Item 1.01.
Entry into a Material Definitive Agreement.
Preferred
Stock
On
January 30, 2019, Co-Diagnostics, Inc. (the “
Company
”) entered into a securities purchase agreement (the “
Preferred
Purchase Agreement
”) with two investors (the “
Preferred Investors
”), whereby the Preferred Purchasers
purchased from the Company 30,000 shares of Series A Convertible Preferred Stock of the Company (the “
Series A Preferred
Stock
”) for an aggregate purchase price of $3.0 million (the “
Purchase Price
”).
The
Purchase Price was paid by the Preferred Investors with $1.0 million in cash and the conversion of a $2.0 million note owed by
the Company to one of the Preferred Investors into shares of Series A Preferred Stock. The Preferred Investors may not
convert the Series A Preferred Stock to the extent that such conversion would result in beneficial ownership by the Preferred
Investors and their affiliates of more than 4.99% of the issued and outstanding Common Stock of the Company. The Preferred Purchase
Agreement contains certain representations, warranties, covenants and events of default. The Closing occurred on January 30, 2019.
The
form of the Preferred Purchase Agreement is filed as Exhibit 10.1 to this Current Report on Form 8-K. The foregoing summaries
of the terms of the Preferred Purchase Agreement is subject to, and qualified in its entirety by, such agreement, which is incorporated
herein by reference.
Common
Stock
On
January 31, 2019, the Company entered into Securities Purchase Agreements (the “
Purchase Agreement
”) with three
institutional investors (the “
Investors
”) for the sale by the Company of 3,925,716 shares (the “
Common
Shares
”) of the Company’s common stock, par value $0.001 per share (the “
Common Stock
”), at
a purchase price of $1.40 per share in a registered direct offering. The aggregate gross proceeds for the sale of the Common Shares
was $5,496,002, The closing of the offering is expected to occur on or about February 4, 2019, subject to the satisfaction of
customary closing conditions.
H.C.
Wainwright & Co. LLC (the “
Placement Agent
”), is acting as the exclusive placement agent in
connection with the offering. The Company has agreed to pay Placement Agent an aggregate fee equal to 5.5% of the gross
proceeds received by the Company from the sale of the securities in the transactions. The Company has also agreed to pay
Maxim Group LLC $137,400 to act as an independent financial advisor to the Company in connection with the offering.
The Company also agreed to reimburse the Placement Agent $50,000 for non-accountable expenses and $10,000 for clearing
expenses.
The
net proceeds to the Company from the transaction, after deducting the Placement Agent’s fees and offering expenses, are
expected to be approximately $5.0 million. The Company intends to use the net proceeds from the offering for expansion of existing
initiatives in the infectious disease testing and agrigenomics verticals, to further develop and commercialize applications of
its technology in the growing liquid biopsy and next-gen sequencing markets, to expand its sales efforts, and for working capital
and other general corporate purposes.
The
Common Shares sold in the offering were offered and sold by the Company pursuant to an effective shelf registration statement
on Form S-3, that was originally filed on August 14, 2018 and declared effective by the Securities and Exchange Commission (“
SEC
”)
on September 7, 2018, and the base prospectus contained therein (File No. 333-226835) (the “
Registration Statement
”).
The Company will file a final prospectus supplement and the accompanying prospectus with the SEC in connection with the sale of
the securities.
The
representations, warranties and covenants contained in the Purchase Agreement were made solely for the benefit of the parties
to the Purchase Agreement. In addition, such representations, warranties and covenants (i) are intended as a way of allocating
the risk between the parties to the Purchase Agreement and not as statements of fact, and (ii) may apply standards of materiality
in a way that is different from what may be viewed as material by stockholders of, or other investors in, the Company. Accordingly,
the Purchase Agreement is included with this filing only to provide investors with information regarding the terms of transaction,
and not to provide investors with any other factual information regarding the Company. Stockholders should not rely on the representations,
warranties and covenants or any descriptions thereof as characterizations of the actual state of facts or condition of the Company
or any of its subsidiaries or affiliates. Moreover, information concerning the subject matter of the representations and warranties
may change after the date of the Purchase Agreement, which subsequent information may or may not be fully reflected in public
disclosures.
The
form of the Purchase Agreement is filed as Exhibit 10.2 to this Current Report on Form 8-K. The foregoing summaries of the terms
of the Purchase Agreement is subject to, and qualified in their entirety by, such agreement, which is incorporated herein by reference.
The
legal opinion and consent of Carmel, Milazzo & DiChiara LLP relating to the securities is filed as Exhibit 5.1 to this Current
Report on Form 8-K and is incorporated herein by reference.