Over the last three days CODX’s share price has a seen a near three-fold increase, daily trading volume has exceeded 50 million (over three times the number of outstanding shares) and daily RSI (14) has breached 90. This has been on the back of Coronavirus news pieces suggesting that CODX is preparing a test to diagnose the disease. This has also coincided with an offering pricing announcement. We looked into it and found some red flags that we would like to share with our readers. They include: paid promotion, a transfer agent with questionable links, an institutional shareholder with a string of dubious “investments”, bad financials and dilution.
Company information:CODX 8.20 -0.31 -3.64%
CODX describes itself as a “molecular diagnostics company formed in April 2013 that develops, manufactures and markets a new, state-of-the-art diagnostics technology.” They are currently selling tests for the diagnosis of diseases such as Zika, Dengue, Chikungunya, Tuberculosis and Hepatitis B and C. The company has not been in great shape over the last year. In their latest 10K it goes as far as stating that it faces serious going concerns about its ability to continue operating ( 1 ).
- January 27, 2020, Vaccine, diagnostics stocks rise again on spreading coronavirus
- January 24, 2020, Co-Diagnostics’ stock tumbles after stock sale agreement priced at 29% discount
- January 24, 2020, Co-Diagnostics Announces $5.0 Million Registered Direct Offering Priced At-the-Market
- January 23, 2020, Co-Diagnostics (NASDAQ:CODX) Prepares Coronavirus Test as World Health Organization Weighs Global Health Emergency
CODX financials are not as bad as one would expect. Debt seems to be under control with significant reductions in its overall levels during 2019. However, it is pretty clear that the company is generating close to no revenue. Net losses have averaged over $1.5 million per quarter over the last 21 months. This deficit has been funded with cash as this figure has been steadily declining over the same period excluding a significant increase during Q1 2019. This cash increase was due to the sale of equity to a couple of institutional investors. This resulted in an increase in the number of issued shares from around 12 million to over 17 million ( 2 ). One of these institutional investors purchased over 1.3 million shares of common stock and it is an investor one should be quite wary about given other tickers it has been involved with.
A shareholder to worry about
On January 30, 2019, CVI investments acquired 1.3 million CODX shares of common stock ( 3 ). According to our Asgard database (a proprietary database and stock selection tool that identifies high-probability fraudulent/dubious companies based on several characteristics), CVI has been involved with other suspect tickers, such as BPTH, RKDA and TRNX among other. A quick look at the historical price action of these tickers will show the same trend; a very extended downward trend characterised by “spikes in volatility”. TRNX is one of the dodgiest ticker we took a look at when we started publishing our research, check out our very short article on it.
Needless to say, CVI’s involvement is a big red flag when considering the similar fate of its other “investments”.
A stock transfer agent to worry about
CODX’s transfer agent is VStock transfer. VStock has been involved with a few suspect tickers over the last couple of years such as PULM, QBIO and MTNB,. But the most interesting one is undoubtedly BEAG (Blue Eagle Lithium). BEAG is a confirmed mailer pump and dump as exposed by Michael Goode ( 4 ), that paid over $1.3 million dollar for a landing page. It ended up getting into serious trouble with the SEC, which suspended its trading on July 1, 2019 because of lack of accuracy of publicly available information and unusual unexplained market activity ( 5 ). BEAG now dwells in the grey market (also known as the OTC cemetery) where it currently trades at less than $0.10 after having reached $3.50 pre SEC suspension.
VStock transfer is thus a big red flag as it has been previously involved with a ticker that has been suspended for trading irregularities by the SEC. Furthermore, Brent Satterfield, CODX’s Chief Science Officer and Director, sued VStock transfer in 2019 ( 6 ).The reason for the lawsuit being that CODX pledged restricted shares to America 2030 Capital as security for a loan. Even after the loan was paid back, America 2030 Capital sold half of the pledged shares and pocketed the proceeds. So Mr. Satterfield sought to prevent VStock transfer from selling the rest of the pledged shares to America 2030 Capital.
Paid Newsletter Promotion:
On January 23, 2019, before the markets opened well known promoters such as OTCtipReporter, Buzzstocks.com, James Connelly (aka Penny Stock Prophet), HotOTC, BullRally and other, sent out premarket alerts promoting CODX.
According to the disclaimer CODX paid $110,000 for these pump newsletters. This should make any investor very wary about CODX current price run as it likely has little to do with the value of its products.
CODX is a terrible investment. Bad financials, dilution, dodgy institutional shareholders, dodgy transfer agents and paid promotion is a recipe for a swift share price crash. Stay away from this company’s unless you are a trader with experience with this type of tickers.