None None |
Schedule of Warrant Activity | The following table summarizes warrant activity during nine months ended September 30, 2020 Number of Warrants Weighted Average Exercise Price Weighted Average Fair Value Weighted Average Remaining Contractual Life (Years) Outstanding at December 31, 2019 983,535 $ 1.44 $ 1.03 Granted 20,000 16.49 15.19 Expired - - - Forfeited/Cancelled - - - Exercised (894,445 ) 1.37 1.05 Outstanding at September 30, 2020 109,090 $ 2.06 $ 1.17 3.37 |
Schedule of Recognized Stock-based Compensation Expense | The Company recognized stock-based compensation expense related to the types of awards discussed above as follows: Three Months Ended Nine Months Ended 2020 2019 2020 2019 Options $ 158,344 $ 253,798 $ 831,541 $ 468,076 Warrants - - 303,802 - Stock 914,790 22,135 1,032,033 102,556 Total stock-based compensation expense $ 1,073,134 $ 275,933 $ 2,167,376 $ 570,632 |
Income Taxes (Tables)
Income Taxes (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Income Tax Disclosure [Abstract] | |
Schedule of Benefit from Income Taxes and Effective Tax Rates | The following table summarizes our benefit from income taxes and our effective tax rates for the three and nine months ended September 30, 2020 and 2019: Three Months Ended Nine Months Ended 2020 2019 2020 2019 Income (loss) before income taxes $ 12,816,751 $ (1,747,766 ) $ 26,756,567 $ (4,460,551 ) Income tax provision (benefit) (2,914,781 ) - (2,914,781 ) - Effective tax rate -22.7 % 0.0 % -10.9 % 0.0 % |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Commitments and Contingencies Disclosure [Abstract] | |
Schedule of Future Minimum Lease Payments | The Company’s future minimum lease payments were as follows as of September 30, 2020: Year Ending December 31, 2020 (remainder) $ 86,362 2021 345,900 2022 345,900 2023 345,900 2024 57,653 Total lease payments $ 1,181,715 |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Details Narrative) - USD ($) | 3 Months Ended | 9 Months Ended | |
Sep. 30, 2020 | Sep. 30, 2020 | Dec. 31, 2019 | |
Accounts receivable | $ 11,495,417 | $ 11,495,417 | |
Doubtful accounts | 855,000 | 855,000 | |
Accounts receivable, net | 10,640,417 | 10,640,417 | $ 131,382 |
Inventory | 10,726,982 | 10,726,982 | $ 197,168 |
Inventory finished goods | 1,740,378 | 1,740,378 | |
Inventory raw materials | $ 8,986,604 | $ 8,986,604 | |
Customer Concentration Risk [Member] | Revenue Benchmark [Member] | Three Customers [Member] | |||
Concentration risk percentage | 64.00% | ||
Customer Concentration Risk [Member] | Revenue Benchmark [Member] | Two Customers [Member] | |||
Concentration risk percentage | 42.00% | ||
Customer Concentration Risk [Member] | Accounts Receivable [Member] | Two Customers Each [Member] | |||
Concentration risk percentage | 10.00% | ||
Customer Concentration Risk [Member] | Accounts Receivable [Member] | Two Customers Together [Member] | |||
Concentration risk percentage | 66.00% |
Fair Value Measurements - Summa
Fair Value Measurements - Summary of Assets Measured at Fair Value On Recurring Basis (Details) - Fair Value, Recurring [Member] | Sep. 30, 2020USD ($) |
Fair value of assets | $ 6,050,000 |
Fair Value, Inputs, Level 1 [Member] | |
Fair value of assets | |
Fair Value, Inputs, Level 2 [Member] | |
Fair value of assets | 6,050,000 |
Fair Value, Inputs, Level 3 [Member] | |
Fair value of assets |
Revenue - Summary of Revenue by
Revenue - Summary of Revenue by Geographic Area (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Revenue | $ 21,818,753 | $ 41,434 | $ 47,407,555 | $ 106,408 |
United States [Member] | ||||
Revenue | $ 14,054,316 | $ 41,434 | $ 28,151,446 | $ 106,408 |
Percentage of revenue | 64.00% | 100.00% | 59.00% | 100.00% |
Rest of World [Member] | ||||
Revenue | $ 7,764,437 | $ 19,256,109 | ||
Percentage of revenue | 36.00% | 0.00% | 41.00% | 0.00% |
Revenue - Schedule of Deferred
Revenue - Schedule of Deferred Revenue (Details) | 9 Months Ended |
Sep. 30, 2020USD ($) | |
Revenue from Contract with Customer [Abstract] | |
Deferred revenue, beginning balance | $ 1,323 |
Revenue recognized that was included in deferred revenue balance at the beginning of the period | (1,323) |
Increase due to prepayments from customers | 657,925 |
Deferred revenue, ending balance | $ 657,925 |
Stockholders' Equity (Details N
Stockholders' Equity (Details Narrative) - USD ($) | Mar. 02, 2020 | Feb. 13, 2020 | Jan. 28, 2020 | Sep. 30, 2020 | Mar. 31, 2020 | Sep. 30, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | Dec. 31, 2019 |
Class of Stock [Line Items] | |||||||||||
Number of common stock issued | 470,000 | 3,324,676 | 3,448,278 | ||||||||
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 | ||||||||
Issuance of common stock gross proceeds | $ 4,230,000 | $ 10,240,002 | $ 5,000,003 | $ 19,470,005 | $ 5,496,002 | ||||||
Net proceeds from issuance of common stock | 3,882,420 | 9,612,561 | 4,517,102 | ||||||||
Offering costs | $ 347,580 | $ 627,441 | $ 482,901 | ||||||||
Number of shares issued for exercise of options, value | $ 274,518 | ||||||||||
Options [Member] | |||||||||||
Class of Stock [Line Items] | |||||||||||
Potentially dilutive shares | 50,000 | 2,021,817 | |||||||||
Warrants [Member] | |||||||||||
Class of Stock [Line Items] | |||||||||||
Potentially dilutive shares | 953,535 | ||||||||||
Convertible Preferred Stock [Member] | |||||||||||
Class of Stock [Line Items] | |||||||||||
Potentially dilutive shares | 2,133,333 | ||||||||||
Third Parties [Member] | |||||||||||
Class of Stock [Line Items] | |||||||||||
Number of shares issued for services | 83,935 | ||||||||||
Common Stock [Member] | |||||||||||
Class of Stock [Line Items] | |||||||||||
Number of common stock issued | 7,242,954 | 3,925,716 | |||||||||
Number of conversion of shares issued | 2,133,333 | 166,667 | 2,133,333 | ||||||||
Number of shares issued for exercise of options | 108,334 | ||||||||||
Number of shares issued for exercise of options, value | $ 108 | ||||||||||
Number of shares issued for services | 200,000 | 100,000 | |||||||||
Warrant [Member] | |||||||||||
Class of Stock [Line Items] | |||||||||||
Number of shares issued for warrant exercise | 829,492 | ||||||||||
Number of shares issued for warrant exercise, value | $ 270,000 | ||||||||||
Options [Member] | |||||||||||
Class of Stock [Line Items] | |||||||||||
Number of shares issued for exercise of options | 528,623 | ||||||||||
Number of shares issued for exercise of options, value | $ 917,984 |
Stockholders' Equity - Schedule
Stockholders' Equity - Schedule of Basic and Diluted Earnings Per Share (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||||||
Sep. 30, 2020 | Jun. 30, 2020 | Mar. 31, 2020 | Sep. 30, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Earnings Per Share [Abstract] | ||||||||
Net income, as reported | $ 15,731,532 | $ 15,005,009 | $ (1,065,193) | $ (1,747,766) | $ (1,344,396) | $ (1,368,389) | $ 29,671,348 | $ (4,460,551) |
Weighted average shares, basic | 28,084,267 | 17,328,787 | 26,172,439 | 16,809,085 | ||||
Dilutive effect of stock options and warrants | 1,513,525 | 1,449,092 | ||||||
Shares used to compute diluted earnings per share | 29,597,792 | 17,328,787 | 27,621,531 | 16,809,085 | ||||
Basic earnings per share | $ 0.56 | $ (0.10) | $ 1.13 | $ (0.27) | ||||
Diluted earnings per share | $ 0.53 | $ (0.10) | $ 1.07 | $ (0.27) |
Stock-Based Compensation (Detai
Stock-Based Compensation (Details Narrative) - USD ($) | 3 Months Ended | 9 Months Ended | |
Sep. 30, 2020 | Sep. 30, 2020 | Sep. 30, 2019 | |
Third Parties [Member] | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Number of shares issued for services | 83,935 | ||
Warrants [Member] | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Intrinsic value of options outstanding | $ 1,300,000 | $ 1,300,000 | |
Stock Options [Member] | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Intrinsic value of options execised | 8,300,000 | ||
Intrinsic value of options outstanding | $ 15,476,739 | $ 15,476,739 | |
Unvested option shares outstanding | 296,667 | 296,667 | |
Unrecognized stock-based compensation | $ 339,951 | ||
Unrecognized stock-based compensation recognition period | 2 years 6 months | ||
Intrinsic value of warrants exercised | $ 9,400,000 | ||
Restricted Stock [Member] | Third Parties [Member] | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Number of shares issued for services | 83,935 | ||
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 | 6,000,000 | |
Number of common shares avaialble for issuance | 3,828,183 | 3,828,183 |
Stock-Based Compensation - Sche
Stock-Based Compensation - Schedule of Option Activity (Details) | 9 Months Ended |
Sep. 30, 2020$ / sharesshares | |
Share-based Payment Arrangement [Abstract] | |
Options Outstanding, Beginning | shares | 2,021,817 |
Options Outstanding, Granted | shares | 150,000 |
Options Outstanding, Expired | shares | |
Options Outstanding, Forfeited/Cancelled | shares | |
Options Outstanding, Exercised | shares | (528,623) |
Options Outstanding, Ending | shares | 1,643,194 |
Weighted Average Exercise Price Outstanding, Beginning | $ 1.69 |
Weighted Average Exercise Price Granted | 8.14 |
Weighted Average Exercise Price Expired | |
Weighted Average Exercise Price Forfeited/Cancelled | |
Weighted Average Exercise Price Exercised | 1.74 |
Weighted Average Exercise Price Outstanding, Ending | 2.26 |
Weighted Average Fair Value Outstanding, Beginning | 0.83 |
Weighted Average Fair Value Granted | 4.75 |
Weighted Average Fair Value Expired | |
Weighted Average Fair Value Forfeited/Cancelled | |
Weighted Average Fair Value Exercised | 0.88 |
Weighted Average Fair Value Outstanding, Ending | $ 1.21 |
Weighted-average Remaining Contractual Life (years) Outstanding, Ending | 8 years 6 months |
Stock-Based Compensation - Sc_2
Stock-Based Compensation - Schedule of Fair Value of Options Weighted Average Assumptions (Details) | 9 Months Ended | |
Sep. 30, 2020 | Sep. 30, 2019 | |
Share-based Payment Arrangement [Abstract] | ||
Risk free interest rate | 1.05% | 1.56% |
Expected life (years) | 7 years 3 months 19 days | 10 years |
Expected volatility | 62.82% | 63.65% |
Expected dividend yield | 0.00% | 0.00% |
Stock-Based Compensation - Sc_3
Stock-Based Compensation - Schedule of Warrant Activity (Details) | 9 Months Ended |
Sep. 30, 2020$ / sharesshares | |
Share-based Payment Arrangement [Abstract] | |
Number of Warrants Outstanding, Beginning | shares | 983,535 |
Number of Warrants Outstanding, Granted | shares | 20,000 |
Number of Warrants Outstanding, Expired | shares | |
Number of Warrants Outstanding, Forfeited/Cancelled | shares | |
Number of Warrants Outstanding, Exercised | shares | (894,445) |
Number of Warrants Outstanding, Ending | shares | 109,090 |
Weighted Average Exercise Price, Beginning | $ 1.44 |
Weighted Average Exercise Price, Granted | 16.49 |
Weighted Average Exercise Price, Expired | |
Weighted Average Exercise Price, Forfeited/Cancelled | |
Weighted Average Exercise Price, Exercised | 1.37 |
Weighted Average Exercise Price, Ending | 2.06 |
Weighted Average Fair Value, Beginning | 1.03 |
Weighted Average Fair Value, Granted | 15.19 |
Weighted Average Fair Value, Expired | |
Weighted Average Fair Value, Forfeited/Cancelled | |
Weighted Average Fair Value, Exercised | 1.05 |
Weighted Average Fair Value, Ending | $ 1.17 |
Weighted-average Remaining Contractual Life (Years), Ending | 3 years 4 months 13 days |
Stock-Based Compensation - Sc_4
Stock-Based Compensation - Schedule of Recognized Stock-based Compensation Expense (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Total stock-based compensation expense | $ 1,073,134 | $ 275,933 | $ 2,167,376 | $ 570,632 |
Options [Member] | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Total stock-based compensation expense | 158,344 | 253,798 | 831,541 | 468,076 |
Warrants [Member] | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Total stock-based compensation expense | 303,802 | |||
Stock [Member] | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Total stock-based compensation expense | $ 914,790 | $ 22,135 | $ 1,032,033 | $ 102,556 |
Income Taxes (Details Narrative
Income Taxes (Details Narrative) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Income Tax Disclosure [Abstract] | ||||
Income tax provision (benefit) | $ (2,914,781) | $ (2,914,781) | ||
Effective tax rate | (22.70%) | 0.00% | (10.90%) | 0.00% |
Income Taxes - Schedule of Bene
Income Taxes - Schedule of Benefit from Income Taxes and Effective Tax Rates (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Income Tax Disclosure [Abstract] | ||||
Income (loss) before income taxes | $ 12,816,751 | $ (1,747,766) | $ 26,756,567 | $ (4,460,551) |
Income tax provision (benefit) | $ (2,914,781) | $ (2,914,781) | ||
Effective tax rate | (22.70%) | 0.00% | (10.90%) | 0.00% |
Related Party Transactions (Det
Related Party Transactions (Details Narrative) - Exclusive License Agreement [Member] - USD ($) | Jan. 01, 2017 | Sep. 30, 2020 |
Dr. Satterfield [Member] | ||
Accrued royalties | $ 700,000 | |
Increase in Royalties Payable, per month | $ 10,000 | |
Dr. Brent Satterfield [Member] | ||
Due to related party | $ 180,000 |
Commitments and Contingencies_2
Commitments and Contingencies (Details Narrative) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020USD ($)a | Sep. 30, 2019USD ($) | Sep. 30, 2020USD ($)a | Sep. 30, 2019USD ($) | |
Commitments and Contingencies Disclosure [Abstract] | ||||
Lease term | 4 years | 4 years | ||
Area of land | a | 13,687 | 13,687 | ||
Payments for rent | $ 28,825 | |||
Lease expiration date | Feb. 29, 2024 | |||
Rent expenses | $ 86,588 | $ 42,259 | $ 225,374 | $ 132,879 |
Commitments and Contingencies -
Commitments and Contingencies - Schedule of Future Minimum Lease Payments (Details) | Sep. 30, 2020USD ($) |
Commitments and Contingencies Disclosure [Abstract] | |
2020 (remainder) | $ 86,362 |
2021 | 345,900 |
2022 | 345,900 |
2023 | 345,900 |
2024 | 57,653 |
Total lease payments | $ 1,181,715 |