DEF: Co-Diagnostics Seeks Shareholder Approval for Reverse Stock Split

Co-Diagnostics, Inc. will hold a Special Meeting on December 5, 2025, to seek shareholder approval for a reverse stock split to maintain its Nasdaq listing.

Summary

• A Special Meeting of Shareholders will be held on December 5, 2025, at 9:00 A.M. (Mountain Time) to vote on an amendment to the Company's Articles of Incorporation to effect a reverse stock split.
• The proposed reverse stock split ratio will be between 1-for-2 and 1-for-30, with the final ratio to be determined by the Board of Directors within twelve months of shareholder approval.
• The primary purpose of the reverse stock split is to regain compliance with Nasdaq Listing Rule 5550(a)(2), which requires a minimum bid price of $1.00 per share for continued listing on the Nasdaq Capital Market.
• The Company received a deficiency notice on January 10, 2025, and failed to regain compliance by the initial deadline of July 9, 2025, subsequently receiving an extension until January 5, 2026.
• As of October 29, 2025, there were 60,892,582 shares of common stock issued and outstanding.
• The closing price of the Company's common stock on November 5, 2025, was $0.3921 per share.
• The Board of Directors unanimously recommends that shareholders vote FOR the proposal.
• The reverse split will not change the number of authorized shares (100,000,000) or the par value ($0.001) of the common stock.
• Fractional shares resulting from the reverse split will be rounded up to the nearest whole share, and no cash will be issued in lieu of fractional shares.

Sentiment

Score: 3

Explanation: The filing addresses a critical issue of potential delisting from Nasdaq due to a sustained low stock price. While the proposed reverse stock split aims to resolve this and maintain the listing, the necessity of such an action reflects underlying stock performance issues. The Board's recommendation is primarily to prevent a worse outcome (delisting), rather than signaling strong positive operational performance or growth.

Positives

• Maintaining the Nasdaq listing is crucial for market visibility, liquidity, and access to capital, which the reverse stock split aims to achieve.
• An increased per-share market price may encourage greater interest in the Company's common stock and enhance its acceptability and marketability to the financial community and investing public.
• The Board believes the reverse split may promote greater liquidity for shareholders.
• The reverse split will not immediately dilute existing shareholders' percentage ownership interest, except for the treatment of fractional shares.

Negatives

• Reverse stock splits often carry a negative perception among many investors, analysts, and stock market participants.
• There is a risk that the stock price of companies that have effected reverse stock splits may subsequently decline back to pre-reverse stock split levels.
• A reduction in the number of outstanding shares may impair the liquidity of the Company's common stock, potentially reducing its value.
• Shareholders owning less than one hundred shares following the reverse split may incur incrementally higher trading costs through certain brokers.
• The increase in authorized but unissued shares (relative to outstanding shares post-split) could have an anti-takeover effect and be dilutive if issued in the future without further shareholder approval.

Risks

• The effect of the Reverse Split on the market price for the Common Stock cannot be accurately predicted, and the post-split market price may be less than the pre-Reverse Split price multiplied by the reverse stock split ratio.
• A reduction in the number of outstanding shares of Common Stock may impair its liquidity, which could reduce the value of the Common Stock.
• Some shareholders may own less than one hundred shares of Common Stock after the split, potentially leading to higher trading costs.
• There is no assurance that the Common Stock will be more attractive to institutional and other long-term investors or that its liquidity will increase.
• Even if the Reverse Split is approved and effected, there is no assurance that the Common Stock will not be delisted prior to the effective date or that the Company will subsequently meet and continue to meet Nasdaq listing requirements.
• Future issuance of additional authorized shares of Common Stock could be dilutive to existing shareholders by decreasing their percentage of equity ownership in the Company.

Future Outlook

The Board intends to implement the reverse stock split shortly after receiving shareholder approval to regain Nasdaq compliance by January 5, 2026. The exact ratio, within the 1-for-2 to 1-for-30 range, will be determined by the Board based on market conditions and Nasdaq requirements, and the split must be effected within twelve months of shareholder approval. If the Board does not implement the Reverse Split within twelve months, further stockholder approval would be required.

Management Comments

• "OUR BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE FOR THE PROPOSAL."
• "We believe that enabling our Board to fix the specific ratio of the Reverse Split within the stated range will provide us with the flexibility to implement the Reverse Split in a manner designed to maximize the anticipated benefits for our shareholders."
• "Given the current price of our Common Stock on the Nasdaq Capital Market, we expect that we will implement the Reverse Split shortly after receiving stockholder approval thereof in order to regain compliance with Nasdaqs minimum bid price requirement."
• "Our Board, however, determined that these potential negative factors were significantly outweighed by the potential benefits, including, chiefly, maintaining a Nasdaq listing, and believes that increasing the per share market price of our Common Stock as a result of the Reverse Split may encourage greater interest in our Common Stock and enhance the acceptability and marketability of our Common Stock to the financial community and investing public as well as promote greater liquidity for our shareholders."

Industry Context

Reverse stock splits are a common defensive strategy employed by publicly traded companies to avoid delisting from major stock exchanges, such as Nasdaq, when their share price consistently falls below minimum bid price requirements. Maintaining a listing on a major exchange is generally critical for a company's reputation, investor confidence, liquidity, and ability to raise capital, as it provides greater visibility and adherence to stricter regulatory standards compared to over-the-counter markets.

Comparison to Industry Standards

• NA

Corporate Governance

Related Party Transactions

• Seth Egan, the Company's Chief Commercialization Officer, and Winston Egan, the Company's Director of Customer Experience, are sons of Dwight Egan, the President, CEO, and Chairman of the Board.
• During the year ended December 31, 2024, Seth Egan received total compensation of $0.4 million, and Winston Egan received total compensation of $0.1 million.
• Richard Abbott, the Company's President, was an indirect shareholder of Advanced Conceptions, Inc. through his 50% ownership interest in Whiteknob LLC at the time of its acquisition by the Company in December 2021.
• Whiteknob LLC, which owned 71.61% of Advanced Conceptions at acquisition, has the opportunity to earn an additional 507,386 common shares and 166,503 common stock purchase warrants of Co-Diagnostics upon the achievement of certain milestones, with Mr. Abbott having a 50% interest in these potential earnings.

Stakeholder Impact

• Shareholders: Will experience a reduction in the number of shares held, but their percentage ownership will remain largely the same (except for fractional shares). They may face higher trading costs for odd lots. The action aims to maintain Nasdaq listing, which could preserve market access and liquidity, but also carries risks of negative perception and potential future dilution.
• Employees: No direct impact on employment or compensation is mentioned, but maintaining a Nasdaq listing can contribute to overall company stability and reputation, indirectly benefiting employees.
• Customers/Suppliers/Creditors: No direct impact on these stakeholders is mentioned in the context of the reverse stock split.

Next Steps

• Shareholders will vote on the reverse stock split proposal at the Special Meeting on December 5, 2025.
• If approved, the Board will determine the exact reverse split ratio (between 1-for-2 and 1-for-30) and implement it within twelve months of shareholder approval.
• The Company will file an amendment to its Charter with the Utah Division of Corporations to effect the split.
• The Company will announce preliminary voting results at the Special Meeting and disclose final results in a Current Report on Form 8-K within four business days after the meeting.
• The Company will communicate additional details regarding the Reverse Split to the public prior to its effective date.

Key Dates

Recommendation

The proposed reverse stock split is a necessary defensive action to prevent delisting from Nasdaq, which would be a significant negative event for the Company's market visibility and access to capital. While successfully maintaining the listing is a positive outcome of this action, the underlying reason for the split (a sustained low stock price) indicates fundamental challenges. The filing itself does not present new information about operational improvements or growth strategies that would warrant a 'buy' recommendation. The risks associated with reverse splits, such as negative investor perception and potential for further price decline, suggest caution. Therefore, a 'hold' recommendation is appropriate for existing investors to observe the Company's performance post-split and assess any future strategic developments. New investors should approach with caution, as the action is primarily defensive.

Keywords

Reverse Stock Split, Nasdaq Listing, Shareholder Meeting, Corporate Governance, Stock Price, Delisting Risk, CODX, Proxy Statement, Equity Incentive Plan, Capital Market